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United States and the British pro

vinces.

"I have thought that whatever arrangements may be made on these two subjects, it is expedient that they should be embraced in separate Conventions. The illness and death of the late Secretary of State prevented the commencement of the contemplated negotiation. Pains have been taken to collect the information required for the details of such an arrangeThe subject is attended with considerable difficulty. If it is found practicable to come to an agreement mutually acceptable to the two parties, Conventions may be concluded in the course of the present winter. The control of Congress over all the provisions of such an arrangement affecting the revenue will, of course, be reserved.

ment.

Cuba.-"The affairs of Cuba formed a prominent topic in my last annual message. They remain in an uneasy condition, and a feeling of alarm and irritation on the part of the Cuban authorities appears to exist. This feeling has interfered with the regular commercial intercourse between the United States and the island, and led to some acts of which we have a right to complain. But the Captain-General of Cuba is clothed with no power to treat with foreign governments, nor is he in any degree under the control of the Spanish Minister at Washington.

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spectfully received by the CaptainGeneral, who conferred with him freely on the recent occurrences, but no permanent arrangement was effected.

"In the meantime, the refusal of the Captain-General to allow passengers and the mail to be landed in certain cases, for a reason which does not furnish in the opinion of this Government even a good presumptive ground for such a prohibition, has been made the subject of a serious remonstrance at Madrid; and I have no reason to doubt that due respect will be paid by the Government of Her Catholic Majesty to the representations which our Minister has been instructed to make on the subject.

"It is but justice to the CaptainGeneral to add, that his conduct towards the steamers employed to carry the mails of the United States to Havannah has, with the exceptions above alluded to, been marked with kindness and liberality, and indicates no general purpose of interfering with the commercial correspondence and intercourse between the island and this country.

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spectfully declined, for reasons which it would occupy too much space in this communication to state in detail, but which led me to think that the proposed measure would be of doubtful constitutionality, impolitic, and unavailing. I have, however, in common with several of my predecessors, directed the Ministers of France and England to be assured that the United States entertain no designs against Cuba; but, that, on the contrary, I should regard its incorporation into the Union at the present time as fraught with serious peril.

"Were this island comparatively destitute of inhabitants, or occupied by a kindred race, I should regard it, if voluntarily ceded by Spain, as a most desirable acquisition. But under existing circumstances, I should look upon its incorporation into our Union as a very hazardous measure. It would bring into the confederacy a population of a different national stock, speaking a different language, and not likely to harmonise with the other members. It would probably affect in a prejudicial manner the industrial interests of the South, and it might revive those conflicts of opinion between the different sections of the country which lately shook the Union to its centre, and which have been so happily compromised.

Isthmus of Tehuantepec.-"The rejection by the Mexican Congress of the convention which has been concluded between that republic and the United States, for the protection of a transit way across the Isthmus of Tehuantepec and of the interests of those citizens of the United States who had become proprietors of the rights which Mexico had conferred on one of her own citizens in re

gard to that transit, has thrown a serious obstacle in the way of the attainment of a very desirable national object.

"I am still willing to hope that the differences on the subject which exist, or may hereafter arise, between the Governments will be amicably adjusted. This subject, however, has already engaged the attention of the Senate of the United States, and requires no further comment in this communication.

Central America." The settlement of the question respecting the port of San Juan de Nicaragua, and of the controvery between the republic of Costa Rica and Nicaragua, in regard to their boundaries, was considered indispensable to the commencement of the ship canal between the two oceans, which was the subject of the convention between the United States and Great Britain of the 19th of April, 1850. Accordingly, a proposition for the same purposes, addressed to the two Governments in that quarter, and to the Musquito Indians, was agreed to in April last by the Secretary of State and the Minister of Her Britannic Majesty.

