It is a gratification to be able to announce that, through the judicious and energetic action of the military commanders of the two nations on each side of the Rio Grande, under the instructions of their respective Governments, raids and depredations have greatly decreased, and in the localities where formerly most destructive have now almost wholly ceased.  In view of this result, I entertain a confident expectation that the prevalence of quiet on the border will soon become so assured as to justify a modification of the present orders to our military commanders as to crossing the border, without encouraging such disturbances as would endanger the peace of the two countries.

The third installment of the award against Mexico under the claims commission of July 4, 1868, was duly paid, and has been put in course of distribution in pursuance of the act of Congress providing for the same.  This satisfactory situation between the two countries leads me to anticipate an expansion of our trade with Mexico and an increased contribution of capital and industry by our people to the development of the great resources of that country.  I earnestly commend to the wisdom of Congress the provision of suitable legislation looking to this result.

Diplomatic intercourse with Colombia is again fully restored by the arrival of a minister from that country to the United States.  This is especially fortunate in view of the fact that the question of an inter-oceanic canal has recently assumed a new and important aspect and is now under discussion with the Central American countries through whose territory the canal, by the Nicaragua route, would have to pass.  It is trusted that enlightened statesmanship on their part will see that the early prosecution of such a work will largely inure to the benefit, not only of their own citizens and those of the United States, but of the commerce of the civilized world.  It is not doubted that should the work be undertaken under the protective auspices of the United States, and upon satisfactory concessions for the right of way and its security by the Central American Governments, the capital for its completion would be readily furnished from this country and Europe, which might, failing such guaranties, prove inaccessible.

Diplomatic relations with Chile have also been strengthened by the reception of a minister from that country.

The war between Peru, Bolivia, and Chile still continues.  The United States have not deemed it proper to interpose in the matter further than to convey to all the Governments concerned the assurance that the friendly offices of the Government of the United States for the restoration of peace upon an honorable basis will be extended in case the belligerents shall exhibit a readiness to accept them.

Cordial relations continue with Brazil and the Argentine Republic, and trade with those countries is improving.  A provision for regular and more frequent mail communication, in our own ships, between the ports of this country and the nations of South America seems to me to deserve the attention of Congress as an essential precursor of an enlargement of our commerce with them and an extension of our carrying trade.