793 



vokc our adhesion to principles that we approve. Let 

 our hope for redress rest rather on a returning sense 

 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 impor- 

 tant changes in the condition of our southern neigh- 

 bor. 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 con- 

 stitution of the country, have excited lively interest. 

 Although preferring our own government and institu- 

 tions to those of other countries, we can have no dis- 

 position 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 repub- 

 lic, 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 rea- 

 son to apprehend any obstacle to the free exercise 

 of their choice. The Emperor of the French has sol- 

 emnly 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 con- 

 tinuance of those peaceful relations which have been 

 maintained on the frontier, and even a large develop- 

 ment 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 consuls 

 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 Depart- 

 ment, 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 communi- 

 cate 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 separa- 

 tion took effect. It was partly with a view to enter- 

 ing into such arrangements as the change in our gov- 

 ernment had made necessary, that we felt it our duty 

 to send commissioners abroad, for the purpose of en- 

 tering 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 for- 

 eign 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 laws of nations. 

 It is proper to add that these remarks are intended to 

 apply solely to treaty obligations toward foreign Gov- 

 ernments, and have no reference to the rights of indi- 

 viduals. 



The state of the public finances is such as to demand 

 your eaiiiest and most earnest attention. I need hard- 

 ly 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 contribu- 

 tion. Relief is thus entirely wi'thin our reach, if we 

 have the wisdom to legislate in such manner as to ren- 

 der available the means at our disposal. 



At the commencement of the war, we were far from 

 anticipating the magnitude and duration of the strug- 

 gle 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, in- 



habited by many millions of people, whose birthright 

 of freedom is dearer to them than life. A long ex- 

 emption from direct taxation by the General Govern- 

 ment, has 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 expenditures, while the means for con- 

 ducting 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 rais- 

 ing 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 be- 

 tween the confederacy and the United States, and pro- 

 vision 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 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 contest a 

 short and decisive one," and had called on Congress 

 for four hundred thousand men and four hundred mil- 

 lions of dollars. The Congress had exceeded the exe- 

 cutive 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 per- 

 manent 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, conver- 

 tible 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 de- 

 preciation that might arise from over issue of the cur- 

 rency, would be checked by the constant exercise of 

 the holder's right to fund the notes at a liberal inter- 

 est, payable in specie. This system depended for suc- 

 cess on the continued ability of Government to pay 

 the interest in specie; and means were, therefore, pro- 

 vided for that purpose in the law authorizing the is- 

 sues. 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 com- 

 merce 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 block- 

 ade "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 Treas- 

 ury notes at rates nearly equal to par in specie. So 

 long as the interest continued to be thus paid with the 

 reserve of coin preexisting iu our country, experi- 

 ence sustained the expectations of those who devised 

 the system. Thus, on the 1st of the following Decem- 

 ber, 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 neu- 



