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A Compilation of the Messages and Papers of the Presidents: Polk by Compiled by James D. Richardson

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Taylor's report, nor in that of any other officer except the report of
Brigadier-General Worth. The following extract from the latter contains
all that is said having relation to the conduct of Captain Holmes:

"My thanks are also especially due to Lieutenant-Colonel Stanford,
Eighth, commanding First Brigade; Major Munroe, chief of artillery,
general staff; Brevet Major Brown and Captain J.R. Vinton, artillery
battalion; Captain J.B. Scott, artillery battalion, light troops; Major
Scott (commanding) and Captain Merrill, Fifth; Captain Miles
(commanding), Holmes, and Ross, Seventh Infantry, and Captain Screven,
commanding Eighth Infantry; to Lieutenant-Colonel Walker, captain of
rifles; Major Chevalier and Captain McCulloch, of the Texan, and Captain
Blanchard, of the Louisiana, Volunteers; to Lieutenant Mackall,
commanding battery; Roland, Martin, Hays, Irons, Clark, and Curd, horse
artillery; Lieutenant Longstreet, commanding light company, Eighth;
Lieutenant Ayers, artillery battalion, who was among the first in the
assault upon the place and who secured the colors. Each of the officers
named either headed special detachments, columns of attack, storming
parties, or detached guns, and all were conspicuous for conduct and
courage."

It will be perceived that in this list there are twenty-one officers
(besides the medical staff and officers of volunteers) who are highly
commended by General Worth for gallant conduct. That they were justly
entitled to the praise bestowed on them is not doubted; but if I had
recommended all of them to be brevetted, together with all those in the
reports of other generals also in like manner highly commended, the
number of officers in my list submitted for your consideration would
have been probably trebled. Indeed, the whole Army behaved most
gallantly on that occasion. It was deemed proper to discriminate and
select from among the well deserving those who had peculiar claims to
distinction. In making this selection I exercised my best judgment,
regarding the official reports as the authentic source of information.
Six or seven only of the officers named in the foregoing extract from
General Worth's report were placed on the list. A close examination of
the reports will, I think, disclose the ground for the discrimination,
and I hope justify the distinction which I felt it my duty to make.
Without disparagement to Captain Holmes, whose conduct was highly
creditable, it appears to me that a rule of selection which would have
brought him upon the list for promotion by brevet would also have placed
on the same list nearly everyone named with him in General Worth's
report, and many of the reports of other generals not presented in my
report to you of the 19th ultimo. There is not time before the
adjournment of the Senate to make the thorough examination which a due
regard to the relative claims of the gallant officers engaged in the
actions of Monterey would require if the list of brevet promotions is to
be enlarged to this extent. Such enlargement would not accord with my
own views on the subject of bestowing brevet rewards.

There are on file other papers relative to Captain Holmes. They were not
written with reference to his brevet promotion, but for an appointment
in the new regiments. Copies of those are herewith transmitted. The
letter of the Hon. W.P. Mangum inclosing the statement from Generals
Twiggs and Smith is dated the 26th, and my report the 19th ultimo, and
was not, consequently, received at this Department until some days after
the list for brevets was made out and presented to you.

From the facts and recommendations of the official reports of the
actions at Monterey I should not feel warranted in presenting Captain
Holmes for brevet promotion without at the same time including on the
same list many others not recommended in my report of the 19th ultimo;
but as his conduct fell under the immediate observation of General Smith
(General Twiggs commanded in a different part of the town), it may be
proper to regard their statement, received since my former report was
prepared and handed to you, as additional evidence of his gallantry and
of claims to your particular notice. I therefore recommend him to be
promoted major by brevet.

I have the honor to be, very respectfully, your obedient servant,

W.L. MARCY,
_Secretary of War_.

PROCLAMATIONS.

[From Statutes at Large (Little & Brown), Vol. IX, p. 1001.]

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION.

Whereas by an act of the Congress of the United States approved the 3d
day of March, 1845, entitled "An act regulating commercial intercourse
within the islands of Miquelon and St. Pierre," it is provided that all
French vessels coming directly from those islands, either in ballast or
laden with articles the growth or manufacture of either of said islands,
and which are permitted to be exported therefrom in American vessels,
may be admitted into the ports of the United States on payment of no
higher duties of tonnage or on their cargoes aforesaid than are imposed
on American vessels and on like cargoes imported in American vessels,
provided that this act shall not take effect until the President of the
United States shall have received satisfactory information that similar
privileges have been allowed to American vessels and their cargoes at
said islands by the Government of France and shall have made
proclamation accordingly; and

Whereas satisfactory information has been received by me that similar
privileges have been allowed to American vessels and their cargoes at
said islands by the Government of France:

Now, therefore, I, James K. Polk, President of the United States of
America, do hereby declare and proclaim that all French vessels coming
directly from the islands of Miquelon and St. Pierre, either in ballast
or laden with articles the growth or manufacture of either of said
islands, and which are permitted to be exported therefrom in American
vessels, shall from this date be admitted into the ports of the United
States on payment of no higher duties on tonnage or on their cargoes
aforesaid than are imposed on American vessels and on like cargoes
imported in American vessels.

Given under my hand, at the city of Washington, the 20th day of April,
A.D. 1847, and of the Independence of the United States the
seventy-first.

JAMES K. POLK.

By the President:
JAMES BUCHANAN,
_Secretary of State_.

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA.

A PROCLAMATION.

Whereas by an act of the Congress of the United States of the 24th of
May, 1828, entitled "An act in addition to an act entitled 'An act
concerning discriminating duties of tonnage and impost' and to equalize
the duties on Prussian vessels and their cargoes," it is provided that
upon satisfactory evidence being given to the President of the United
States by the government of any foreign nation that no discriminating
duties of tonnage or impost are imposed or levied in the ports of the
said nation upon vessels wholly belonging to citizens of the United
States, or upon the produce, manufactures, or merchandise imported in
the same from the United States or from any foreign country, the
President is thereby authorized to issue his proclamation declaring that
the foreign discriminating duties of tonnage and impost within the
United States are and shall be suspended and discontinued so far as
respects the vessels of the said foreign nation and the produce,
manufactures, or merchandise imported into the United States in the same
from the said foreign nation or from any other foreign country, the said
suspension to take effect from the time of such notification being given
to the President of the United States and to continue so long as the
reciprocal exemption of vessels belonging to citizens of the United
States and their cargoes as aforesaid shall be continued, and no longer;
and

Whereas satisfactory evidence has lately been received by me from His
Majesty the Emperor of Brazil, through an official communication of Mr.
Felippe Jose Pereira Leal, his charge d'affaires in the United States,
under date of the 25th of October, 1847, that no other or higher duties
of tonnage and impost are imposed or levied in the ports of Brazil upon
vessels wholly belonging to citizens of the United States and upon the
produce, manufactures, or merchandise imported in the same from the
United States and from any foreign country whatever than are levied on
Brazilian ships and their cargoes in the same ports under like
circumstances:

Now, therefore, I, James K. Polk, President of the United States of
America, do hereby declare and proclaim that so much of the several acts
imposing discriminating duties of tonnage and impost within the United
States are and shall be suspended and discontinued so far as respects
the vessels of Brazil and the produce, manufactures, and merchandise
imported into the United States in the same from Brazil and from any
other foreign country whatever, the said suspension to take effect from
the day above mentioned and to continue thenceforward so long as the
reciprocal exemption of the vessels of the United States and the
produce, manufactures, and merchandise imported into Brazil in the same
as aforesaid shall be continued on the part of the Government of Brazil.

Given under my hand, at the city of Washington, this 4th day of
November, A.D. 1847, and the seventy-second of the Independence of the
United States.

JAMES K. POLK.

By the President:
JAMES BUCHANAN,
_Secretary of State_.

EXECUTIVE ORDERS.

WASHINGTON, _March 23, 1847_.

The SECRETARY OF THE TREASURY.

SIR: The Government of Mexico having repeatedly rejected the friendly
overtures of the United States to open negotiations with a view to the
restoration of peace, sound policy and a just regard to the interests of
our own country require that the enemy should be made, as far as
practicable, to bear the expenses of a war of which they are the
authors, and which they obstinately persist in protracting.

It is the right of the conqueror to levy contribution upon the enemy in
their seaports, towns, or provinces which may be in his military
possession by conquest and to apply the same to defray the expenses of
the war. The conqueror possesses the right also to establish a temporary
military government over such seaports, towns, or provinces and to
prescribe the conditions and restrictions upon which commerce with such
places may be permitted. He may, in his discretion, exclude all trade,
or admit it with limitation or restriction, or impose terms the
observance of which will be the condition of carrying it on. One of
these conditions may be the payment of a prescribed rate of duties on
tonnage and imports.

In the exercise of these unquestioned rights of war, I have, on full
consideration, determined to order that all the ports or places in
Mexico which now are or hereafter may be in the actual possession of our
land and naval forces by conquest shall be opened while our military
occupation may continue to the commerce of all neutral nations, as well
as our own, in articles not contraband of war, upon the payment of
prescribed rates of duties, which will be made known and enforced by our
military and naval commanders.

While the adoption of this policy will be to impose a burden on the
enemy, and at the same time to deprive them of the revenue to be derived
from trade at such ports or places, as well as to secure it to
ourselves, whereby the expenses of the war maybe diminished, a just
regard to the general interests of commerce and the obvious advantages
of uniformity in the exercise of these belligerent rights require that
well-considered regulations and restrictions should be prepared for the
guidance of those who may be charged with carrying it into effect.

You are therefore instructed to examine the existing Mexican tariff of
duties and report to me a schedule of articles of trade to be admitted
at such ports or places as may be at any time in our military
possession, with such rates of duty on them and also on tonnage as will
be likely to produce the greatest amount of revenue. You will also
communicate the considerations which may recommend the scale of duties
which you may propose, and will submit such regulations as you may deem
advisable in order to enforce their collection.

As the levy of the contribution proposed is a military right, derived
from the laws of nations, the collection and disbursement of the duties
will be made, under the orders of the Secretary of War and the Secretary
of the Navy, by the military and naval commanders at the ports or places
in Mexico which may be in possession of our arms. The report requested
is therefore necessary in order to enable me to give the proper
directions to the War and Navy Departments.

JAMES K POLK.

TREASURY DEPARTMENT, _March 30, 1847_.

The PRESIDENT.

SIR: Your instructions of the 23d instant have been received by this
Department, and in conformity thereto I present you herewith, for your
consideration, a scale of duties proposed to be collected as a military
contribution during the war in the ports of Mexico in possession of our
Army or Navy by conquest, with regulations for the ascertainment and
collection of such duties, together with the reasons which appear to me
to recommend their adoption.

