Speech Transcript:

Fellow-Citizens of the Senate and House of Representatives:

To express gratitude to God in the name of the people for the
preservation of the United States is my first 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 civil war substantially to a close; that his 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 any one of his predecessors. To fulfill my trust I
need the support and confidence of all who are associated with me in
the various departments of Government and the support and confidence
of the people. There is but one way in which I can hope to gain their
necessary aid. It is to state with frankness 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 great
measure depend on your and their undivided approbation.

The Union of the United States of America was intended by its authors
to last as long as the States themselves shall last. "The Union shall
be perpetual" are the words of the Confederation. "To form a more
perfect Union," by an ordinance of the people of the United States,
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, and, 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 experience. And when for its validity it required the
approval of a people that occupied 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 imparted contains within itself
ample resources for 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 United States to make good the guaranty to that
State of a republican form of government, and so to maintain the
homogeneousness of all. Does the lapse of time reveal defects? A
simple mode of amendment is provided in the Constitution 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 every patriotic Chief Magistrate by Jefferson and
Jackson not less than by Washington and Madison. The parting advice
of the Father of his Country, while yet President, to the people of
the United States 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 whole constitutional vigor as the sheet anchor of
our peace at home and safety abroad." The Constitution is the work of
"the people of the United States," and it should be as indestructible
as the people.

It is not strange that the framers of the Constitution, which had no
model in the past, should not have fully comprehended the excellence
of their own work. Fresh from a struggle against arbitrary power,
many patriots suffered from harassing fears of an 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 four 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 departments 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--This Constitution and the laws of the United States
which shall be made in pursuance thereof, and all treaties made or
which shall be made under the authority of the United States, shall
be the supreme law of the land, and the judges in every State shall
be bound thereby, anything in the constitution or laws of any State
to the contrary notwithstanding. Certainly the Government of the
United States 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
municipal--and rests on the great distinguishing principle of the
recognition of the 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 interest of union, as to the individual
citizen in the interest of freedom.

States, with proper limitations of power, are essential to the
existence of the Constitution of the United States. At the very
commencement, when we assumed a place among the powers of the earth,
the Declaration of Independence was adopted by States; so also were
the Articles of Confederation: and when "the people of the United
States" ordained and established the Constitution it was the assent
of the States, one by one, which gave it vitality. In the event, too,
of any amendment to the Constitution, the proposition 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 "supreme authority" of the
Constitution of the United States. The perpetuity of the Constitution
brings with it the perpetuity of the States; their mutual relation
makes us what we are, and in our political system their connection is
indissoluble. The whole can not exist without the parts, nor the parts
without the whole. So long as the Constitution of the United States
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 effects of a civil war.
Resistance to the General Government appeared to have exhausted
itself. The United States had recovered possession of their forts and
arsenals, and their armies were in the occupation of every State which
had attempted to secede. Whether the territory within the limits of
those States should be held as conquered territory, under military
authority emanating from the President as the head of the Army, was
the first question that presented itself for decision.

Now military governments, established for an indefinite period, would
have offered no security for the early 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? The chief persons who would
have followed in the train of the Army would have been dependents on
the General Government or men who expected profit from the miseries
of their erring fellow-citizens. The powers of patronage and rule
which would have been exercised under the President, over a vast and
populous and naturally wealthy region are greater than, unless under
extreme necessity, I should be willing to intrust to any one man.
They are such as, for myself, I could never, unless on occasions of
great emergency, consent to exercise. The willful use of such powers,
if continued through a period of years, would have endangered the
purity 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 inhabitants ceased to exist.
But the true theory is that all pretended acts of secession were from
the beginning null and void. The States can not 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 foreign power. 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
quietly, and by almost imperceptible steps, sought to restore the
rightful energy of the General Government and of the States. To that
end provisional governors have been appointed for the States,
conventions called, governors elected, legislatures assembled, and
Senators and Representatives chosen to the Congress of the United
States. At the same time the courts of the United States, as far as
could be done, have been reopened, so that the laws of the United
States may be enforced through their agency. The blockade has been
removed and the custom-houses reestablished in ports of entry, so
that the revenue of the United States may be collected. The
Post-Office Department renews its ceaseless activity, and the General
Government is thereby enabled to communicate promptly with its
officers and agents. The courts bring security to persons and
property; the opening of the ports invites the restoration of
industry and commerce; the post-office renews the facilities of
social intercourse and of business. And is it not happy for us all
that the restoration of each one of these functions of the General
Government brings with it a blessing to the States over which they
are extended? Is it not a sure promise of harmony and renewed
attachment to the Union that after all that has happened the return
of the General Government is known only as a beneficence?

