THE POTUS. Fellow Citizens of the Senate and HoRep: To exfiress gratitude to God, in the name of the peop e, for the preservation of the U.S., is my 1st duty in addressing you. Our thoughts next revert to the death of the late President by an act of parricidal treason. The grief of the' nation is still fresh; it finds some solace in the consideration that he lived to enjoy the highest proof of its confidence by entering on the renewed term of the Chief Magistracy to which he had been elected; that he brought the civilWar substantially to a close; that is loss was deplored in all parts of the Union; and that foreign nations have rendered justice to his memory. His removal cast upon me a heavier weight of cares than ever devolved upon anyone of his predecessors. To fulfill my trust, I need the support and confidence of all who are associated With me in the various depts of Government, and the support and confidence of the people. There is but one way in which I can hope to y in their necessary aid; it is, to state with fran nose the principles which guide my conduct and their application to the‘present state of affairs, well aware that the efficiency of my labors will, in a eat measure, depend on your and their undivided a probation. The Union of the U.S.A. was intended by its authors to last as long as the States themselves shall last. “THE Union anau. m: PERPETUAL” are the words of the Confederation. “To Form A nous rnnrsc'r UNION, " by an ordinance of the people of the U.S., is the declared purpose of the Constitution. The hand of divine providence was never more plainly visible in the affairs of men than in the framing and the adopting of that instrument. It is, beyond comparison the greatest event in American history; an indeed is it not, of all events in modern times, the most pregnant with consequences for every people of the earth? The members of the convention which prepared it, brought to their work the experience of the Confederation. of their several States, and of other republican governments, old and new; but they needed and they obtained a wisdom superior to exerience. And when for its validity it require the approval of a people that occnpie a large part of a continent and acted separately in many distinct conventions, what is more wonderful than that, after earnest contention and long discussion, all feelings and all opinions were ultimately drawn in one way to its support? The Constitution to which life was thus imrted contains within itself ample resources or its OWn preservation. It has power to enforce the laws, punish treason, and insure domestic tranquillity. In case of the usurpation of the government of a State by one man, or an oligarchy, it becomes a duty of the U.S. to make good the guarantee to that State of a RFG, and so to maintain the homogeneousness of all. Does the lapse of time reveal defects? A simple mode of amendment is provided in the IConstitution itself, so that its conditions can always be made to conform to the requirements of advancing civilization. No room is allowed even for the thought of a possibility of its coming to an end. And these powers of self preservation have always been asserted in their complete integrity by (we? patriotic Chief Magistrate by Jeffersonan Jackson, not less than by Washington and Madison. The parting advice of the Father of his Count ', while yet President, to the people of the U.S., was, that “the free Constitution, which was the work of their hands, might be sacredly maintained;" and the inaugural words of President Jefferson held up “the preservation of the General Government, in its constitutional vigor, as the sheet anchor of our peace at home and safety abroad." The Constitution is the work of ‘the people of the U.S., ” and it should be as indestructible as the people. It is not strange that the framers of the constitution, which had nomodel in the past, should not have fully comprehended the excellence of their own work. resli from a struggle against arbitrary power, many patriots suTTered from harassing fears ofan absorption of the State governments by the General Government, and many from a dread that the States would break away from their orbits. But the very greatness of our country should allay the apprehension of encroachments by the General Government. The subjects that come unquestionably within its jurisdiction are so numerous, that it must ever naturally refuse to be embarrassed by questions that lie beyond it. Were it otherwise, the Executive would sink beneath the burden; the channels of justice would be choked; legislation would be obstructed by excess; so that there is a greater temptation to exercise some of the functions of the' General Government through the States than to trespass on their rightful sphere. “The absolute acquiescence in the decisions of the majority” was, at the beginning of the century, enforced by Jefferson "as the vital principle of republics, ” and the events of the last 4 years have established, we will hope forever, that there lies no appeal to force. The maintenance of the Union brings with it “the support of the State governments in all their rights, " but it is not one of the rights of any State government to renounce its own place in the Union, or to nullify the laws of the Union. The largest liberty is to be maintained in the discussion of the acts of the federal Government; but there is no appeal from its laws, except. to the various branches of that government itself, or to the people, who grant to the members of the legislative and of the executive depts no tenure but a limited one, and in that manner always retain the powers of redress. “The sovereignty of the States” is the language of the Confederacy, and not the language of the Constitution. The latter contains the emphatic words, “The Constitution, and the laws of the U.S. which shall be made in pursuance thereof, and all treaties made or which shall be made under the authority of the U.S., shall be the supreme law of the land; and the judges in every State shall be bound thereby, anything in the constitution or lawsnof any State to the contrary notwithstand in. Certainly the Government of the U.S. is a limited Government; and so is every State government a limited government. With us, this idea of limitation spreads through every form of administration, general, State, and m u nicipal, and rests on the great distinguishing principle of the recognition 0 e rights of man. The ancient republics absorbed the individual in the State, prescribed his religion, and controlled his activity. The American system rests on the assertion of the equal right of every man to life, liberty, and the pursuit of happiness; to freedom of conscience, to the