It is clear that we must either adopt our own tariff or that of Mexico,
or establish a new system of duties. Our own tariff could not be
adopted, because the Mexican exports and imports are so different from
our own that different rates of duties are indispensable in order to
collect the largest revenue. Thus upon many articles produced in great
abundance here duties must be imposed at the lowest rate in order to
collect any revenue, whereas many of the same articles are not produced
in Mexico, or to a very inconsiderable extent, and would therefore bear
there a much higher duty for revenue. A great change is also rendered
necessary by the proposed exaction of duties on all imports to any
Mexican port in our possession from any other Mexican port occupied by
us in the same manner. This measure would largely increase the revenue
which we might collect. It is recommended, however, for reasons of
obvious safety, that this Mexican coastwise trade should be confined to
our own vessels, as well as the interior trade above any port of entry
in our possession, but that in all other respects the ports of Mexico
held by us should be freely opened at the rate of duties herein
recommended to the vessels and commerce of all the world. The _ad
valorem_ system of duties adopted by us, although by far the most just
and equitable, yet requires an appraisement to ascertain the actual
value of every article. This demands great mercantile skill, knowledge,
and experience, and therefore, for the want of skillful appraisers (a
class of officers wholly unknown in Mexico), could not at once be put
into successful operation there. If also, as proposed, these duties are
to be ascertained and collected as a military contribution through the
officers of our Army and Navy, those brave men would more easily perform
almost any other duty than that of estimating the value of every
description of goods, wares, and merchandise.

The system of specific duties already prevails in Mexico, and may be put
by us into immediate operation; and if, as conceded, specific duties
should be more burdensome upon the people of Mexico, the more onerous
the operation of these duties upon them the sooner it is likely that
they will force their military rulers to agree to a peace. It is certain
that a mild and forbearing system of warfare, collecting no duties in
their ports in our possession on the Gulf and levying no contributions,
whilst our armies purchase supplies from them at high prices, by
rendering the war a benefit to the people of Mexico rather than an
injury has not hastened the conclusion of a peace. It may be, however,
that specific duties, onerous as they are, and heavy contributions,
accompanied by a vigorous prosecution of the war, may more speedily
insure that peace which we have failed to obtain from magnanimous
forbearance, from brilliant victories, or from proffered negotiation.
The duties, however, whilst they may be specific, and therefore more
onerous than _ad valorem_ duties, should not be so high as to defeat
revenue.

It is impossible to adopt as a basis the tariff of Mexico, because the
duties are extravagantly high, defeating importation, commerce, and
revenue and producing innumerable frauds and smuggling. There are also
sixty articles the importation of which into Mexico is strictly
prohibited by their tariff, embracing most of the necessaries of life
and far the greater portion of our products and fabrics.

Among the sixty prohibited articles are sugar, rice, cotton, boots and
half-boots, coffee, nails of all kinds, leather of most kinds, flour,
cotton yarn and thread, soap of all kinds, common earthenware, lard,
molasses, timber of all kinds, saddles of all kinds, coarse woolen
cloth, cloths for cloaks, ready-made clothing of all kinds, salt,
tobacco of all kinds, cotton goods or textures, chiefly such as are made
by ourselves; pork, fresh or salted, smoked or corned; woolen or cotton
blankets or counterpanes, shoes and slippers, wheat and grain of all
kinds. Such is a list of but part of the articles whose importation is
prohibited by the Mexican tariff. These prohibitions should not be
permitted to continue, because they exclude most of our products and
fabrics and prevent the collection of revenue. We turn from the
prohibitions to the actual duties imposed by Mexico. The duties are
specific throughout, and almost universally by weight, irrespective of
value; are generally protective or exorbitant, and without any
discrimination for revenue. The duties proposed to be substituted are
moderate when compared with those imposed by Mexico, being generally
reduced to a standard more than one-half below the Mexican duties. The
duties are also based upon a discrimination throughout for revenue, and,
keeping in view the customs and habits of the people of Mexico, so
different from our own, are fixed in each case at that rate which it is
believed will produce in the Mexican ports the largest amount of
revenue.

In order to realize from this system the largest amount of revenue, it
would be necessary that our Army and Navy should seize every important
port or place upon the Gulf of Mexico or California, or on the Pacific,
and open the way through the interior for the free transit of exports
and imports, and especially that the interior passage through the
Mexican isthmus should be secured from ocean to ocean, for the benefit
of our commerce and that of all the world. This measure, whilst it would
greatly increase our revenue from these duties and facilitate
communication between our forces upon the eastern and western coasts of
Mexico, would probably lead at the conclusion of a peace to results of
incalculable importance to our own commerce and to that of all the
world.

In the meantime the Mexican Government monopoly in tobacco, from which a
considerable revenue is realized by Mexico, together with the culture
there which yields that revenue, should be abolished, so as to diminish
the resources of that Government and augment our own by collecting the
duty upon all the imported tobacco. The Mexican interior transit duties
should also be abolished, and also their internal Government duty on
coin and bullion. The prohibition of exports and the duties upon exports
should be annulled, and especially the heavy export duty on coin and
bullion, so as to cheapen and facilitate the purchase of imports and
permit the precious metals, untaxed, to flow out freely from Mexico into
general circulation. Quicksilver and machinery for working the mines of
precious metals in Mexico, for the same reasons, should also be admitted
duty free, which, with the measures above indicated, would largely
increase the production and circulation of the precious metals, improve
our own commerce and industry and that of all neutral powers.

In thus opening the ports of Mexico to the commerce of the world you
will present to all nations with whom we are at peace the best evidence
of your desire to maintain with them our friendly relations, to render
the war to them productive of as little injury as possible, and even to
advance their interests, so far as it safely can be done, by affording
to them in common with ourselves the advantages of a liberal commerce
with Mexico. To extend this commerce, you will have unsealed the ports
of Mexico, repealed their interior transit duties, which obstruct the
passage of merchandise to and from the coast; you will have annulled the
Government duty on coin and bullion and abolished the heavy export
duties on the precious metals, so as to permit them to flow out freely
for the benefit of mankind; you will have expunged the long list of
their prohibited articles and reduced more than one-half their duties on
imports, whilst the freest scope would be left for the mining of the
precious metals. These are great advantages which would be secured to
friendly nations, especially when compared with the exclusion of their
commerce by rigorous blockades. It is true, the duties collected from
these imports would be for the benefit of our own Government, but it is
equally true that the expenses of the war, which Mexico insists upon
prosecuting, are borne exclusively by ourselves, and not by foreign
nations. It can not be doubted but that all neutral nations will see in
the adoption of such a course by you a manifestation of your good will
toward them and a strong desire to advance those just and humane
principles which make it the duty of belligerents, as we have always
contended, to render the war in which they are engaged as little
injurious as practicable to neutral powers.

These duties would not be imposed upon any imports into our own country,
but only upon imports into Mexico, and the tax would fall upon the
people of Mexico in the enhancement to them of the prices of these
imports. Nearly all our own products are excluded by the Mexican tariff
even in time of peace; they are excluded also during the war so far as
we continue the system of blockading any of the ports of Mexico; and
they are also excluded even from the ports not blockaded in possession
of Mexico; whereas the new system would soon open to our commerce all
the ports of Mexico as they shall fall into our military possession.
Neither our own nor foreign merchants are required to send any goods to
Mexico, and if they do so voluntarily it will be because they can make a
profit upon the importation there, and therefore they will have no right
to complain of the duties levied in the ports of Mexico upon the
consumers of those goods--the people of Mexico. The whole money
collected would inure to the benefit of our own Government and people,
to sustain the war and to prevent to that extent new loans and increased
taxation. Indeed, in view of the fact that the Government is thrown upon
the ordinary revenues for peace, with no other additional resources but
loans to carry on the war, the income to be derived from the new system,
which it is believed will be large if these suggestions are adopted,
would be highly important to sustain the credit of the Government, to
prevent the embarrassment of the Treasury, and to save the country from
such ruinous sacrifices as occurred during the last war, including the
inevitable legacy to posterity of a large public debt and onerous
taxation. The new system would not only arrest the expensive transfer
and ruinous drain of specie to Mexico, but would cause it, in duties and
in return for our exports, to reflow into our country to an amount,
perhaps, soon exceeding the $9,000,000 which it had reached in 1835 even
under the restrictive laws of Mexico, thus relieving our own people from
a grievous tax and imposing it where it should fall, upon our enemies,
the people of Mexico, as a contribution levied upon them to conquer a
peace as well as to defray the expenses of the war; whereas by admitting
our exports freely, without duty, into the Mexican ports which we may
occupy from time to time, and affording those goods, including the
necessaries of life, at less than one-half the prices which they had
heretofore paid for them, the war might in time become a benefit instead
of a burden to the people of Mexico, and they would therefore be
unwilling to terminate the contest. It is hoped also that Mexico, after
a peace, will never renew her present prohibitory and protective system,
so nearly resembling that of ancient China or Japan, but that,
liberalized, enlightened, and regenerated by the contact and intercourse
with our people and those of other civilized nations, she will continue
the far more moderate system of duties resembling that prescribed by
these regulations.

In the meantime it is not just that Mexico, by her obstinate persistence
in this contest, should compel us to overthrow our own financial policy
and arrest this great nation in her high and prosperous career. To
reimpose high duties would be alike injurious to ourselves and to all
neutral powers, and, unless demanded by a stern necessity, ungenerous to
those enlightened nations which have adopted cotemporaneously with us a
more liberal commercial policy. The system you now propose of imposing
the burden as far as practicable upon our enemies, the people of Mexico,
and not upon ourselves or upon friendly nations, appears to be most just
in itself, and is further recommended as the only policy which is likely
to hasten the conclusion of a just and honorable peace.

A tonnage duty on all vessels, whether our own or of neutral powers, of
$1 per ton, which is greatly less than that imposed by Mexico, is
recommended in lieu of all port duties and charges. Appended to these
regulations are tables of the rates at which foreign money is fixed by
law, as also a separate table of currencies by usage, in which a
certificate of value is required to be attached to the invoice. There is
also annexed a table of foreign weights and measures reduced to the
standard of the United States, together with blank forms to facilitate
the transaction of business.

It is recommended that the duties herein suggested shall be collected
exclusively in gold or silver coin. These duties can only be collected
as a military contribution through the agency of our brave officers of
the Army and Navy, who will no doubt cheerfully and faithfully collect
and keep these moneys and account for them, not to the Treasury, but to
the Secretaries of War or of the Navy, respectively.

It is recommended that these duties be performed by the commandant of
the port, whether naval or military, aided by the paymaster or purser or
other officer, the accounts of each being countersigned by the other, as
a check upon mistakes or error, in the same manner as is now the case
with the collector and naval officer of our several principal ports,
which has introduced so much order and accuracy in our system. It is
suggested that as in some cases the attention of the commandant of the
port might be necessary for the performance of other duties that he be
permitted to substitute some other officer, making known the fact to the
Secretaries of War or of the Navy, and subject to their direction.

I have the honor to be, with great respect, your obedient servant,

R.J. WALKER,
_Secretary of the Treasury_.

WASHINGTON, _March 31, 1847_.