I know very well that this policy is attended with some risk; 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 United States, 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 United States. 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 United States 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 of amending 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 restoration 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 within 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
efface the sad memory of the past; this is the measure which will
most certainly call population and capital and security to those
parts 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 peace. Until it
is done the past, however much we may desire it, will not be
forgotten, The adoption of the amendment reunites us beyond all power
of disruption; it heals the wound that is still imperfectly 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 than ever to mutual affection and support.

The amendment to the Constitution being adopted, it would remain for
the States whose powers have been so long in abeyance to resume their
places in the two branches of the National Legislature, and thereby
complete the work of restoration. Here it is for you, fellow-citizens
of the Senate, and for you, fellow-citizens of the House of
Representatives, 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 United States 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
existed; and it was ascertained by inquiry, that the circuit court of
the United States would not be held 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
deliberations the restoration of this branch of the civil authority
of the United States is therefore necessarily referred, with the hope
that early provision will be made for the resumption of all its
functions. It is manifest that treason, most flagrant in 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
fully vindicated, the truth dearly established and affirmed that
treason is a crime, that traitors should be punished and the offense
made infamous, and, at the same time, that the question may be
judicially settled, finally and forever, that no State of its own
will has the right to renounce its place in the Union.

The relations of the General Government toward the 4,000,000
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 first movement toward
independence, the Congress of the United States 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 franchise. 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 United States recognizes these
diversities when it enjoins that in the choice of members of the
House of Representatives of the United States "the electors in each
State shall have the qualifications requisite for electors of the
most numerous branch 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 electors 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 civil
war the late President never harbored the purpose--certainly never
avowed the purpose--of disregarding it; and in the acts of Congress
during that period nothing can be found which, during the continuance
of hostilities much less after their close, would have sanctioned any
departure by the Executive from a policy which has so uniformly
obtained. Moreover, a concession of the elective franchise to the
freedmen by act of the President of the United States 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 United States would have warranted.

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 change shall have
subsided, it may prove that they will receive the kindest 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 extend 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 can not too strongly urge a dispassionate
treatment of this subject, which should be carefully kept aloof from
all party strife. We must equally avoid hasty assumptions of any
natural impossibility for the two 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 migration and
expatriation is not to be questioned, I would not advise their forced
removal and colonization. Let us 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 certainty 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 can not
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 ought to be able to enforce the
contract, so ought the other. The public interest will be best
promoted if the several States will provide adequate 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 greatest acts on record to have brought
4,000,000 people into freedom. The career of free industry must be
fairly opened to them, and then their future prosperity and condition
must, after all, rest mainly on themselves. If they fail, and so
perish away, let us be careful 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 quietly settle themselves. Now that slavery is at an
end, or near its end, the greatness of its evil in the point of view
of public economy becomes more and more apparent. Slavery was
essentially a monopoly of labor, and as such locked the States where
it prevailed against the incoming of free industry. Where labor was
the property of the capitalist, the white man was excluded from
employment, or had but the second 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 pans of the civilized world to assist in
developing various and immeasurable resources which have hitherto
lain dormant. The eight or nine 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 part
of our country. And the future influx of population to them will be
mainly from the North or from the most cultivated 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 enterprising population, which will vie with
any in the Union in compactness, inventive genius, wealth, and
industry.

