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President's message.

To the Senate and House of Representatives of the Confederate States:

The necessity for legislative action, arising out of the important events that have marked the interval since your adjournment, and my desire to have the aid of your counsel on other matters of grave public interest, render your presence at this time more than ordinarily welcome. Indeed, but for serious obstacles to convoking you in extraordinary session, and the necessity for my own temporary absence from the seat of Government, I would have invited you to an earlier meeting than that fired at the date of your adjournment.

Grave reverses befell our arms soon after your departure from Richmond. Early in July our strong holds at Vicksburg and Port Hudson, together with their entire garrisons, capitulated to the combined land and naval forces of the enemy. The important interior position of Jackson next fell into their temporary possessing. Our unsuccessful assault on the past at Helena was followed at a later period by the invasion of Arkansas, and the retreat of our army from Little Rook gave to the enemy the control of the important valley in which it is situated.

The resolute spirit of the people soon rose superior to the temporary despondency naturally resulting from these reverses. The gallant troops, so ably commanded in the States beyond the Mississippi, indicted repeated defeats on the invading armies in Louisiana and on the coast of Texas.--Detachments of troops and active bodies of partisans kept up so effective a war on the Mississippi river as practically to destroy its value as an avenue of commerce.

The determined and successful defence of Charleston against the joint land and naval operations of the enemy afforded an inspiring example of our ability to repel the attacks even of the ironclad fleet on which they chiefly rely, while on the Northern frontier our success was still more marked.

The able commander who conducted the campaign in Virginia determined to meet the threatened advance on Richmond, for which the enemy had made long and costly preparations, by forcing their armies to cross the Potomac and fight in defence of their own capital and homes. Transferring the battle-field to their own soll, he succeeded in compelling their rapid retreat from Virginia, and in the hard-fought battle of Gettysburg inflicted such severity of punishment as disabled them from early renewal of the campaign as originally projected. Unfortunately the communications on which our General relied for receiving his supplies of munitions were interrupted by extraordinary floods, which so swelled the Potomac as to render impassable the fords by which his advance had been made, and he was thus forced to a withdrawal, which was conducted with deliberation, after securing large trains of captured supplies, and a constant but unaccepted tender of battle.--On more than one occasion the enemy has since made demonstrations of a purpose to advance, invariably followed by a precipitate retreat to entrenched lines on the approach of our forces.

The effective check thus offered to the advance of the invaders at all points, was such as to afford hope of their early expulsion from portions of the territory previously occupied by them, when the country was painfully surprised by the intelligence that the officer in command of Cumberland Gap had surrendered that important and easily defensible pass without firing a shot, upon the summons of a force still believed to have been inadequate to its reduction, and when reinforcements were within supporting distance and had been ordered to his aid. The entire garrison, including the commander, being still held prisoners by the enemy, I am unable to suggest any explanation of this disaster, which laid open Eastern Tennessee and Southwestern Virginia to hostile operations, and broke the line of communication between the seat of Government and Middle Tennessee. This easy success of the enemy was followed by an advance of Gen'l Rosecrans into Georgia, and our army evacuated Chattanooga and availed itself of the opportunity thus afforded of winning, on the field of Chickamauga, one of the most brilliant and decisive victories of the war. The signal defeat of General Rosecrans was followed by his retreat into Chattanooga, where his imperilled position had the immediate effect of relieving the pressure of the invasion at other points, forcing the concentration for his relief of large bodies of troops withdrawn from the armies in the Mississippi Valley and in Northern Virginia. The combined forces thus accumulated against us in Tennessee so greatly outnumbered our army as to encourage the enemy to attack. After a long and severe battle, in which great carnage was inflicted on him, some of our troops inexplicably abandoned positions of great strength, and by a disorderly retreat compelled the commander to withdraw the forces elsewhere successfully, and finally to retire with his whole army to a position some twenty or thirty miles to the rear. it is believed that if the troops who yielded to the assault had fought with the valor which they had displayed on previous occasions, and which was manifested in this battle on the other parts of the line, the enemy would have been repulsed with very great slaughter, and our country would have escaped the misfortune, and the army the mortification, of the first defeat that has resulted from misconduct by the troops. In the meantime the army of Gen'l Burnside was driven from all its field positions in Eastern Tennessee, and forced to retreat into its entrenchments at Knoxville, where, for some weeks, it was threatened with capture by the forces under Gen. Longstreet. No information has reached me of the final result of the operations of our commander, though intelligence has arrived of his withdrawal from that place.

While, therefore, our success in driving the enemy from our soil has not equalled the expectations confidently entertained at the commencement of the campaign, his further progress has been checked. If we are forced to regret losses in Tennessee and Arkansas, we are not without ground for congratulation on success in Louisiana and Texas. On the sea-coast he is exhausted by vain efforts to capture our ports, while on the Northern frontier he has in turn felt the pressure, and dreads the renewal of invasion. The indomitable courage and perseverance of the people in the defence of their homes have been nobly attested by the unanimity with which the Legislatures of Virginia, North Carolina, and Georgia, have recently given expression to the popular sentiment; and like manifestations may be anticipated from all the States. Whatever obstinacy may be displayed by the enemy in his desperate sacrifices of money, life, and liberty, in the hope of enslaving us, the experience of mankind has too conclusively shown the superior endurance of those who fight for liberty, and independence, to permit any doubt of the result.

Foreign relations.

I regret to inform you that there has been no improvement in the state of our relations with foreign countries since my message in January last. On the contrary, there has been a still greater divergence in the conduct of European nations from that practical impartiality which alone deserves the name of neutrality, and their action, in some cases, has assumed a character positively unfriendly.