SIR:[15] Being charged by the Constitution with the prosecution of the
existing war with Mexico, I deem it proper, in the exercise of an
undoubted belligerent right, to order that military contributions be
levied upon the enemy in such of their ports or other places as now are
or may be hereafter in the possession of our land and naval forces by
conquest, and that the same be collected and applied toward defraying
the expenses of the war. As one means of effecting this object, the
blockade at such conquered ports will be raised, and they will be opened
to our own commerce and that of all neutral nations in articles not
contraband of war during our military occupation of them, and duties on
tonnage and imports will be levied and collected through the agency of
our military and naval officers in command at such ports, acting under
orders from the War and Navy Departments.

I transmit to you herewith, for your information and guidance, a copy of
a communication addressed by me to the Secretary of the Treasury on the
23d instant, instructing him to examine the existing Mexican tariff and
to report to me, for my consideration, a scale of duties which he would
recommend to be levied on tonnage and imports in such conquered ports,
together with such regulations as he would propose as necessary and
proper in order to carry this policy into effect; and also a copy of the
report of the Secretary of the Treasury made on the 30th instant in
answer to my communication to him. The scale of duties and the
regulations for their collection as military contributions exacted from
the enemy, recommended by the Secretary of the Treasury in this report,
have been approved by me.

You will, after consulting with the Secretary of the Navy, so as to
secure concert of action between the War and Navy Departments, issue
the necessary orders to carry the measure proposed into immediate effect.

JAMES K. POLK.

[Footnote 15: Addressed to the Secretaries of War and of the Navy.]

TREASURY DEPARTMENT, _June 10, 1847_.

The PRESIDENT.

SIR: In compliance with your directions, I have examined the questions
presented by the Secretary of War in regard to the military
contributions proposed to be levied in Mexico under the tariff and
regulations sanctioned by you on the 31st of March last, and
respectfully recommend the following modifications, namely:

First. On all manufactures of cotton, or of cotton mixed with any other
material except wool, worsted, and silk, in the piece or in any other
form, a duty, as a military contribution, of 30 per cent _ad valorem_.

Second. When goods on which the duties are levied by weight are imported
into said ports in the package, the duties shall be collected on the net
weight only; and in all cases an allowance shall be made for all
deficiencies, leakage, breakage, or damage proved to have actually
occurred during the voyage of importation, and made known before the
goods are warehoused.

Third. The period named in the eighth of said regulations during which
the goods may remain in warehouse before the payment of duties is
extended from thirty to ninety days, and within said period of ninety
days any portion of the said goods on which the duties, as a military
contribution, have been paid may be taken, after such payment, from the
warehouse and entered free of any further duty at any other port or
ports of Mexico in our military possession, the facts of the case, with
a particular description of said goods and a statement that the duties
thereon have been paid, being certified by the proper officer of the
port or ports of reshipment.

Fourth. It is intended to provide by the treaty of peace that all goods
imported during the war into any of the Mexican ports in our military
possession shall be exempt from any new import duty or confiscation by
Mexico in the same manner as if said goods had been imported and paid
the import duties prescribed by the Government of Mexico.

Most respectfully, your obedient servant,

R.J. WALKER,
_Secretary of the Treasury_.

JUNE 11, 1847.

The modifications as above recommended by the Secretary of the Treasury
are approved by me, and the Secretary of War and the Secretary of the
Navy will give the proper orders to carry them into effect.

JAMES K. POLK.

TREASURY DEPARTMENT, _November 5, 1847_.

The PRESIDENT.

SIR: The military contributions in the form of duties upon imports into
Mexican ports have been levied by the Departments of War and of the Navy
during the last six months under your order of the 31st of March last,
and in view of the experience of the practical operation of the system
I respectfully recommend the following modifications in some of its
details, which will largely augment the revenue:

That the duty on silk, flax, hemp or grass, cotton, wool, worsted or any
manufactures of the same, or of either or mixtures thereof; coffee,
teas, sugar, molasses, tobacco and all manufactures thereof, including
cigars and cigarritos; glass, china, and stoneware, iron and steel and
all manufactures of either not prohibited, be 30 per cent _ad valorem_;
on copper and all manufactures thereof, tallow, tallow candles, soap,
fish, beef, pork, hams, bacon, tongues, butter, lard, cheese, rice,
Indian corn and meal, potatoes, wheat, rye, oats, and all other grain,
rye meal and oat meal, flour, whale and sperm oil, clocks, boots and
shoes, pumps, bootees and slippers, bonnets, hats, caps, beer, ale,
porter, cider, timber, boards, planks, scantling, shingles, laths,
pitch, tar, rosin, turpentine, spirits of turpentine, vinegar, apples,
ship bread, hides, leather and manufactures thereof, and paper of all
kinds, 20 per cent _ad valorem;_ and these reduced rates shall also
apply to all goods on which the duties are not paid remaining not
exceeding ninety days in deposit in the Mexican ports, introduced under
previous regulations enforcing military contributions.

Yours, most respectfully,

R.J. WALKER,
_Secretary of the Treasury_.

NOVEMBER 6, 1847.

The modifications as above recommended by the Secretary of the Treasury
are approved by me, and the Secretary of War and the Secretary of the
Navy will give the proper orders to carry them into effect.

JAMES K. POLK.

TREASURY DEPARTMENT, _November 16, 1847_.

The PRESIDENT.

SIR: With a view to augment the military contributions now collected by
the Departments of War and of the Navy under your order of the 31st of
March last, I recommend that the export duty exacted before the war by
the Government of Mexico be now collected at the port of exportation by
the same officers of the Army or Navy of the United States in the
Mexican ports in our possession who are authorized to collect the import
duties, abolishing, however, the prohibition of export established in
certain cases by the Mexican Government, as also all interior transit
duties; dispensing also with the necessity of any certificate of having
paid any duty to the Mexican Government.

The export duty would then be as follows:

_____________________________________________________________
Per cent.
Gold, coined or wrought 3
Silver, coined 6
Silver, wrought, with or without certificate
of having paid any duty to the Mexican Government 7
Silver, refined or pure, wrought in ingots,
with or without certificate of having paid
the Mexican Government duty 7
Gold, unwrought or in a state of ore or dust 3
Silver, unwrought or in a state of ore 7
_____________________________________________________________

Where gold or silver in any form is taken from any interior Mexican city
in our military possession, the export duty must be paid there to the
officer of the United States commanding, and his certificate of such
prepayment must be produced at the Mexican port of exportation;
otherwise a double duty will be collected upon the arrival of such gold
or silver at the Mexican port of exportation. Whenever it is
practicable, all internal taxes of every description, whether upon
persons or property, exacted by the Government of Mexico, or by any
department, town, or city thereof, should be collected by our military
officers in possession and appropriated as a military contribution
toward defraying the expenses of the war, excluding however, all duties
on the transit of goods from one department to another, which duties,
being prejudicial to revenue and restrictive of the exchange of imports
for exports, were abolished by your order of the 31st of March last.

Yours, most respectfully,

R.J. WALKER
_Secretary of the Treasury_.

NOVEMBER 16, 1847.

The modifications and military contributions as above recommended by the
Secretary of the Treasury are approved by me, and the Secretary of War
and the Secretary of the Navy will give the proper orders to carry them
into effect.

JAMES K. POLK.

THIRD ANNUAL MESSAGE.

WASHINGTON, _December 7, 1847_.

_Fellow-Citizens of the Senate and of the House of Representatives_:

The annual meeting of Congress is always an interesting event. The
representatives of the States and of the people come fresh from their
constituents to take counsel together for the common good.

After an existence of near three-fourths of a century as a free and
independent Republic, the problem no longer remains to be solved whether
man is capable of self-government. The success of our admirable system
is a conclusive refutation of the theories of those in other countries
who maintain that a "favored few" are born to rule and that the mass of
mankind must be governed by force. Subject to no arbitrary or hereditary
authority, the people are the only sovereigns recognized by our
Constitution.

Numerous emigrants, of every lineage and language, attracted by the
civil and religious freedom we enjoy and by our happy condition,
annually crowd to our shores, and transfer their heart, not less than
their allegiance, to the country whose dominion belongs alone to the
people.

No country has been so much favored, or should acknowledge with deeper
reverence the manifestations of the divine protection. An all-wise
Creator directed and guarded us in our infant struggle for freedom and
has constantly watched over our surprising progress until we have become
one of the great nations of the earth.

It is in a country thus favored, and under a Government in which the
executive and legislative branches hold their authority for limited
periods alike from the people, and where all are responsible to their
respective constituencies, that it is again my duty to communicate with
Congress upon the state of the Union and the present condition of public
affairs.

During the past year the most gratifying proofs are presented that our
country has been blessed with a widespread and universal prosperity.
There has been no period since the Government was founded when all the
industrial pursuits of our people have been more successful or when
labor in all branches of business has received a fairer or better
reward. From our abundance we have been enabled to perform the pleasing
duty of furnishing food for the starving millions of less favored
countries.

In the enjoyment of the bounties of Providence at home such as have
rarely fallen to the lot of any people, it is cause of congratulation
that our intercourse with all the powers of the earth except Mexico
continues to be of an amicable character.

It has ever been our cherished policy to cultivate peace and good will
with all nations, and this policy has been steadily pursued by me.

No change has taken place in our relations with Mexico since the
adjournment of the last Congress. The war in which the United States
were forced to engage with the Government of that country still
continues.

I deem it unnecessary, after the full exposition of them contained in my
message of the 11th of May, 1846, and in my annual message at the
commencement of the session of Congress in December last, to reiterate
the serious causes of complaint which we had against Mexico before she
commenced hostilities.

It is sufficient on the present occasion to say that the wanton
violation of the rights of person and property of our citizens committed
by Mexico, her repeated acts of bad faith through a long series of
years, and her disregard of solemn treaties stipulating for indemnity to
our injured citizens not only constituted ample cause of war on our
part, but were of such an aggravated character as would have justified
us before the whole world in resorting to this extreme remedy. With an
anxious desire to avoid a rupture between the two countries, we forbore
for years to assert our clear rights by force, and continued to seek
redress for the wrongs we had suffered by amicable negotiation in the
hope that Mexico might yield to pacific counsels and the demands of
justice. In this hope we were disappointed. Our minister of peace sent
to Mexico was insultingly rejected. The Mexican Government refused even
to hear the terms of adjustment which he was authorized to propose, and
finally, under wholly unjustifiable pretexts, involved the two countries
in war by invading the territory of the State of Texas, striking the
first blow, and shedding the blood of our citizens on our own soil.

Though the United States were the aggrieved nation, Mexico commenced the
war, and we were compelled in self-defense to repel the invader and to
vindicate the national honor and interests by prosecuting it with vigor
until we could obtain a just and honorable peace.

On learning that hostilities had been commenced by Mexico I promptly
communicated that fact, accompanied with a succinct statement of our
other causes of complaint against Mexico, to Congress, and that body, by
the act of the 13th of May, 1846, declared that "by the act of the
Republic of Mexico a state of war exists between that Government and the
United States." This act declaring "the war to exist by the act of the
Republic of Mexico," and making provision for its prosecution "to a
speedy and successful termination," was passed with great unanimity by
Congress, there being but two negative votes in the Senate and but
fourteen in the House of Representatives.