Our Government springs 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 people, from whom it derives
its existence, it should, 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 first necessity, for the
maintenance of the Union, that that 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 even virtually prohibited. It is best, while
the country is still young and while the tendency to dangerous
monopolies of this kind is still feeble, 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 Secretary of the Interior explains the condition of
the public lands, the transactions of the Patent Office and the
Pension Bureau, the management of our Indian affairs, the progress
made in the construction of the Pacific Railroad, and furnishes
information in reference to matters of local interest in the District
of Columbia. It also presents evidence of the successful operation of
the homestead act, under the provisions of which 1,160,533 acres of
the public lands were entered during the last fiscal year--more than
one-fourth of the whole number of acres sold or otherwise disposed of
during 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 per cent 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, whose labor creates wealth and contributes to
the public resources, are worth more to the United States than if
they had been reserved as a solitude for future purchasers.

The lamentable events of the last four 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 expenses, the sum of $8,023,445. The
number of applications 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
perished in the service of the country will no doubt be cheerfully
and promptly granted. A grateful people will not hesitate to sanction
any measures having for their object the relief of soldiers mutilated
and families made fatherless in the efforts to preserve our national
existence.

The report of the Postmaster-General presents an encouraging exhibit
of the operations of the Post-Office Department 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 four years, compared with the revenues of the four
years immediately preceding the rebellion, was $3,533,845. The
revenues of the last fiscal year amounted to $14,556,158 and the
expenditures to $13,694,728, leaving a surplus of receipts over
expenditures of $861,430. Progress has been made in restoring the
postal service in the Southern States. The views presented by the
Postmaster-General against the policy of granting subsidies to the
ocean mail 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 Secretary of the Navy that while at
the commencement of the present year there were in commission 530
vessels of all classes and descriptions, armed with 3,000 guns and
manned by 51,000 men, the number of vessels at present in commission
is 117, with 830 guns and 12,128 men. By this prompt reduction of the
naval forces the expenses 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 reestablished, 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 establishment of one in fresh water for ironclad
vessels, is deserving of consideration, as is also the recommendation
for a different location and more ample grounds for the Naval
Academy.

In the report of the Secretary of War 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 War
Department during the past year are detailed and an estimate made of
the appropriations that will be required for military purposes in the
fiscal year commencing the 1st day of July, 1866. The national
military force on the 1st 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 up 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 Department is proceeding
rapidly in the work of further reduction. The war estimates are
reduced from $516,240,131 to $33,814,461, which amount, in the
opinion of the Department, 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 provision for
wounded and disabled officers and 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 Secretary of the Treasury will lay
before you a full and detailed report of the receipts and
disbursements of the last fiscal year, of the first quarter of the
present fiscal year, of the probable receipts and expenditures for
the other three quarters, and the estimates for the year following
the 30th of June, 1866. 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 can not 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 people.
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 preservation of the
nation's life. Now, on the first 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 be put 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 effacement
of the financial evils that necessarily followed a state of civil war.
We must endeavor to apply the earliest remedy to the deranged state of
the currency, and not shrink from devising a policy which, with-out
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 first duty to prepare in earnest for our recovery from the
ever-increasing evils of an 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 duty 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 issue
notes secured by bonds of the United States 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 short 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. Five
years ago the bank-note circulation of the country amounted to not
much more than two hundred millions; now the circulation, bank and
national, exceeds seven hundred millions. The simple statement of the
fact recommends more strongly than any words of mine could do the
necessity 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 may be made redeemable at the pleasure
of the Government.

Our debt is doubly secure--first 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 national
obligations are distributed more widely through 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 incidentally imparted to all the industrial
interests of the nation, the duties should be so adjusted as to fall
most heavily on articles of luxury leaving the necessaries of life as
free from taxation as the absolute wants of the Government
economically administered will justify. No favored class should
demand freedom from assessment, and the taxes should be so
distributed as not to fall unduly on the poor, but rather on the
accumulated 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 Secretary of the Treasury that the
expenditures for the fiscal year ending the 30th of 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
30th of June, 1867, will exceed the expenditures in the sum of
$111,682,818. 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
Secretary of the Treasury, may be accomplished by annual payments
even within a period not exceeding thirty 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 civil war which was thought to be beyond
the control of any government, so we shall equally show the
superiority of our institutions by the prompt and faithful discharge
of our national obligations.