culture and exercise of all his faculties. As a consequence, the State government is limited, as to the general Government in the interests of union, as to the individual citizen in the interest of freedom. States, with proper limitations of power, are essential to the eminence of the Constitution of the U.S. At the very commencement, when we assumed a place among the Powers of the earth, the DeclarIndep was adopted by States; so also were the Articles of Confederation; and when “the people of the U.S.” ordained and established the Constitution. itwas the assent of the States, one by one, which gave it vitality. In the event, too, of any amendment to the Constitution, the propo$ion of Congress needs the confirmation of States. Without States, one great branch of the legislative government would be wanting. And, if we look beyond the letter of the constitution to the character of our country, its capacity for comprehending within its jurisdiction a vast continental empire' is due to the system of States. The best security for the perpetual existence of the States is the “su reme authorit ” of the Constitution of the U.S. The perpetuity of the Constitution brings with it. the perpetuity of the States; their mutual relation may es us what we are, and in our political system their connection is indissoluble. The whole cannot exist without the parts, nor the parts without the whole. So long as the constitution of the U.S. endures, the States will endure; the destruction of the one is the destruction of the other; the preservation of the one is the preservation of the other. I have thus explained my views of the mutual relations of the Constitution and the States because they unfold the principles on which I have sought to solve the momentous questions and overcome the appalling difficulties that met me at the very commencement of my administration. It has been my steadfast object to escape from the sway of momentary passions, and to derive a healing policy from the fundamental and unchanging principles of the Constitution.: I found the States suffering from the etfectd of a civilWar. Resistance to the General government appeared to have exhausted itself. The U.S. had recovered possession of their forts and arsenals; and their armies were in the occppation of every State which had attempted to “ the ver the territory within the imiwbf'eihos States should be held as conquered territory, under military authority emanating from the President as the head of the Army, was the 1st question that presented it self for decision. Now, military governments, established for an indefinite period, would have offered no security for the earl suppression of discontent; would have divided the people into the vanquishers and the vanquished; and would have envenomed hatred, rather than have restored affection. Once established, no precise limit to their continuance was conceivable. They would have occasioned an incalculable and exhausting expense. Peaceful emigration to and from that portion of the country is one of the best means that can be thought of for the restoration of harmony; and that emigration would have been prevented; for what emigrant from abroad, what industrious citizen at home, would place himself willingly under military rule? he chief persons who would have followed in the train of the Army would have been dependents on the General Government, or men who excted profit from the miseries of their errin fellow  citizcns. he powers of patronage an rule which would have been exercised, under the President, over a vast and populous and naturally wealthy region, are cuter than, an kss under extreme necessity, should be willing to intrust to anyone man; they are such as, for myself, I could never, unless on occasions of great emergenc, consent to exercise. The will ul use of such powers, if continued through a period of years, would have endan gered the parity of the general administration and the liberties of the States which remained loyal. Besides the policy of military rule over a conquered territory would have implied that the States whose inhabitants may have taken part in the rebellion had, by the act of those inhab itants, ceased to exist. But the true theory is, that all pretended acts of secession were, from the beginning, null and void. The States cannot commit treason, nor screen the individual citizens who may have committed treason, any more than they can make valid treaties or engage in lawful commerce with any foreigwfower. the States attempting to secede placed themselves in a condition where their vitality was impaired, but not extinguished their functions suspended, but not destroyed. But if any State neglects or refuses to perform its offices, there is the more need that the general government should maintain all its authority, and, as soon as practicable, 'resume the exercise of all its functions. On this principle I have acted, and have gradually and quietSy, and by almost imperceptible ate a, sought tore store the rightful energy of the General Government and of the States. To thatend, provisional governors have been appointed for the States, conventions called, Governors elected, Legislatures assembled, and Sens&Reps chosen to the Congress of the U.S. At the same time the courts of the U.S., as far as could be'douc, have been reopened, so that the laws of the U.S. may be enforced through their agency. The blockade has been removed and the customhouses reestablilshed in ports of entry, so that the revenue of the U.S. may be collected. The postoffice dept renews its ceaseless activity and the General Government is thereby to communicate promptly with its office enrasbaleng agents. The courts bring security to persons and property; the opening of the ports invites the restoration of industry and commerce; the postoffice renews the facilities of social interconrse and of business. And is it not h.pp for us all, that the restoration of each one of th functions of the General Government brings with it a blessing to the States over which they are exteilded? Is it not a sure promise ofhar mony and renewed attachmentto the Union that, after all that has happened, the return of the General Governmentis known only as a beneficence? v I know ver well that this policy is attended with some rish; that for its success it requires at least the acquiescence of the States which it concerns; that it implies an invitation to those States, by renewing their allegiance to the U.S., to resume their functions as States of the Union. But it is a risk that must be taken; in the choice of difficulties, it is the smallest risk; and to diminish, and, if possible, to remove all danger, I have felt it incumbent on me to assert one other