Not perceiving in what manner any of the powers given to the Executive alone could be further usefully employed in bringing this unfortunate controversy to a satisfactory termination, the subject was by my predecessor referred to Congress as one calling for its interposition.  In accordance with the clearly understood wishes of the Legislature, another and formal demand for satisfaction has been made upon the Mexican Government, with what success the documents now communicated will show.  On a careful and deliberate examination of their contents, and considering the spirit manifested by the Mexican Government, it has become my painful duty to return the subject as it now stands to Congress, to whom it belongs to decide upon the time, the mode, and the measure of redress.  Whatever may be your decision, it shall be faithfully executed, confident that it will be characterized by that moderation and justice which will, I trust, under all circumstances govern the councils of our country.

The balance in the Treasury on the 1st January, 1837, was $45,968,523.  The receipts during the present year from all sources, including the amount of Treasury notes issued, are estimated at $23,499,981, constituting an aggregate of $69,468,504.  Of this amount about $35,281,361 will have been expended at the end of the year on appropriations made by Congress, and the residue, amounting to $34,187,143, will be the nominal balance in the Treasury on the 1st of January next; but of that sum only $1,085,498 is considered as immediately available for and applicable to public purposes.  Those portions of it which will be for some time unavailable consist chiefly of sums deposited with the States and due from the former deposit banks.  The details upon this subject will be found in the annual report of the Secretary of the Treasury.  The amount of Treasury notes which it will be necessary to issue during the year on account of those funds being unavailable will, it is supposed, not exceed four and a half millions.  It seemed proper, in the condition of the country, to have the estimates on all subjects made as low as practicable without prejudice to any great public measures.  The Departments were therefore desired to prepare their estimates accordingly, and I am happy to find that they have been able to graduate them on so economical a scale.  In the great and often unexpected fluctuations to which the revenue is subjected it is not possible to compute the receipts beforehand with great certainty, but should they not differ essentially from present anticipations, and should the appropriations not much exceed the estimates, no difficulty seems likely to happen in defraying the current expenses with promptitude and fidelity.

Notwithstanding the great embarrassments which have recently occurred in commercial affairs, and the liberal indulgence which in consequence of these embarrassments has been extended to both the merchants and the banks, it is gratifying to be able to anticipate that the Treasury notes which have been issued during the present year will be redeemed and that the resources of the Treasury, without any resort to loans or increased taxes, will prove ample for defraying all charges imposed on it during 1838.