I recommend a provision for an increase of the general officers of the Army, the deficiency of which has been illustrated by the number and distance of separate commands which the course of the war and the advantage of the service have required.

And I can not press too strongly on the earliest attention of the Legislature the importance of the reorganization of the staff establishment with a view to render more distinct and definite the relations and responsibilities of its several departments.  That there is room for improvements which will materially promote both economy and success in what appertains to the Army and the war is equally inculcated by the examples of other countries and by the experience of our own.

A revision of the militia laws for the purpose of rendering them more systematic and better adapting them to emergencies of the war is at this time particularly desirable.

Of the additional ships authorized to be fitted for service, two will be shortly ready to sail, a third is under repair, and delay will be avoided in the repair of the residue.  Of the appropriations for the purchase of materials for ship building, the greater part has been applied to that object and the purchase will be continued with the balance.

The enterprising spirit which has characterized our naval force and its success, both in restraining insults and depredations on our coasts and in reprisals on the enemy, will not fail to recommend an enlargement of it.

There being reason to believe that the act prohibiting the acceptance of British licenses is not a sufficient guard against the use of them, for purposes favorable to the interests and views of the enemy, further provisions on that subject are highly important.  Nor is it less so that penal enactments should be provided for cases of corrupt and perfidious intercourse with the enemy, not amounting to treason nor yet embraced by any statutory provisions.

A considerable number of American vessels which were in England when the revocation of the orders in council took place were laden with British manufactures under an erroneous impression that the non-importation act would immediately cease to operate, and have arrived in the United States.  It did not appear proper to exercise on unforeseen cases of such magnitude the powers vested in the Treasury Department to mitigate forfeitures without previously affording to Congress an opportunity of making on the subject such provision as they may think proper.  In their decision they will doubtless equally consult what is due to equitable considerations and to the public interest.

The receipts into the Treasury during the year ending on the 30th of September last have exceeded $16.5 millions, which have been sufficient to defray all the demands on the Treasury to that day, including a necessary reimbursement of near $3 millions of the principal of the public debt.  In these receipts is included a sum of near $5.85 millions, received on account of the loans authorized by the acts of the last session; the whole sum actually obtained on loan amounts to $11 millions, the residue of which, being receivable subsequent to the 30th of September last, will, together with the current revenue, enable us to defray all the expenses of this year.