power of the General Government the power of pardon. As no State can throw a defense over the crime of treason, the power of pardon is, exclusively vested in the Executive Government of the U.S. In exercising that power, I have taken every precaution to connect it with the clearest recognition of the binding force of the laws of the U.S., and an unqualified acknowledgment of the great social change of condition in regard to slavery which has grown out of the war. The next step which I have taken to restore the constitutional relations of the States has been an invitation to them to participate in the high office ofamending the Constitution. Every patriot must wish for a General amnesty at the earliest epoch.consistent with public safety. For this great end there is need) of a concurrence of all opinions, and the spirit of mutual conciliation. All parties in the late terrible conflict must work together in harmony. It is not too much to ask, in the name of the whole people, that, on the one side, the plan of res toration shall proceed in conformity with a willingness to cast the disorders of the past into oblivion; and that, on the other, the evidence of sincerity in the future maintenance of the Union shall be put beyond any doubt by the ratification of the proposed amendment to the Constitution, which provides for the abolition of slavery forever with n the limits of our country. So long as the adoption of this amendment is delayed, so long will doubt and jealousy and uncertainty prevail. This is the measure which will effacethe sad memory of the past; this is the measure which will most certainly call population and capital and security to those arts of the Union that need them most. Indeed, it is not too much to ask of the States which are now resuming their places in the family of the Union to give this pledge of perpetual loyalty and once. Until it is done, the past, however muc we may desire it, will not e forgotten. The adoption of the amendment reunites us beyond all power of disrution. It heals the wound that is still imperfect closed; it removes slavery, the element which has so long perplexed and divided the country; it makes of us once more a united people, renewed and strengthened, bound more t ran over to mutual affection and support. The amendment to the Constitution being adopted, it would remain for the States, whose powers have been solonginabeyancc, to resume their places in the 2 branches of the national Legisstars, and thereby complete the work of 056‘. restoration. Here it is for you, fellow citizens of the Senate, and for you, fellow citizens of the HoRep, to judge, each of you for yourselves, of the elections, returns, and qualifications of your own members. The full assertion of the powers of the general Government requires the holding of circuit courts of the U.A. within the districts where their authority has been interrupted. In the present posture of our public affairs, strong objections have been urged to holding those courts in any of the States where the rebellion has existkd and itwasas ined, by inquir thatth circilit court of the U.S. would not be old within the district of Virginia during the autumn or early winter, nor until congress should have “an opportunity to consider and act on the whole subject.” To your delib erations the restoration of this branch of the civil authority of the U.S. is therefore necessarily referred, 'with the hope that earl provision will be made for the resumption of a I its functions. It is manifest that treason, most flagrant in its character, has been committed. Persons who are charged 'with its commission should have fair and impartial trials in the highest civil tribunals of the country, in order that the Constitution and the laws may be full vindicated; the truth clearly established an affirmed that treason is a crime, that traitors should be punished and the offense made i111 famous; and, at the same time, that the question may be judiciall settled, finally an the ever, that no State of its own will has the right to renounce its place in the Union., y The relations of the General Government toward the 4 million inhabitants whom the war has called into freedom have engaged my most serious consideration. On the propriety of attempting to make the freedmen electors by the proclamation of the Executive I took for my counsel the Constitution itself, the interpretations of that instrument by its authors and their contemporaries, and recent legislation by Congress. When, at the 1st movement toward independence, the Congress of the U.S. instructed the several States to institute governments of their own; they left; each State to decide for itself the conditions for' the enjoyment of the elective During the period of the Confederacy, there continued to exist a very great; diversity in the qualifications of electors in the several States; and even within a State a distinction of qualifications prevailed with regard to the officers who were to be chosen. The Constitution of the U.S. recognizes these diversities when it en'oins that, in the choice of members of the HoRep of the U.S., “the electors in each State shall have the qualifications requisite for electors of the most numerous French of the State Legislature.” After the formation of the Constitution, it remained, as before, the uniform usage for each State to enlarge the body of its e ectors, according to its own judgment; and, under this system, one State after another has proceeded to increase the number of its electors, until now universal suffrage, or something very near it, is the general rule. So fixed was this reservation of power in the habits of the people, and so unquestioned has been the interpretation of the Constitution, that. during the civilWar the late President never harbored the purPose certainly never avowed the purpose of disrerdmg it; and in the acts of Congress, during t not period, nothing can be found which, during the continuance of hostilities, much less after their close, would have sanctioned any depart ure by the Executive from a policy which has so uniformly obtained. Moreover, a concession of the elective franchise to the freedmen, by not of the POTUS, must have been extended to all colored men wherever found, and so must have established a change of suffrage in, the northern middle, and western States, not less than in the southern and southwestern. such an act would have created a new class of voters, and would have been an assumption of power by the President. which nothing in the Constitution or laws of the U.S. would have war ranted. On the other hand, every danger of conflict is avoided when the settlement of the question is referred to the several States. They can, each