the refunding cf duti-s unjustly exacted 'rorri American vessels at different custom houses in fuln, so 1..-g ao as the year 184-t. Tire prin- j ciples upon which th> v rest are so manifestly ; equitable anl just that after a period of .nearly i ten years, in iso+ithey <vpre recognised hv the : Spanish government. i'roceedirgs were after-i wards instituted to ascertain the amount, and | this was finally llxt-u according to their own 1 statement (with which we were satisfied) at the j smn of one hundred and twenty-eight thousand j six huut red and thirty-five dollars an;! fifty-four i cents. Just at the in ne nt, after a delay of fourteen yeais, when we had rt-a.-on to expect ; that thhtsum would be re-paid with i !.•).>(, we have received a proposal offering to refund unr third.of that amount (forty-two thousand eight hundred and seventy eight dollar - ami fortv-one cents,) btu without interest, if we wniild accept tiiis in full satisfaction. The offer is also accom panied by a declaral on that this indemnification is not founded on any reason of strict justice ;. but is made as as; ecia! favor. One alleged cause for procrastination in the examination and adjustment of our cla'mm, arises from an obstacle which it is the duty of the Spanish government to remove. Whilst the captain-general of Cuba is invested with gener al despotic authority in the government of that island the, power is within Id from him to exam ine and redress u rongs committed -by officials under his control, on citizens ol the United States. Instead of making our complaints di rectly to him at Havana, we are obligod to pre sent then) through our minister at Madrid.— These are then referred lack to the captain general for information ; and much time is thus consumed in preliminary investigations and cor respondence between Madrid and Cuba, before the Spanish government will consent to pro ceed to negotiation. Many of the difficulties between the two governments would obviated and a long tiain of negotiations avoided, if the captain genera! were invested with authority to settle questions of casj solution, on the spot, where ail the facts are fresh and could be prom ptly and satisfactorily ascertained. We have hitherto in vain urged upon Ihe Spanish gov ernment to confer this power upon the captain general, and our minister to Spain will again be instructed to urge this subject on their notice. In this respect, we occupy a different position from the powers of Europe. Cuba is almost within sight of our shores; our commerce with it is far greater than that of any other nation including Spain itself, and our citizens are in habits of daily and extended personal intercourse with every part of the island. It is, therefore, a great grievance that, when any difficulty oc curs, no matte" how unimportant, which might be readily settled at the moment we should be obliged to resort to Madrid, especially w hen the very first step to be taken there is to refer it back to Cuba. The truth is that Cuba, in its existing coloni al condition, is a constant source of injury and annoyance to the American people. It is the oniy spot in the civilized world where the |Af rican slave trade is tolerated : and we are bound bv treaty with Great Britain to maintain a na val force on the coast of Africa, at much expe nse both of life and treasure, solely f m the pur pose of arresting slavers bound to that island.— The late serious difficulties between the United States and Great Britain respecting the right of search now so ha pi I y terminated, could never have arisen if Cuba had not afforded a market for slaves. As long as this market shall remain ui he no hone for the civilization slaves'continues in Cuba, wars will be waged a among the petty and barbarous chiefs in Africa lor the purpose ol seizing subjects to supply this trade. In such a condition ofafFairs, it i 3 impossible that the Jigbt of civilization and re ligion, can ever penetrate these dark abodes. It has been made known to the world by my predecessors, that the United Stales have, on several occasions, endeavored to acquire Cuba from Spain by honorable negotiation. If this were accomplished, the last relic of the African slave-trade would instantly disappear. We would nol, if we could, acquire Cuba in any other manner. This is due to our national character. Ail the territory which we have acquired since the origin of the government, has been by fair purchase from France, Spain, and Mexico, or by the freand volunlary act of the independent State of Texas, in blending her destinies with our own. This course we shall ever pursue, unless circumstances should occur, which we do not now anticipate, rendering a departure from it clearly justifiable, under the imperative and over-ruling law of self-preserva tion. The Island of Cuba, from it? geographical po sition, commands the mouth ol the Mississippi, and the immense and annually-increasing trade, foreign and coastwise, from the valfoy of that noble river, now embracing half the sovereign States ol the Union. With that Island under the domination of a distant foreign power, this trade, of vital importance to these States, is ex posed to the danger of being destroyed in time of war, and it has hitherto been subjected to perpetual injury and annoyance in time ol peace. Our relations with Spain, which ought to be of the most friendly character, must al ways be placed in jeopardy, whilst the existing colonial government over the Island shall re main in its present condition. Whilst the possession of the Island would be of vast importance to the United States, its val ue to Spain is, comparatively, unimportant.