You have heretofore been informed that, by common understanding, the initiative in all action touching the contest on this continent had been left by foreign powers to the two great maritime nations of Western Europe, and that the Governments of these two nations had agreed to take no measures without previous concert. The result of these arrangements has, therefore, placed it in the power of either France or England to obstruct at pleasure the recognition to which the Confederacy is justly entitled, or even to prolong the continuance of hostilities on this side of the Atlantic, if the policy of either could be promoted by the postponement of peace. Each, too, thus became possessed of great influence in so shaping the general exercise of notarial rights in Europe as to render them subservient to the purpose of aiding one of the belligerents to the detriment of the other. I referred at your last session to some of the leading points in the course pursued by professed neutrals, which betrayed a partisan leaning to the side of our enemies; but events have since occurred which induce me to renew the subject in greater detail than was then deemed necessary. In calling to your attention the action of those Governments I shall refer to the documents appended to President Lincoln's messages, and to their own correspondence, as disclosing the true nature of their policy and the motives which guided it. To this course no exception can be taken, inasmuch as our attention has been invited to those sources of information by their official publication.

In May, 1861, the Government of Her Britannia Majesty informed our enemies that it had not "allowed any other than an intermediate position on the part of the Southern States," and assured them "that the sympathies of this country (Great Britain) were rather with the North than with the South"

On the 1st of June, 1861, the British Government interdicted the use of its ports to "armed ships and privateers, both of the United States and the so-called Confederate States," with their prizes. The Secretary of State of the United States fully appreciated the character and motive of this interdiction when he observed to Lord Lyons, who communicated it. "that this measure, and that of the same character which had been adopted by France, would probably prove a death blow to Southern privateering."

On the 12th June, 1861, the United States Minister in London informed Her Majesty's Secretary for Foreign Affairs that the fact of his having held interviews with the Commissioners of this Government had given "dissatisfaction," and that a protraction of this relation would be viewed by the United States "as hostile in spirit, and to require some corresponding action accordingly." in response to this intimation Her Majesty's Secretary assured the minister that "he had no expectation of seeing them any more."

By proclamation, issued on the 19th and 27th of April, 1861, President Lincoln proclaimed the blockade of the coast of the Confederacy, extending from the Potomac to the Rio Grande, embracing, according to the returns of the United States Coast Survey, a coast line of three thousand five hundred and forty-nine statute miles, on which the number of rivers, bays, harbors, intents, sounds, and passes is one hundred and eighty-nine. The navy possessed by the United States for enforcing this blockade was stated in the reports communicated by President Lincoln to the Congress of the United States to consist of twenty-four vessels of all classes in commission, of which half were in distant . The absurdity of the pretension of such a blockade, in face of the authoritative declaration of the maritime sights of neutrals made at Paris, in 1856, was so glaring that the attempt was regarded as an experiment on the forbearance of neutral powers, which they would promptly resist. This conclusion was justified by the fact that the Governments of France and Great Britain determined that it was necessary for their interests to obtain from both belligerents "securities concerning the proper treatment of neutrals." In the instructions which "confided the negotiation on this matter" to the British Consul in Charleston, he was informed that "the most perfect accord on this question existed between Her Majesty's Government and the Government of the Emperor of the French," and these instructions were accompanied by a copy of the dispatch of the British Foreign office, of the 18th May, 1861, stating that there was no difference of opinion between Great Britain and the United States as to the validity of the principles enunciated in the fourth article of the declaration of Paris in reference to blockades. Your predecessors of the Provisional Congress had, therefore, no difficulty in proclaiming, nor approving, the resolutions which abandoned in favor of Great Britain and France our right to capture enemy's property when covered by the flags of those powers. The "securities" desired by those Governments were understood by us to be required from both belligerents. Centrals were exposed on our part to the exercise of the belligerent right of capturing their vessels when conveying the property of our enemies. They were exposed, on the part of the United States, to interruption in their unquestioned right of trading with us by the declaration of the paper blockade above referred to. We had no reason to doubt the good faith of the proposal made to us, nor to suspect that we were to be the only parties bound by its acceptance. It is true that the instructions of the neutral powers informed their agents that it was "essential, under present circumstances, that they should act with great caution in order to avoid raising the question of the recognition of the new Confederation," and that the understanding on the subject did not assume, for that reason, the shape of a formal convention. But it was not deemed just by us to decline the arrangement on this ground, as little more than ninety days had then elapsed since the arrival of our Commissioners in Europe, and neutral nations were fairly entitled to a reasonable delay in acting on a subject of so much importance, and which, from their point of view, presented difficulties that we, perhaps, did not fully appreciate. Certain it is, that the action of this Government on the occasion, and its faithful performance of its own engagements, have been such as to entitle it to expect on the part of those who sought in their own interests a mutual understanding, the most scrupulous adherence to their own promises. I feel constrained to inform you that in this expectation we have been disappointed, and that not only have the Governments which entered into these arrangements yielded to the prohibition against commerce with us, which has been dictated by the United States in defiance of the law of nations, but that this concession of their neutral rights to our detriment has on more than one occasion been claimed in intercourse with our enemies as an evidence of friendly feeling towards them.--A few extracts from the correspondence of Her Majesty's Chief Secretary of State for Foreign Affairs will suffice to show marked encouragement to the United States to persevere in its paper blockade, and unmistakable intimations that Her Majesty's Government would not contest its validity.

On the 21st May, 1861, Farl Russell pointed out to the United States Minister in London that "the blockade might no doubt be made effective, considering the small number of harbors on the Southern coast, even though the extent of 3,000 miles were comprehended in terms of that blockade."

On the 14th January, 1862, Her Majesty's Minister in Washington communicated to his Government that, in extenuation of the barbarous attempt to destroy the port of Charleston by sinking a stone fleet in the harbor, Mr. Seward had explained "that the Government of the United States had, last spring, with a navy very little prepared for so extensive an operation, undertaken to blockade upwards of 3,000 miles of coast. The Secretary of the Navy had reported that he could stop up the large holes' by means of his ships, but that he could not stop up the 'small ones.' It had been found necessary, therefore, to close some of the numerous small inlets by sinking vessels in the channel."