for itself, decide on the measure, and whether it is to be adopted at once and absolutely, or introduced gradually and with conditions. In my judgment, the freedmen, if they show patience and manly virtues, will sooner obtain a participation in the elective franchise through the States than through the General Government, even if it had power to intervene. When the tumult of emotions that have been raised by the suddenness of the social cliaii 0 shall have subsided, it may prove that they Will receive the kindliest usage from some of those on whom they have heretofore most closely depended. But while I have no doubt that now, after the close of the war, it is not competent for the General Government to exten the elective franchise in the several States, it is equally clear that good faith requires the security of the freedmen in their liberty and their property, their right to labor, and their right to claim the just return of their labor. I cannot too strongly urge a dispassionate treatment of this subject. which should be carefully ke t aloof from all party strife. We must equal y avoid hasty assumptions of any natural impossibility for the 2 races to live side by side, in a state of mutual benefit and good will. The experiment involves us in no inconsistency. Let us, then, go on and make that experiment in good faith, and not be too easily disheartened. The country is in need of labor, and the freedmen are in need of employment, culture, and protection. While their right of voluntary mition and exatriation is not to be questione, I would not vise their forced removal and colonization. Let as rather encourage them to honorable and useful industry where it may be beneficial to themselves and to the country; and, instead of hasty anticipations of the certaint of failure, let there be nothing wanting to the fair trial of the experiment. The change in their condition is the substitution of labor by contract for the status of slavery. The freedman cannot fairly be accused of unwillingness to work, so long as a doubt remains about his freedom of choice. in his pursuits, and the certainty of his recovering his stipulated wages. In this the interests of the employer and the employed coincide. The employer desires in his workmen spirit and alacrity, and these can be permanently secured in no other way. And if the one on ht to be able to enforce the contract, so ought the other. The public interest will be best promoted, if the several States will provide a equate protection and remedies for the freedmen. Until this is in some way accomplished, there is no chance for the advantageous use of their labor; and the blame of ill success will not rest on them. I know that sincere philanthropy is earnest for the immediate realization of its remotest aims; but time is always an element in reform. It is one of the cutest acts on record to have brought 4 mifon people into freedom. The career of free industry must be fairly opened to them; and then their future prosperity and condition must, after all I rest mainly on themselves. If they fail, and so perish away, let us be mrcful that the failure shall not be attributable to any denial of justice. In all that relates to the destiny of the freedmen, we need not be too anxious to read the future; many incidents which, from a speculative point of view, might raise alarm, will quiefly settle themselves. Now that slavery is at an end or near its end, the reatness of its evil, in the point of view of public economy, becomes more and more aparent. Slavery was essentially a monopoly of labor, and as such locked the States where it wevailed against the incoming of free industry. here labor was the property of the capitalist, the white man was excluded from employment, or had but the 2nd best chance of finding it; and the foreign emigrant turned away from the region where his condition would be so precarious. With the destruction of the monopoly, free labor will hasten from all parts of the ciVilized world to assist in devcloing various and immeasurable resoumes which have hitherto lain dormant. The 8 or 9 States nearest the Gulf of Mexico have a soil of exuberant fertility, a climate friendly to long life, and can sustain a denser population than is found as yet in any art of our country. And the future influx of population to them will be main] from the orth, or from the most cultivate nations in Europe. From the sufferings that have attended them during our late struggle, let us look away to the future, which is sure to be laden for them with greater prosperity than has ever before been known. The removal of the monopoly of slave labor is a pledge that those regions will be peopled by a numerous and enter rising population, which will vie with any in the Union in compactness, inventive genius, wealth, and industry. Our Government s rings from and was made for the people not the people for the Government. To them it owes allegiance; from them it must derive its courage, strength and wisdom. But, while the Government is thus bound to defer to the co le, from whom it derives its existence, it s on d, from the very consideration of its origin, be strong in its power of resistance to the establishment of inequalities. Monopolies, perpetuities, and class legislation, are contrary to the genius of free government, and ought not to be allowed. Here, there is no room for favored classes or monopolies; the principle of our Government is that of equal laws and freedom of industry. Wherever monopoly attains a foothold, it is sure to be a source of danger, discord, and trouble. We shall but fulfill our duties as legislators by according “ equal and exact justice to all men, ” special privileges to none. The Government is subordinate to the people; but, as the agent and representative of the people, it must be held superior to monopolies, which, in themselves, ought never to be granted, and which, where they exist, must be subordinate and yield to the Government. The Constitution confers on Congress the right to regulate commerce among the several States. It is of the 1st nccessit, or the main tenance of the Union, that at commerce should be free and unobstructed. No State can be justified in any device to tax the transit of travel and commerce between States. The position of many States is such that, if they were allowed to take advantage of it for purposes of local revenue, the commerce between States might be injuriously burdened, or oven virtually prohibited. it is best, while the country is still young, and while the tendency to dangerous monopolies of this kind is still fee ble, to use the power of.Congress so as to prevent any selfish impediment to the free circulation of men and merchandise. A