— Such was the relative situation of the parties, when the great Napoleon transferred Louisiana to the United States. Jealous, as lie ever was, of the national honor and interests of France, no person throughout the world, has imputed biame to him, lor accepting a pecuniary equiva lent for this cession. The publicity which has been given to our former negotiations upon this subject, and the large appropriation which may be required to effect the purpose, render it expedient, before making anntl.-r atfpmpt to renew the negotia tion, that I should lay Ih* whole subject be fore Congress. This is especially n-c< s.-.ary, as it may become iridi-pensable t.i success, that I should be intrusted w ill) the means of making an advance to the Spanish government immedi ately alter the signing of the treaty, without awaiting the ratification of it by the Senate.— I am encouraged to make this suggestion, bv the example ot Mr. Jefforson previous to the pur chase of Louisiana from France, and by that of Mr. Polk in view of t he acquisition of tm iitorv from Mexico, i refw the whole subject to Congress, a: ! c rnm mi ;t to their careful cun sideratioit, I repeat the reccomrnendation made in my message r>| IN ce • b< r last, in favor of an appro bation 'Mi; t e paid to the Spanish government for the pmpose of distribution omong claimants in the Amistail ca*e. President Polk fir<t made a similar recommendation in December 1847, and it was repeated by my immediate prede cessor in December iS:.'t. 1 entertain no douht tint indemnity is fairly due to these clai mants under our treaty with Spain of the '27 th October, 17115 ; and whilst demanding justice, we ought to do justice. An appropriation promptly made for this purpose, could not fail to exert a favorable influence on our negotia tions with Spain. Our position in relation to the independent States South of us on this continent, and especial ly those within the limits of North America, is of a peculiar character. The northern bonuda ry of Mexico is coincident with our own south ern boundary ffom ocean to ocean ; and we must necessarily feel a* deep interest in all that concerns the well-being and the fate of so near a neighbor. We have always cherished the kin dest v> islies for the success of that republic, and lave indulged the hope that it might at last, after ail its trials, enjoy peace and prosperity under a free and stable government. We have never hitherto interfered, directly or indirectly, with its internal affairs, and it is a duty which we owe to ourselves, to protect the integrity of its territory, against the hostile interference of any otjier power. Our geographical position, our jdireci interest in all that concerns Mexico, and J our well-settled policy in regard to the North American continent, renders this an indespensa ! hie dlllV. M-xico has been in a state of constant re volution, almost ever since it achieved its independence. One military leader alter anoth er has usurped the government in rapid success ion ; and the various constitutions from time to time adopted, have been set at naught al most as soon as they were proclaimed. The successive governments have afforded no ade quate protection, either to Mexican citizens or foreign residents, against I' wless violence.— Heretofore, a seizure of the capital by a milita ry chieftain; has been generally followed by at least the nominal submission of the country to his rule for a brief period, but not so at this crisis of Mexican affairs. A civil war lias been ra ging for some time throughout the republic, be tween the central government at the city of Mexico, which has endeavored to subvert the constitution last framed, by military power, and those who maintain the authority ol that constitution. The antagonistic parties each hold possession of different States of the republic, and the fortunes of the war are constantly chan ging. Meanwhile, the most reprehensible means have been employed by both parties to extort money from foreigners, as well as na tives, to carry on this ruinous contest. The truth is, that this fine country, blessed with a productive soil and a benign climate, has been reduced by civil dissension to a condition of almost hopeless anarchy and imbecility. It would be vain for this government to attempt to enforce payment in money of the claims of American citizens, now amounting fo more than ten million dollars, against Mexico, because she is destitute of all pecuniary means to satisfy these demands. i Our late minister was furnished with ample j powers and instructions tor the adjustment of all i pending questions with the central government j of Mexico, and he performed his duty with zeal and ability. The claims of our citizens, some of them arising out of the violation of an ex press provision of the treaty of Guadalupe Hidalgo, and others from gross injuries to per sons as well as property, have remained un redressed and even unnoticed. Remonstrances