On the return of peace our forces were withdrawn from Mexico, and the volunteers and that portion of the Regular Army engaged for the war were disbanded.  Orders have been issued for stationing the forces of our permanent establishment at various positions in our extended country where troops may be required.  Owing to the remoteness of some of these positions, the detachments have not yet reached their destination.  Notwithstanding the extension of the limits of our country and the forces required in the new territories, it is confidently believed that our present military establishment is sufficient for all exigencies so long as our peaceful relations remain undisturbed.

Of the amount of military contributions collected in Mexico, the sum of $769,650 was applied toward the payment of the first installment due under the treaty with Mexico.  The further sum of $346,369.30 has been paid into the Treasury, and unexpended balances still remain in the hands of disbursing officers and those who were engaged in the collection of these moneys.  After the proclamation of peace no further disbursements were made of any unexpended moneys arising from this source.  The balances on hand were directed to be paid into the Treasury, and individual claims on the fund will remain unadjusted until Congress shall authorize their settlement and payment.  These claims are not considerable in number or amount.

I recommend to your favorable consideration the suggestions of the Secretary of War and the Secretary of the Navy in regard to legislation on this subject.

Our Indian relations are presented in a most favorable view in the report from the War Department.  The wisdom of our policy in regard to the tribes within our limits is clearly manifested by their improved and rapidly improving condition.

A most important treaty with the Menomonies has been recently negotiated by the Commissioner of Indian Affairs in person, by which all their land in the State of Wisconsin—­being about 4,000,000 acres—­has been ceded to the United States.  This treaty will be submitted to the Senate for ratification at an early period of your present session.

Within the last four years eight important treaties have been negotiated with different Indian tribes, and at a cost of $1,842,000; Indian lands to the amount of more than 18,500,000 acres have been ceded to the United States, and provision has been made for settling in the country west of the Mississippi the tribes which occupied this large extent of the public domain.  The title to all the Indian lands within the several States of our Union, with the exception of a few small reservations, is now extinguished, and a vast region opened for settlement and cultivation.

The accompanying report of the Secretary of the Navy gives a satisfactory exhibit of the operations and condition of that branch of the public service.

A number of small vessels, suitable for entering the mouths of rivers, were judiciously purchased during the war, and gave great efficiency to the squadron in the Gulf of Mexico.  On the return of peace, when no longer valuable for naval purposes, and liable to constant deterioration, they were sold and the money placed in the Treasury.