tax on travel and merchandise, in their transit, constitutes one of the worst forms of monopoly, and the evil is increased if coupled with a denial of the choice of route. When the vast extent of our country is considered, it is plain that every obstacle to the free circulation of commerce between the States ought to be sternly guarded against by appropriate legislation, within the limits of the constitution. The report of the SecyInterior explains the condition of the public lands the transactions of the Patent Ofhcc and the pension Bureau, the management of our Indian af fairs, the proress made in the construction of the Pacific railroad, and furnishes information in reference to matters of local interest in the DistCol. Italso presents evidence of the successful operation of the homestead act, under the provisions of which 1, 160, 538 acres of the public lands were entered during the last fiscal year more than one 4th of the whole number of acres sold or otherwise disposed of dining that period. It is estimated that the receipts derived from this source are sufficient to cover the expenses incident to the survey and disposal of the lands entered under this act, and that payments in cash to the extent of from 40 to 50%. will be made by settlers, who may thus at any time acquire title before the expiration of the period at which it would otherwise vest. The homestead policy was established only after long and earnest resistance; experience proves its wisdom. The lands, in the hands of industrious settlers, Wliose labor creates wealth and contributes to the public resources, are worth more to the U.S. than if they had been reserved as a soli tude for future purchasers. The lamentable events of the last 4 years, and the sacrifices made by the gallant men of our Army and Navy, have swelled the records of the Pension Bureau to an unprecedented extent. On the 30th day of June last, the total number of pensioners was 85, 986, requiring for their annual pay, exclusive of expensas, the sum of $8,023, 445. The number of applicwtions that have been allowed since that date will require a large increase of this amount for the next fiscal year. The means for the payment of the stipends due, under existing laws, to our disabled soldiers and sailors, and to the families of such as have erished in the service of the country, will no doubt be checrfully and promptly granted. A grateful people will not esitate to sanction an measures having for their object the relief 0 soldiers mutilated and families made fatherless in the efforts to preserve our national existence. The report of the Postmasfir General presents an encouraging exhibit of the operations of the postoffice Dept during the year. The revenues of the past year from the loyal States alone exceeded the maximum annual receipts from all the States previous to the rebellion, in the sum of $6,038,091; and the annual average increase of revenue during the last 4 years, compared with the revenues of the 4 years immediately preceding the rebellion, was $3, 638, 845. The revenues of the last fiscal ear amounted to $14,556,158, and the expend itures to $18,094,728, leaving a surplus of receipts over exenditures of $861,430. Progress has been made in restoring the postal service in the southern States. The views by the PostMGenl against presented the policy of granting subsidies to ocean iiiuil steamship lines upon established routes, and in favor of continuing the present system, which limits the compensation for ocean service to the postage earnings, are recommended to the careful consideration of Congress. It appears, from the report of the SecyNavy, that while, at the commencement of the present year, there were in commission 630 vessels of all classes and descriptions, armed with 3,000 guns and mannedby 51,000 men, the number of vessels at present in 00"}? mission is 117, with 830 guns and 12, 128 men. By this prompt reduction of the naval forces the excnses of the Government have been largely diminished, and a number of vessels, purchased for naval purposes from the merchant marine, have been returned to the peaceful pursuits of commerce. Since the suppression of active hostilities our foreign squadrons have been re'established, and consist of vessels much more efficient than those employed on similar service previous to the rebellion. The suggestion for the enlargement of the navy yards, and especially for the establilshment of one in fresh water for iron clad vessels, is deservin of consideration, as is also the recommenation for a different loca on and more ample grounds for the Naval Academy. In the report of the SecyWar, a general summary is given of the military campaigns of 1864 and 1865, ending in the suppression of armed resistance to the national authority in the insurgent States. The operations of the general administrative bureaus of the lVar Dept during the ast year are detailed, and an estimate m e of the appropriations that Will be required for military purposes in the fiscal ear commencing the 1st pay of July, 1866. The national military force on the lst of May 1865, numbered 1,000, 516 men. It is proposed to reduce the military establishment to a peace footing, comprehending 50,000 troops of all arms organized so as to admit.of an enlargement by filling n the ranks to 82,600, if the circumstances of the country should require an augmentation of the Army. The volunteer force has already been reduced by the discharge from service of over 800,000 troops, and the Dept is proceed in rapidly in the work of further reduction. Tewar estimates are reduced from $516, 240, 131 to $33, 814, 461; which amount, in the opinion of the Dept, is adequate for a peace establishment. The measures of retrenchment in each bureau and branch of the service exhibit a diligent economy worthy of commendation. Reference is also made in the report to the necessity of providing for a uniform militia system, and to the propriety of making suitable proviso n for wounded and disabled officers an soldiers. The revenue system of the country is a subject of vital interest to its honor and prosperity, and should command the earnest consideration of Congress. The Secrets of the Treasury will lay before you a full an detailed report of the receipts and disbursements of the last fiscal year, of the 1st quarter of the present fiscal year, of the probable receipts and expenditures for the other tfec quarters, and the estimates for the year following the 30th of June, 1860. I might content myself with a reference to that report, in which you will find all the information required for your deliberations and decision, but the paramount importance of the subject so presses itself on my own mind, that I cannot