against these grievances, have been addressed , vv.dfiCVjtj'JTy.cA.tP Jjiat government. Meantime, j been numerous of the murder, imprisonment, j and plunder of our cit'z ns, by different parties ; clai rning and exercising a local jurisdiction : but j the central government, although repeatedly | urged thereto, have made no effort either to ! punish the authors of these outrages, or to pre j vent their recurrence. .No American citizens | can now visit Mexico on lawful business, with , out imminent danger to his person and propertv. j There is no adequate protection to either : and :in this respect our treaty with that republic is ! almost a dead letter. This state of affairs was brought to a crisis in May last, by the promulgation of a decree i levying a contribution pro ruin upon all the 1 capital in the republic, betwen certain specified | amounts, whether held by Mexicans or foreign j ers. Mr. Forsyth, regarding this decree in the ; light of a "forced loan," formally protested a | gainst its application to his countrymen, and i advised them not to pay the contribution, but to ! suffer it to 1 c forcibly exacted. Acting upon this | advice, an American citizen refused to pay the j contribution, and his property was seized by armed men to ( 'satisfy the amount. Not cun- I tent with this, the government proceeded still i further, and issued a decree banishing him from ; the country. Our minister immediately notifi ed them that if this decree should be carried i into execution, he would feel it to be his duty ! 'o adopt "the mast decided measures that belong | to the [lowers and obligations of the representa : t.ve office." Notwithstanding this warning, I the banishment was enforced, and Mr. Forsyth promptly announced to the government the i suspension of the political relations of his lega ! tion with them, until the pleasure of his own j government should be ascertained. This government did not regard the corifribu ition imposed by the decree of the 15th May last to be in strictness a "forced loan," ano as such prohibited by the 10th article of the treaty of IS'dli between Great Britain and Mexico, to the benefits of which American citizens are entitled by treaty ; yet the imposition of the contribution upon foreigners was considered an unjust and oppressive measure. Besides, inter nal factions in other parts of the republic were at the same time levying sinvlar exactions upon the property of our citizens, and interrup ting Ihei r commerce. There had been an en tire failure on the part of our minister, to se cure redress for the wrongs which our citizens had endured, notwithstanding bis persevering efforts. And from the temper manifested by the Mexican government, d>e had repeatpdlv assured us that no favorable change could be expected, the United States should "give striking evidence of their will and power to protect their citizens," and that "severe chast ening is tlie only eaithly remedy for our grievan ces." From this statement of facts, it would have been worse than idle, to direct Mr. For syth to retrace his steps and resume diplomat ic relations with that government : and it was, therefore, deemed proper to sanction his with drawal of the legation from rhe city of Mexico. Abundant cause now undoubtedly exists, for a resort to hostilities against the government still holding possession of the capital. Should they succeed in subduing the constitutional forces, all reasonable hope will then have expi red of a peaceful settlement of our difficulties. On the other hand, should the constitutional party prevail, and their authority be established over the republic, there is reason to hope that they will be animated by a b-ss unfriendly spir- ■ it, and may grant that redrew to American oiti- ; zeiis which justice requires, so lar as they may | possess the means. But lor this expectation, I \ should at once have recommended to Con gress to grant the necessary power to the Presi dent, to take possession of a sutiicient portion ol the remote and unsettled territory of Mexico, to be held in pledge until our injuries shall he redressed and just demands be satisfied. We have already exhausted every milder means of obtaining justice. In such a case, this remedy ol reprisals is recognised by the law of nations not only as just in itself, but as a means ol pre venting actual war. But there is another view of our relations j with Mexico, arising from the unhappy con- j (Jition of affairs along our southwestern frontier, i which demands immediate action, la that re-j inote region, where there are hut few white inhabitants, large bauds of hostile and predalo ty Indians roam promiscuously over the Mexi can States of Chihuahua and Sonara, and our adjoining Territories. The local governments of these States are perfectly helpless, and are kept in a state of constant alarm by the Indians. They have not the power, if they possessed the will, even to restrain lawless Mexican from passing the border and committing depredations on our remote settlers. A state of anarchy and violence prevails throughout the distant frontier. The la ws are a dead Utter, and life and property are wholly (insecure. For this reason the settlement ol Arizona is arrested, whilst it is of srreat importance that a chain of inhabitants should extend all