On the 6th of May, 1862, so far from claiming the right of British subjects as neutrals to trade with us as belligerents, and to disregard the blockade on the ground of this explicit confession by our enemy of his inability to render it effective, Her Majesty's Secretary of State for Foreign Affairs claimed credit with the United States for friendly action in respecting it. His lordship stated that "the United States Government, on the allegation of a rebellion pervading from nine to eleven States of the Union, have now, for more than twelve months, endeavored to maintain a blockade of three thousand miles of coast. This blockade, kept up irregularly, but when enforced, enforced severely, has seriously injured the trade and manufactures of the United Kingdom. Thousands are now obliged to resort to the poor rates for subsistence owing to this blockade. Yet Her Majesty's Government have never sought to take advantage of the obvious imperfections of this blockade in order to declare it ineffective. They have, to the loss and detriment of the British nation, scrupulously observed the duties of Great Britain towards a friendly State."

Again, on the 22d September, 1862, the same noble Earl asserted that the United States were "very far indeed" from being in "a condition to ask other nations to assume that every port of the coasts of the so-styled Confederate States is effectively blockaded."

When, in view of these facts; of the obligation of the British nation to adhere to the pledge made by their Government at Paris, in 1856, and renewed to this Confederacy in 1861; and of these repeated and explicit avowals of the imperfection, irregularity, and inefficiency of the pretended blockade of our coast, I directed our Commissioner at London to call upon the British Government to redeem its promise and to withhold its moral aid and sanction from the flagrant violation of public law committed by our enemies, we were informed that Her Majesty's Government could not regard the blockade of the Southern ports as having been otherwise than "practically effective," in February, 1862, and that "the manner in which it has since been enforced gives to neutral Governments no excuse for asserting that the blockade has not been efficiently maintained." We were further informed, when we insisted that by the terms of our agreement no blockade was to be considered effective unless "sufficient really to prevent access to our coast," "that the declaration of Paris was, in truth, directed against blockades not sustained by any actual force, or sustained by a notoriously inadequate force, such as the occasional appearance of a man-of-war in the offing for the like."

It was impossible that this mode of construing an agreement, so as to make its terms mean almost the reverse of what they plainly conveyed, could be considered otherwise than as a notification of the refusal of the British Government to remain bound by its agreement, or longer to respect those articles of the declaration of Paris, which had been repeatedly denounced by British statesmen, and had been characterized by Earl Russell as "very imprudent" and "most unsatisfactory."

If any doubt remained of the motives by which the British Ministry have been actuated in their conduct, it would be completely dissipated by the distinct avowals and explanations contained in the published speech recently made by Her Majesty's Secretary for Foreign Affairs. In commenting on the remonstrances of this Government against the countenance given to an ineffective blockade, the following language is used: "It is said we have, contrary to the declarations of Paris, contrary to international law, permitted the blockade of 3,000 miles of American coast. It is quite true we did so, and the presumable cause of complaint is quite true, that although the blockade is kept up by a sufficient number of ships, yet these ships were sent into the United States Navy in a hurry, and are ill-fitted for the purpose, and did not keep up so completely and effectively as was required an effective blockade."

This unequivocal confession of violation, both of agreement with us and of international law, is defended on grounds the validity of which we submit with confidence to the candid judgment of mankind.

These grounds are thus stated: "Still looking at the law of nations it was a blockade we, as a great belligerent power in former times, should have acknowledged. We, ourselves, had a blockade of upwards of 2,000 miles, and it did seem to me that we were bound in justice to the Federal States of America to acknowledge that blockade. But there was another reason which weighed with me: Our people were suffering severely for the want of that material which was the main staff of their industry, and it was a question of self-interest whether we should not break the blockade. But in my opinion the men of England would have been forever infamous if, for the sake of their own interest, they had violated the law of nations and made war in conjunction with these slaveholding States of America against the Federal States."

In the second of these reasons our rights are not involved, although it may be permitted to observe that the conduct of Governments has not heretofore, to my knowledge, been guided by the principle that it is infamous to assert their rights when ever the invasion of those rights creates severe suffering among their people and injuriously affects great interests. But the intimation that relations with these States would be discreditable because they are slaveholding would probably have been omitted if the official personage who has published it to the world had remembered that these States were, when colonies, made slaveholding by the direct exercise of the power of Great Britain, whose dependencies they were, and whose interests in the slave trade were then supposed to require that her colonies should be made slaveholding.

But the other ground stated is of a very grave character. It asserts that a violation of the law of nations by Great Britain in 1807, when that Government declared a paper blockade of 2,000 miles of coast, (a violation then defended by her courts and jurists on the sole ground that her action was retaliatory,) affords a justification for a similar outrage on neutral rights by the United States in 1861, for which no palliation can be suggested; and that Great Britain "is bound, in jus- tice to the Federal States, "to make return for the war waged against her by the United States in resistance of her illegal blockade of 1807 by an acquiescence in the Federal illegal blockade of 1861. The most alarming feature in this statement is its admission of a just claim on the part of the United States to require of Great Britain, during this war, a disregard of the recognized principles of modern public law and of her own compacts, whenever any questionable conduct of Great Britain "in former times" can be cited as a precedent. It is not inconsistent with respect and admiration for the great people whose Government have given us this warning to suggest that their history, like that of mankind in general, offers exceptional instances of indefensible conduct "in former times;" and we may well deny the morality of violating recent engagements through deference to the evil precedents of the past.

After defending in the manner just stated the course of the British Government on the subject of the blockade, Her Majesty's Foreign Secretary takes case to leave no doubt of the further purpose of the British Government to prevent our purchase, of vessels in Great Britain while supplying our enemies with rifles and other munitions of war, and states the intention to apply to Par lament for the furtherance of this design. He gives to the United States the assurance that he will do in their favor not only "everything that the law of nations requires, everything that the present foreign enlistment act requires," but that he will ask the sanction of Parliament"to further measures that Her Majesty's ministers may still add." This language is so unmistakably an official exposition of the policy adopted by the British Government in relation to our affairs, that the duty imposed on me by the Constitution of giving you from time to time "information of the state of the Confederacy," would not have been performed if I had failed to place it distinctly before you.