"Besides the wish to aid in reconciling the differences of the two republics, I engaged in the negotiation from a desire to place the great work of a ship canal between the two oceans under one jurisdiction, and to establish the important port of San Juan de Nicaragua under the government of a civilised power. The proposition in question was assented to by Costa Rica and the Musquito Indians. It has not proved equally acceptable to Nicaragua, but it is to be hoped that the further nego. tiations on the subject which are in train will be carried out in that spirit of conciliation and compro

mise which ought always to prevail on such occasions, and that they will lead to a satisfactory result.

"I have the satisfaction to inform you that the executive Government of Venezuela has acknowledged some claims of citizens of the United States, which have for many years past been urged by our chargé d'affaires at Caraccas. It is hoped that the same sense of justice will actuate the Congress of that republic in providing the means for their payment.

South America, the Lobos Islands." The recent revolution in Buenos Ayres and the confederated States having opened the prospect of an improved state of things in that quarter, the Governments of Great Britain and France determined to negotiate with the chief of the new confederacy for the free access of their commerce to the extensive countries watered by the tributaries of La Plata; and they gave a friendly notice of this purpose to the United States, that we might, if we thought proper, pursue the same course.

The

"In compliance with this invitation, our minister at Rio Janeiro, and our chargé d'affaires at Buenos Ayres, have been fully authorised to conclude treaties with the newly-organised confederation, or the States composing it. delays which have taken place in the formation of the new Government have as yet prevented the execution of those instructions; but there is every reason to hope that those vast countries will be eventually opened to our commerce.

"A treaty of commerce has been concluded between the United States and the Oriental Republic of Uruguay, which will be laid before the Senate. Should this convention go into operation, it will

open to the commercial enterprise of our citizens a country of great extent, and unsurpassed in natural resources, but from which foreign nations have hitherto been almost wholly excluded.

"The correspondence of the late Secretary of State with the Peruvian chargé d'affaires relative to the Lobos Islands was communicated to Congress towards the close of the last session. Since that time, on further investigation of the subject, the doubts which had been entertained of the title of Peru to those islands have been removed; and I have deemed it just that the temporary wrong which had been unintentionally done her, for want of information, should be repaired by an unreserved acknowledgment of her sovereignty.

"I have the satisfaction to inform you that the course pursued by Peru has been creditable to the liberality of her Government. Before it was known by her that her title would be acknowledged at Washington, her Minister of Foreign Affairs had authorised our chargé d'affaires at Lima to announce to the American vessels which had gone to the Lobos for guano, that the Peruvian Government was willing to freight them on its own account. This intention has been carried into effect by the Peruvian Minister here, by an arrangement which is believed to be advantageous to the parties in interest.

The Pacific. "Our settlements on the shores of the Pacific have already given a great extension, and in some respects a new direction, to our commerce in that ocean. A direct and rapidlyincreasing intercourse has sprung up with Eastern Asia. The waters of the Northern Pacific, even into

the Arctic Sea, have of late years been frequented by our whalemen. The application of steam to the general purpose of navigation is becoming daily more common, and makes it desirable to obtain fuel and other necessary supplies at convenient points on the route between Asia and our Pacific shores. Our unfortunate countrymen who, from time to time, suffer shipwreck on the coasts of the eastern seas are entitled to protection. Besides these specific objects, the general prosperity of our States on the Pacific requires that an attempt be made to open the opposite regions of Asia to a mutually beneficial in

tercourse.

"It is obvious that this attempt could be made by no power to so great advantage as by the United States, whose constitutional system excludes every idea of distant colonial dependencies. I have accordingly been led to order an appropriate naval force to Japan, under the command of a discreet and intelligent officer of the highest rank known to our service. He is instructed to endeavour to obtain from the Government of that country some relaxation of the inhospitable and anti-social system which it has pursued for about two centuries. He has been directed particularly to remonstrate in the strongest language against the cruel treatment to which our shipwrecked mariners have often been subjected, and to insist that they shall be treated with humanity.