ilong its southern holder, sufficient for their own protection and that of the United Slates mail passing to and from California. Well founded apprehensions are now enleilained, that the Indians, and wandering Mexicans equally lawless, may break up the important stage and postal com munication recently established between our Atlantic and Pacific possessions. This posses very near to the Mexican boundary, through out the whole length of Arizona. I can ima gine no possible remedy for these evils, and no mode ol restating law and order on that remote and unsettled frontier, hut for the government ol the United Slates to assume a temporary protectorate over the northern portions of Chihuahua and Sonora, and to establish milita ry posts within the same—and this 1 earnestly recommend to Congress. This protection may be withdrawn, as soon as local governments shall be established in tlies" Mexican Slates, capable of performing their duties to the United States, restraining the lawless and preserving peace aiong Ihe border. 1 do not doubt that this measure will be viewed in a friendly spirit by 'he governments and people of Chihuahua and Sonora, as it will prove equally effectual for the protection of their citizens on that remote and law less iion tier, as for citizens of the United States. And in this connexion, permit me to recall your attention, to the condition of Arizona.— Th a population of that Territory, numbering, as is alleged, more than ten thosuand souls, are practically without a government, without any tegular administration of justice. Murder and other crimes are committed with impunity. This state of things calls loudly for redress ; and I, therefore, repeat my recommendation for the establishment of a territorial government over Arizona. The political condition of the narrow isth mus of Central America through which transit routes pass, between the Atlantic and Pacific that a large proportion ol the trade and travel ; between the European and Asiatic continents, lis destined to pass. To the United States these I routes are of incalculable importance, as a ' means ol communication between their Atlan ! tic and Pacific oossessions. The latter now extend throughout seventeen degrees of latitude !ou the Pacific coast, embracing the important j Slate of Colilornia and the nourishing Territo ries of Oregon and Washington. All com , mercial nations, therefore, have a deep ami di ced inter-, sf, that these communications shall Ibe rendered secure from interruption. If an arm of the sea, connecting the two oceans, penetrated through Nicaragua and Costa Pica, lit could not be pretended that these States would have the right to arrest or retard its i navigation, to the injury of other nations.— The transit by land over this narrow istlnnus, occupies nearly the same position. It is a high way in which they themselves have little inter est, when compared with the vai interests of the rest of the world. Whilst their rights of sovereignty ought to be respected, it is the duty of other nations to require, (hat tiiis important passage shall not be interrupted, by the civil war and revolutionary outbreaks, which have so frequently occurred in that re gion. The stake is too important, to be left at the merry of rival companies, claiming to hold conflicting contracts with Nicaragua. The commerce of other nations is not to stand still and await the adjustment of such petty controversies. The government of the United States expect no more than this, and they will not be satisfied with less. They would not. if they could, derive any advantage Irom the Nicaragua transit, riot common to the rest of the world. Its neutrality and protection, for the common nse of all nations, is their only object. Thpy have no objection that Nicara gua shall demand and receive a fair compensa tion, from the companies and individuals who may traverse the route ; but they insist tlul it shall never hereafter be closed, by an arbitrary decree of that government. II disputes arise between it and those with whom they may have entered in to contracts, these must be adjusted by some fair tribunal provided for the i purpose, and the route must not be closed pen ding the controversy. Th'sisotir whole poli- j cv, and it cannot lail to be acceptable to other j nations. All these difficulties might be avoided, if, consistently with the good faith of Nicaragua, the use of this transit could be thrown open to genera! competition ; providing at the same time for the payment of a reasonable rate to the Nicaraguan government, on passengers and freight. In August, 1852, the Accessory Transit Company made its first iutercceanic trip over the Nicaraguan route, and continued in successful operation, with great advantage !n the public, until I lie 18th February, lSft>, when it was closed, and the grant to this company, as well as its c! at T, were summar.ly an 1 arbitrarily revoked by the government oi Presi dent Rivas. Previous to this date, however, in 185 !•, sei ious disputes concerning the settle men of their accounts had arisen between the company and the government, threatening the interruption of the route at any moment.