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her aid in the manner proposed to accomplish an improvement so important to her own best interests.

We have reason to hope that the proposed railroad across the Isthmus at Panama will be successfully constructed under the protection of the late treaty with New Granada, ratified and exchanged by my predecessor on the 10th day of June, 1848, which guarantees the perfect neutrality of the Isthmus and the rights of sovereignty and property of New Granada over that territory, "with a view that the free transit from ocean to ocean may not be interrupted or embarrassed" during the existence of the treaty. It is our policy to encourage every practicable route across the isthmus which connects North and South America, either by railroad or canal, which the energy and enterprise of our citizens may induce them to complete, and I consider it obligatory upon me to adopt that policy, especially in consequence of the absolute necessity of facilitating intercourse with our possessions on the Pacific.

The position of the Sandwich Islands with reference to the territory of the United States on the Pacific, the success of our persevering and benevolent citizens who have repaired to that remote quarter in Christianizing the natives and inducing them to adopt a system of government and laws suited to their capacity and wants, and the use made by our numerous whale ships of the harbors of the islands as places of resort for obtaining refreshments and repairs all combine to render their destiny peculiarly interesting to us. It is our duty to encourage the authorities of those islands in their efforts to improve and elevate the moral and political condition of the inhabitants, and we should make reasonable allowances for the difficulties inseparable from this task. We desire that the islands may maintain their independence and that other nations should concur with us in this sentiment. We could in no event be indifferent to their passing under the dominion of any other power. The principal commercial states have in this a common interest, and it is to be hoped that no one of them will attempt to interpose obstacles to the entire independence of the islands.

The receipts into the Treasury for the fiscal year ending on the 30th of June last were, in cash, $48,830,097.50, and in Treasury notes funded $10,833,000, making an aggregate of $59,663,097.50; and the expenditures for the same time were, in cash, $46,798,667.82, and in Treasury notes funded $10,833,000, making an aggregate of $57,631,667.82.

The accounts and estimates which will be submitted to Congress in the report of the Secretary of the Treasury show that there will probably be a deficit occasioned by the expenses of the Mexican War and treaty on the 1st day of July next of $5,828, 121.66, and on the 1st day of July, 1851, of $10,547,092.73, making in the whole a probable deficit to be provided for of $16,375,214.39. The extraordinary expenses of the war with Mexico and the purchase of California and New Mexico exceed `in amount this deficit, together with the loans heretofore made for those M P-VOL V—2

objects. I therefore recommend that authority be given to borrow whatever sum may be necessary to cover that deficit. I recommend the observance of strict economy in the appropriation and expenditure of public

money.

I recommend a revision of the existing tariff and its adjustment on a basis which may augment the revenue. I do not doubt the right or duty of Congress to encourage domestic industry, which is the great source of national as well as individual wealth and prosperity. I look to the wisdom and patriotism of Congress for the adoption of a system which may place home labor at last on a sure and permanent footing and by due encouragement of manufactures give a new and increased stimulus to agriculture and promote the development of our vast resources and the extension of our commerce. Believing that to the attainment of these ends, as well as the necessary augmentation of the revenue and the prevention of frauds, a system of specific duties is best adapted, I strongly recommend to Congress the adoption of that system, fixing the duties at rates high enough to afford substantial and sufficient encouragement to our own industry and at the same time so adjusted as to insure stability. The question of the continuance of the subtreasury system is respectfully submitted to the wisdom of Congress. If continued, important modifications of it appear to be indispensable.

For further details and views on the above and other matters connected with commerce, the finances, and revenue I refer to the report of the Secretary of the Treasury.

No direct aid has been given by the General Government to the improvement of agriculture except by the expenditure of small sums for the collection and publication of agricultural statistics and for some chemical analyses, which have been thus far paid for out of the patent fund. This aid is, in my opinion, wholly inadequate. To give to this leading branch of American industry the encouragement which it merits, I respectfully recommend the establishment of an agricultural bureau, to be connected with the Department of the Interior. To elevate the social condition of the agriculturist, to increase his prosperity, and to extend his means of usefulness to his country, by multiplying his sources of information, should be the study of every statesman and a primary object with every legislator.

No civil government having been provided by Congress for California, the people of that Territory, impelled by the necessities of their political condition, recently met in convention for the purpose of forming a constitution and State government, which the latest advices give me reason to suppose has been accomplished; and it is believed they will shortly apply for the admission of California into the Union as a sovereign State. Should such be the case, and should their constitution be conformable to the requisitions of the Constitution of the United States, I recommend their application to the favorable consideration of Congress.

Dec. 4,1849

The people of New Mexico will also, it is believed, at no very distant period present themselves for admission into the Union. Preparatory to the admission of California and New Mexico the people of each will have instituted for themselves a republican form of government, "laying its foundation in such principles and organizing its powers in such form as to them shall seem most likely to effect their safety and happiness.' By awaiting their action all causes of uneasiness may be avoided and confidence and kind feeling preserved. With a view of maintaining the harmony and tranquillity so dear to all, we should abstain from the introduction of those exciting topics of a sectional character which have hitherto produced painful apprehensions in the public mind; and I repeat the solemn warning of the first and most illustrious of my predecessors against furnishing "any ground for characterizing parties by geographical discriminations."

A collector has been appointed at San Francisco under the act of Congress extending the revenue laws over California, and measures have been taken to organize the custom-houses at that and the other ports inentioned in that act at the earliest period practicable. The collector proceeded overland, and advices have not yet been received of his arrival at San Francisco. Meanwhile, it is understood that the customs have continued to be collected there by officers acting under the military authority, as they were during the Administration of my predecessor. It will, I think, be expedient to confirm the collections thus made, and direct the avails (after such allowances as Congress may think fit to authorize) to be expended within the Territory or to be paid into the Treasury for the purpose of meeting appropriations for the improvement of its rivers and harbors.

