its treasury, the inevitable consequence of long continued and exhausting internal wars. The last instalment of the interest of the debt due under the convention with the Queen of Spain has not been paid; and similar failures may be expected to happen until a portion of the resources of her kingdom can be devoted to the extinguishment of its foreign debt.

Having received satisfactory evidence that discriminating tonnage duties were charged upon the vessels of the United States in the ports of Portugal, a proclamation was issued on the 11th day of October last, in compliance with the act of May 25th, 1832, declaring that fact, and the duties on foreign tonnage which were levied upon Portuguese vessels in the United States previously to the passage of that act are accordingly revived.

The act of July 4th, 1836, suspending the discriminating duties upon the produce of Portugal imported into this country in Portuguese vessels, was passed, upon the application of that government through its representative here, under the belief that no similar discrimination existed in Portugal to the prejudice of the United States. I regret to state that such duties are now exacted in that country, upon the cargoes of American vessels; and as the act referred to, vests no discretion in the executive, it is for Congress to determine upon the expediency of farther legislation upon the subject. Against these discriminations, affecting the vessels of this country and their cargoes, seasonable remonstrance was made, and notice was given to the Portuguese government, that unless they should be discontinued, the adoption of countervailing measures on the part of the United States would become necessary; but the reply of that government received at the department of state through our chargé d'affaires at Lisbon, in the month of September last, afforded no ground to hope for the abandonment of a system, so little in harmony with the treatment shown to the vessels of Portugal and their cargoes, in the ports of this country, and so contrary to the expectations we had a right to entertain.

With Holland, Sweden, Denmark, Naples and Belgium, a friendly intercourse has been uninterruptedly maintained.

With the government of the Ottoman Porte, and its dependencies on the coast of the Mediterranean, peace and good-will are carefully cultivated, and have been fostered by such good offices as the relative distance and the condition of those countries would permit.

Our commerce with Greece is carried on under the laws of the two governments, reciprocally beneficial to the navigating interests of both; and I have reason to look forward to the adoption of other measures which will be more extensively and permanently advantageous.

Copies of the treaties concluded with the governments of Siam and Muscat are transmitted for the information of Congress, the ratifications having been received, and the treaties made public since the close of the last annual session. Already have we reason to congratulate ourselves on the prospect of considerable commercial benefit; and we have, besides, received from the Sultan of Muscat, prompt evidence of his desire to culti vate the most friendly feelings, by liberal acts toward one of our vessels, bestowed in a manner so striking as to require on our part a grateful acknowledgment.

Our commerce with the islands of Cuba and Porto Rico still labors under heavy restrictions, the continuance of which is a subject of regret. The only effect of an adherence to them will be to benefit the navigation of other countries at the expense both of the United States and Spain.

The independent nations of this continent have, ever since they emerged from the colonial state, experienced severe trials in their progress to the permanent establishment of liberal political institutions. Their unsettled condition not only interrupts their own advances to prosperity, but has often seriously injured the other powers of the world. The claims of our citizens upon Peru, Chili, Brazil, the Argentine Republic, the governments formed out of the republics of Colombia, and Mexico, are still pending, although many of them have been presented for examination more than twenty years. New Granada, Venezuela, and Ecuador, have recently formed a convention for the purpose of ascertaining and adjusting the claims upon the republic of Colombia, from which it is earnestly hoped our citizens will, ere long, receive full compensation for the injuries originally inflicted upon them, and for the delay in affording it.

An advantageous treaty of commerce has been concluded by the United States with the Peru-Bolivian Confederation, which wants only the ratification of that government. The progress of a subsequent negotiation for the settlement of claims upon Peru, has been unfavorably affected by the war between that power and Chili, and the Argentine Republic; and the same event is also likely to produce delays in the settlement of our demands on those powers.

The aggravating circumstances connected with our claims upon Mexico, and a variety of events touching the honor and integrity of our government, led my predecessor to make, at the second session of the last Congress, a special recommendation of the course to be pursued to obtain a speedy and final satisfaction of the injuries complained of by this government and by our citizens. He recommended a final demand of redress, with a contingent authority to the executive to make reprisals, if that demand should be made in vain. From the proceedings of Congress on that recommendation, it appeared that the opinion of both branches of the legislature coincided with that of the executive, that any mode of redress known to the law of nations might justifiably be used. It was obvious, too, that Congress believed, with the President, that another demand should be made, in order to give undeniable and satisfactory proof of our desire to avoid extremities with a neighboring power; but that there was an indisposition to vest a discretionary authority in the executive to take redress, should it unfortunately be either denied or unreasonably delayed by the Mexican government.