— These the United Slates in vain endeavored to compose. It would be useless to narrate the various proceedings which look place between the parties, up till the time when the transit] was discontinued. Suffice it to say that, since i February, I Sub, it ha. remained closed, greatly to the predjudice ol citizens of the United States. STnce that time the competition has ceased be tween the rival routes ol Panama and Nicara gua, and, in consequence thereof, an unjust and unreasonable amount lias been exacted from our citizens for tbjir passage to and from Calfornia. A treaty was signed on the 16th of Novem ber, 1857, by the Secretary ol State and Minis- | tor of Nicaragua, under the stipulations of which the use and protection of the transit route would have been secured, not only to the Uni ted States, but equally to all other nations.— How and on what pretext this treaty has (ailed ' to receive the ratification of the Nicaraguan | government, will appear by the papers here with communicated from the State Depaitment. I The principal objection seems to have been ! to the provision authorising the United Stales |to employ force to keep the toute open, if ! Nicaragua should fail to perform iu-r duty in ! ibis respect. From the feebleness oi that re ! public,.its frequent changes of government, and its constant internal dissensions, this had be ' come a most important stipulation, and one ! essentially necessary not only lor the security I of the route, hut lot the safety of American citi i /.ens passing and repassing to and from our Paci ' tic possessions. \V ere such a stipulation : embraced in a treaty between the United States and Nicaragua, the knowledge ol this fact would i of itself most probably prevent hostile parties from committing aggressions on the route, and | render our actual interference for its protection : unnecessary. The executive government ol this country, in its intercourse with foreign nations, is limi ted to the employment of diplomacy alone.— When this fails, it can proceed no further. It cannot legitimately resort to force, without the direct authority of Congress, except in resisting and repelling hostile attacks. It would have no authority to enter the territories of Nicara gua, even to prevent the destruction of the tran sit, and protect the lives and property ofour own citizens on their passage, it is true that on a sudden emergency of this character, the Presi dent would direct any armed force in the vicini ty to maich to their relief, but in doing tins he would act upon his own responsibility. Under these circumstances, I earnestly ic commend to Congress the passage ol an act authorizing the President, under such .restric tions as they may deem proper, to employ the land and naval lores ol the United States in preventing the transit from being obstructed or closed by lawless violence, and in protecting the lives and property of American citizens traveling thereupon, requiring at the same time these forces shall be withdrawn the mo ment thedanger shall have passed away. \Y ith out such a provison, our citizens will be constantly exposed to interruption in their pro gress, and to lawless violence. * A similar necessity exists for the passage of such an act, for the protection of the Panama and Tehuantepec routes. In reference to the Panama route, the United States, by their exis ting treaty with New Granada, expressly guaran tee the neutrality of the Isthmus, ''with the view that the free transit from the one to the other sea may not be interrupted or em barrassed in any future time while thistrea y exists. In regard to the Tehuantepec route, which has been recently opened under themost favorable auspices, our treaty with Mexico ol the 30th December, 1553, secures to the citizens ol the United Slates a right of transit over it for their n eiftier goverlTmenl Vl)aff l! any ' Obsta cle" thereto. It also concedes to the United Slates the "right to trans] ort across the Isthmus in closed bags, the mails of the United Stales not intended for distribution along the line of the communication ; also, the effects of the Uni ted States goeernment and its citizens which may be intended fir transit, and'not for distribu tion on the isthmus, free of cu.-tom-house or other charges by the Mexican government." These treat}' stipulations with New Granada, and Mexico, in addition to the considerations applicable to (lie Nicaragua route, secin to require legislation for the purpose of carrying them into effect. The injuries which have b°cn inflicted upon our citizens in Costa Rica and Nicaragua, do ing the last two or three years, have received the prompt attention of this government. Some of these injuries were of the most aggravated character. The transaction at Virgin Bay in April, 1556, when a company of unarmed Americans, who were in no way connected with any belligerent conduct or party, were fired upon by the troops of Costa Rica, and num bers ol them killed arid wounded, was brought to the knowledge of Congress by my predeces sor soon after its occurrence, and was also presented to the government of Costa Rica, for that immediate investigation ard redress which the nature of the case demanded. A similar course was pursued with reference to other out rages in these countries, some of which were hardly less aggravated in their character than the transaction at Virgin Bay. At the time, however, when our present minister to Nicara gua was