but lay before you my views of the measures which are required for the good character, and, I might almost say, for the existence of this peop e The life of a republic lies certainly in the energy, virtue, and intelligence of its citizens; but it is equally true that a good revenue system is the life of an organized Government. I meet you at a time when the nation has voluntarily burdened itself with a debt unprecedented in our annals. Vast as is its amount, it fades away into nothing when compared with the countless bleSsings that will be conferred upon our country and upon man by the reservation of the nation’s life. Now, on the rst occasion of the meeting of Congress since the return of peace, it is of the utmost importance to inaugurate a just policy, which shall at once h. but in motion, and which shall commend itself to those who come after us for its continuance. We must aim at nothing less than the complete elfacement of the financial evils that necessarily followed a state of civilWar. We must endeavor to appl the earliest remedy to the deranged state of the currency, and not shrink from devising a policy which, without being oppressive to the people, shall immediately begin to effect a reduction of the debt, and, if persisted in, discharge it fully within a definitely fixed number of years. It is our 1st duty to prepare in earnest for our recovery from the ever increasing evils of on irredeemable currency, without a sudden revulsion, and yet without untimely procrastination. For that end, we must, each in our respective positions, prepare the way. I hold it the dut of the Executive to insist upon frugality in the expenditures; and a sparing economy is itself a great national resource. Of the banks to which authority has been given to is? sue notes secured by bonds of the U.S., I we may require the greatest moderation and prudence, and the law must be rigidly enforced when its limits are exceeded. We may, each one of us, counsel our active and enterprising countrymen to be constantly on their guard, to liquidate debts Contracted in a paper currency, and, by conducting business as nearly as possible on a system of cash payments or s ort credits, to hold themselves prepared to return to the standard of gold and silver. To aid our fellow citizens in the prudent management of their monetary affairs, the duty devolves on us to diminish by law the amount of paper money now in circulation. 5 years ago the bank note circulation of the country amounted to not much more than 200 millions; now the circulation, bank and national, exceeds 700 millions. The simple statment of the fact recommends, more strongly than any words of mine could do, the necessitf of our restraining this expansion. The gradual reduction of the currency is the only measure that can save the business of the country from disastrous calamities; and this can be almost imperceptibly accomplished by gradually funding the national Circulation in securities that maybe made redeemable at the pleasure of the Government. Our debt is doubly secure 1st in the actual wealth and still greater undeveloped resources of the country; and next in the character of our institutions. The most intelligent observers among political economists have not failed to remark, that the public debt of a country is safe in proportion as its people are free; that the debt of a republic is the safest of all. Our history confirms and establishes the theory and is, I firmly believe, destined to give it a still more signal illustration. The secret of this superiority springs not merely from the fact that in a republic the n tioual obligations are distributed more widely t rough countless numbers in all classes of society; it has its root in the character of our laws. Here all men contribute to the public welfare, and bear their fair share of the public burdens. During the war, under the impulses of patriotism, the men of the great body of the people, without regard to their own comparative want of wealth, thronged to our armies and filled our fleets of war, and held themselves ready to offer their lives for the public good. Now, in their turn, the property and income of the country should bear their just proportion of the burden of taxation, while in our impost system, through means of which increased vitality is incident ally imparted to all the industrial interests of the nation, the duties should be so adjusted as to fall most heavily on nrticles of luxury, leaving the necessaries of life as free from taxation as the absolute wants of the Government, economically administered, will justity. No favored class should demand freedom from assessment, and the taxes should be so distributed as not to fall undul on the poor, but rather on the acoumula wealth of the country. We should look at the national debt just as it is not as a national blessing, but as a heavy burden on the industry of the country, to be discharged without unnecessary delay. It is estimated by the SecyTreasury that the expenditures for the fiscal year ending the 30th June, 1866, will exceed the receipts $112, 194, 947. It is gratifying, however, to state that it is also estimated that the revenue for the year ending the 80th of June, 1867, will exceed the expenditures in the sum of $111,082, 818. This amount, or so much as may be deemed sufficient for the purpose. may be applied to the reduction of the public debt, which, on the 31st day of October, 1865, was $2, 740, 854, 750. Every reduction will diminish the total amount of interest to be paid, and so enlarge the means of still further reductions, until the whole shall be liquidated; and this, as will be seen from the estimates of the SecyTreasury, may be accomplished by annual payments even within a period not exceedin 30 years. I have faith that we shall do all this within a reasonable time; that, as we have amazed the world by the suppression of a civilWar which was thought to be beyond the control of any Government, so we shall equally show the superiorit of our institutions by the prompt and faithfu discharge of our national obligations. The Dept of Agriculture, under its present direction, is accomplishing much in evcloing and utilizing the vast agricultural capabilities of the country; and for information respecting the details of its management, reference is made to the annual report of the Commissioner. I have dwelt thus fully on our domestic affairs because of their transcendent importance. Under any circumstances. our great extent of territory and variety of climate, producing almost everything that is necessary for the wants, and even the comforts of man, make us singularly independent of the varying policy of foreign Powers, and protect us against every