The existence of the war having thus been declared by Congress, it
became my duty under the Constitution and the laws to conduct and
prosecute it. This duty has been performed, and though at every stage of
its progress I have manifested a willingness to terminate it by a just
peace, Mexico has refused to accede to any terms which could be accepted
by the United States consistently with the national honor and interest.

The rapid and brilliant successes of our arms and the vast extent of the
enemy's territory which had been overrun and conquered before the close
of the last session of Congress were fully known to that body. Since
that time the war has been prosecuted with increased energy, and, I am
gratified to state, with a success which commands universal admiration.
History presents no parallel of so many glorious victories achieved by
any nation within so short a period. Our Army, regulars and volunteers,
have covered themselves with imperishable honors. Whenever and wherever
our forces have encountered the enemy, though he was in vastly superior
numbers and often intrenched in fortified positions of his own selection
and of great strength, he has been defeated. Too much praise can not be
bestowed upon our officers and men, regulars and volunteers, for their
gallantry, discipline, indomitable courage, and perseverance, all
seeking the post of danger and vying with each other in deeds of noble
daring.

While every patriot's heart must exult and a just national pride animate
every bosom in beholding the high proofs of courage, consummate military
skill, steady discipline, and humanity to the vanquished enemy exhibited
by our gallant Army, the nation is called to mourn over the loss of many
brave officers and soldiers, who have fallen in defense of their
country's honor and interests. The brave dead met their melancholy fate
in a foreign land, nobly discharging their duty, and with their
country's flag waving triumphantly in the face of the foe. Their
patriotic deeds are justly appreciated, and will long be remembered by
their grateful countrymen. The parental care of the Government they
loved and served should be extended to their surviving families.

Shortly after the adjournment of the last session of Congress the
gratifying intelligence was received of the signal victory of Buena
Vista, and of the fall of the city of Vera Cruz, and with it the strong
castle of San Juan de Ulloa, by which it was defended. Believing that
after these and other successes so honorable to our arms and so
disastrous to Mexico the period was propitious to afford her another
opportunity, if she thought proper to embrace it, to enter into
negotiations for peace, a commissioner was appointed to proceed to the
headquarters of our Army with full powers to enter upon negotiations and
to conclude a just and honorable treaty of peace. He was not directed to
make any new overtures of peace, but was the bearer of a dispatch from
the Secretary of State of the United States to the minister of foreign
affairs of Mexico, in reply to one received from the latter of the 22d
of February, 1847, in which the Mexican Government was informed of his
appointment and of his presence at the headquarters of our Army, and
that he was invested with full powers to conclude a definitive treaty of
peace whenever the Mexican Government might signify a desire to do so.
While I was unwilling to subject the United States to another indignant
refusal, I was yet resolved that the evils of the war should not be
protracted a day longer than might be rendered absolutely necessary by
the Mexican Government.

Care was taken to give no instructions to the commissioner which could
in any way interfere with our military operations or relax our energies
in the prosecution of the war. He possessed no authority in any manner
to control these operations. He was authorized to exhibit his
instructions to the general in command of the Army, and in the event of
a treaty being concluded and ratified on the part of Mexico he was
directed to give him notice of that fact. On the happening of such
contingency, and on receiving notice thereof, the general in command was
instructed by the Secretary of War to suspend further active military
operations until further orders. These instructions were given with a
view to intermit hostilities until the treaty thus ratified by Mexico
could be transmitted to Washington and receive the action of the
Government of the United States. The commissioner was also directed on
reaching the Army to deliver to the general in command the dispatch
which he bore from the Secretary of State to the minister of foreign
affairs of Mexico, and on receiving it the general was instructed by the
Secretary of War to cause it to be transmitted to the commander of the
Mexican forces, with a request that it might be communicated to his
Government.

The commissioner did not reach the headquarters of the Army until after
another brilliant victory had crowned our arms at Cerro Gordo.

The dispatch which he bore from the Secretary of War to the general in
command of the Army was received by that officer, then at Jalapa, on the
7th of May, 1847, together with the dispatch from the Secretary of State
to the minister of foreign affairs of Mexico, having been transmitted to
him from Vera Cruz. The commissioner arrived at the headquarters of the
Army a few days afterwards. His presence with the Army and his
diplomatic character were made known to the Mexican Government from
Puebla on the 12th of June, 1847, by the transmission of the dispatch
from the Secretary of State to the minister of foreign affairs of
Mexico.

Many weeks elapsed after its receipt, and no overtures were made nor was
any desire expressed by the Mexican Government to enter into
negotiations for peace.

Our Army pursued its march upon the capital, and as it approached it was
met by formidable resistance. Our forces first encountered the enemy,
and achieved signal victories in the severely contested battles of
Contreras and Churubusco. It was not until after these actions had
resulted in decisive victories and the capital of the enemy was within
our power that the Mexican Government manifested any disposition to
enter into negotiations for peace, and even then, as events have proved,
there is too much reason to believe they were insincere, and that in
agreeing to go through the forms of negotiation the object was to gain
time to strengthen the defenses of their capital and to prepare for
fresh resistance.

The general in command of the Army deemed it expedient to suspend
hostilities temporarily by entering into an armistice with a view to the
opening of negotiations. Commissioners were appointed on the part of
Mexico to meet the commissioner on the part of the United States. The
result of the conferences which took place between these functionaries
of the two Governments was a failure to conclude a treaty of peace.

The commissioner of the United States took with him the project of a
treaty already prepared, by the terms of which the indemnity required by
the United States was a cession of territory.

It is well known that the only indemnity which it is in the power of
Mexico to make in satisfaction of the just and long-deferred claims of
our citizens against her and the only means by which she can reimburse
the United States for the expenses of the war is a cession to the United
States of a portion of her territory. Mexico has no money to pay, and no
other means of making the required indemnity. If we refuse this, we can
obtain nothing else. To reject indemnity by refusing to accept a cession
of territory would be to abandon all our just demands, and to wage the
war, bearing all its expenses, without a purpose or definite object.

A state of war abrogates treaties previously existing between the
belligerents and a treaty of peace puts an end to all claims for
indemnity for tortious acts committed under the authority of one
government against the citizens or subjects of another unless they are
provided for in its stipulations. A treaty of peace which would
terminate the existing war without providing for indemnity would enable
Mexico, the acknowledged debtor and herself the aggressor in the war, to
relieve herself from her just liabilities. By such a treaty our citizens
who hold just demands against her would have no remedy either against
Mexico or their own Government. Our duty to these citizens must forever
prevent such a peace, and no treaty which does not provide ample means
of discharging these demands can receive my sanction.

A treaty of peace should settle all existing differences between the two
countries. If an adequate cession of territory should be made by such a
treaty, the United States should release Mexico from all her liabilities
and assume their payment to our own citizens. If instead of this the
United States were to consent to a treaty by which Mexico should again
engage to pay the heavy amount of indebtedness which a just indemnity to
our Government and our citizens would impose on her, it is notorious
that she does not possess the means to meet such an undertaking. From
such a treaty no result could be anticipated but the same irritating
disappointments which have heretofore attended the violations of similar
treaty stipulations on the part of Mexico. Such a treaty would be but a
temporary cessation of hostilities, without the restoration of the
friendship and good understanding which should characterize the future
intercourse between the two countries.

That Congress contemplated the acquisition of territorial indemnity when
that body made provision for the prosecution of the war is obvious.
Congress could not have meant when, in May, 1846, they appropriated
$10,000,000 and authorized the President to employ the militia and naval
and military forces of the United States and to accept the services of
50,000 volunteers to enable him to prosecute the war, and when, at their
last session, and after our Army had invaded Mexico, they made
additional appropriations and authorized the raising of additional
troops for the same purpose, that no indemnity was to be obtained from
Mexico at the conclusion of the war; and yet it was certain that if no
Mexican territory was acquired no indemnity could be obtained. It is
further manifest that Congress contemplated territorial indemnity from
the fact that at their last session an act was passed, upon the
Executive recommendation, appropriating $3,000,000 with that express
object. This appropriation was made "to enable the President to conclude
a treaty of peace, limits, and boundaries with the Republic of Mexico,
to be used by him in the event that said treaty, when signed by the
authorized agents of the two Governments and duly ratified by Mexico,
shall call for the expenditure of the same or any part thereof." The
object of asking this appropriation was distinctly stated in the several
messages on the subject which I communicated to Congress. Similar
appropriations made in 1803 and 1806, which were referred to, were
intended to be applied in part consideration for the cession of
Louisiana and the Floridas. In like manner it was anticipated that in
settling the terms of a treaty of "limits and boundaries" with Mexico a
cession of territory estimated to be of greater value than the amount of
our demands against her might be obtained, and that the prompt payment
of this sum in part consideration for the territory ceded, on the
conclusion of a treaty and its ratification on her part, might be an
inducement with her to make such a cession of territory as would be
satisfactory to the United States; and although the failure to conclude
such a treaty has rendered it unnecessary to use any part of the
$3,000,000 appropriated by that act, and the entire sum remains in the
Treasury, it is still applicable to that object should the contingency
occur making such application proper.

The doctrine of no territory is the doctrine of no indemnity, and if
sanctioned would be a public acknowledgment that our country was wrong
and that the war declared by Congress with extraordinary unanimity was
unjust and should be abandoned--an admission unfounded in fact and
degrading to the national character.

The terms of the treaty proposed by the United States were not only just
to Mexico, but, considering the character and amount of our claims, the
unjustifiable and unprovoked commencement of hostilities by her, the
expenses of the war to which we have been subjected, and the success
which had attended our arms, were deemed to be of a most liberal
character.

The commissioner of the United States was authorized to agree to the
establishment of the Rio Grande as the boundary from its entrance into
the Gulf to its intersection with the southern boundary of New Mexico,
in north latitude about 32 deg., and to obtain a cession to the United
States of the Provinces of New Mexico and the Californias and the
privilege of the right of way across the Isthmus of Tehuantepec. The
boundary of the Rio Grande and the cession to the United States of New
Mexico and Upper California constituted an ultimatum which our
commissioner was under no circumstances to yield.

That it might be manifest, not only to Mexico, but to all other nations,
that the United States were not disposed to take advantage of a feeble
power by insisting upon wresting from her all the other Provinces,
including many of her principal towns and cities, which we had conquered
and held in our military occupation, but were willing to conclude a
treaty in a spirit of liberality, our commissioner was authorized to
stipulate for the restoration to Mexico of all our other conquests.

As the territory to be acquired by the boundary proposed might be
estimated to be of greater value than a fair equivalent for our just
demands, our commissioner was authorized to stipulate for the payment of
such additional pecuniary consideration as was deemed reasonable.

The terms of a treaty proposed by the Mexican commissioners were wholly
inadmissible. They negotiated as if Mexico were the victorious, and not
the vanquished, party. They must have known that their ultimatum could
never be accepted. It required the United States to dismember Texas by
surrendering to Mexico that part of the territory of that State lying
between the Nueces and the Rio Grande, included within her limits by her
laws when she was an independent republic, and when she was annexed to
the United States and admitted by Congress as one of the States of our
Union. It contained no provision for the payment by Mexico of the just
claims of our citizens. It required indemnity to Mexican citizens for
injuries they may have sustained by our troops in the prosecution of the
war. It demanded the right for Mexico to levy and collect the Mexican
tariff of duties on goods imported into her ports while in our military
occupation during the war, and the owners of which had paid to officers
of the United States the military contributions which had been levied
upon them; and it offered to cede to the United States, for a pecuniary
consideration, that part of Upper California lying north of latitude
37 deg.. Such were the unreasonable terms proposed by the Mexican
commissioners.

