ment and that of The United States, in December, 1831, American vessels, since the 29th of April, 1832, have been admitted to entry in the ports of Spain, including those of the Balearic and Canary Islands, on payment of the same tonnage duty of 5 cents per ton, as though they had been Spanish vessels; and this, whether our vessels arrive in Spain directly from The United States, or indirectly from any other country. When Congress by the Act of the 13th of July, 1832, gave effect to this arrangement between the 2 Governments, they confined the reduction of tonnage duty merely to Spanish vessels "coming from a port in Spain," leaving the former discriminating duty to remain against such vessels coming from a port in any other country. It is manifestly unjust that, whilst American vessels arriving in the ports of Spain from other countries pay no more duty than Spanish vessels, Spanish vessels arriving in the ports of The United States from other countries should be subjected to heavy discriminating tonnage duties. This is neither equality nor reciprocity, and is in violation of the arrangement concluded in December, 1831, between the 2 countries. The Spanish Government have made repeated and earnest remonstrances against this inequality, and the favourable attention of Congress has been several times invoked to the subject by my predecessors. I recommend, as an act of justice to Spain, that this inequality be removed by Congress, and that the discriminating duties which have been levied under the Act of the 13th of July, 1832, on Spanish vessels coming to The United States from any other foreign country, be refunded. This recommendation does not embrace Spanish vessels arriving in The United States from Cuba and Porto Rico, which will still remain subject to the provisions of the Act of June 30th, 1834, concerning tonnage duty on such vessels.

By the Act of the 14th of July, 1832, coffee was exempted from duty altogether. This exemption was universal, without reference to the country where it was produced, or the national character of the vessel in which it was imported. By the Tariff Act of the 30th of August, 1842, this exemption from duty was restricted to coffee imported in American vessels from the place of its production; whilst coffee imported under all other circumstances was subjected to a duty of 20 per cent. ad valorem. Under this Act, and our existing Treaty with the King of the Netherlands, Java coffee imported from the European ports of that kingdom into The United States, whether in Dutch or American vessels, now pays this rate of duty. The Government of the Netherlands complains that such a discriminating duty should have been imposed on coffee, the production of one of its colonies, and which is chiefly brought from Java to the ports of that kingdom, and exported from thence to foreign countries. Our trade with the Netherlands is highly beneficial to both countries, and our relations with them have ever been of the most friendly character.

Under all the circumstances of the case, I recommend that this discrimination should be abolished, and that the coffee of Java, imported from the Netherlands, be placed upon the same footing with that imported directly from Brazil and other countries where it is produced.

Under the 8th section of the Tariff Act of the 30th of August, 1842, a duty of 15 cents per gallon was imposed on port wine in casks; while, on the red wines of several other countries, when imported in casks, a duty of only 6 cents per gallon was imposed. This discrimination, so far as regarded the port wine of Portugal, was deemed a violation of our Treaty with that Power, which provides that "No higher or other duties shall be imposed on the importation into the United States of America of any article the growth, produce, or manufacture of the kingdom and possessions of Portugal, than such as are or shall be payable on the like article being the growth, produce, or manufacture of any other foreign country." Accordingly, to give effect to the Treaty, as well as to the intention of Congress, expressed in a proviso to the Tariff Act itself, that nothing therein. contained should be so construed as to interfere with subsisting Treaties with foreign nations, a Treasury Circular was issued on the 16th of July, 1844, which, among other things, declared the duty on the port wine of Portugal, in casks, under the existing laws and Treaty, to be 6 cents per gallon, and directed that the excess of duties which had been collected on such wine should be refunded. By virtue of another clause in the same section of the Act, it is provided that all imitations of port, or any other wines, "shall be subject to the duty provided for the genuine article." Imitations of port wine, the production of France, are imported to some extent into The United States; and the Government of that country now claims that, under a correct construction of the Act, these imitations ought not to pay a higher duty than that imposed upon the original port wine of Portugal. It appears to me to be unequal and unjust that French imitations of port wine should be subjected to a duty of 15 cents, while the more valuable article from Portugal should pay a duty of 6 cents only per gallon. I therefore recommend to Congress such legislation as may be necessary to correct the inequality.

The late President, in his annual message of December last, recommended an appropriation to satisfy the claims of the Texan Government against The United States, which had been previously adjusted, so far as the powers of the Executive extend. These claims arose out of the act of disarming a body of Texan troops under the command of Major Snively, by an officer in the service of The United States, acting under the orders of our Government; and the forcible entry into the Custom-House at Bryarly's landing, on Red river, by certain citizens of The United States, and taking away therefrom the goods seized by the collector of the Customs as forfeited under the

laws of Texas. This was a liquidated debt, ascertained to be due to Texas when an independent State. Her acceptance of the terms of annexation proposed by The United States does not discharge or invalidate the claim. I recommend that provision be made for its payment.

The commissioner appointed to China during the special session of the Senate in March last, shortly afterwards set out on his mission in The United States ship Columbus. On arriving at Rio de Janeiro on his passage, the state of his health had become so critical, that, by the advice of his medical attendants, he returned to The United States early in the month of October last. Commodore Biddle, commanding the East India squadron, proceeded on his voyage in the Columbus, and was charged by the commissioner with the duty of exchanging with the proper authorities the Ratifications of the Treaty lately concluded with the Emperor of China. Since the return of the commissioner to The United States, his health has been much improved, and he entertains the confident belief that he will soon be able to proceed on his mission.