temptation to “ entangling alliances, ” while at the present moment the reiestablislnnent of harmony, and the strength that comes from harmony, will be our best security against “ nations who feel power and forget right.” For myself, it has sea and it will be my constant aim to promote cues and antity with all foreign nations and ’owers; and I have every reason to believe that they all, without exception, are animated by the same disposition. Our relations with the Emperor of China, so recent in their origin, are most friendly. Our commerce with his dominions is receiving new developments; and it is very pleasing to find that the Government of that great empire manifests satisfaction with our policy, and reposes just confidence in the fairness which marks our intercourse. The unbroken harmony between the U.S and the Emperor of Russia is receiving s new support from an enterprise designed to carry tele graphic lines across the continent of Asia, through his dominions, and so to connect us with all Europe by a new channel of intercourse. Our commerce with South America is about to receive encouragement by a direct line of mail steamships to the rising empire of Brazil. The distinguished party of men of science who have recently left our country to make a scientific exploration of the natural history and rivers and mountain ranges of that region, have received from the Emperor that generous welcome which was to have been expected from his constant friendship for the U.S., and his well known zeal in promoting the advancement of knowledge. A hope is entertained that our commerce with the rich and populous countries that border the Mediterranean seamay be largely increased. Nothing will be wanting, on the part of this Government, to extend the protection of our flag over the enterprise of our fellow citizens. We receive from the Powers in that region assurances of good will; and it is worthy of note that a special envoy has brought us messages of condolence on the death of our late Chief Magistrate from the Bey of Tunis, whose rule includes the old dominions of Carthage, on the African coast. Our domestic contest, now happily ended, has left some traces in our relations With one at least of the great maritime Powers. The formal accordance of belligerent rights to the insurgent States was unprecedente, and has not been justified by the issue. But in the systems of neutrality pursued by the Powers which made that concession, there was a marked difference. The materials of war for the insurgent States were furnished, in a great measure, from the workshops of GreatBritain; and British ships, manned 'y British subjects, and prepared for receiving British armaments, sallied from the ports of Gr Britain to make war on American commerce, under the shelter of a commission from the insurgent States. These ships, having once escaped from British ports, ever afterward entere them in every part of the world, to refit, and so to renew their depredations. The consequences of this conduct were most disastrous to the States then in rebellion, increasing their desolation and misery by the prolongation of our civil contest. It had. more over, the effect, to a great extent, to drive the American flag from the sea, and to transfer much of our shipping and our commerce to the very Power whose subjects had created the necessity for such a change. These events took place before I was called to the administration of the Government. The sincere desire for peace by which I am animated led me to approve the prosal, already made, to submitt e questions which had thus arisen between the countries to arbitration. These questions are of such moment that they must have commanded the attention of the great Powers, and are so interwoven with the cues and interests of every one of them as to have insured an impartial decision. I regret to inform you that GreatBritain declined the arbitrament, but, on the other hand, invited us to the formation of a Jtcommission to settle mutual claims between the 2 countries, from which those for the dedations before mentioned should be excluded.The proposition, in that very unsatisfactory form, has been declined. The U.S. did not present the subject as an impeachment of the good faith of aPower which Was professing the most friendly dispositions, but as involving questions of public law, of which the settlement is essential to the peace of nations; and, though pecuniary reparation to their injured citizens would have followed incidentally on a decision against GreatBritain, such compensation was not their primary object. They had a higher motive, and it was in the interests of peace and justice to establish important principles of intemational law. The correspondence will be placed before you. The groun on which the British minister rests his Estification is, substantially, that the municipal wof anation, and the domestic interpretations of that law, are the measure of its duty as a neutral; and vI feel bound to declare my opinion. before you and before the world, that that justification cannot be sustained before the tribunal of nations. At the same time I do not advise to any present attempt at redress by acts of legislation. For the future, friendship between the 2 countries must rest on the basis of mutual justice. From the moment of the establishment of our free Constitution, the civilized world has been convulsed by revolutions in the interests of democracy or of monarchy; but through all those revolutions the U.S. have wisely and firmly refused to become propagandists of republicanism. It is the only government suited to our condition; but we have never sought to impose it on others; and we have consistently allowed the advice of Washington to recommend it only by the careful res ervation and prudentuse oft e blessing. during all the intervening period the policy of European Powers and of the U.S. has, oh the whole, been harmonious. Twice, in deed, rumors of the invasion of some parts of America. in the interest of monarchy, have prevailed; twice my predecessors have had occasion to announce the views of this nation in respect to such interference. On both occasions the remonstrance of the U.S. was respected, from a deep conviction, on the part of ‘uro can Governments, that the system of non-inte erence and mutual abstinence from propagandism was the true rule for the 2 cmis hares. Since those times we have advance in wealth and power; but we retain the same purpose to leave the nations of Europe to choose their own dynasties and form their own systems of government. This consistent moderation mav justly demand a corresponding moderation. We should regard it as a great calamity to ourselves, to the cause of good