I refer you for fuller details on this whole subject to the correspondence of the State Department which accompanies this message. The tacts which I have briefly narrated are. I trust, sufficient to enable you to appreciate the true nature of the neutrality professed in this war. it is not in my power to apprise you to what extent the Government of France shares the views so unreservedly avowed by that of Great Britain, no published correspondence of the French Government on the subject having been received. No public protest nor opposition, however, has been made by His Imperial Majesty against the prohibition to trade with us imposed on French citizens by the paper blockade of the United States, although I have reason to believe that an unsuccessful attempt was made on his part to secure the assent of the British Government to a course of action more consonant with the dictates of public law and with the demands of justice towards us.

The partiality of Her Majesty's Government in favor of our enemies has been further evinced in the marked difference of its conduct on the subject of the purchase of supplies by the two belligerents. This difference has been conspicuous since the very commencement of the war. As early as the 1st May, 1861, the British Minister in Washington was informed by the Secretary of State of the United States that he had sent agents to England, and that others would go to France, to purchase arms, and this fact was communicated to the British Foreign Office, which interposed no objection. Yet in October of the same year Earl Russell entertained the complaint of the United States Minister in London that the Confederate States were importing contraband of war from the island of Nassau, directed inquiry into the matter, and obtained a report from the authorities of the island denying the allegations, which report was enclosed to Mr. Adams and received by him as satisfactory evidence to dissipate "the suspicion naturally thrown upon the authorities of Nassau by that unwarrantable act" So, too, when the Confederate Government purchased in Great Britain, as a neutral country, (and with strict observance both of the law of nations and the municipal law of Great Britain,) vessels which were subsequently armed and commissioned as vessels-of-war, after they had been far removed from English waters, the British Government, in violation of its own laws and in deference to the importunate demands of the United States, made an ineffectual attempt to seize one vessel, and did actually seize and detain another which touched at the island of Nassau on her way to a Confederate port, and subjected her to an unfounded prosecution at the very time when cargoes of munitions of war were being openly shipped from British ports to New York, to be used in warfare against us. Even now the public journals bring intelligence that the British Government has ordered the seizure, in a British port, of two vessels, on the suspicion that they may have been sold to this Government, and that they may be hereafter armed and equipped in our service, while British subjects are engaged in Ireland by tens of thousands to proceed to the United States for warfare against the Confederacy, in defiance both of the law of nations and of the express terms of the British statutes, and are transported in British ships, without an effort at concealment, to the ports of the United States, there to be armed with rifles imported from Great Britain, and to be employed against our people in a war for conquest. No royal prerogative is invoked, no executive interference is interposed against this flagrant breach of municipal and international law on the part of our enemies, while strained constructions are placed on existing statutes, new enactments proposed, and questionable expedients devised for precluding the possibility of purchase, by this Government, of vessels that are useless for belligerent purposes, unless hereafter armed and equipped outside of the neutral jurisdiction of Great Britain.

For nearly three years this Government has exercised unquestioned jurisdiction over many millions of willing and united people. It has met and defeated vast armies of invaders, who have in vain sought its subversion. Supported by the confidence and affection of its citizens, the Confederacy has lacked no element which distinguishes an independent nation according to the principles of public law. Its legislative, executive, and judicial departments, each in its sphere, have performed their appropriate functions with a regularity as undisturbed as in a time of profound peace, and the whole energies of the people have been developed in the organization of vast armies, while their rights and liberties have rested secure under the protection of the courts of justice.--This Confederacy is either independent, or it is a dependency of the United States, for no other earthly power claims the right to govern it. Without one historic fact on which the pretension can rest, without one line or word of treaty or covenant which can give color to title, the United States have asserted, and the British Government has chosen to concede, that these sovereign States are dependencies of the Government which is administered in Washington. Great Britain has accordingly entertained with that Government the closest and most intimate relations, while refusing on its demand ordinary amicable intercourse with us, and has, under arrangements made with the other nations of Europe, not only denied our just claim of admission into the family of nations, but interposed a passive, though effectual, bar to the acknowledgment of our rights by other powers. So soon as it had become apparent, by the declarations of the British Ministers in the debates of the British Parliament in July last, that Her Majesty's Government was determined to persist indefinitely in a course of policy which, under professions of neutrality, had become subservient to the designs of our enemy, I felt it my duty to recall the Commissioner formerly accredited to that Court, and the correspondence on the subject is submitted to you.

It is due to you and to our country that this full statement should be made of the just grounds which exist for dissatisfaction with the conduct of the British Government. I am well aware that we are, unfortunately, without adequate remedy for the injustice under which we have suffered at the hands of a powerful nation, at a juncture when our entire resources are absorbed in the defence of our lives, liberties, and independence, against an enemy possessed of greatly superior numbers and material resources. Claiming no favor, desiring no aid, conscious of our own ability to defend our own rights against the utmost efforts of an infuriate foe, we had thought it not extravagant to expect that assistance would be withheld from our enemies, and that the conduct of foreign nations would be marked by a genuine impartiality between the belligerents. It was not supposed that a professed neutrality would be so conducted as to justify the Foreign Secretary of the British nation in explaining, in correspondence with our enemies, how "the impartial observance of neutral obligations by Her Majesty's Government has thus been exceedingly advantageous to the cause of the more powerful of the two contending parties." The British Government may deem this war a favorable occasion for establishing, by the temporary sacrifice of their neutral rights, a precedent which shall justify the future exercise of those extreme belligerent pretensions that their naval power renders so formidable." The opportunity for obtaining the tacit assent of European Governments to a line of conduct which ignores the obligations of the declaration of Paris, and treats that instrument rather as a theoretical exposition of principles than a binding agreement, may be considered by the British Ministry as justifying them in seeking a great advantage for their own country at the expense of ours. But we cannot permit, without protest, the assertion that international law or morals regard as "impartial neutrality" conduct avowed to be "exceedingly advantageous" to one of the belligerents.

I have stated that we are without adequate remedy against the injustice under which we suffer. --There are but two measures that seem applicable to the present condition of our relations with neutral powers. One is, to imitate the wrong of which we complain, to retaliate by the declaration of a paper blockade of the coast of the United States, and to capture all neutral vessels trading with their ports that our cruisers can intercept on the high seas. This measure I cannot recommend. It is true, that in so doing we should but follow the precedents set by Great Britain and France in the Berlin and Milan decrees, and the British orders in council at the beginning of the present century.--But it must be remembered that we, ourselves, protested against those very measures as signal violations of the law of nations, and declared the attempts to excuse them, on the ground of their being retaliatory, utterly insufficient. Those blockades are now quoted by writers on public law as a standing reproach on the good name of the nations who were betrayed by temporary exasperation into wrong doing, and ought to be regarded rather as errors to be avoided than as examples to be followed.