The cession to the United States by Mexico of the Provinces of New
Mexico and the Californias, as proposed by the commissioner of the
United States, it was believed would be more in accordance with the
convenience and interests of both nations than any other cession of
territory which it was probable Mexico could be induced to make.

It is manifest to all who have observed the actual condition of the
Mexican Government for some years past and at present that if these
Provinces should be retained by her she could not long continue to hold
and govern them. Mexico is too feeble a power to govern these Provinces,
lying as they do at a distance of more than 1,000 miles from her
capital, and if attempted to be retained by her they would constitute
but for a short time even nominally a part of her dominions. This would
be especially the case with Upper California.

The sagacity of powerful European nations has long since directed their
attention to the commercial importance of that Province, and there can
be little doubt that the moment the United States shall relinquish their
present occupation of it and their claim to it as indemnity an effort
would be made by some foreign power to possess it, either by conquest or
by purchase. If no foreign government should acquire it in either of
these modes, an independent revolutionary government would probably be
established by the inhabitants and such foreigners as may remain in or
remove to the country as soon as it shall be known that the United
States have abandoned it. Such a government would be too feeble long to
maintain its separate independent existence, and would finally become
annexed to or be a dependent colony of some more powerful state.

Should any foreign government attempt to possess it as a colony, or
otherwise to incorporate it with itself, the principle avowed by
President Monroe in 1824, and reaffirmed in my first annual message,
that no foreign power shall with our consent be permitted to plant or
establish any new colony or dominion on any part of the North American
continent must be maintained. In maintaining this principle and in
resisting its invasion by any foreign power we might be involved in
other wars more expensive and more difficult than that in which we are
now engaged.

The Provinces of New Mexico and the Californias are contiguous to the
territories of the United States, and if brought under the government of
our laws their resources--mineral, agricultural, manufacturing, and
commercial--would soon be developed.

Upper California is bounded on the north by our Oregon possessions, and
if held by the United States would soon be settled by a hardy,
enterprising, and intelligent portion of our population. The Bay of San
Francisco and other harbors along the Californian coast would afford
shelter for our Navy, for our numerous whale ships, and other merchant
vessels employed in the Pacific Ocean, and would in a short period
become the marts of an extensive and profitable commerce with China and
other countries of the East.

These advantages, in which the whole commercial world would participate,
would at once be secured to the United States by the cession of this
territory; while it is certain that as long as it remains a part of the
Mexican dominions they can be enjoyed neither by Mexico herself nor by
any other nation.

New Mexico is a frontier Province, and has never been of any
considerable value to Mexico. From its locality it is naturally
connected with our Western settlements. The territorial limits of the
State of Texas, too, as defined by her laws before her admission into
our Union, embrace all that portion of New Mexico lying east of the Rio
Grande, while Mexico still claims to hold this territory as a part of
her dominions. The adjustment of this question of boundary is important.

There is another consideration which induced the belief that the Mexican
Government might even desire to place this Province under the protection
of the Government of the United States. Numerous bands of fierce and
warlike savages wander over it and upon its borders. Mexico has been and
must continue to be too feeble to restrain them from committing
depredations, robberies, and murders, not only upon the inhabitants of
New Mexico itself, but upon those of the other northern States of
Mexico. It would be a blessing to all these northern States to have
their citizens protected against them by the power of the United States.
At this moment many Mexicans, principally females and children, are in
captivity among them. If New Mexico were held and governed by the United
States, we could effectually prevent these tribes from committing such
outrages, and compel them to release these captives and restore them to
their families and friends.

In proposing to acquire New Mexico and the Californias, it was known
that but an inconsiderable portion of the Mexican people would be
transferred with them, the country embraced within these Provinces being
chiefly an uninhabited region.

These were the leading considerations which induced me to authorize the
terms of peace which were proposed to Mexico. They were rejected, and,
negotiations being at an end, hostilities were renewed. An assault was
made by our gallant Army upon the strongly fortified places near the
gates of the City of Mexico and upon the city itself, and after several
days of severe conflict the Mexican forces, vastly superior in number to
our own, were driven from the city, and it was occupied by our troops.

Immediately after information was received of the unfavorable result of
the negotiations, believing that his continued presence with the Army
could be productive of no good, I determined to recall our commissioner.
A dispatch to this effect was transmitted to him on the 6th of October
last. The Mexican Government will be informed of his recall, and that in
the existing state of things I shall not deem it proper to make any
further overtures of peace, but shall be at all times ready to receive
and consider any proposals which may be made by Mexico.

Since the liberal proposition of the United States was authorized to be
made, in April last, large expenditures have been incurred and the
precious blood of many of our patriotic fellow-citizens has been shed in
the prosecution of the war. This consideration and the obstinate
perseverance of Mexico in protracting the war must influence the terms
of peace which it may be deemed proper hereafter to accept.

Our arms having been everywhere victorious, having subjected to our
military occupation a large portion of the enemy's country, including
his capital, and negotiations for peace having failed, the important
questions arise, in what manner the war ought to be prosecuted and what
should be our future policy. I can not doubt that we should secure and
render available the conquests which we have already made, and that with
this view we should hold and occupy by our naval and military forces all
the ports, towns, cities, and Provinces now in our occupation or which
may hereafter fall into our possession; that we should press forward our
military operations and levy such military contributions on the enemy as
may, as far as practicable, defray the future expenses of the war.

Had the Government of Mexico acceded to the equitable and liberal terms
proposed, that mode of adjustment would have been preferred. Mexico
having declined to do this and failed to offer any other terms which
could be accepted by the United States, the national honor, no less than
the public interests, requires that the war should be prosecuted with
increased energy and power until a just and satisfactory peace can be
obtained. In the meantime, as Mexico refuses all indemnity, we should
adopt measures to indemnify ourselves by appropriating permanently a
portion of her territory. Early after the commencement of the war New
Mexico and the Californias were taken possession of by our forces. Our
military and naval commanders were ordered to conquer and hold them,
subject to be disposed of by a treaty of peace.

These Provinces are now in our undisputed occupation, and have been so
for many months, all resistance on the part of Mexico having ceased
within their limits. I am satisfied that they should never be
surrendered to Mexico. Should Congress concur with me in this opinion,
and that they should be retained by the United States as indemnity, I
can perceive no good reason why the civil jurisdiction and laws of the
United States should not at once be extended over them. To wait for a
treaty of peace such as we are willing to make, by which our relations
toward them would not be changed, can not be good policy; whilst our own
interest and that of the people inhabiting them require that a stable,
responsible, and free government under our authority should as soon as
possible be established over them. Should Congress, therefore, determine
to hold these Provinces permanently, and that they shall hereafter be
considered as constituent parts of our country, the early establishment
of Territorial governments over them will be important for the more
perfect protection of persons and property; and I recommend that such
Territorial governments be established. It will promote peace and
tranquillity among the inhabitants, by allaying all apprehension that
they may still entertain of being again subjected to the jurisdiction of
Mexico. I invite the early and favorable consideration of Congress to
this important subject.

Besides New Mexico and the Californias, there are other Mexican
Provinces which have been reduced to our possession by conquest. These
other Mexican Provinces are now governed by our military and naval
commanders under the general authority which is conferred upon a
conqueror by the laws of war. They should continue to be held, as a
means of coercing Mexico to accede to just terms of peace. Civil as well
as military officers are required to conduct such a government. Adequate
compensation, to be drawn from contributions levied on the enemy, should
be fixed by law for such officers as may be thus employed. What further
provision may become necessary and what final disposition it may be
proper to make of them must depend on the future progress of the war and
the course which Mexico may think proper hereafter to pursue.

With the views I entertain I can not favor the policy which has been
suggested, either to withdraw our Army altogether or to retire to a
designated line and simply hold and defend it. To withdraw our Army
altogether from the conquests they have made by deeds of unparalleled
bravery, and at the expense of so much blood and treasure, in a just war
on our part, and one which, by the act of the enemy, we could not
honorably have avoided, would be to degrade the nation in its own
estimation and in that of the world. To retire to a line and simply hold
and defend it would not terminate the war. On the contrary, it would
encourage Mexico to persevere and tend to protract it indefinitely. It
is not to be expected that Mexico, after refusing to establish such a
line as a permanent boundary when our victorious Army are in possession
of her capital and in the heart of her country, would permit us to hold
it without resistance. That she would continue the war, and in the most
harassing and annoying forms, there can be no doubt. A border warfare of
the most savage character, extending over a long line, would be
unceasingly waged. It would require a large army to be kept constantly
in the field, stationed at posts and garrisons along such a line, to
protect and defend it. The enemy, relieved from the pressure of our arms
on his coasts and in the populous parts of the interior, would direct
his attention to this line, and, selecting an isolated post for attack,
would concentrate his forces upon it. This would be a condition of
affairs which the Mexicans, pursuing their favorite system of guerrilla
warfare, would probably prefer to any other. Were we to assume a
defensive attitude on such a line, all the advantages of such a state of
war would be on the side of the enemy. We could levy no contributions
upon him, or in any other way make him feel the pressure of the war, but
must remain inactive and await his approach, being in constant
uncertainty at what point on the line or at what time he might make an
assault. He may assemble and organize an overwhelming force in the
interior on his own side of the line, and, concealing his purpose, make
a sudden assault upon some one of our posts so distant from any other as
to prevent the possibility of timely succor or reenforcements, and in
this way our gallant Army would be exposed to the danger of being cut
off in detail; or if by their unequaled bravery and prowess everywhere
exhibited during this war they should repulse the enemy, their numbers
stationed at any one post may be too small to pursue him. If the enemy
be repulsed in one attack, he would have nothing to do but to retreat to
his own side of the line, and, being in no fear of a pursuing army, may
reenforce himself at leisure for another attack on the same or some
other post. He may, too, cross the line between our posts, make rapid
incursions into the country which we hold, murder the inhabitants,
commit depredations on them, and then retreat to the interior before a
sufficient force can be concentrated to pursue him. Such would probably
be the harassing character of a mere defensive war on our part. If our
forces when attacked, or threatened with attack, be permitted to cross
the line, drive back the enemy, and conquer him, this would be again to
invade the enemy's country after having lost all the advantages of the
conquests we have already made by having voluntarily abandoned them.

To hold such a line successfully and in security it is far from being
certain that it would not require as large an army as would be necessary
to hold all the conquests we have already made and to continue the
prosecution of the war in the heart of the enemy's country. It is also
far from being certain that the expenses of the war would be diminished
by such a policy.

I am persuaded that the best means of vindicating the national honor and
interest and of bringing the war to an honorable close will be to
prosecute it with increased energy and power in the vital parts of the
enemy's country.