A party engaged on the coast survey was dispatched to Oregon in January last. According to the latest advices, they had not left California; and directions have been given to them, as soon as they shall have fixed on the sites of the two light-houses and the buoys authorized to be constructed and placed in Oregon, to proceed without delay to make reconnoissances of the most important points on the coast of California, and especially to examine and determine on sites for light-houses on that coast, the speedy erection of which is urgently demanded by our rapidly increasing commerce.

I have transferred the Indian agencies from upper Missouri and Council Bluffs to Santa Fe and Salt Lake, and have caused to be appointed subagents in the valleys of the Gila, the Sacramento, and the San Joaquin rivers. Still further legal provisions will be necessary for the effective and successful extension of our system of Indian intercourse over the new territories.

I recommend the establishment of a branch mint in California, as it will, in my opinion, afford important facilities to those engaged in mining, as well as to the Government in the disposition of the mineral lands.

I also recommend that commissions be organized by Congress to examine and decide upon the validity of the present subsisting land titles in California and New Mexico, and that provision be made for the establishment of offices of surveyor-general in New Mexico, California, and Oregon and for the surveying and bringing into market the public lands in those Territories. Those lands, remote in position and difficult of access, ought to be disposed of on terms liberal to all, but especially favorable to the early emigrants.

In order that the situation and character of the principal mineral deposits in California may be ascertained, I recommend that a geological and mineralogical exploration be connected with the linear surveys, and that the mineral lands be divided into small lots suitable for mining and be disposed of by sale or lease, so as to give our citizens an opportunity of procuring a permanent right of property in the soil. This would seem to be as important to the success of mining as of agricultural pursuits.

The great mineral wealth of California and the advantages which its ports and harbors and those of Oregon afford to commerce, especially with the islands of the Pacific and Indian oceans and the populous regions of eastern Asia, make it certain that there will arise in a few years large and prosperous communities on our western coast. It therefore becomes important that a line of communication, the best and most expeditious which the nature of the country will admit, should be opened within the territory of the United States from the navigable waters of the Atlantic or the Gulf of Mexico to the Pacific. Opinion, as elicited and expressed by two large and respectable conventions lately assembled at St. Louis and Memphis, points to a railroad as that which, if practicable, will best meet the wishes and wants of the country. But while this, if in successful operation, would be a work of great national importance and of a value to the country which it would be difficult to estimate, it ought also to be regarded as an undertaking of vast magnitude and expense, and one which must, if it be indeed practicable, encounter many difficulties in its construction and use. Therefore, to avoid failure and disappointment; to enable Congress to judge whether in the condition of the country through which it must pass the work be feasible, and, if it be found so, whether it should be undertaken as a national improvement or left to individual enterprise, and in the latter alternative what aid, if any, ought to be extended to it by the Government, I recommend as a preliminary measure a careful reconnoissance of the several proposed routes by a scientific corps and a report as to the practicability of making such a road, with an estimate of the cost of its construction and support.

For further views on these and other matters connected with the duties of the home department I refer you to the report of the Secretary of the Interior.

I recommend early appropriations for continuing the river and harbor improvements which have been already begun, and also for the construc

tion of those for which estimates have been made, as well as for exami nations and estimates preparatory to the commencement of such others as the wants of the country, and especially the advance of our population over new districts and the extension of commerce, may render necessary. An estimate of the amount which can be advantageously expended within the next fiscal year under the direction of the Bureau of Topographical Engineers accompanies the report of the Secretary of War, to which I respectfully invite the attention of Congress.

The cession of territory made by the late treaty with Mexico has greatly extended our exposed frontier and rendered its defense more difficult. That treaty has also brought us under obligations to Mexico, to comply with which a military force is requisite. But our military establishment is not materially changed as to its efficiency from the condition in which it stood before the commencement of the Mexican War. Some addition to it will therefore be necessary, and I recommend to the favorable consideration of Congress an increase of the several corps of the Army at our distant Western posts, as proposed in the accompanying report of the Secretary of War.

Great embarrassment has resulted from the effect upon rank in the Army heretofore given to brevet and staff commissions. The views of the Secretary of War on this subject are deemed important, and if carried into effect will, it is believed, promote the harmony of the service. The plan proposed for retiring disabled officers and providing an asylum for such of the rank and file as from age, wounds, and other infirmities occasioned by service have become unfit to perform their respective duties is recommended as a means of increasing the efficiency of the Army and as an act of justice due from a grateful country to the faithful soldier.

The accompanying report of the Secretary of the Navy presents a full and satisfactory account of the condition and operations of the naval service during the past year. Our citizens engaged in the legitimate pursuits of commerce have enjoyed its benefits. Wherever our national vessels have gone they have been received with respect, our officers have been treated with kindness and courtesy, and they have on all occasions pursued a course of strict neutrality, in accordance with the policy of our Government.

The naval force at present in commission is as large as is admissible with the number of men authorized by Congress to be employed.

I invite your attention to the recommendation of the Secretary of the Navy on the subject of a reorganization of the Navy in its various grades of officers, and the establishing of a retired list for such of the officers as are disqualified for active and effective service. Should Congress adopt some such measure as is recommended, it will greatly increase the efficiency of the Navy and reduce its expenditures.

I also ask your attention to the views expressed by him in reference to the employment of war steamers and in regard to the contracts for the