The other measure is not open to this objection. The second article of the declaration of Paris, which provides "that the neutral flag covers enemy's goods, with the exception of contraband of war," was a new concession by belligerents in favor of neutrals, and not simply the enunciation of an acknowledged pre-existing rule like the fourth article, which referred to blockades. To this concession we bound ourselves by the Convention with Great Britain and France, which took the shape of the resolutions adopted by your predecessors on the 13th August, 1861. The consideration tendered us for that concession has been with-held. We have, therefore, the undeniable right to refuse longer to remain bound by a compact which the other party refuses to fulfill. But we should not forget that war is but temporary, and that we desire that peace shall be permanent.--The future policy of the Confederacy must ever be to uphold neutral rights to their full extent. The principles of the declaration of Paris commend themselves to our judgment as more just, more humane, and more consonant with modern civilization than those belligerent pretensions which great naval powers have heretofore sought to introduce into the maritime code. To forego our undeniable right to the exercise of those pretensions is a policy higher, worthier of us and of our cause than to revoke our adhesion to principles that we approve. Let our hope for redress rest rather on a returning since of justice which cannot fail to awaken a great people to the consciousness that the war in which we are engaged ought rather to be made a reason for forbearance of advantage, than an occasion for the unfriendly conduct of which we make just complaint.

The events of the last year have produced important changes in the condition of our Southern neighbor. The occupation of the capital of Mexico by the French army, and the establishment of a provisional government, followed by a radical change in the Constitution of the country, have excited lively interest. Although preferring our own Government and institutions to those of other countries, we can have no disposition to contest the exercise by them of the same right of self-government which we assert for ourselves. It the Mexican people prefer a monarchy to a republic, it is our plain duty cheerfully to acquiesce in their decision, and to evince a sincere and friendly interest in their prosperity. If, however, the Mexicans prefer maintaining their former institutions, we have no reason to apprehend any obstacle to the free exercise of their choice. The Emperor of the French has solemnly disclaimed any purpose to impose on Mexico a form of government not acceptable to the nation; and the eminent personage to whom the throne has been tendered declines its acceptance unless the offer be sanctioned by the suffrages of the people. In either event, therefore, we may confidently expect the continuance of those peaceful relations which have been maintained on the frontier, and even a large development of the commerce already existing to the mutual advantage of the two countries.

It has been found necessary since your adjournment to take action on the subject of certain foreign Console within the Confederacy. The nature of this action and the reasons on which it was based are so fully exhibited in the correspondence of the State Department, which is transmitted to you, that no additional comment is required.

In connection with this subject of our relations with foreign countries, it is deemed opportune to communicate my views in reference to the treaties made by the Government of the United States at a date anterior to our separation, and which were consequently binding on us as well as on foreign powers when the separation took effect. It was partly with a view to entering into such arrangements as the change in our Government had made necessary that we tell it our duty to send Commissioners abroad for the purpose of entering into the negotiations proper to fix the relative rights and obligations of the parties to those treaties. As this tender on our part has been declined — as foreign nations have refused us the benefit of the treaties to which we were parties — they certainly have ceased to be binding on us, and, in my opinion, our relations with European nations are, therefore, now controlled exclusively by the general rules of the law of nations. It is proper to add that these remarks are intended to apply solely to treaty obligations towards foreign Governments, and have no reference to rights of individuals.


The state of the public finances is such as to demand your earliest and most earnest attention. I need hardly say that a prompt and efficacious remedy for the present condition of the currency is necessary to the successful performance of the functions of Government. Fortunately the resources of our country are so ample, and the spirit of our people so devoted to its cause, that they are ready to make any necessary contribution. Relief is thus entirely within our reach if we have the wisdom to legislate in such manner as to render available the means at our disposal.

At the commencement of the war we were tar from anticipating the magnitude and duration of the struggle in which we were engaged. The most sagacious foresight could not have predicted that the passions of the Northern people would lead them blindly to the sacrifice of life, treasure, and liberty, in so vain a hope as that of subjugating thirteen independent States, inhabited by many millions of people, whose birthright of freedom is dearer to them than life. A long exemption from direct taxation by the General Government had created an aversion to its raising revenue by any other means than by duties on imports, and it was supposed that these duties would be ample for current peace expenditure, while the means for conducting the war could be raised almost exclusively by the use of the public credit.

The first action of the Provisional Congress was therefore confined to passing a tariff law and to raising a sum of fifteen millions of dollars by loan, with a pledge of a small export duty on cotton to provide for the redemption of the debt.

At its second session war was declared to exist between the Confederacy and the United States, and provision was made for the issue of twenty millions of dollars in Treasury notes, and for borrowing thirty millions of dollars on bonds. The tariff was revised, and preparatory measures taken to enable the Congress to levy internal taxation at its succeeding session. These laws were passed in May, and the States of Virginia, North Carolina, Tennessee, and Arkansas having joined the Confederacy, the Congress adjourned to meet in the city of Richmond in the following month of July.

Prior to the assembling of your predecessors in Richmond at their third session near the end of July, 1861, the President of the United States had developed in his message the purpose "to make the centrist a short and a decisive one," and had called on Congress for 400,000 men and four hundred millions of dollars. The Congress had exceeded the Executive recommendation and had authorized the levy of half a million of volunteers, besides largely increasing the regular land and naval forces of the United States. The necessity thus first became urgent that a financial scheme should be devised on a basis sufficiently large for the vast proportions of the contest with which we were threatened. Knowing that the struggle, instead of being "short and decisive," would be indefinite in duration, and could only end when the United States should awaken from their delusion of conquest, a permanent system was required, fully adapted to the great, exigencies before us.