appointed, in December, 1857, no re dress had been obtained for any ol these wrongs, and no reply even had been received to the demands which bad been made by this govern ment upon that of Costa Rica more than a vear before. Our minister was instructed, therefore, to lose no time in expressing to those govern ments the deep regret with which the President witnessed tiiis inattention to the just claims of the United states, and in demanding their prompt and satisfactory 'adjustmeht. Unless this demand shall be complied with at an early day, it only remains for this government to a dopt such ather measures as may be necessary, in order to obtain for itself thai justice which it has in vain attempted to spenre by peaceful means, from the governments of Nicargua and Cosla Rica. Whi! it has shown and will continue to show, the most sincere regard for the rights and honored these republics, it can not permit this regard to be met bv an utter neg lect, on their part, of what is due to the government and citizens of the United States. Against New Granada we have long stan ding causes of complaint, arising out of the un satisfied claims of our citizens upon that repub lic ; and to these have been more recently ad ded the outrages committed upon our citizens at Panama, in April, 1856. A treaty fur the adjustment of these was concluded by (lie Secretary of State an.l the Minister of New Granada, in September, 1857, which con tained just and acceptable provisions for that purpose. This treaty was transmitted to Bogo ta, and was ratified by the government of New Granada, but with certain amendments. It was not, however, returned to this city until after the close of the last session of the Senate. It will be immediately transmitted to that body fur lheir advice and consent; and should this be obtained, it will remove all our existing cau ses of complaint against New Granada on the subject of claims. Questions have arisen between the two gov ernments, as to the right ol New Granada to lew a tonnage duly upon the vessels o! the U nited Stales in its poits ol the Uthirius, and to levy a passenger tax upon our citizens arriving in t hat country, whether with a design to re main there or to pass from ocean to ocean hv the transit route; and also a tax upon the mail of the United States, transported over the Pa nama railroad. The government of New Gra nada lias been informed, that the United States would consider the collection ol either ol these taxes as an act in violation of the treaty be tween the two countries, and as such would !>• resisted by the United States. At the same time we are prepared to discuss th-*se questions in a spirit ol amity and justice, and with a sin cere desire to adjust them in a satisfactory man ner. A negotiation foi that purpose has already bpen commenced. No effort has recently been made to collect these taxes, nor is any anticipa ted under present circumstances. With the empire of Brazil, our relations are of the most friendly character. The produc tions of tin two countries, and especially those ol an agricultural nature, are such as to invite extensive mutual exchanges. A large quantify of American flour is consumed in Brazil; whilst more than treble the amount in value ol Brazil- ian coffee is consumed in the United States.— Whilst this is the case, a heavy duty has been levied, until very recently, upon the im|>ort.i tion of American flour into Brazil. Tam grati fied, however, to be able to inform you that in September last this has been reduced from $!,- 32 to about forty-nine cents per barrel, and the duties on other articles of otir production have been diminished in nearly the same proportion. 1 regret to state that the government of Bra zil still continues to levy an export duty of a bout 11 per cent, on cofF-e, notwithstanding this article is admitted free from duty in the United States. This is a heavy charge upon the consumers of coffee in our country, as we purchase half of the entire surplus crop of that article raised in Brazil. Our minister, und'-r instruction, w ill reiterate his etfjrts to have this export duly removed; and it is hoped that the enlightened government of the E nperor will adopt this wise,just and equal policy. In that event, there is good reason to believe that the commerce between the two countries, will greatly inciease, much to the' advantage of both. The claims of cur citizens against the govern ment 01 Brazil are not, in the aggregate, of a very large amount; but some of these rest upon plain principles of justice, and their settlement ought not to be longer delayed. A renewed and earnest, and I trust a successful effort, will be made by our minister, to procure their final adjustment. On the 2d of June last, Congress passed a joint resolution authorizing the President "to adopt such measures and use s.icli force as, in his judgment, may be necessary and advisable" "for the purpose of adjusting the difference be tween the United States and the republic of Paraguay, in connexion with the attack on the UnitedSiat'-s steamer Water Witch, and with other measures referred to" in tiis annual mes sage. And on the 12th July following, they made an appropriation to defray the expenses and compensation of a commissioner to that re public, should the President deem it proper