"He is instructed, however, at the same time to give that Government the amplest assurances that the objects of the United States are such, and such only, as I have indicated, and that the expedition is friendly and peaceful. Notwithstanding the jealousy with which

the Governments of Eastern Asia regarded all overtures from foreigners, I am not without hopes of a beneficial result of the expedition. Should it be crowned with success, the advantages will not be confined to the United States, but, as in the case of China, will be equally enjoyed by all the other maritime powers. I have much satisfaction in stating that in all the steps preparatory to this expedition, the Government of the United States has been materially aided by the good offices of the King of the Netherlands, the only European power having any commercial relations with Japan.

The Treasury." The condition of the Treasury is exhibited in the annual report from that depart

ment.

"The cash receipts into the Treasury for the fiscal year ending the 30th of June last, exclusive of trust funds, were forty-nine millions seven hundred and twentyeight thousand three hundred and eighty-six dollars and eighty-nine cents. (dols. 49,728,386 89); and the expenditure for the same period, likewise exclusive of trust funds, were forty-six millions seven thousand eight hundred and ninetysix dollars and twenty cents. (dols. 46,007,896 20), of which nine millions four hundred and fiftyfive thousand eight hundred and fifteen dollars and eighty-three cents. (dols. 9,455,815 83) was on account of the principal and interest of the public debt, including the last instalment of the indemnity to Mexico, under the treaty of Guadaloupe Hidalgo, leaving a balance of dols. 14,632,136 37 in the Treasury on the first day of July last. Since this latter period, further purchases of the principal of the public debt have been made

to the extent of two millions four hundred and fifty-six thousand five hundred and forty-seven dollars and forty-nine cents. (dols. 2,456,547 49), and the surplus in the Treasury will continue to be applied to that object, when ever the stock can be procured within the limits, as to price authorised by law.

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The value of foreign merchandise imported during the last fiscal year was two hundred and seven millions two hundred and forty thousand one hundred and one dollars (dols. 207,240,101); and the value of domestic productions exported was one hundred and forty-nine millions eight hundred and sixty-one thousand nine hundred and eleven dollars (dols. 149,861,911); besides seventeen millions two hundred and four thousand and twenty-six dollars (dols. 17,204,026), of foreign merchandise exported; making the aggregate of the entire exports, one hundred and sixty-seven millions sixty-five thousand nine hundred and thirty-seven dollars (dols. 167,065,937); exclusive of the above, there was exported forty-two millions five hundred and seven thousand two hundred and eighty-five dollars (dols. 42,507,285) in specie, and imported from foreign ports five millions two hundred and sixty-two thousand six hundred and fortythree dollars (dols. 5,262,643).

The Tariff-Protection.-" In my first annual message to Congress I called your attention to what seemed to me some defects in the present tariff, and recommended such modifications as in my judgment were best adapted to remedy its evils and promote the prosperity of the country. No thing has since occurred to change

my views on this important question.

"Without repeating the arguments contained in my former message, in favour of discriminating protective duties, I deem it my duty to call your attention to one or two other considerations affecting this subject. The first is the effect of large importations of foreign goods upon our currency. Most of the gold of California, as fast as it is coined, finds its way directly to Europe in payment for goods purchased.

"In the second place, as our manufacturing establishments are broken down by competition with foreigners, the capital invested in them is lost, thousands of honest and industrious citizens are thrown out of employment, and the farmer to that extent is deprived of a home market for the sale of his surplus produce. In the third place, the destruction of our manufactures leaves the foreigner without competition in our market, and he consequently raises the price of the articles sent here for sale, as is now seen in the increased cost of iron imported from England. The prosperity and wealth of every nation must depend upon its productive industry. The farmer is stimulated to exertion by finding a ready market for his surplus products, and benefited by being able to exchange them without loss of time or expense of transportation for the manufactures which his comfort or convenience requires.

"This is always done to the best advantage where a portion of the community in which he lives is engaged in other pursuits. But most manufactures require an amount of capital and a practical skill which cannot be commanded,

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