In my annual message to Congress of December last I declared that--

The war has not been waged with a view to conquest, but, having been
commenced by Mexico, it has been carried into the enemy's country and
will be vigorously prosecuted there with a view to obtain an honorable
peace, and thereby secure ample indemnity for the expenses of the war,
as well as to our much-injured citizens, who hold large pecuniary
demands against Mexico.

Such, in my judgment, continues to be our true policy; indeed, the only
policy which will probably secure a permanent peace.

It has never been contemplated by me, as an object of the war, to make a
permanent conquest of the Republic of Mexico or to annihilate her
separate existence as an independent nation. On the contrary, it has
ever been my desire that she should maintain her nationality, and under
a good government adapted to her condition be a free, independent, and
prosperous Republic. The United States were the first among the nations
to recognize her independence, and have always desired to be on terms of
amity and good neighborhood with her. This she would not suffer. By her
own conduct we have been compelled to engage in the present war. In its
prosecution we seek not her overthrow as a nation, but in vindicating
our national honor we seek to obtain redress for the wrongs she has done
us and indemnity for our just demands against her. We demand an
honorable peace, and that peace must bring with it indemnity for the
past and security for the future. Hitherto Mexico has refused all
accommodation by which such a peace could be obtained.

Whilst our armies have advanced from victory to victory from the
commencement of the war, it has always been with the olive branch of
peace in their hands, and it has been in the power of Mexico at every
step to arrest hostilities by accepting it.

One great obstacle to the attainment of peace has undoubtedly arisen
from the fact that Mexico has been so long held in subjection by one
faction or military usurper after another, and such has been the
condition of insecurity in which their successive governments have been
placed that each has been deterred from making peace lest for this very
cause a rival faction might expel it from power. Such was the fate of
President Herrera's administration in 1845 for being disposed even to
listen to the overtures of the United States to prevent the war, as is
fully confirmed by an official correspondence which took place in the
month of August last between him and his Government, a copy of which is
herewith communicated. "For this cause alone the revolution which
displaced him from power was set on foot" by General Paredes. Such may
be the condition of insecurity of the present Government.

There can be no doubt that the peaceable and well-disposed inhabitants
of Mexico are convinced that it is the true interest of their country to
conclude an honorable peace with the United States, but the apprehension
of becoming the victims of some military faction or usurper may have
prevented them from manifesting their feelings by any public act. The
removal of any such apprehension would probably cause them to speak
their sentiments freely and to adopt the measures necessary for the
restoration of peace. With a people distracted and divided by contending
factions and a Government subject to constant changes by successive
revolutions, the continued successes of our arms may fail to secure a
satisfactory peace. In such event it may become proper for our
commanding generals in the field to give encouragement and assurances of
protection to the friends of peace in Mexico in the establishment and
maintenance of a free republican government of their own choice, able
and willing to conclude a peace which would be just to them and secure
to us the indemnity we demand. This may become the only mode of
obtaining such a peace. Should such be the result, the war which Mexico
has forced upon us would thus be converted into an enduring blessing to
herself. After finding her torn and distracted by factions, and ruled by
military usurpers, we should then leave her with a republican government
in the enjoyment of real independence and domestic peace and prosperity,
performing all her relative duties in the great family of nations and
promoting her own happiness by wise laws and their faithful execution.

If, after affording this encouragement and protection, and after all the
persevering and sincere efforts we have made from the moment Mexico
commenced the war, and prior to that time, to adjust our differences
with her, we shall ultimately fail, then we shall have exhausted all
honorable means in pursuit of peace, and must continue to occupy her
country with our troops, taking the full measure of indemnity into our
own hands, and must enforce the terms which our honor demands.

To act otherwise in the existing state of things in Mexico, and to
withdraw our Army without a peace, would not only leave all the wrongs
of which we complain unredressed, but would be the signal for new and
fierce civil dissensions and new revolutions--all alike hostile to
peaceful relations with the United States. Besides, there is danger, if
our troops were withdrawn before a peace was concluded, that the Mexican
people, wearied with successive revolutions and deprived of protection
for their persons and property, might at length be inclined to yield to
foreign influences and to cast themselves into the arms of some European
monarch for protection from the anarchy and suffering which would ensue.
This, for our own safety and in pursuance of our established policy, we
should be compelled to resist. We could never consent that Mexico should
be thus converted into a monarchy governed by a foreign prince.

Mexico is our near neighbor, and her boundaries are coterminous with our
own through the whole extent across the North American continent, from
ocean to ocean. Both politically and commercially we have the deepest
interest in her regeneration and prosperity. Indeed, it is impossible
that, with any just regard to our own safety, we can ever become
indifferent to her fate.

It may be that the Mexican Government and people have misconstrued or
misunderstood our forbearance and our objects in desiring to conclude an
amicable adjustment of the existing differences between the two
countries. They may have supposed that we would submit to terms
degrading to the nation, or they may have drawn false inferences from
the supposed division of opinion in the United States on the subject of
the war, and may have calculated to gain much by protracting it, and,
indeed, that we might ultimately abandon it altogether without insisting
on any indemnity, territorial or otherwise. Whatever may be the false
impressions under which they have acted, the adoption and prosecution of
the energetic policy proposed must soon undeceive them.

In the future prosecution of the war the enemy must be made to feel its
pressure more than they have heretofore done. At its commencement it was
deemed proper to conduct it in a spirit of forbearance and liberality.
With this end in view, early measures were adopted to conciliate, as far
as a state of war would permit, the mass of the Mexican population; to
convince them that the war was waged, not against the peaceful
inhabitants of Mexico, but against their faithless Government, which had
commenced hostilities; to remove from their minds the false impressions
which their designing and interested rulers had artfully attempted to
make, that the war on our part was one of conquest, that it was a war
against their religion and their churches, which were to be desecrated
and overthrown, and that their rights of person and private property
would be violated. To remove these false impressions, our commanders in
the field were directed scrupulously to respect their religion, their
churches, and their church property, which were in no manner to be
violated; fhey were directed also to respect the rights of persons and
property of all who should not take up arms against us.

Assurances to this effect were given to the Mexican people by
Major-General Taylor in a proclamation issued in pursuance of
instructions from the Secretary of War in the month of June, 1846, and
again by Major-General Scott, who acted upon his own convictions of the
propriety of issuing it, in a proclamation of the 11th of May, 1847. In
this spirit of liberality and conciliation, and with a view to prevent
the body of the Mexican population from taking up arms against us, was
the war conducted on our part. Provisions and other supplies furnished
to our Army by Mexican citizens were paid for at fair and liberal
prices, agreed upon by the parties. After the lapse of a few months it
became apparent that these assurances and this mild treatment had failed
to produce the desired effect upon the Mexican population. While the war
had been conducted on our part according to the most humane and liberal
principles observed by civilized nations, it was waged in a far
different spirit on the part of Mexico. Not appreciating our
forbearance, the Mexican people generally became hostile to the United
States, and availed themselves of every opportunity to commit the most
savage excesses upon our troops. Large numbers of the population took up
arms, and, engaging in guerrilla warfare, robbed and murdered in the
most cruel manner individual soldiers or small parties whom accident or
other causes had separated from the main body of our Army; bands of
guerrilleros and robbers infested the roads, harassed our trains, and
whenever it was in their power cut off our supplies.

The Mexicans having thus shown themselves to be wholly incapable of
appreciating our forbearance and liberality, it was deemed proper to
change the manner of conducting the war, by making them feel its
pressure according to the usages observed under similar circumstances by
all other civilized nations.

Accordingly, as early as the 22d of September, 1846, instructions were
given by the Secretary of War to Major-General Taylor to "draw supplies"
for our Army "from the enemy without paying for them, and to require
contributions for its support, if in that way he was satisfied he could
get abundant supplies for his forces." In directing the execution of
these instructions much was necessarily left to the discretion of the
commanding officer, who was best acquainted with the circumstances by
which he was surrounded, the wants of the Army, and the practicability
of enforcing the measure. General Taylor, on the 26th of October, 1846,
replied from Monterey that "it would have been impossible hitherto, and
is so now, to sustain the Army to any extent by forced contributions of
money or supplies." For the reasons assigned by him, he did not adopt
the policy of his instructions, but declared his readiness to do so
"should the Army in its future operations reach a portion of the country
which may be made to supply the troops with advantage." He continued to
pay for the articles of supply which were drawn from the enemy's
country.

Similar instructions were issued to Major-General Scott on the 3d of
April, 1847, who replied from Jalapa on the 20th of May, 1847, that if
it be expected "that the Army is to support itself by forced
contributions levied upon the country we may ruin and exasperate the
inhabitants and starve ourselves." The same discretion was given to him
that had been to General Taylor in this respect. General Scott, for the
reasons assigned by him, also continued to pay for the articles of
supply for the Army which were drawn from the enemy.

After the Army had reached the heart of the most wealthy portion of
Mexico it was supposed that the obstacles which had before that time
prevented it would not be such as to render impracticable the levy of
forced contributions for its support, and on the 1st of September and
again on the 6th of October, 1847, the order was repeated in dispatches
addressed by the Secretary of War to General Scott, and his attention
was again called to the importance of making the enemy bear the burdens
of the war by requiring them to furnish the means of supporting our
Army, and he was directed to adopt this policy unless by doing so there
was danger of depriving the Army of the necessary supplies. Copies of
these dispatches were forwarded to General Taylor for his government.

On the 31st of March last I caused an order to be issued to our military
and naval commanders to levy and collect a military contribution upon
all vessels and merchandise which might enter any of the ports of Mexico
in our military occupation, and to apply such contributions toward
defraying the expenses of the war. By virtue of the right of conquest
and the laws of war, the conqueror, consulting his own safety or
convenience, may either exclude foreign commerce altogether from all
such ports or permit it upon such terms and conditions as he may
prescribe. Before the principal ports of Mexico were blockaded by our
Navy the revenue derived from import duties under the laws of Mexico was
paid into the Mexican treasury. After these ports had fallen into our
military possession the blockade was raised and commerce with them
permitted upon prescribed terms and conditions. They were opened to the
trade of all nations upon the payment of duties more moderate in their
amount than those which had been previously levied by Mexico, and the
revenue, which was formerly paid into the Mexican treasury, was directed
to be collected by our military and naval officers and applied co the
use of our Army and Navy. Care was taken that the officers, soldiers,
and sailors of our Army and Navy should be exempted from the operations
of the order, and, as the merchandise imported upon which the order
operated must be consumed by Mexican citizens, the contributions exacted
were in effect the seizure of the public revenues of Mexico and the
application of them to our own use. In directing this measure the object
was to compel the enemy to contribute as far as practicable toward the
expenses of the war.

For the amount of contributions which have been levied in this form I
refer you to the accompanying reports of the Secretary of War and of the
Secretary of the Navy, by which it appears that a sum exceeding half a
million of dollars has been collected. This amount would undoubtedly
have been much larger but for the difficulty of keeping open
communications between the coast and the interior, so as to enable the
owners of the merchandise imported to transport and vend it to the
inhabitants of the country. It is confidently expected that this
difficulty will to a great extent be soon removed by our increased
forces which have been sent to the field.