The plan devised by Congress at that time was based on the theory of issuing Treasury notes convertible at the pleasure of the holder into eight per cent. bonds, the interest of which was to be payable in coin, and it was correctly assumed that any tendency to depreciation that might arise from over issue of the currency would he checked by the constant exercise of the holder's right to fund the notes at a liberal interest payable in specie.--This system depended for success on the continued ability of Government to pay the interest in specie, and means were, therefore, provided for that purpose in the law authorizing the issues. An internal tax termed a war tax was levied, the proceeds of which, together with the revenue from imports, were deemed sufficient for the object designed. This scheme required for its operation that our commerce with foreign nations should not be suspended. It was not to be anticipated that such suspension would be permitted otherwise than by an effective blockade; and it was absurd to suppose that a blockade "sufficient really to prevent access" to our entire coast could be maintained.

We had the means, therefore, (if neutral nations had not combined to aid our enemies by the sanction of an illegal prohibition on their commerce,) to secure the receipt into the Treasury of coin sufficient to pay the interest on the bonds, and thus maintain the Treasury notes at rates nearly equal to par in specie. So long as the interest continued to be thus paid with the reserve of coin pre existing in our country experience sustained the expectations of those who devised the system. Thus, on the first of the following December coin had only reached a premium of about twenty per cent., although it had already become apparent that the commerce of the country was threatened with permanent suspension by reason of the conduct of neutral nations, and that the accessary result must be the exhaustion of our specie reserve. Wheat, in the beginning of the year 1862, was selling at one dollar and thirty cents per bushel, not exceeding, therefore, its average price in time of peace. The other agricultural products of the country were at similar moderate rates, thus indicating that there was no excess of circulation, and that the rate of premium on specie was heightened by the exceptional causes which tended to its exhaustion, without the possibility of renewing the supply.

This review of the policy of your predecessors is given in justice to them, and it exhibits the condition of the finances at the date when the permanent Government was organized.

In the meantime the popular aversion to internal taxation by the General Government had influenced the legislation of the several States, and in only three of them--South Carolina, Mississippi and Texas--were the taxes actually collected from the people. The quotas devolving upon the remaining States had been raised by the issue of bonds and State treasury notes, and the public debt of the country was thus actually increased instead of being diminished by the taxation imposed by Congress.

Neither at the first nor second session of the present Congress were means provided by taxation for maintaining the Government, the legislation being confined to authorizing further sales of bonds and issues of treasury notes. Although repeated efforts were made to frame a proper system of taxation, you were confronted with an obstacle which did not exist for your predecessors, and which created grave embarrassment in devising any scheme of taxation. About two-thirds of the entire taxable property of the Confederate States consist of lands and slaves. The general power of taxation vested in Congress by the Provisional Constitution, (which was to be only temporary its operation,) was not restricted by any other condition than that "all duties, imposts, and excises, should be uniform throughout the States of the Confederacy." But the permanent Constitution sanctioning the principle that taxation and representation ought to rest on the same basis, specially provided that "representatives and direct taxes shall be apportioned among the several States according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and including Indians not three-fifths of all slaves."

It was further ordered that a census should be made within three years after the first meeting of the Congress, and that "no capitation or other tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken."

It is plain that under these provisions capitation and direct taxes must be levied in proportion to the ceases when made. It is also plain that the duty is imposed on Congress to pro for making a census prior to the 22d February, 1863. It may further be stated that, according to the received construction of the Constitution of the United States, (a construction acquiesced in for upwards of sixty years,) taxes on lands and slaves are direct taxes, and the conclusion seems necessarily to be that in repeating without modification, in our Constitution, this language of the Constitution of 1787, our Convention intended to attach to it the meaning which had been sanctioned by long and uninterrupted acquiescence.

So long as there seemed to be a probability of being able to carry out these provisions of the Constitution in their entirety, and in conformity with the intentions of its authors, there was an obvious difficulty in framing any system of taxation. A law which should exempt from the burthen two thirds of the property of the country would be as unfair to the owners of the remaining third as it would be inadequate to meet the requirements of the public service.

The urgency of the need was such, however, that, after very great embarrassment, and more than three months of assiduous labor, you succeeded in framing the law of the 24th April, 1863, by which you sought to reach, so far as practicable, every resource of the country except the capital invested in real estate and slaves, and by means of an income tax and a tax in kind on the produce of the soll, as well as by licenses on business occupations and professions, to command resources sufficient for the wants of the country. But a very large proportion of these resources could only be made available at the close of the present and the commencement of the ensuing year, while the intervening exigences permitted no delay. In this state of affairs, superinduced almost unavoidably by the fortunes of the war in which we are engaged, the issues of treasury notes have been increased until the currency in circulation amounts to more than six hundred millions of dollars, or more than three fold the amount required by the business of the country.

I need not enlarge upon the evil effects of this condition of things. They are unfortunately but too apparent. In addition to the difficulty presented to the necessary operations of the Government, and the efficient conduct of the war, the most deplorable of all its results is undoubtedly its corrupting influence on the mounds of the people. The possession of large amounts of treasury notes has naturally led to a desire for investment, and with a constantly increasing volume of currency there has been an equally constant increase of price in all objects of investment. This effect has stimulated purchase by the apparent certainty of profit, and a spirit of speculation has thus been festered which has so debasing an influence and such ruinous consequences that it is our highest duty to remove the cause, and no measures directed to that end can be too prompt or too stringent.

Reverting to the Constitutional provisions already cited the question recurs whether it be possible to execute the duty of apportioning taxation in accordance with the census ordered to be made as a basis. So long as this appeared to be practicable none can deny the propriety of your course in abstaining from the imposition of direct taxes till you could exercise the power in the precise mode pointed out by the terms of the fundamental law. But It is obvious that there are many duties imposed by the Constitution which depend for their fulfilment on the undisturbed possession of the territory within which they are to be performed. The same instrument which orders a census to be made in all the States imposes the duty on the Confederacy "to guarantee to every State a republican form of Government." It enjoins on us "to protect each State from invasion," and while declaring that its great objects and purposes are "to establish justice, ensure domestic tranquility, and secure the blessings of liberty to out selves and our posterity," it confers the means and thereby imposes on us the paramount duty of effecting its intent by "laying and collecting taxes, duties, imposts and excises, necessary to pay the debts, provide for the common defence and carry on the Government of the Confederate States."