So soon as the necessary documents were prepared, after entering upon the duties of my office, a special messenger was sent to Mexico, to make a final demand of redress, with the documents required by the provisions of our treaty. The demand was made on the 20th of July last. The reply, which bears date the 29th of the same month, contains assurances of a desire, on the part of that government, to give a prompt and explicit answer respecting each of the complaints, but that the examination of them would necessarily be deliberate; that in this examination it would be guided by the principles of public law and the obligation of treaties; that nothing should be left undone that might lead to the most speedy and equitable adjustment of our demands; and that its determination, in respect to each case, should be communicated through the Mexican minister here.

Since that time, an envoy extraordinary and minister plenipotentiary has been accredited to this government by that of the Mexican republic. He brought with him assurances of a sincere desire that the pending differences between the two governments should be terminated in a manner satisfactory

to both. He was received with reciprocal assurances, and a hope was entertained that his mission would lead to a speedy, satisfactory, and final adjustment of all existing subjects of complaint. A sincere believer in the wisdom of the pacific policy by which the United States have always been governed in their intercourse with foreign nations, it was my particular desire, from the proximity of the Mexican republic, and well known occurrences on our frontier, to be instrumental in obviating all existing difficulties with that government, and in restoring the intercourse between the two republics to that liberal and friendly character by which they should always be distinguished. I regret, therefore, the more deeply, to have found in the recent communications of that government, so little reason to hope that any future efforts of mine for the accomplishment of those desirable objects would be successful.

Although the larger number, and many of them aggravated cases of personal wrongs, have been now for years before the Mexican government, and some of the causes of national complaint, and those of the most offensive character, admitted of immediate, simple, and satisfactory replies, it is only within a few days past that any specific communication in answer to our last demand, made five months ago, has been received from the Mexican minister. By the report of the secretary of state, herewith presented, and the accompanying documents, it will be seen, that for not one of our public complaints has satisfaction been given or offered; and that but four cases of both descriptions, out of all those formally presented, and earnestly pressed, have as yet been decided upon by the Mexican government.

Not perceiving in what manner any of the powers given to the executive alone could be farther usefully employed in bringing this unfortunate controversy to a satisfactory termination, the subject was by my predecessor referred to Congress, as one calling for its interposition. In accordance with the clearly understood wishes of the legislature, another and formal demand for satisfaction has been made upon the Mexican government, with what success the documents now communicated will show. On a careful and deliberate examination of their contents, and considering the spirit manifested by the Mexican government, it has become my painful duty to return the subject, as it now stands, to Congress, to whom it belongs to decide upon the time, the mode, and the measures of redress. Whatever may be your decision, it shall be faithfully executed, confident that it will be characterized by that moderation and justice which will, I trust, under all circumstances, govern the counsels of our country.

The balance in the treasury on the first day of January, 1837, was fortyfive millions nine hundred and sixty-eight thousand five hundred and twentythree dollars. The receipts during the present year from all sources, including the amount of treasury notes issued, are estimated at twenty-three millions four hundred and ninety-nine thousand nine hundred and eightyone dollars, constituting an aggregate of sixty-nine millions four hundred and sixty-eight thousand five hundred and four dollars. Of this amount, about thirty-five millions two hundred and eighty-one thousand three hundred and sixty-one dollars will have been expended, at the end of the year, on appropriations made by Congress; and the residue, amounting to thirtyfour millions one hundred and eighty-seven thousand one hundred and fortythree dollars, will be the nominal balance in the treasury on the first of January next. But of that sum, only one million and eighty-five thousand four hundred and ninety-eight dollars is considered as immediately available for, and applicable to, public purposes.

Those portions of it which will be for some time unavailable consist chiefly of sums deposited with the states, and due from the former deposite banks. The details upon this subject will be found in the annual report of the secretary of the treasury. The amount of treasury notes which it will be necessary to issue during the year on account of those funds being unavailable, will, it is supposed, not exceed four and a half millions. It seemed proper, in the condition of the country, to have the estimates on all subjects made as low as practicable, without prejudice to any great public measures. The departments were, therefore, desired to prepare their estimates accordingly; and I am happy to find that they have been able to graduate them on so economical a scale.

In the great and often unexpected fluctuations to which the revenue is subjected, it is not possible to compute the receipts beforehand with great certainty, but should they not differ essentially from present anticipations, and should the appropriations not much exceed the estimates, no difficulty seems likely to happen in defraying the current expenses with promptitude and fidelity.

