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tion, and entitle our brave officers and soldiers to the grateful thanks of their country. The nation deplores the loss of the brave officers and men who have gallantly fallen while vindicating and defending their country's rights and honor.

It is a subject of pride and satisfaction that our volunteer citizen soldiers, who so promptly responded to their country's call, with an experience of the discipline of a camp of only a few weeks, have borne their part in the hard-fought battle of Monterey with a constancy and courage equal to that of veteran troops and worthy of the highest admiration. The privations of long marches through the enemy's country and through a wilderness have been borne without a murmur. By rapid movements the Province of New Mexico, with Santa Fe, its capital, has been captured without bloodshed. The Navy has cooperated with the Army and rendered important services; if not so brilliant, it is because the enemy had no force to meet them on their own element and because of the defenses which nature has interposed in the difficulties of the navigation on the Mexican coast. Our squadron in the Pacific, with the cooperation of a gallant officer of the Army and a small force hastily collected in that distant country, has acquired bloodless possession of the Californias, and the American flag has been raised at every important point in that Province.

I congratulate you on the success which has thus attended our military and naval operations. In less than seven months after Mexico commenced hostilities, at a time selected by herself, we have taken possession of many of her principal ports, driven back and pursued her invading army, and acquired military possession of the Mexican Provinces of New Mexico, New Leon, Coahuila, Tamaulipas, and the Californias, a territory larger in extent than that embraced in the original thirteen States of the Union, inhabited by a considerable population, and much of it more than 1,000 miles from the points at which we had to collect our forces and commence our movements. By the blockade the import and export trade of the enemy has been cut off. Well may the American people be proud of the energy and gallantry of our regular and volunteer officers and soldiers. The events of these few months afford a gratifying proof that our country can under any emergency confidently rely for the maintenance of her honor and the defense of her rights on an effective force, ready at all times voluntarily to relinquish the comforts of home for the perils and privations of the camp. And though such a force may be for the time expensive, it is in the end economical, as the ability to command it removes the necessity of employing a large standing army in time of peace, and proves that our people love their institutions and are ever ready to defend and protect them. While the war was in a course of vigorous and successful prosecution, being still anxious to arrest its evils, and considering that after the brilliant victories of our arms on the 8th and 9th of May last the national

honor could not be compromitted by it, another overture was made to Mexico, by my direction, on the 27th of July last to terminate hostilities by a peace just and honorable to both countries. On the 31st of August following the Mexican Government declined to accept this friendly overture, but referred it to the decision of a Mexican Congress to be assembled in the early part of the present month. I communicate to you herewith a copy of the letter of the Secretary of State proposing to reopen negotiations, of the answer of the Mexican Government, and of the reply thereto of the Secretary of State.

The war will continue to be prosecuted with vigor as the best means of securing peace. It is hoped that the decision of the Mexican Congress, to which our last overture has been referred, may result in a speedy and honorable peace. With our experience, however, of the unreasonable course of the Mexican authorities, it is the part of wisdom not to relax in the energy of our military operations until the result is made known. In this view it is deemed important to hold military possession of all the Provinces which have been taken until a definitive treaty of peace shall have been concluded and ratified by the two countries.

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.

By the laws of nations a conquered country is subject to be governed by the conqueror during his military possession and until there is either a treaty of peace or he shall voluntarily withdraw from it. The old civil government being necessarily superseded, it is the right and duty of the conqueror to secure his conquest and to provide for the maintenance of civil order and the rights of the inhabitants. This right has been exercised and this duty performed by our military and naval commanders by the establishment of temporary governments in some of the conquered Provinces of Mexico, assimilating them as far as practicable to the free institutions of our own country. In the Provinces of New Mexico and of the Californias little, if any, further resistance is apprehended from the inhabitants to the temporary governments which have thus, from the necessity of the case and according to the laws of war, been established. It may be proper to provide for the security of these important conquests by making an adequate appropriation for the purpose of erecting fortifications and defraying the expenses necessarily incident to the maintenance of our possession and authority over them.

Near the close of your last session, for reasons communicated to Congress, I deemed it important as a measure for securing a speedy peace with Mexico, that a sum of money should be appropriated and placed in the power of the Executive, similar to that which had been made upon two former occasions during the Administration of President Jefferson. On the 26th of February, 1803, an appropriation of $2,000.000 was

made and placed at the disposal of the President. Its object is well known. It was at that time in contemplation to acquire Louisiana from France, and it was intended to be applied as a part of the consideration which might be paid for that territory. On the 13th of February, 1806, the same sum was in like manner appropriated, with a view to the purchase of the Floridas from Spain. These appropriations were made to facilitate negotiations and as a means to enable the President to accomplish the important objects in view. Though it did not become necessary for the President to use these appropriations, yet a state of things might have arisen in which it would have been highly important for him to do so, and the wisdom of making them can not be doubted. It is believed that the measure recommended at your last session met with the approbation of decided majorities in both Houses of Congress. Indeed, in different forms, a bill making an appropriation of $2,000,000 passed each House, and it is much to be regretted that it did not become a law. The reasons which induced me to recommend the measure at that time still exist, and I again submit the subject for your consideration and suggest the importance of early action upon it. Should the appropriation be made and be not needed, it will remain in the Treasury; should it be deemed proper to apply it in whole or in part, it will be accounted for as other public expenditures.

Immediately after Congress had recognized the existence of the war with Mexico my attention was directed to the danger that privateers might be fitted out in the ports of Cuba and Porto Rico to prey upon the commerce of the United States, and I invited the special attention of the Spanish Government to the fourteenth article of our treaty with that power of the 27th of October, 1795, under which the citizens and subjects of either nation who shall take commissions or letters of marque to act as privateers against the other "shall be punished as pirates."