None would pretend that the Constitution is violated because, by reason of the presence of hostile armies, we are unable to guarantee a Republican form of government to those States or portions of States now temporality held by the enemy, and as little justice would there be imputing blame for the failure to make the census, when that failure is attributable to causes not foreseen by the authors of the Constitution, and beyond our control. The general intent of our constitutional charter is unquestionably that the property of the country is to be taxed in order to raise revenue for the common defence, and the special mode provided for levying this tax is impracticable from unforeseen causes. It is, in my judgment, our primary duty to execute the general indent expressed by the terms of the instrument which we have sworn to obey, and we cannot excuse ourselves for the failure to fulfill this obligation on the ground that we are unable to perform it in the precise mode pointed out. Whenever it shall be possible to execute our duty in all its parts we must do so in exact compliance with the whole letter and spirit of the Constitution. Until that period shall arrive we must execute so much of it as our condition renders practicable. Whenever the withdrawal of the enemy shall place it in our power to make a census and apportionment of direct taxes, any other mode of levying them will be contrary to the will of the law giver, and incompatible with our obligation to obey that will; until that period the alternative left is to obey the paramount precept, and to execute it according to the only other rule provided, which is to "make the tax uniform throughout the Confederate States."

The considerations just presented are greatly enforced by the reflection that any attempt to apportion taxes amongst States, some of which are wholly or partially in the occupation of hostile forces, would subvert the whole intention of the framers of the Constitution, and be productive of the most revolting injustice, instead of that just correlation between taxation and representation which it was their purpose to secure.--With large portions of some of the States occupied by the enemy, what justice would there be in imposing on the remainder the whole amount of the taxation of the entire State in proportion to its representation? What else would this be in effect than to increase the burthen of those who are the heaviest sufferers by the war, and to make our own inability to protect them from invasion, as we are required to do by the Constitution, the ground for adding to their losses by an attempted adherence to the letter, in violation of the spirit, of that instrument? No such purpose could have been entertained and no such result contemplated by the framers of the Constitution. It may add weight to these considerations it we reflect that although the Constitution provided that it should go into operation with a representation temporarily distributed among the States, it expressly ordains, after providing for a census within three years, that this temporary distribution of representative power is to endure "until enumeration shall be made." Would any one argue that because the census cannot be made within the fixed period the Government must, at the expiration of that period, perish for want of a representative body? in any aspect in which the subject can be viewed I am led to the conclusion already announced, and which is understood to be in accordance with a vote taken in one or both houses at your last session. I shall, therefore, until we are able to pursue the precise mode required by the Constitution, deem it my duty to approve any law levying the taxation which you are bound to impose for the defence of the country, in any other practicable mode which shall distribute the burthen uniformly and impartially on the whole property of the people.

In your former legislation you have sought to avoid the increase in the volume of notes in circulation, by offering inducements to voluntary funding. The measures adopted for that purpose have been but partially successful, and the evil has now reached such a magnitude as to permit no other remedy than the compulsory reduction of the currency to the amount required by the business of the country. This reduction should be accompanied by a pledge that under no stress of circumstances will that amount be exceeded. No possible mode of using the credit of the Government can be so disastrous as one which disturbs the basis of all exchanges, renders impossible all calculations of future values, augments, in constantly increasing proportions, the price of all commodities, and so deprecates all fixed wages, salaries, and incomes, as to render them inadequate to bare subsistence, if to these be added the still more fatal influence on the morals and character of the people, to which I have already adverted, I am persuaded you will concur in the conclusion that an inflexible adherence to a limitation of the currency at a fixed sum is an indispensable element of any system of finance now to be adopted.

The holders of the currency now outstanding can only be protected in the recovery of their just claims by substituting for their notes some other security. If the currency is not greatly and promptly reduced, the present scale of inflated prices will not only continue to exist, but by the very fact of the large amounts thus made requisite in the conduct of the war those prices will reach rates still more extravagant and the whole system will full under its own weight, thus rendering the redemption of the debt impossible, and destroying its whole value in the hands of the holder. If, on the contrary, a funded, debt, with interest secured by adequate taxation can be substituted for the outstanding currency, its entire amount will be made available to the holder, and the Government will be in a condition canbling it, beyond the reach of any probable contingency, to prosecute the war to a successful issue. It is, therefore, demanded, as well by the interest of the creditor as of the country at large, that the evidences of the public debt now outstanding, in the shape of treasury notes, be converted into bonds, bearing adequate interest, with a provision for taxation sufficient to ensure punctual payment, and final redemption of the whole debt.

The report of the Secretary of the Treasury presents the outlines of a system which, in conjunction with existing legislation, is intended to secure the several objects of a reduction of the circulation within fixed, reasonable limit; of providing for the future wants of the Government; of furnishing security for the punctual payment of interest and final extinction of the principal of the public debt; and of placing the whole business of the country on a basis as near a specie standard as is possible during the continuance of the war. I earnestly recommend it to your consideration, and that no delay be permitted to intervene before your action on this vital subject. I trust that it will be suffered to engross your attention until you shall have disposed of it in the mannar best adapted to attain the important results which your country anticipates from your legislation.

It may be added that, in considering this subject, the people ought steadily to keep in view that the Government in contracting debt is but their agent: that its debt is their debt. As the currency in held exclusively by ourselves, it is obvious that, if each person hold treasury notes in exact proportion to the value of his whole means, each would in fact owe himself the amount of the notes held by him, and, were it possible to distribute the currency alone, to an amount sufficient to reduce it to proper limits, would afford the best of all remedies. Under such circumstances, the notes remaining in the hands of each holder, after the payment of his tax, would be worth quite as much as the whole sum previously held, for it would purchase at least an equal amount of commodities. This result cannot be perfectly attained by any device of legislation, but it can be approximated by taxation. A tax on all values has for its effect not only to impose a due share of the burthen on the note holder, but to force those who have few or none of the notes to part with a share of their possessions to those who hold the notes in excess, in order to obtain the means of satisfying the demands of the tax-gatherer. This is the only mode by which it is practicable to make all contribute as equally as possible in the burthen which all are bound to share; and it is for this reason that taxation adequate to the public exigencies, under our present circumstances, must be the basis of any funding system or other remedy for restoring stability to our finances.

