The value of foreign merchandise imported during the last fiscal year was $207,240,101, and the value of domestic productions exported was $149,861,911, besides $17,204,026 of foreign merchandise exported, making the aggregate of the entire exports $167,065,937.  Exclusive of the above, there was exported $42,507,285 in specie, and imported from foreign ports $5,262,643.

In my first annual message to Congress I called your attention to what seemed to me some defects in the present tariff, and recommended such modifications as in my judgment were best adapted to remedy its evils and promote the prosperity of the country.  Nothing has since occurred to change my views on this important question.

Without repeating the arguments contained in my former message in favor of discriminating protective duties, I deem it my duty to call your attention to one or two other considerations affecting this subject.  The first is the effect of large importations of foreign goods upon our currency.  Most of the gold of California, as fast as it is coined, finds its way directly to Europe in payment for goods purchased.  In the second place, as our manufacturing establishments are broken down by competition with foreigners, the capital invested in them is lost, thousands of honest and industrious citizens are thrown out of employment, and the farmer, to that extent, is deprived of a home market for the sale of his surplus produce.  In the third place, the destruction of our manufactures leaves the foreigner without competition in our market, and he consequently raises the price of the article sent here for sale, as is now seen in the increased cost of iron imported from England.  The prosperity and wealth of every nation must depend upon its productive industry.  The farmer is stimulated to exertion by finding a ready market for his surplus products, and benefited by being able to exchange them without loss of time or expense of transportation for the manufactures which his comfort or convenience requires.  This is always done to the best advantage where a portion of the community in which he lives is engaged in other pursuits.  But most manufactures require an amount of capital and a practical skill which can not be commanded unless they be protected for a time from ruinous competition from abroad.  Hence the necessity of laying those duties upon imported goods which the Constitution authorizes for revenue in such a manner as to protect and encourage the labor of our own citizens.  Duties, however, should not be fixed at a rate so high as to exclude the foreign article, but should be so graduated as to enable the domestic manufacturer fairly to compete with the foreigner in our own markets, and by this competition to reduce the price of the manufactured article to the consumer to the lowest rate at which it can be produced.  This policy would place the mechanic by the side of the farmer, create a mutual interchange of their respective commodities, and thus stimulate the industry of the whole country and render us independent of foreign nations for the supplies required by the habits or necessities of the people.