Measures have recently been adopted by which the internal as well as the
external revenues of Mexico in all places in our military occupation
will be seized and appropriated to the use of our Army and Navy.

The policy of levying upon the enemy contributions in every form
consistently with the laws of nations, which it may be practicable for
our military commanders to adopt, should, in my judgment, be rigidly
enforced, and orders to this effect have accordingly been given. By such
a policy, at the same time that our own Treasury will be relieved from a
heavy drain, the Mexican people will be made to feel the burdens of the
war, and, consulting their own interests, may be induced the more
readily to require their rulers to accede to a just peace.

After the adjournment of the last session of Congress events transpired
in the prosecution of the war which in my judgment required a greater
number of troops in the field than had been anticipated. The strength of
the Army was accordingly increased by "accepting" the services of all
the volunteer forces authorized by the act of the 13th of May, 1846,
without putting a construction on that act the correctness of which was
seriously questioned. The volunteer forces now in the field, with those
which had been "accepted" to "serve for twelve months" and were
discharged at the end of their term of service, exhaust the 50,000 men
authorized by that act. Had it been clear that a proper construction of
the act warranted it, the services of an additional number would have
been called for and accepted; but doubts existing upon this point, the
power was not exercised. It is deemed important that Congress should at
an early period of their session confer the authority to raise an
additional regular force to serve during the war with Mexico and to be
discharged upon the conclusion and ratification of a treaty of peace. I
invite the attention of Congress to the views presented by the Secretary
of War in his report upon this subject.

I recommend also that authority be given by law to call for and accept
the services of an additional number of volunteers, to be exercised at
such time and to such extent as the emergencies of the service may
require.

In prosecuting the war with Mexico, whilst the utmost care has been
taken to avoid every just cause of complaint on the part of neutral
nations, and none has been given, liberal privileges have been granted
to their commerce in the ports of the enemy in our military occupation.

The difficulty with the Brazilian Government, which at one time
threatened to interrupt the friendly relations between the two
countries, will, I trust, be speedily adjusted. I have received
information that an envoy extraordinary and minister plenipotentiary to
the United States will shortly be appointed by His Imperial Majesty, and
it is hoped that he will come instructed and prepared to adjust all
remaining differences between the two Governments in a manner acceptable
and honorable to both. In the meantime, I have every reason to believe
that nothing will occur to interrupt our amicable relations with Brazil.

It has been my constant effort to maintain and cultivate the most
intimate relations of friendship with all the independent powers of
South America, and this policy has been attended with the happiest
results. It is true that the settlement and payment of many just claims
of American citizens against these nations have been long delayed. The
peculiar position in which they have been placed and the desire on the
part of my predecessors as well as myself to grant them the utmost
indulgence have hitherto prevented these claims from being urged in a
manner demanded by strict justice. The time has arrived when they ought
to be finally adjusted and liquidated, and efforts are now making for
that purpose.

It is proper to inform you that the Government of Peru has in good faith
paid the first two installments of the indemnity of $30,000 each, and
the greater portion of the interest due thereon, in execution of the
convention between that Government and the United States the
ratifications of which were exchanged at Lima on the 31st of October,
1846. The Attorney-General of the United States early in August last
completed the adjudication of the claims under this convention, and made
his report thereon in pursuance of the act of the 8th of August, 1846.
The sums to which the claimants are respectively entitled will be paid
on demand at the Treasury.

I invite the early attention of Congress to the present condition of our
citizens in China. Under our treaty with that power American citizens
are withdrawn from the jurisdiction, whether civil or criminal, of the
Chinese Government and placed under that of our public functionaries in
that country. By these alone can our citizens be tried and punished for
the commission of any crime; by these alone can questions be decided
between them involving the rights of persons and property, and by these
alone can contracts be enforced into which they may have entered with
the citizens or subjects of foreign powers. The merchant vessels of the
United States lying in the waters of the five ports of China open to
foreign commerce are under the exclusive jurisdiction of officers of
their own Government. Until Congress shall establish competent tribunals
to try and punish crimes and to exercise jurisdiction in civil cases in
China, American citizens there are subject to no law whatever. Crimes
may be committed with impunity and debts may be contracted without any
means to enforce their payment. Inconveniences have already resulted
from the omission of Congress to legislate upon the subject, and still
greater are apprehended. The British authorities in China have already
complained that this Government has not provided for the punishment of
crimes or the enforcement of contracts against American citizens in that
country, whilst their Government has established tribunals by which an
American citizen can recover debts due from British subjects.

Accustomed, as the Chinese are, to summary justice, they could not be
made to comprehend why criminals who are citizens of the United States
should escape with impunity, in violation of treaty obligations, whilst
the punishment of a Chinese who had committed any crime against an
American citizen would be rigorously exacted. Indeed, the consequences
might be fatal to American citizens in China should a flagrant crime be
committed by any one of them upon a Chinese, and should trial and
punishment not follow according to the requisitions of the treaty. This
might disturb, if not destroy, our friendly relations with that Empire
and cause an interruption of our valuable commerce.

Our treaties with the Sublime Porte, Tripoli, Tunis, Morocco, and Muscat
also require the legislation of Congress to carry them into execution,
though the necessity for immediate action may not be so urgent as in
regard to China.

The Secretary of State has submitted an estimate to defray the expense
of opening diplomatic relations with the Papal States. The interesting
political events now in progress in these States, as well as a just
regard to our commercial interests, have, in my opinion, rendered such a
measure highly expedient.

Estimates have also been submitted for the outfits and salaries of
charges d'affaires to the Republics of Bolivia, Guatemala, and Ecuador.
The manifest importance of cultivating the most friendly relations with
all the independent States upon this continent has induced me to
recommend appropriations necessary for the maintenance of these
missions.

I recommend to Congress that an appropriation be made to be paid to the
Spanish Government for the purpose of distribution among the claimants
in the _Amistad_ case. I entertain the conviction that this is due to
Spain under the treaty of the 20th of October, 1795, and, moreover, that
from the earnest manner in which the claim continues to be urged so long
as it shall remain unsettled it will be a source of irritation and
discord between the two countries, which may prove highly prejudicial to
the interests of the United States. Good policy, no less than a faithful
compliance with our treaty obligations, requires that the inconsiderable
appropriation demanded should be made.

A detailed statement of the condition of the finances will be presented
in the annual report of the Secretary of the Treasury. The imports for
the last fiscal year, ending on the 30th of June, 1847, were of the
value of $146,545,638, of which the amount exported was $8,011,158,
leaving $138,534,480 in the country for domestic use. The value of the
exports for the same period was $158,648,622, of which $150,637,464
consisted of domestic productions and $8,011,158 of foreign articles.

The receipts into the Treasury for the same period amounted to
$26,346,790.37, of which there was derived from customs $23,747,864.66,
from sales of public lands $2,498,335.20, and from incidental and
miscellaneous sources $100,570.51. The last fiscal year, during which
this amount was received, embraced five months under the operation of
the tariff act of 1842 and seven months during which the tariff act of
1846 was in force. During the five months under the act of 1842 the
amount received from customs was $7,842,306.90, and during the seven
months under the act of 1846 the amount received was $15,905,557.76.

The net revenue from customs during the year ending on the 1st of
December, 1846, being the last year under the operation of the tariff
act of 1842, was $22,971,403.10, and the net revenue from customs during
the year ending on the 1st of December, 1847, being the first year under
the operations of the tariff act of 1846, was about $31,500,000, being
an increase of revenue for the first year under the tariff of 1846 of
more than $8,500,000 over that of the last year under the tariff of
1842.

The expenditures during the fiscal year ending on the 30th of June last
were $59,451,177.65, of which $3,522,082.37 was on account of payment of
principal and interest of the public debt, including Treasury notes
redeemed and not funded. The expenditures exclusive of payment of public
debt were $55,929,095.28.

It is estimated that the receipts into the Treasury for the fiscal year
ending on the 30th of June, 1848, including the balance in the Treasury
on the 1st of July last, will amount to $42,886,545.80, of which
$31,000,000, it is estimated, will be derived from customs, $3,500,000
from the sale of the public lands, $400,000 from incidental sources,
including sales made by the Solicitor of the Treasury, and $6,285,294.55
from loans already authorized by law, which, together with the balance
in the Treasury on the 1st of July last, make the sum estimated.

The expenditures for the same period, if peace with Mexico shall not be
concluded and the Army shall be increased as is proposed, will amount,
including the necessary payments on account of principal and interest of
the public debt and Treasury notes, to $58,615,660.07.

On the 1st of the present month the amount of the public debt actually
incurred, including Treasury notes, was $45,659,659.40. The public debt
due on the 4th of March, 1845, including Treasury notes, was
$17,788,799.62, and consequently the addition made to the public debt
since that time is $27,870,859.78.

Of the loan of twenty-three millions authorized by the act of the 28th
of January, 1847, the sum of five millions was paid out to the public
creditors or exchanged at par for specie; the remaining eighteen
millions was offered for specie to the highest bidder not below par, by
an advertisement issued by the Secretary of the Treasury and published
from the 9th of February until the 10th of April, 1847, when it was
awarded to the several highest bidders at premiums varying from
one-eighth of 1 per cent to 2 per cent above par. The premium has been
paid into the Treasury and the sums awarded deposited in specie in the
Treasury as fast as it was required by the wants of the Government.

To meet the expenditures for the remainder of the present and for the
next fiscal year, ending on the 30th of June, 1849, a further loan in
aid of the ordinary revenues of the Government will be necessary.
Retaining a sufficient surplus in the Treasury, the loan required for
the remainder of the present fiscal year will be about $18,500,000. If
the duty on tea and coffee be imposed and the graduation of the price of
the public lands shall be made at an early period of your session, as
recommended, the loan for the present fiscal year may be reduced to
$17,000,000. The loan may be further reduced by whatever amount of
expenditures can be saved by military contributions collected in Mexico.
The most vigorous measures for the augmentation of these contributions
have been directed and a very considerable sum is expected from that
source. Its amount can not, however, be calculated with any certainty.
It is recommended that the loan to be made be authorized upon the same
terms and for the same time as that which was authorized under the
provisions of the act of the 28th of January, 1847.

Should the war with Mexico be continued until the 30th of June, 1849, it
is estimated that a further loan of $20,500,000 will be required for the
fiscal year ending on that day, in case no duty be imposed on tea and
coffee, and the public lands be not reduced and graduated in price, and
no military contributions shall be collected in Mexico. If the duty on
tea and coffee be imposed and the lands be reduced and graduated in
price as proposed, the loan may be reduced to $17,000,000, and will be
subject to be still further reduced by the amount of the military
contributions which may be collected in Mexico. It is not proposed,
however, at present to ask Congress for authority to negotiate this loan
for the next fiscal year, as it is hoped that the loan asked for the
remainder of the present fiscal year, aided by military contributions
which may be collected in Mexico, may be sufficient. If, contrary to
my expectation, there should be a necessity for it, the fact will be
communicated to Congress in time for their action during the present
session. In no event will a sum exceeding $6,000,000 of this amount be
needed before the meeting of the session of Congress in December, 1848.