The Department of Agriculture under its present direction is
accomplishing much in developing 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 reestablishment 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 been and it will be
my constant aim to promote peace and amity with all foreign nations
and powers, 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 United States and the Emperor of Russia is receiving a new support
from an enterprise designed to carry telegraphic 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
United States 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 Sea may 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
unprecedented, 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 Great Britain, and British ships, manned by British
subjects and prepared for receiving British armaments, sallied from
the ports of Great 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 afterwards entered 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, moreover, 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
proposal, already made, to submit the question 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 peace and interests of every
one of them as to have insured an impartial decision. I regret to
inform you that Great Britain declined the arbitrament, but, on the
other hand, invited us to the formation of a joint commission to
settle mutual claims between the two countries, from which those for
the depredations before mentioned should be excluded. The
proposition, in that very unsatisfactory form, has been declined.

The United States did not present the subject as an impeachment of
the good faith of a power 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 Great Britain, 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
international law. The correspondence will be placed before you. The
ground on which the British minister rests his justification is,
substantially, that the municipal law of a nation and the domestic
interpretations of that law are the measure of its duty as a neutral,
and I feel bound to declare my opinion before you and before the world
that that justification can not 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 two 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 United
States 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
followed the advice of Washington to recommend it only by the careful
preservation and prudent use of the blessing. During all the
intervening period the policy of European powers and of the United
States has, on the whole, been harmonious. Twice, indeed, 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 United States was respected from a
deep conviction on the part of European Governments that the system
of noninterference and mutual abstinence from propagandism was the
true rule for the two hemispheres. Since those times we have advanced
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 may 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 should any European power challenge the American people, as it
were, to the defense of republicanism against foreign interference.
We can not 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
United States desire to act in the future as they have ever acted
heretofore; they never will be driven from that course but by the
aggression of European powers, and we rely on the wisdom and justice
of those powers to respect the system of noninterference which has so
long been sanctioned by time, and which by its good results has
approved itself to both continents.

The correspondence between the United States and France in reference
to questions which have become subjects of discussion between the two
Governments will at a proper time be laid before Congress.

When, on the organization of our Government under the Constitution,
the President of the United States delivered his inaugural address to
the two Houses of Congress, he said to them, and through them to the
country and to mankind, that--The preservation of the sacred fire of
liberty and the destiny of the republican model of government are
justly considered, perhaps, as deeply, as finally, staked on the
experiment intrusted to the hands of the American people. And the
House of Representatives answered Washington by the voice of Madison:
We adore the Invisible Hand which has led the American people, through
so many difficulties, to cherish a conscious responsibility for the
destiny of republican liberty. More than seventy-six years have
glided away since these words were spoken; the United States have
passed through severer trials than were foreseen; 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 republican
form of government. Experience has proved its sufficiency in peace
and in war; it has vindicated its authority through dangers and
afflictions, and sudden and terrible emergencies, which would have
crushed any system that had been less firmly fixed in the hearts of
the people. At the inauguration 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 welcome 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, first 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 two great oceans. Other nations were wasted by
civil wars 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 civil war within four 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 peoples in our permanence. Here is the great
land of free labor, where industry is blessed with unexampled rewards
and the bread of the workingman is sweetened by the consciousness that
the cause of the country "is his own cause, his own safety, his own
dignity." Here everyone enjoys the free use of his faculties and 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 fifteen-fold within a century. Here, through
the easy development of boundless resources, wealth has increased with
twofold 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 everyone
born on our soil. Here religion, released from political connection
with the civil government, refuses to subserve the craft of
statesmen, and 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 European statesmen,
"gives a power of which no other form is capable, because it
incorporates every man with the state and arouses everything that
belongs to the soul."

Where in past history does a parallel exist to the public happiness
which is within the reach of the people of the United States? Where
in any part of the globe can institutions be found 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 United States have advanced to the character of an independent
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?