inducing them to adopt a system of government and laws suited to their capacity and wants, and the use made by our numerous whale ships of the harbors of the islands as places of resort for obtaining refreshments and repairs all combine to render their destiny peculiarly interesting to us. It is our duty to encourage the authorities of those islands in their efforts to improve and elevate the moral and political condition of the inhabitants, and we should make reasonable allowances for the difficulties inseparable from this task. We desire that the islands may maintain their independence and that other nations should concur with us in this sentiment. We could in no event be indifferent to their passing under the dominion of any other power. The principal commercial states have in this a common interest, and it is to be hoped that no one of them will attempt to interpose obstacles to the entire independence of the islands.

The receipts into the Treasury for the fiscal year ending on the 30th of June last were, in cash, $48,830,097.50, and in Treasury notes funded $10,833,000, making an aggregate of $59,663,097.50; and the expenditures for the same time were, in cash, $46,798,667.82, and in Treasury notes funded $10,833,000, making an aggregate of $57,631,667.82.

The accounts and estimates which will be submitted to Congress in the report of the Secretary of the Treasury show that there will probably be a deficit occasioned by the expenses of the Mexican War and treaty on the 1st day of July next of $5,828,121.66, and on the 1st day of July, 1851, of $10,547,092.73, making in the whole a probable deficit to be provided for of $16,375,214.39. The extraordinary expenses of the war with Mexico and the purchase of California and New Mexico exceed in amount this deficit, together with the loans heretofore made for those objects. I therefore recommend that authority be given to borrow what ever sum may be necessary to cover that deficit. I recommend the observance of strict economy in the appropriation and expenditure of public money.

I recommend a revision of the existing tariff and its adjustment on a basis which may augment the revenue. I do not doubt the right or duty of Congress to encourage domestic industry, which is the great source of national as well as individual wealth and prosperity. I look to the wisdom and patriotism of Congress for the adoption of a system which may place home labor at last on a sure and permanent footing and by due encouragement of manufactures give a new and increased stimulus to agriculture and promote the development of our vast resources and the extension of our commerce. Believing that to the attainment of these ends, as well as the necessary augmentation of the revenue and the prevention of frauds, a system of specific duties is best adapted, I strongly recommend to Congress the adoption of that system, fixing the duties at rates high enough to afford substantial and sufficient encouragement to our own industry and at the same time so adjusted as to insure stability.

The question of the continuance of the subtreasury system is respectfully submitted to the wisdom of Congress. If continued, important modifications of it appear to be indispensable.

For further details and views on the above and other matters connected with commerce, the finances, and revenue I refer to the report of the Secretary of the Treasury.

No direct aid has been given by the General Government to the improvement of agriculture except by the expenditure of small sums for the collection and publication of agricultural statistics and for some chemical analyses, which have been thus far paid for out of the patent fund. This aid is, in my opinion, wholly inadequate. To give to this leading branch of American industry the encouragement which it merits, I respectfully recommend the establishment of an agricultural bureau, to be connected with the Department of the Interior. To elevate the social condition of the agriculturist, to increase his prosperity, and to extend his means of usefulness to his country, by multiplying his sources of information, should be the study of every statesman and a primary object with every legislator.

No civil government having been provided by Congress for California, the people of that Territory, impelled by the necessities of their political condition, recently met in convention for the purpose of forming a constitution and State government, which the latest advices give me reason to suppose has been accomplished; and it is believed they will shortly apply for the admission of California into the Union as a sovereign State. Should such be the case, and should their constitution be conformable to the requisitions of the Constitution of the United States, I recommend their application to the favorable consideration of Congress. The people of New Mexico will also, it is believed, at no very distant period present themselves for admission into the Union. Preparatory to the admission of California and New Mexico the people of each will have instituted for themselves a republican form of government, "laying its foundation in such principles and organizing its powers in such form as to them shall seem most likely to effect their safety and happiness." By awaiting their action all causes of uneasiness may be avoided and confidence and kind feeling preserved. With a view of maintaining the harmony and tranquillity so dear to all, we should abstain from the introduction of those exciting topics of a sectional character which have hitherto produced painful apprehensions in the public mind; and I repeat the solemn warning of the first and most illustrious of my predecessors against furnishing "any ground for characterizing parties by geographical discriminations."

A collector has been appointed at San Francisco under the act of Congress extending the revenue laws over California, and measures have been taken to organize the custom-houses at that and the other ports mentioned in that act at the earliest period practicable. The collector proceeded overland, and advices have not yet been received of his arrival at San Francisco. Meanwhile, it is understood that the customs have continued to be collected there by officers acting under the military authority, as they were during the Administration of my predecessor. It will, I think, be expedient to confirm the collections thus made, and direct the avails (after such allowances as Congress may think fit to authorize) to be expended within the Territory or to be paid into the Treasury for the purpose of meeting appropriations for the improvement of its rivers and harbors.

A party engaged on the coast survey was dispatched to Oregon in January last. According to the latest advices, they had not left California; and directions have been given to them, as soon as they shall have fixed on the sites of the two light-houses and the buoys authorized to be constructed and placed in Oregon, to proceed without delay to make reconnaissance of the most important points on the coast of California, and especially to examine and determine on sites for light-houses on that coast, the speedy erection of which is urgently demanded by our rapidly increasing commerce.

I have transferred the Indian agencies from upper Missouri and Council Bluffs to Santa Fe and Salt Lake, and have caused to be appointed subagents in the valleys of the Gila, the Sacramento, and the San Joaquin rivers. Still further legal provisions will be necessary for the effective and successful extension of our system of Indian intercourse over the new territories.

I recommend the establishment of a branch mint in California, as it will, in my opinion, afford important facilities to those engaged in mining, as well as to the Government in the disposition of the mineral lands.

I also recommend that commissions be organized by Congress to examine and decide upon the validity of the present subsisting land titles in California and New Mexico, and that provision be made for the establishment of offices of surveyor-general in New Mexico, California,