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negotiation　of　new　loans　greatly　facilitated　by　the　steady　market

demand　for　government　bonds　which　the　adoption　of　the　proposed　system

would　create。



It　is　an　additional　recommendation　of　the　measure；　of　considerable

weight；　in　my　judgment；　that　it　would　reconcile　as　far　as　possible

all　existing　interests　by　the　opportunity　offered　to　existing

institutions　to　reorganize　under　the　act；　substituting　only　the

secured　uniform　national　circulation　for　the　local　and　various

circulation；　secured　and　unsecured；　now　issued　by　them。



The　receipts　into　the　treasury　from　all　sources；　including　loans　and

balance　from　the　preceding　year；　for　the　fiscal　year　ending　on　the

30th　June；　1862；　were　583；885；247。06；　of　which　sum　49；056；397。62

were　derived　from　customs；　1；795；331。73　from　the　direct　tax；　from

public　lands；　152；203。77；　from　miscellaneous　sources；　931；787。64；

from　loans　in　all　forms；　529；692；460。50。　　　The　remainder；

2；257；065。80；　was　the　balance　from　last　year。



The　disbursements　during　the　same　period　were：　　For　congressional；

executive；　and　judicial　purposes；　5；939；009。29；　for　foreign

intercourse；　1；339；710。35；　for　miscellaneous　expenses；　including　the

mints；　loans；　post…office　deficiencies；　collection　of　revenue；　and

other　like　charges；　14；129；771。50；　for　expenses　under　the　Interior

Department；　3；102；985。52；　under　the　War　Department；　394；368；407。36；

under　the　Navy　Department；　42；674；569。69；　for　interest　on　public

debt；　13；190；324。45；　and　for　payment　of　public　debt；　including

reimbursement　of　temporary　loan　and　redemptions；　96；096；922。09；

making　an　aggregate　of　570；841；700。25；　and　leaving　a　balance　in　the

treasury　on　the　1st　day　of　July；　1862；　of　13；043；546。81。



It　should　be　observed　that　the　sum　of　96；096；922。09；　expended　for

reimbursements　and　redemption　of　public　debt；　being　included　also　in

the　loans　made；　may　be　properly　deducted　both　from　receipts　and

expenditures；　leaving　the　actual　receipts　for　the　year

487；788；324。97；　and　the　expenditures　474；744；778。16。



Other　information　on　the　subject　of　the　finances　will　be　found　in　the

report　of　the　Secretary　of　the　Treasury；　to　whose　statements　and

views　I　invite　your　most　candid　and　considerate　attention。



The　reports　of　the　Secretaries　of　War　and　of　the　Navy　are　herewith

transmitted。　　These　reports；　though　lengthy；　are　scarcely　more　than

brief　abstracts　of　the　very　numerous　and　extensive　transactions　and

operations　conducted　through　those　departments。　　Nor　could　I　give　a

summary　of　them　here　upon　any　principle　which　would　admit　of　its

being　much　shorter　than　the　reports　themselves。　　I　therefore　content

myself　with　laying　the　reports　before　you　and　asking　your　attention

to　them。



It　gives　me　pleasure　to　report　a　decided　improvement　in　the　financial

condition　of　the　Post…Office　Department　as　compared　with　several

preceding　years。　　The　receipts　for　the　fiscal　year　1861　amounted　to

8；349；296。40；　which　embraced　the　revenue　from　all　the　States　of　the

Union　for　three　quarters　of　that　year。　　Notwithstanding　the　cessation

of　revenue　from　the　so…called　seceded　States　during　the　last　fiscal

year；　the　increase　of　the　correspondence　of　the　loyal　States　has　been

sufficient　to　produce　a　revenue　during　the　same　year　of

8；299；820。90；　being　only　50；000　less　than　was　derived　from　all　the

States　of　the　Union　during　the　previous　year。　　The　expenditures　show

a　still　more　favorable　result。　　The　amount　expended　in　1861　was

13；606；759。11。　　For　the　last　year　the　amount　has　been　reduced　to

11；125；364。13；　showing　a　decrease　of　about　2；481；000　in　the

expenditures　as　compared　with　the　preceding　year；　and　about

3；750；000　as　compared　with　the　fiscal　year　1860。　　The　deficiency　in

the　department　for　the　previous　year　was　4；551；966。98。　　For　the　last

fiscal　year　it　was　reduced　to　2；112；814。57。　　These　favorable　results

are　in　part　owing　to　the　cessation　of　mail　service　in　the

insurrectionary　States　and　in　part　to　a　careful　review　of　all

expenditures　in　that　department　in　the　interest　of　economy。　　The

efficiency　of　the　postal　service；　it　is　believed；　has　also　been　much

improved。　　The　Postmaster…General　has　also　opened　a　correspondence

through　the　Department　of　State　with　foreign　governments　proposing　a

convention　of　postal　representatives　for　the　purpose　of　simplifying

the　rates　of　foreign　postage　and　to　expedite　the　foreign　mails。　　This

proposition；　equally　important　to　our　adopted　citizens　and　to　the

commercial　interests　of　this　country；　has　been　favorably　entertained

and　agreed　to　by　all　the　governments　from　whom　replies　have　been

received。



I　ask　the　attention　of　Congress　to　the　suggestions　of　the

Postmaster…General　in　his　report　respecting　the　further　legislation

required；　in　his　opinion；　for　the　benefit　of　the　postal　service。



The　Secretary　of　the　Interior　reports　as　follows　in　regard　to　the

public　lands：



〃The　public　lands　have　ceased　to　be　a　source　of　revenue。　　From　the