government, and to the peace of the world, lhonld any EurOpeau Power challenge the American people, as it were, to the defense of republicanism against foreign interference. We cannot foresee and are unwilling to consider what opportunities might present themselves, what combinations might offer to protect ourselves against designs inimical to our form of government. The U.S. desire to act in the future as they have ever acted heretofore; the never will be driven from that course but y the aggression, of European Powers; and we rely on the wisdom and justice of those Powers to respect the system of non-interference which has so long been sanctioned by time, and which, by its good results, has aproved itself to both continents. The correspondence between the U.S and France, in reference to questions which have become subjects of discussion be ‘tween the 2 Governments, will, at a.proper time, be laid before Congress. When, on the organization of our Government, under the Constitution, the POTUS delivered his inaugural address to the 2 Houses of Congress, he said to them, and through them to the country and to mankind, that “the reservation of the sacred fire of liberty and t a destiny of the republican model of government are justly considered as deeply, perhaps as finally, staked on the experiment mtruste to the American people." And the HoRep answered Washington by the Voice of Madison: “We adore the invisible Hand which has led the American people, through so many difficulties, to cheris a conscious responsibility for the destiny of republican liberty.” More than 76 years have glided away since these words were 5 oken; the U.S. have passed throng severer trials than were fore seen; and now, at this new epoch in our existence as one nation, with our Union purified by sorroWs, and strengthened by conflict, and established by the virtue of the people, the greatness of the occasiOn invites us once more to repeat, with solemnity, the pledges of our fathers to hold ourselves answerable before our fellow men for the success of the RFG. Experience has proved its sufficiency in peace an in war; it has vin dicated its authority through dangers, and afflictions, and sudden and terrible emergencies which Would have crushed an system that ha been less firmly fixed in the cart of the people. At the inn ration of Washington the foreign relations of the country were few and its trade was repressed by hostile regulations; now all the civilized nations of the globe wel come our commerce, and their Governments profess toward us amity. Then our country felt its way hesitatingly along an untried path, with States so little bound together by rapid means of communication as to be hardly known to one another, and with historic traditions extending over very few years; now intercourse between the States is swift and intimate; the eXperience of centuries has been crowded into a few generations, and has created an intense, indestructible nationality., Then our jurisdiction did not reach beyond the inconvenient boundaries of the territory which had achieved independence; now, through cessions of lands, 1st colonized by Spain and France, the country has acquired a more complex character, and has for its natural limits the chain of lakes, the Gulf of Mexico, and on the east and the west the 2 great oceans. Other nations were wasted by civilWars for ages before they could establish for themselves the necessary degree of unity; the latent conviction that our form of government is the best ever known to the world, has enabled us to emerge from civilWar within 4 years, with a complete vindication of the constitutional authority of the General Government, and with our local liberties and State institutions unimpaired. The throngs of emigrants that crowd to our shores are witnesses of the confidence of all peo les in our performance. Here is the great ad of free labor, where industry is blessed with unexampled rewards, and the bread of the working man is sweetened by the consciousness that the cause of the country “is his own cause, his own safety, his own dignity.” Here every one enjoys the free use of his faculties am the choice of activity as a natural right. Here, under the combined influence of a fruitful soil, genial climes, and happy institutions, population has increased 15 fold within a century. Here, through the easy development of bound less resources, wealth has increased with 2 fold greater rapidity than numbers, so that we have become secure against the financial vicissitudes of other countries, and alike in business and in opinion, are self centered and truly independent. Here more and more care is given to provide education for every one born on our soil. Here religion, released from political connection with the civil refuses to subServe the craft of state government becomes, in its independence, the spiritual life of the people. Here toleration is extended to every opinion, in the quiet certainty that truth needs only a fair field to secure the victory. Here the human mind goes forth unshackled in the pursuit of science, to collect stores of knowledge and acquire an ever increasing mastery over the forces of nature. Here the national domain is offered and held in millions of separate freeholds, so that our fellow citizens, beyond the occupants of any other part of the earth, constitute in reality a people. Here exists the democratic form of government; and that form of government, by the confession of Euro can statesmen, “gives a power of which no ot or form is capable, because it incorporates every man wrth the State, and arouses evWthing that belongs to the soul.” here, in past history, does a parallel exist to the public happiness which is within the reach of the people of the U.S.? Where, in an part of the glflie, can institutions be foun so suited to their habits or so entitled to their love as their own free Constitution? Every one of them, then, in whatever part of the land he has his home, must wish its perpetuity. Who of them will not now acknowledge, in the words of Washington that “every step by which the people of the U.S. have advanced to the character of an in dependent nation, seems to have been distinguished by some token of providential agency? Who will not join with me in the prayer, that the invisible Hand which has led us through the clouds that gloomed around our path, will so guide us onward to a perfect restoration of fraternal affection, that we of this day may be able to transmit our great inheritance, of State governments in all their rights, of the General Government in its whole constitutional vigor, to our posterity, and they to theirs through countless generations? ANDREWJOHNSON. WASHINGTON, December 4, 1866.