Notwithstanding the great embarrassments which have recently occurred in commercial affairs, and the liberal indulgence which, in consequence of these embarrassments, has been extended to both the merchants and the banks, it is gratifying to be able to anticipate that the treasury notes, which have been issued during the present year, will be redeemed, and that the resources of the treasury, without any resort to loans or increased taxes, will prove ample for defraying all charges imposed on it during 1838.

The report of the secretary of the treasury will afford you a more minute exposition of all matters connected with the administration of the finances during the current year; a period which, for the amount of public moneys disbursed and deposited with the states, as well as the financial difficulties encountered and overcome, has few parallels in our history.

Your attention was, at the last session, invited to the necessity of additional legislative provisions in respect to the collection, safe-keeping and transfer of the public money. No law having been then matured, and not understanding the proceedings of Congress as intended to be final, it becomes my duty again to bring the subject to your notice.

On that occasion, three modes of performing this branch of the public service were presented for consideration. These were, the creation of a national bank; the revival, with modifications, of the deposite system established by the act of the 23d of June, 1836, permitting the use of the public moneys by the banks; and the discontinuance of the use of such institutions for the purposes referred to, with suitable provisions for their accomplishment through the agency of public officers. Considering the opinions of both houses of Congress on the two first propositions as expressed in the negative, in which I entirely concur, it is unnecessary for me again to recur to them. In respect to the last, you have had an oppor tunity, since your adjournment, not only to attest still farther the expediency of the measure by the continued practical operation of such parts of it as are now in force, but also to discover what should ever be sought for and regarded with the utmost deference-the opinions and wishes of the people,

The national will is the supreme law of the republic, and on all subjects within the limits of its constitutional powers, should be faithfully obeyed by the public servant. Since the measure in question was submitted to your consideration, most of you have enjoyed the advantage of personal commu

nication with your constituents. For one state only has an election been held for the federal government; but the early day at which it took place, deprives the measure under consideration of much of the support it might otherwise have derived from the result. Local elections for state officers have, however, been held in several of the states, at which the expediency of the plan proposed by the executive has been more or less discussed. You will, I am confident, yield to their results the respect due to every expression of the public voice. Desiring, however, to arrive at truth and a just view of the subject in all its bearings, you will at the same time remember, that questions of far deeper and more immediate local interest than the fiscal plans of the national treasury were involved in those elections.

Aboye all, we cannot overlook the striking fact, that there were, at the time, in those states, more than one hundred and sixty millions of bank capital, of which large portions were subject to actual forfeiture-other large portions upheld only by special and limited legislative indulgencesand most of it, if not all, to a greater or less extent, dependent for a continuance of its corporate existence upon the will of the state legislatures to be then chosen. Apprized of this circumstance, you will judge whether it is not most probable that the peculiar condition of that vast interest in these respects, the extent to which it has been spread through all the ramifications of society, its direct connection with the then pending elections, and the feelings it was calculated to infuse into the canvass, have not exercised a far greater influence over the result that any which could possibly have been produced by a conflict of opinion in respect to a question in the administration of the general government, more remote and far less important in its bearings upon that interest.

I have found no reason to change my own opinion as to the expediency of adopting the system proposed, being perfectly satisfied that there will be neither stability nor safety, either in the fiscal affairs of the government, or in the pecuniary transactions of individuals and corporations, so long as a connection exists between them, which, like the past, offers such strong inducements to make them the subjects of political agitation. Indeed, I am more than ever convinced of the dangers to which the free and unbiased exercise of political opinion-the only sure foundation and safeguard of republican government-would be exposed by any farther increase of the already overgrown influence of corporate authorities. I cannot, therefore, consistently with my views of duty, advise a renewal of a connection which circumstances have dissolved.

The discontinuance of the use of state banks for fiscal purposes ought not to be regarded as a measure of hostility toward those institutions. Banks, properly established and conducted, are highly useful to the business of the country, and doubtless will continue to exist in the states so long as they conform to their laws, and are found to be safe and beneficial. How they should be created, what privileges they should enjoy, under what responsibilities they should act, and to what restrictions they should be subject, are questions which, as I observed on a previous occasion, belong to the states to decide. Upon their rights, or the exercise of them, the general government can have no motive to encroach. Its duty toward them is well performed, when it refrains from legislating for their special benefit, because such legislation would violate the spirit of the constitution, and be unjust to other interests; when it takes no steps to impair their usefulness, but so manages its own affairs as to make it the interest of those institutions