1st　July；　1861；　to　the　3oth　September；　1862；　the　entire　cash　receipts

from　the　sale　of　lands　were　137；476。2a　sum　much　less　than　the

expenses　of　our　land　system　during　the　same　period。　　　The　homestead

law；　which　will　take　effect　on　the　1st　of　January　next；　offers　such

inducements　to　settlers　that　sales　for　cash　cannot　be　expected　to　an

extent　sufficient　to　meet　the　expenses　of　the　General　Land　Office　and

the　cost　of　surveying　and　bringing　the　land　into　market。〃



The　discrepancy　between　the　sum　here　stated　as　arising　from　the　sales

of　the　public　lands　and　the　sum　derived　from　the　same　source　as

reported　from　the　Treasury　Department　arises；　as　I　understand；　from

the　fact　that　the　periods　of　time；　though　apparently　were　not　really

coincident　at　the　beginning　point；　the　Treasury　report　including　a

considerable　sum　now　which　had　previously　been　reported　from　the

Interior；　sufficiently　large　to　greatly　overreach　the　sum　derived

from　the　three　months　now　reported　upon　by　the　Interior　and　not　by

the　Treasury。



The　Indian　tribes　upon　our　frontiers　have　during　the　past　year

manifested　a　spirit　of　insubordination；　and　at　several　points　have

engaged　in　open　hostilities　against　the　white　settlements　in　their

vicinity。　　The　tribes　occupying　the　Indian　country　south　of　Kansas

renounced　their　allegiance　to　the　United　States　and　entered　into

treaties　with　the　insurgents。　　Those　who　remained　loyal　to　the　United

States　were　driven　from　the　country。　　The　chief　of　the　Cherokees　has

visited　this　city　for　the　purpose　of　restoring　the　former　relations

of　the　tribe　with　the　United　States。　　He　alleges　that　they　were

constrained　by　superior　force　to　enter　into　treaties　with　the

insurgents；　and　that　the　United　States　neglected　to　furnish　the

protection　which　their　treaty　stipulations　required。



In　the　month　of　August　last　the　Sioux　Indians　in　Minnesota　attacked

the　settlements　in　their　vicinity　with　extreme　ferocity；　killing

indiscriminately　men；　women；　and　children。　　This　attack　was　wholly

unexpected；　and　therefore　no　means　of　defense　had　been　provided。　　It

is　estimated　that　not　less　than　800　persons　were　killed　by　the

Indians；　and　a　large　amount　of　property　was　destroyed。　　How　this

outbreak　was　induced　is　not　definitely　known；　and　suspicions；　which

may　be　unjust；　need　not　to　be　stated。　　Information　was　received　by

the　Indian　Bureau　from　different　sources　about　the　time　hostilities

were　commenced　that　a　simultaneous　attack　was　to　be　made　upon　white

settlements　by　all　the　tribes　between　the　Mississippi　River　and　the

Rocky　Mountains。　　The　State　of　Minnesota　has　suffered　great　injury

from　this　Indian　war。　　A　large　portion　of　her　territory　has　been

depopulated；　and　a　severe　loss　has　been　sustained　by　the　destruction

of　property。　　The　people　of　that　State　manifest　much　anxiety　for　the

removal　of　the　tribes　beyond　the　limits　of　the　State　as　a　guaranty

against　future　hostilities。　　The　Commissioner　of　Indian　Affairs　will

furnish　full　details。　　I　submit　for　your　especial　consideration

whether　our　Indian　system　shall　not　be　remodeled。　　Many　wise　and　good

men　have　impressed　me　with　the　belief　that　this　can　be　profitably

done。



I　submit　a　statement　of　the　proceedings　of　commissioners；　which　shows

the　progress　that　has　been　made　in　the　enterprise　of　constructing　the

Pacific　Railroad。　　And　this　suggests　the　earliest　completion　of　this

road；　and　also　the　favorable　action　of　Congress　upon　the　projects　now

pending　before　them　for　enlarging　the　capacities　of　the　great　canals

in　New　York　and　Illinois；　as　being　of　vital　and　rapidly　increasing

importance　to　the　whole　nation；　and　especially　to　the　vast　interior

region　hereinafter　to　be　noticed　at　some　greater　length。　　I　purpose

having　prepared　and　laid　before　you　at　an　early　day　some　interesting

and　valuable　statistical　information　upon　this　subject。　　The　military

and　commercial　importance　of　enlarging　the　Illinois　and　Michigan

Canal　and　improving　the　Illinois　River　is　presented　in　the　report　of

Colonel　Webster　to　the　Secretary　of　War；　and　now　transmitted　to

Congress。　　I　respectfully　ask　attention　to　it。



To　carry　out　the　provisions　of　the　act　of　Congress　of　the　15th　of　May

last；　I　have　caused　the　Department　of　Agriculture　of　the　United

States　to　be　organized。



The　Commissioner　informs　me　that　within　the　period　of　a　few　months

this　department　has　established　an　extensive　system　of　correspondence

and　exchanges；　both　at　home　and　abroad；　which　promises　to　effect

highly　beneficial　results　in　the　development　of　a　correct　knowledge

of　recent　improvements　in　agriculture；　in　the　introduction　of　new

products；　and　in　the　collection　of　the　agricultural　statistics　of　the

different　States。



Also；　that　it　will　soon　be　prepared　to　distribute　largely　seeds；

cereals；　plants；　and　cuttings；　and　has　already　published　and

liberally　diffused　much　valuable　information　in　anticipation。　　of　a

more　elaborate　report；　which　will　in　due　time　be　furnished；