Unfortunately, differences continue to exist among some of the nations of South America, which, following our example, have established their independence; while in others, internal dissensions prevail. It is natural that our sympathies should be warmly enlisted for their welfare; that we should desire that all controversies between them should be amicably adjusted, and their Governments administered in a mauner to protect the rights, and promote the prosperity of their people. It is contrary, however, to our settled policy, to interfere in their controversies, whether external or internal.

I have thus adverted to all the subjects connected with our foreign relations, to which I deem it necessary to call your attention. Our policy is not only peace with all, but good will towards all the Powers of the earth. While we are just to all, we require that all shall be just to us. Excepting the differences with Mexico and Great Britain, our relations with all civilized nations are of the most satisfactory character. It is hoped that in this enlightened age, these differences may be amicably adjusted.

The Secretary of the Treasury, in his annual report to Congress, will communicate a full statement of the condition of our finances. The imports for the fiscal year ending on the 30th of June last, were of the value of 117,254,564 dollars, of which the amount exported was 15,346,830 dollars, leaving a balance of 101,907,734 dollars for domestic consumption. The exports for the same year were of the value of 114,646,606 dollars; of which, the amount of domestic articles was 99,299,776 dollars. The receipts into the Treasury during the same year were 29,769,133 dollars; of which, there were derived from customs 27,528,112 dollars; from sales of public lands, 2,077,022

dollars; and from incidental and miscellaneous sources 163,998 dollars. The expenditures for the same period were 29,968,206 dollars; of which, 8,588,157 dollars were applied to the payment of the public debt. The balance in the Treasury on the 1st of July last, was 7,658,306 dollars.

The amount of the public debt remaining unpaid on the 1st of October last, was 17,075,445 dollars. Further payments of the public debt would have been made, in anticipation of the period of its reimbursement under the authority conferred upon the Secretary of the Treasury by the Acts of July 21, 1841, and of April 15, 1842, and March 3, 1843, had not the unsettled state of our relations with Mexico menaced hostile collision with that Power. In view of such a contingency, it was deemed prudent to retain in the Treasury an amount unusually large for ordinary purposes.

A few years ago, our whole national debt growing out of the revolution and the war of 1812 with Great Britain was extinguished, and we presented to the world the rare and noble spectacle of a great and growing people who had fully discharged every obligation. Since that time, the existing debt has been contracted; and small as it is, in comparison with the similar burdens of most other nations, it should be extinguished at the earliest practicable period. Should the state of the country permit, and, especially, if our foreign relations interpose no obstacle, it is contemplated to apply all the moneys in the Treasury, as they accrue beyond what is required for the appropriations by Congress, to its liquidation. I cherish the hope of soon being able to congratulate the country on its recovering once more the lofty position which it so recently occupied. Our country, which exhibits to the world the benefits of self-government, in developing all the sources of national prosperity, owes to mankind the permanent example of a nation free from the blighting influence of a public debt.

The attention of Congress is invited to the importance of making suitable modifications and reductions of the rates of duty imposed by our present tariff laws. The object of imposing duties on imports should be to raise revenue to pay the necessary expenses of Government. Congress may, undoubtedly, in the exercise of a sound discretion, discriminate in arranging the rates of duty on different articles; but the discriminations should be within the revenue standard, and be made with the view to raise money for the support of Government.

It becomes important to understand distinctly what is meant by a revenue standard, the maximum of which should not be exceeded in the rates of duty imposed. It is conceded, and experience proves, that duties may be laid so high as to diminish or prohibit altogether the importation of any given article, and thereby lessen or destroy

the revenue which, at lower rates, would be derived from its importation. Such duties exceed the revenue rates, and are not imposed to raise money for the support of Government. If Congress levy a duty for revenue of 1 per cent. on a given article, it will produce a given amount of money to the Treasury, and will incidentally and necessarily afford protection or advantage to the amount of 1 per cent. to the home manufacturer of a similar or like article over the importer. If the duty be raised to 10 per cent. it will produce a greater amount of money, and afford greater protection. If it be still raised to 20, 25, or 30 per cent., and if, as it is raised, the revenue derived from it is found to be increased, the protection or advantage will also be increased; but if it be raised to 31 per cent., and it is found that the revenue produced at that rate is less than at 30 per cent., it ceases to be a revenue duty. The precise point in the ascending scale of duties at which it is ascertained from experience that the revenue is greatest, is the maximum rate of duty which can be laid for the bona fide purpose of collecting money for the support of Government. To raise the duties higher than that point, and thereby diminish the amount collected, is to levy them for protection merely, and not for revenue. As long, then, as Congress may gradually increase the rate of duty on a given article, and the revenue is increased by such increase of duty, they are within the revenue standard. When they go beyond that point, and as they increase the duties, the revenue is diminished or destroyed; the Act ceases to have for its object the raising of money to support Government, but is for protection merely.

It does not follow that Congress should levy the highest duty on all articles of import which they will bear within the revenue standard; for such rates would probably produce a much larger amount than the economical administration of the Government would require. Nor does it follow that the duties on all articles should be at the same, or a horizontal rate. Some articles will bear a much higher revenue duty than others. Below the maximum of the revenue standard Congress may and ought to discriminate in the rates imposed, taking care so to adjust them on different articles as to produce in the aggregate the amount which, when added to the proceeds of the sales of public lands, may be needed to pay the economical expenses of the Government.

In levying a tariff of duties Congress exercise the taxing power, and for purposes of revenue may select the objects of taxation. They may exempt certain articles altogether, and permit their importation free of duty. On others they may impose low duties. In these classes should be embraced such articles of necessity as are in general use, and especially such as are consumed by the labourer and poor, as well as by the wealthy citizen. Care should be taken that all the