I invite your attention to the suggestions on this subject and on others connected with his Department in the report of the Secretary of War.  The appropriations for the support of the Army during the current fiscal year ending 30th June next were reduced far below the estimate submitted by the Department.  The consequence of this reduction is a considerable deficiency, to which I invite your early attention.  The expenditures of that Department for the year ending 30th June last were $9,060,268.58, The estimates for the year commencing 1st July next and ending June 30, 1853, are $7,898,775.83, showing a reductions of $1,161,492.75, The board of commissioners to whom the management of the affairs of the military asylum created by the act of 3d March last was intrusted have selected a site for the establishment of an asylum in the vicinity of this city, which has been approved by me subject to the production of a satisfactory title.

The report of the Secretary of the Navy will exhibit the condition of the public service under the supervision of that Department.  Our naval force afloat during the present year has been actively and usefully employed in giving protection to our widely extended and increasing commerce and interests in the various quarters of the globe, and our flag has everywhere afforded the security and received the respect inspired by the justice and liberality of our intercourse and the dignity and power of the nation.

The expedition commanded by Lieutenant De Haven, dispatched in search of the British commander Sir John Franklin and his companions in the Arctic Seas, returned to New York in the month of October, after having undergone great peril and suffering from an unknown and dangerous navigation and the rigors of a northern climate, without any satisfactory information of the objects of their search, but with new contributions to science and navigation from the unfrequented polar regions.  The officers and men of the expedition having been all volunteers for this service and having so conducted it as to meet the entire approbation of the Government, it is suggested, as an act of grace and generosity, that the same allowance of extra pay and emoluments be extended to them that were made to the officers and men of like rating in the late exploring expedition to the South Seas.

I earnestly recommend to your attention the necessity of reorganizing the naval establishment, apportioning and fixing the number of officers in each grade, providing some mode of promotion to the higher grades of the Navy having reference to merit and capacity rather than seniority or date of entry into the service, and for retiring from the effective list upon reduced pay those who may be incompetent to the performance of active duty.  As a measure of economy, as well as of efficiency, in this arm of the service, the provision last mentioned is eminently worthy of your consideration.