to i make such an appointment. In compliance with these enactments, I have i aanoinU'ai a commissioner, who has proceeded to I ariguay WIIHTUJI pnwns no instructions : to settle these differences in an amieable and : neacefn! manner, if this be practicable. His experience and discretion justify the hope, that he may prove successful in convincing the Para guayan government, that it is due both to hon or and justice, that they should voluntarilv and promptly make atonement for the wrong which they had committed against the United States, and indemnify our injured citizens whom they have forcibly despoiled of their property. Should our commissioner prove unsuccessful, after a sincere and earnest effort, to .accomplish, the object of his mission, then no alternative will remain, but the employment of force to obtain "just satisfaction" from Paraguay. In view of this contingency, the Secretary of the Navy, under my direction, has fitted out and despatched a naval force, £to rendezvous near Buenos Ayres, which, it is believed w ill piove sufficient for the occasion. It is my earnest de sire, however, that it may not be found neces sary to resort to this last alternative. When Congress met in December last, the business of the country had just been crushed by one of those pei judical revulsions, which are the inevitable consequence ol our unsound and extravagant system of bank credits and inflated currency. VVitli all the elements ot national wealth in abundance, our manufactures were suspended, our u-eful public and private enter prises were arrested, and thousands of laborers were deprived ol employment and reduced to want. Universal distress prevailed anion" the I commercial, manufacturing, and mechanic il ' classes. This revulsion was felt the more se verely in the United Slates, because similar causes had produced the like deplorable effects throughout the commercial nations ol Europe. All Were experiencing sad reveises at the same moment. Our manufacturers everywhere suf- It-red severely, not because of the recent reduc tion in the tariff of duties on imports, but be cause there was no demand at any price for their productions. The people were obliged to restrict themselves, in their purchases, to" arti cles ol prime necessity. In the general pros tration of business, the iron manufacturers in different Sta'es probably suffered more than any other class, and much destitution was the inevi table consequence, among the great number of workmen who had been employed in this useful branch of" our industry. There could be no supply where there was no demand. To pre sent an example, there could be no demand for railroad iron, alter our magnificent system of railroad- - , extending its benefits to every por tion ol the Union, had been brought to a dead pause. The same consequences have resulLed from similar causes to many other branches ol useful manufactures. It 'is self-evident that where there is no ability to purchase manufac tured articles, these cannot be sold, and conse quently must cease to be produced. No government, and especially a government ol such limited powers as that of the United States, could have prevented the late revulsion. The whole commercial world seemed for years to have been rushing to this catastrophe. The same ruinous conseuuences would ed in the United Stales, wheth* the duties up on foreign imports had remained as they were under the tariff of ISI6, or had been raised to a much higher standard. The tariff of 1557 had no agency in the result. The general causes existing throughout the world, could not have been controlled r.y tin- legislation of any particular country. ' The periodical revulsions which have existed in our past history, most continue to return a{ intervals, so lone as our pros.-ni unbounded sys tem of hank credits shall prevail. They will however, probably be the. Jess severe in future because it is not lobe expected, at least f, r many years to come that the commercial na tions of EJrope, with whose interests our ow : . are so materially involved, will expose them selves to similar calamities. fjut t | lM su r was treated so much at large in my last annual message that I shall not now pursue it further Still, r respectfully renew the recommenda tion, in favor of the passage of a unilonn bank rupt law, applicable to banking institutions. This is all the power orer the subject, which I believe, the ( d ial government p >s?es;es.L. Such a law would nnti-gale, though it rnialit not prevent the evil, The mstiuct of self-pres ervation might produce a wholesome restraint upon their banking business; if they knew in advance, that a su -pensiou of specie payments would inevitably produce their civil de.illi. But the effects of the revulsion are mow slowly but surely passing away. 