The army.

To the report of the Secretary of War you are referred for details relative to the condition of the army, and the measures of legislation required for maintaining its efficiency, recruiting its numbers, and furnishing the supplies necessary for its support.

Though we have lost many of the best of our soldiers and most patriotic of our citizens, (the sad but unavoidable result of the parties and tolls of such a campaign as that which will render the year 1863 ever memorable in our annals,) the army is believed to be in all respects in better condition than at any previous period of the war. Our gallant defenders, now veterans, familiar with danger, hardened by exposure, and confident in themselves and their officers, endure privations with cheerful fortitude, and welcome battle with alacrity. The officers, by experience in field service, and the action of examining boards in relieving the incompetent, are now greatly more efficient than at the commencement of the war. The assertion is believed to be fully justified that, regarded as a whole, for character, valor, efficiency, and patriotic devotion, our army has not been equalled by any like number of troops in the history of war.

In view of the large conscription ordered by the enemy, and their subsequent call for volunteers, to be followed, if ineffectual, by a still further draft, we are admonished that no effort must be spared to add largely to our effective force as promptly as possible. The sources of supply are to be found by restoring to the army all who are improperly absent, putting an end to substitution, modifying the exemption law, restricting details, and placing in the ranks such of the able bodied men now employed as wagoners, nurses, cooks, and other employees as are doing service for which the negroes may be found competent.

The act of 16th April; 1862, provides "that persons not liable for duty may be received as substitutes for those who are, under such regulations as may be prescribed by the Secretary of War." The policy of granting this privilege has not been sustained by experience. Not only has the numerical strength of the army been seriously impaired by the frequent desertions for which substitutes have become notorious, but dissatisfaction has been excited among those who have been unable or unwilling to avail themselves of the opportunity thus afforded of avoiding the military service of their country.

I fully concur in the opinion expressed by the Secretary, that there is no ground for the objection that a new provision, to include those who furnished substitutes under the former call, would be a breach of contract. To accept a substitute was to confer a privilege, not to enter into a contract; and whenever the substitute is rendered liable to conscription it would seem to follow that the principal, whose place he had taken, should respond for him, as the Government had received no consideration for his exemption. Where, however, the new provision of law would fall to embrace a substitute now in the ranks, there appears, if the principal should again be conscribed, to be an equitable ground for compensation to the conscript, who then would have added to the service a soldier not otherwise liable to enrollment.

On the subject of exemptions, it is believed that abuses cannot be checked unless the system is placed on a basis entirely different from that now provided by law. The object of your legislation has been, not to confer privileges on classes, but to exonerate from military duty such number of persons skilled in the various trades, professions, and mechanical pursuits, as could render more valuable service to their country by laboring in their present occupation than by going into the ranks of the army. The policy is unquestionable; but the result would, it is thought, be better obtained by enrolling all such persons and allowing details to be made of the number necessary to meet the wants of the country. Considerable numbers are believed to be now exempted from the military service who are not needful to the public in their civil vocation.

Certain duties are now performed throughout the country by details from the army, which could be as well executed by persons above the present conscript age. An extension of the limit, so as to embrace persons over forty five years, and physically fit, for service in guarding posts, railroads, and bridges, in apprehending deserters, and, where practicable, assuming the place of younger men detailed for duty with the alter, ordnance, commissary, and quartermaster's bureaus of the War Department, would, it is hoped, add largely to the effective force in the field, without an undue burthen on the population.

If to the above measures be added a law to enlarge the policy of the act of the 21st April, 1862, so as to enable the department to replace not only cooks, but wagoners and other employees in the army, by negroes, it is hoped that the ranks of the army will be so strengthened for the ensuing campaign as to put af defiance the utmost efforts of the enemy.

In order to maintain, unimpaired, the existing organization of the army until the close of the war, your legislation contemplated a frequent supply of recruits, and it was expected that before the expiration of the three years for which the men were enrolled under act of 16th April, 1862, the majority of men in each company would consist of those who joined it at different dates subsequent to the original master of the company into service, and that the discharge of those who had completed their term would at no time be sufficient to leave the company with a less number then in required to enable it to retain its organization. The difficulty of obtaining recruits from certain localities, and the large number of exemptions from military service granted by different laws, have prevented sufficient accessions in many of the companies to preserve their organizations after the discharge of the original members. The advantage of retaining tried and well-approved officers and of mingling recruits with experienced soldiers, is no obvious, and the policy of such a course is no clearly indicated, that it is not deemed necessary to point out the evil consequences which would result from the destruction of the old organizations, or to dwell upon the benefits to be secured from fitting up the veteran companies as long before the discharge of the Cartier member as may be possible. In the cases where it may be found impracticable to maintain regiments in sufficient strength to justify the retention of the present organization, economy and efficiency would be promoted by consolidation and reorganization. This would involve the necessity of disbanding a part of the officers, and making regulations for accruing the most judicious selection of those who are retained, while least wounding the feelings of those who are discharged.

Experience has shown the necessity for further legislation in relation to the horses of the cavalry. Many men loss their horses by casualties of service which are not included in the provisions made to compensate the owner for the loss, and it may thus not unfrequently happen that the most officiant troopers, without fault of their own — indeed, it may be because of their zeal and activity — are lost to the cavalry service.

It would also seem proper that the Government should have complete control over every horse into service, with the limitation that the owner should not be deprived of his horse except upon due compensation being made therefore. Otherwise, mounted men may not keep horses fit for the service and the question whether they should serve mounted or on foot would depend not upon the qualifications of the men, but upon the fact of their having horses.

Some provision is deemed requisite to correct the evils arising from the long continued absence of commissioned officers. Where it is without sufficient cause, it would seem but just that the commission should be thereby vacated. Where it sesuits from capture by the enemy, which,

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