a greater diminution in the revenue, but also to the fact that the appropriations exceeded by nearly six millions the amount which was asked for in the estimates then submitted.  The sum necessary for the service of the year, beyond the probable receipts and the amount which it was intended should be reserved in the Treasury at the commencement of the year, will be about six millions.  If the whole of the reserved balance be not at once applied to the current expenditures, but four millions be still kept in the Treasury, as seems most expedient for the uses of the Mint and to meet contingencies, the sum needed will be ten millions.

In making this estimate the receipts are calculated on the supposition of some further extension of the indulgence granted in the payment of bonds for duties, which will affect the amount of the revenue for the present year to the extent of two and a half millions.

It is not proposed to procure the required amount by loans or increased taxation.  There are now in the Treasury $9,367,214, directed by the act of the 23d of June, 1836, to be deposited with the States in October next.  This sum, if so deposited, will be subject under the law to be recalled if needed to defray existing appropriations; and as it is now evident that the whole, or the principal part, of it will be wanted for that purpose, it appears most proper that the deposit should be withheld.  Until the amount can be collected from the banks, Treasury notes may be temporarily issued, to be gradually redeemed as it is received.

I am aware that this course may be productive of inconvenience to many of the States.  Relying upon the acts of Congress which held out to them the strong probability, if not the certainty, of receiving this installment, they have in some instances adopted measures with which its retention may seriously interfere.  That such a condition of things should have occurred is much to be regretted.  It is not the least among the unfortunate results of the disasters of the times; and it is for Congress to devise a fit remedy, if there be one.  The money being indispensable to the wants of the Treasury, it is difficult to conceive upon what principle of justice or expediency its application to that object can be avoided.  To recall any portion of the sums already deposited with the States would be more inconvenient and less efficient.  To burden the country with increased taxation when there is in fact a large surplus revenue would be unjust and unwise; to raise moneys by loans under such circumstances, and thus to commence a new national debt, would scarcely be sanctioned by the American people.

The plan proposed will be adequate to all our fiscal operations during the remainder of the year.  Should it be adopted, the Treasury, aided by the ample resources of the country, will be able to discharge punctually every pecuniary obligation.  For the future all that is needed will be that caution and forbearance in appropriations which the diminution of the revenue requires and which the complete accomplishment or great forwardness of many expensive national undertakings renders equally consistent with prudence and patriotic liberality.