'Hyy energy and enterprise of our citizens, with our un bounded resource*, will, withio the period of another year, restore a state of wholesome in dustry and tra le. Capital ha; again accumula ted in our large cities. ihe rate of interest is th-re very low. Confidence is gradually revi ving, and so soon as it is discovered that this capital can be profitably employed in •commer cial and manufacturing enterprises, ami fin the construction nf railroads and other works of public and private improvement, prosperity will again smile throughout the land, ft vain, however, to disguise the fact from our : selves, that a speculative inflation of our cur rency, without a corresponding inflation in I other countries whose manufactures] come into competition with our own, must ever produce i disastious results to our domestic manufactures. NotarifT, short of absolute prohibition, ran pre vent <hese evil consequences. In connection with this subject, it is proper to to our financial con.lit ion. The same causes which have produced p.'cunia'v distress throughout the countiy, have so reduced the a mmint of imports from foreign countries, that the revenue has proved inadequate to meet the necessary expenses of the governmont. To supply the deficiency, Congress, bv the act of the 2"2 I of December, 1557, authorized the is sue of §20,000,0000f treasury notes; and, this proving inadequate, they authorized, bv the act of June I Jth, ISSS, a loan of $20,000,000, "to be applied to the payment of appropriations made by law." No statesman would advise, that we should go ori increasing the national debt to meet the ordinary expenses of the government. This would be a most ruinous policy. In case ot war, our credit must be our chief resource, at least f>r the first year, and this would be oreat ly impaired by having contracted a large dfbt in time of peacp. It is our true policy to in crease our revenue so as to equal our expendi tures. It would be ruinous to continue to bor row. Besides, it may be proper to observe that the incidental protection, thus afforded by a re venue tariff, would at the present moment, to some extent, increase the confidence of the man ufacturing interests, ani give a fresh impulse to our reviving buisness. To this, surelv, no per. son will object. In. regard tojfh m ide of assessing and oiler ting duties under a strrctiy revenue tariff", I have long entertained and often expressed the ojmnon, mot p-vticy requires that this should he done by specific duties,* in cases to which these can be properly applied. Thev are well adapted to commodities which are usu ally sold by weight or by measure, anil which from their nature are of equal or nearlv equal Value. Such, fur example, are the articles of i ron of different classes, raw sugar, and foreign wines and spii its. In my deliberate judgment specific duties are the best, if not the only means, securing the revenue against fraudulent and invoices,amfsuch has been tfi- practice a lopltd f.r this purpose hy ! other commercial rations. Resides, specific duties would alTord to Itie American manufactu rer the incidental advantages to which he is fairly entitled under a revenue tariff". The pres ent system i> a sliding scale to his disadvan tage. Under it, when ptices are high and busi ness prosperous, the duties rise in amount when he least requires their aid. On the contrary, when prices fall an I he is struggling a T ainst adversity, the duties are diminished in the same proportion greatly to his injury. Neither wouM'theie be danger tiiat a hi<Th ei rate of duly th in that intended by Congress could be levied in the lorm of specific duties.— It would be easy to ascertain the average value ofany imported article for a series of years ; and instead ol subjecting it loan ad valorem du ty at a certain rate per cnt, to substitute in its place an equivalent specific duty I By such an arrangement the consumer would not be injured. It is true he might have to pay a little more duty on a given article in one year, but if so, he would pay a little less in another; and in a series ot years these would counter balance each other, and amount to the same thing, so far as his interest is concerned. This inconvenience would be trifling, when contras ted with that additional secu ity thus afforded a gainst frauds upon the revenue, in which every consumer is directly interested. I have thrown out these suggestion's as the fruit of my own observations to whicn Con gress in their belter jo dement will give fucjj weight as they may deserve. The report of the Secretary of the Treasury will explain in detail (heoperations of that de partment of the government. The receipts in to the Treasiry from a! 1 sources during the iis cal year ending 30!h June, 1553, including the Treasury notes authorized oy the act of Decern ler'23, 18 57, were seventy millions two hun bred and seventy threes-thousand eight hundred dnd sixy-nine dollars, and fifty-nine cents, (70- 273.895.59,) which amount with the balance of seventeen millions seven hundred ami ten thousand one hundred and fourteen dollars and twenty-seven cents, ($17,710 1 1 f 27,) re maining in the Treasury at the commencement of the year made an aggregate for the service ot the year of $37,983,983.86. The public expenditures during the fiscal year ending June 30, 1858, amounted to eighty one, million five hundred and eighty five thou sand, six hundred and sixty-seven dollars and seventy six cents, ($31.585,567,76,) of which nine miiliion six hundred and eighty-four thou sand five hundred and thirty seven dollars and ninety-nine cents, ($9,684,537.99) were appli ed to the payment of the public debt, and the redemption of treasury notes with the interest thereon, leaving in the treasury on July I,
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