The act of the 30th of July, 1846, "reducing the duties on imports," has
been in force since the 1st of December last, and I am gratified to
state that all the beneficial effects which were anticipated from its
operation have been fully realized. The public revenue derived from
customs during the year ending on the 1st of December, 1847, exceeds by
more than $8,000,000 the amount received in the preceding year under the
operation of the act of 1842, which was superseded and repealed by it.
Its effects are visible in the great and almost unexampled prosperity
which prevails in every branch of business.

While the repeal of the prohibitory and restrictive duties of the act of
1842 and the substitution in their place of reasonable revenue rates
levied on articles imported according to their actual value has
increased the revenue and augmented our foreign trade, all the great
interests of the country have been advanced and promoted.

The great and important interests of agriculture, which had been not
only too much neglected, but actually taxed under the protective policy
for the benefit of other interests, have been relieved of the burdens
which that policy imposed on them; and our farmers and planters, under a
more just and liberal commercial policy, are finding new and profitable
markets abroad for their augmented products. Our commerce is rapidly
increasing, and is extending more widely the circle of international
exchanges. Great as has been the increase of our imports during the past
year, our exports of domestic products sold in foreign markets have been
still greater.

Our navigating interest is eminently prosperous. The number of vessels
built in the United States has been greater than during any preceding
period of equal length. Large profits have been derived by those who
have constructed as well as by those who have navigated them. Should the
ratio of increase in the number of our merchant vessels be progressive,
and be as great for the future as during the past year, the time is not
distant when our tonnage and commercial marine will be larger than that
of any other nation in the world.

Whilst the interests of agriculture, of commerce, and of navigation have
been enlarged and invigorated, it is highly gratifying to observe that
our manufactures are also in a prosperous condition. None of the ruinous
effects upon this interest which were apprehended by some as the result
of the operation of the revenue system established by the act of 1846
have been experienced. On the contrary, the number of manufactories and
the amount of capital invested in them is steadily and rapidly
increasing, affording gratifying proofs that American enterprise and
skill employed in this branch of domestic industry, with no other
advantages than those fairly and incidentally accruing from a just
system of revenue duties, are abundantly able to meet successfully all
competition from abroad and still derive fair and remunerating profits.
While capital invested in manufactures is yielding adequate and fair
profits under the new system, the wages of labor, whether employed in
manufactures, agriculture, commerce, or navigation, have been augmented.
The toiling millions whose daily labor furnishes the supply of food and
raiment and all the necessaries and comforts of life are receiving
higher wages and more steady and permanent employment than in any other
country or at any previous period of our own history.

So successful have been all branches of our industry that a foreign war,
which generally diminishes the resources of a nation, has in no
essential degree retarded our onward progress or checked our general
prosperity.

With such gratifying evidences of prosperity and of the successful
operation of the revenue act of 1846, every consideration of public
policy recommends that it shall remain unchanged. It is hoped that the
system of impost duties which it established may be regarded as the
permanent policy of the country, and that the great interests affected
by it may not again be subject to be injuriously disturbed, as they have
heretofore been, by frequent and sometimes sudden changes.

For the purpose of increasing the revenue, and without changing or
modifying the rates imposed by the act of 1846 on the dutiable articles
embraced by its provisions, I again recommend to your favorable
consideration the expediency of levying a revenue duty on tea and
coffee. The policy which exempted these articles from duty during peace,
and when the revenue to be derived from them was not needed, ceases to
exist when the country is engaged in war and requires the use of all
of its available resources. It is a tax which would be so generally
diffused among the people that it would be felt oppressively by none and
be complained of by none. It is believed that there are not in the list
of imported articles any which are more properly the subject of war
duties than tea and coffee.

It is estimated that $3,000,000 would be derived annually by a moderate
duty imposed on these articles.

Should Congress avail itself of this additional source of revenue, not
only would the amount of the public loan rendered necessary by the war
with Mexico be diminished to that extent, but the public credit and the
public confidence in the ability and determination of the Government to
meet all its engagements promptly would be more firmly established, and
the reduced amount of the loan which it may be necessary to negotiate
could probably be obtained at cheaper rates.

Congress is therefore called upon to determine whether it is wiser to
impose the war duties recommended or by omitting to do so increase the
public debt annually $3,000,000 so long as loans shall be required to
prosecute the war, and afterwards provide in some other form to pay the
semiannual interest upon it, and ultimately to extinguish the principal.
If in addition to these duties Congress should graduate and reduce the
price of such of the public lands as experience has proved will not
command the price placed upon them by the Government, an additional
annual income to the Treasury of between half a million and a million of
dollars, it is estimated, would be derived from this source. Should both
measures receive the sanction of Congress, the annual amount of public
debt necessary to be contracted during the continuance of the war would
be reduced near $4,000,000. The duties recommended to be levied on tea
and coffee it is proposed shall be limited in their duration to the end
of the war, and until the public debt rendered necessary to be
contracted by it shall be discharged. The amount of the public debt to
be contracted should be limited to the lowest practicable sum, and
should be extinguished as early after the conclusion of the war as the
means of the Treasury will permit.

With this view, it is recommended that as soon as the war shall be over
all the surplus in the Treasury not needed for other indispensable
objects shall constitute a sinking fund and be applied to the purchase
of the funded debt, and that authority be conferred by laws for that
purpose.

The act of the 6th of August, 1846, "to establish a warehousing system,"
has been in operation more than a year, and has proved to be an
important auxiliary to the tariff act of 1846 in augmenting the revenue
and extending the commerce of the country. Whilst it has tended to
enlarge commerce, it has been beneficial to our manufactures by
diminishing forced sales at auction of foreign goods at low prices to
raise the duties to be advanced on them, and by checking fluctuations in
the market. The system, although sanctioned by the experience of other
countries, was entirely new in the United States, and is susceptible of
improvement in some of its provisions. The Secretary of the Treasury,
upon whom was devolved large discretionary powers in carrying this
measure into effect, has collected and is now collating the practical
results of the system in other countries where it has long been
established, and will report at an early period of your session such
further regulations suggested by the investigation as may render it
still more effective and beneficial.

By the act to "provide for the better organization of the Treasury and
for the collection, safe-keeping, and disbursement of the public
revenue" all banks were discontinued as fiscal agents of the Government,
and the paper currency issued by them was no longer permitted to be
received in payment of public dues. The constitutional treasury created
by this act went into operation on the 1st of January last. Under the
system established by it the public moneys have been collected, safely
kept, and disbursed by the direct agency of officers of the Government
in gold and silver, and transfers of large amounts have been made from
points of collection to points of disbursement without loss to the
Treasury or injury or inconvenience to the trade of the country.

While the fiscal operations of the Government have been conducted with
regularity and ease under this system, it has had a salutary effect in
checking and preventing an undue inflation of the paper currency issued
by the banks which exist under State charters. Requiring, as it does,
all dues to the Government to be paid in gold and silver, its effect is
to restrain excessive issues of bank paper by the banks disproportioned
to the specie in their vaults, for the reason that they are at all times
liable to be called on by the holders of their notes for their
redemption in order to obtain specie for the payment of duties and other
public dues. The banks, therefore, must keep their business within
prudent limits, and be always in a condition to meet such calls, or run
the hazard of being compelled to suspend specie payments and be thereby
discredited. The amount of specie imported into the United States during
the last fiscal year was $24,121,289, of which there was retained in the
country $22,276,170. Had the former financial system prevailed and the
public moneys been placed on deposit in the banks, nearly the whole of
this amount would have gone into their vaults, not to be thrown into
circulation by them, but to be withheld from the hands of the people as
a currency and made the basis of new and enormous issues of bank paper.
A large proportion of the specie imported has been paid into the
Treasury for public dues, and after having been to a great extent
recoined at the Mint has been paid out to the public creditors and gone
into circulation as a currency among the people. The amount of gold and
silver coin now in circulation in the country is larger than at any
former period.

The financial system established by the constitutional treasury has been
thus far eminently successful in its operations, and I recommend an
adherence to all its essential provisions, and especially to that vital
provision which wholly separates the Government from all connection with
banks and excludes bank paper from all revenue receipts.

In some of its details, not involving its general principles, the system
is defective and will require modification. These defects and such
amendments as are deemed important were set forth in the last annual
report of the Secretary of the Treasury. These amendments are again
recommended to the early and favorable consideration of Congress.

During the past year the coinage at the Mint and its branches has
exceeded $20,000,000. This has consisted chiefly in converting the coins
of foreign countries into American coin.

The largest amount of foreign coin imported has been received at New
York, and if a branch mint were established at that city all the foreign
coin received at that port could at once be converted into our own coin
without the expense, risk, and delay of transporting it to the Mint for
that purpose, and the amount recoined would be much larger.

Experience has proved that foreign coin, and especially foreign gold
coin, will not circulate extensively as a currency among the people. The
important measure of extending our specie circulation, both of gold and
silver, and of diffusing it among the people can only be effected by
converting such foreign coin into American coin. I repeat the
recommendation contained in my last annual message for the establishment
of a branch of the Mint of the United States at the city of New York.

All the public lands which had been surveyed and were ready for market
have been proclaimed for sale during the past year. The quantity offered
and to be offered for sale under proclamations issued since the 1st of
January last amounts to 9,138,531 acres. The prosperity of the Western
States and Territories in which these lands lie will be advanced by
their speedy sale. By withholding them from market their growth and
increase of population would be retarded, while thousands of our
enterprising and meritorious frontier population would be deprived of
the opportunity of securing freeholds for themselves and their families.
But in addition to the general considerations which rendered the early
sale of these lands proper, it was a leading object at this time to
derive as large a sum as possible from this source, and thus diminish by
that amount the public loan rendered necessary by the existence of a
foreign war.

It is estimated that not less than 10,000,000 acres of the public lands
will be surveyed and be in a condition to be proclaimed for sale during
the year 1848.

In my last annual message I presented the reasons which in my judgment
rendered it proper to graduate and reduce the price of such of the
public lands as have remained unsold for long periods after they had
been offered for sale at public auction.

Many millions of acres of public lands lying within the limits of
several of the Western States have been offered in the market and been
subject to sale at private entry for more than twenty years and large
quantities for more than thirty years at the lowest price prescribed by
the existing laws, and it has been found that they will not command that
price. They must remain unsold and uncultivated for an indefinite period
unless the price demanded for them by the Government shall be reduced.
No satisfactory reason is perceived why they should be longer held at
rates above their real value. At the present period an additional reason
exists for adopting the measure recommended. When the country is engaged
in a foreign war, and we must necessarily resort to loans, it would seem
to be the dictate of wisdom that we should avail ourselves of all our
resources and thus limit the amount of the public indebtedness to the
lowest possible sum.

I recommend that the existing laws on the subject of preemption rights
be amended and modified so as to operate prospectively and to embrace
all who may settle upon the public lands and make improvements upon
them, before they are surveyed as well as afterwards, in all cases where
such settlements may be made after the Indian title shall have been
extinguished.

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