2.  The organization of colored persons into the war service.

3.  The exchange of prisoners, fully set forth in the letter of General Hitchcock.

4.  The operations under the act for enrolling and calling out the national forces, detailed in the report of the Provost-Marshal-General.

5.  The organization of the invalid corps, and

6.  The operation of the several departments of the Quartermaster-General, Commissary-General, Paymaster-General, Chief of Engineers, Chief of Ordnance, and Surgeon-General.

It has appeared impossible to make a valuable summary of this report, except such as would be too extended for this place, and hence I content myself by asking your careful attention to the report itself.

The duties devolving on the naval branch of the service during the year and throughout the whole of this unhappy contest have been discharged with fidelity and eminent success.  The extensive blockade has been constantly increasing in efficiency as the Navy has expanded, yet on so long a line it has so far been impossible to entirely suppress illicit trade.  From returns received at the Navy Department it appears that more than 1,000 vessels have been captured since the blockade was instituted, and that the value of prizes already sent in for adjudication amounts to over $13,000,000.

The naval force of the United States consists at this time of 588 vessels completed and in the course of completion, and of these 75 are ironclad or armored steamers.  The events of the war give an increased interest and importance to the Navy which will probably extend beyond the war itself.

The armored vessels in our Navy completed and in service, or which are under contract and approaching completion, are believed to exceed in number those of any other power; but while these may be relied upon for harbor defense and coast service, others of greater strength and capacity will be necessary for cruising purposes and to maintain our rightful position on the ocean.

The change that has taken place in naval vessels and naval warfare since the introduction of steam as a motive power for ships of war demands either a corresponding change in some of our existing navy-yards or the establishment of new ones for the construction and necessary repair of modern naval vessels.  No inconsiderable embarrassment, delay, and public injury have been experienced from the want of such governmental establishments.  The necessity of such a navy-yard, so furnished, at some suitable place upon the Atlantic seaboard has on repeated occasions been brought to the attention of Congress by the Navy Department, and is again presented in the report of the Secretary which accompanies this communication.  I think it my duty to invite your special attention to this subject, and also to that of establishing a yard and depot for naval purposes upon one of the Western rivers.  A naval force has been created on those interior waters, and under