It affords me pleasure to inform you that I have received assurances from the Spanish Government that this article of the treaty shall be faithfully observed on its part. Orders for this purpose were immediately transmitted from that Government to the authorities of Cuba and Porto Rico to exert their utmost vigilance in preventing any attempts to fit out privateers in those islands against the United States. From the good faith of Spain I am fully satisfied that this treaty will be executed in its spirit as well as its letter, whilst the United States will on their part faithfully perform all the obligations which it imposes on them.

Information has been recently received at the Department of State that the Mexican Government has sent to Havana blank commissions to privateers and blank certificates of naturalization signed by General Salas, the present head of the Mexican Government. There is also reason to apprehend that similar documents have been transmitted to other parts of the world. Copies of these papers, in translation, are herewith transmitted.

As the preliminaries required by the practice of civilized nations for commissioning privateers and regulating their conduct appear not to have been observed, and as these commissions are in blank, to be filled up with the names of citizens and subjects of all nations who may be willing to purchase them, the whole proceeding can only be construed as an invitation to all the freebooters upon earth who are willing to pay for the privilege to cruise against American commerce. It will be for our courts of justice to decide whether under such circumstances these Mexican letters of marque and reprisal shall protect those who accept them, and commit robberies upon the high seas under their authority, from the pains and penalties of piracy.

If the certificates of naturalization thus granted be intended by Mexico to shield Spanish subjects from the guilt and punishment of pirates under our treaty with Spain, they will certainly prove unavailing. Such a subterfuge would be but a weak device to defeat the provisions of a solemn treaty.

I recommend that Congress should immediately provide by law for the trial and punishment as pirates of Spanish subjects who, escaping the vigilance of their Government, shall be found guilty of privateering against the United States. I do not apprehend serious danger from these privateers. Our Navy will be constantly on the alert to protect our commerce. Besides, in case prizes should be made of American vessels, the utmost vigilance will be exerted by our blockading squadron to prevent the captors from taking them into Mexican ports, and it is not apprehended that any nation will violate its neutrality by suffering such prizes to be condemned and sold within its jurisdiction.

I recommend that Congress should immediately provide by law for granting letters of marque and reprisal against vessels under the Mexican flag. It is true that there are but few, if any, commercial vessels of Mexico upon the high seas, and it is therefore not probable that many American privateers would be fitted out in case a law should pass authorizing this mode of warfare. It is, notwithstanding, certain that such privateers may render good service to the commercial interests of the country by recapturing our merchant ships should any be taken by armed vessels under the Mexican flag, as well as by capturing these vessels themselves. Every means within our power should be rendered available for the protection of our commerce.

The annual report of the Secretary of the Treasury will exhibit a detailed statement of the condition of the finances. The imports for the fiscal year ending on the 30th of June last were of the value of $121,691,797, of which the amount exported was $11,346,623, leaving the amount retained in the country for domestic consumption $110,345,174. The value of the exports for the same period was $113,488,516, of which $102,141,893 consisted of domestic productions and $11,346,623 of foreign articles.

The receipts into the Treasury for the same year were $29,499,247.06, of which there was derived from customs $26,712,667.87, from the sales of public lands $2,694,452.48, and from incidental and miscellaneous sources $92,126.71. The expenditures for the same period were $28,031,114.20, and the balance in the Treasury on the 1st day of July last was $9,126,439.08.

The amount of the public debt, including Treasury notes, on the 1st of the present month was $24,256,494.60, of which the sum of $17,788,799.62 was outstanding on the 4th of March, 1845, leaving the amount incurred since that time $6,467,694.98.

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In order to prosecute the war with Mexico with vigor and energy, the best means of bringing it to a speedy and honorable termination, a further loan will be necessary to meet the expenditures for the present and the next fiscal year. If the war should be continued until the 30th of June, 1848, being the end of the next fiscal year, it is estimated that an additional loan of $23,000,000 will be required. This estimate is made upon the assumption that it will be necessary to retain constantly in the Treasury $4,000,000 to guard against contingencies. If such surplus were not required to be retained, then a loan of $19,000,000 would be sufficient. If, however, Congress should at the present session impose a revenue duty on the principal articles now embraced in the free list, it is estimated that an additional annual revenue of about two millions and a half, amounting, it is estimated, on the 30th of June, 1848, to $4,000,000, would be derived from that source, and the loan required would be reduced by that amount. It is estimated also that should Congress graduate and reduce the price of such of the public lands as have been long in the market the additional revenue derived from that source would be annually, for several years to come, between half a million and a million dollars; and the loan required may be reduced by that amount also. Should these measures be adopted, the loan required would not probably exceed $18,000,000 or $19,000,000, leaving in the Treasury a constant surplus of $4,000,000. The loan proposed, it is estimated, will be sufficient to cover the necessary expenditures both for the war and for all other purposes up to the 30th of June, 1848, and an amount of this loan not exceeding one-half may be required during the present fiscal year, and the greater part of the remainder during the first half of the fiscal year succeeding.

In order that timely notice may be given and proper measures taken to effect the loan, or such portion of it as may be required, it is important that the authority of Congress to make it be given at an early period of your present session. It is suggested that the loan should be contracted for a period of twenty years, with authority to purchase the stock and pay it off at an earlier period at its market value out of any surplus which may at any time be in the Treasury applicable to that purpose. After the establishment of peace with Mexico, it is supposed that a considerable surplus will exist, and that the debt may be extinguished in a much shorter period than that for which it may be contracted. The

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