I recommend that Congress should immediately provide by law for granting letters of marque and reprisal against vessels under the Mexican flag.  It is true that there are but few, if any, commercial vessels of Mexico upon the high seas, and it is therefore not probable that many American privateers would be fitted out in case a law should pass authorizing this mode of warfare.  It is, notwithstanding, certain that such privateers may render good service to the commercial interests of the country by recapturing our merchant ships should any be taken by armed vessels under the Mexican flag, as well as by capturing these vessels themselves.  Every means within our power should be rendered available for the protection of our commerce.

The annual report of the Secretary of the Treasury will exhibit a detailed statement of the condition of the finances.  The imports for the fiscal year ending on the 30th of June last were of the value of $121,691,797, of which the amount exported was $11,346,623, leaving the amount retained in the country for domestic consumption $110,345,174.  The value of the exports for the same period was $113,488,516, of which $102,141,893 consisted of domestic productions and $11,346,623 of foreign articles.

The receipts into the Treasury for the same year were $29,499,247.06, of which there was derived from customs $26,712,667.87, from the sales of public lands $2,694,452.48, and from incidental and miscellaneous sources $92,126.71.  The expenditures for the same period were $28,031,114.20, and the balance in the Treasury on the 1st day of July last was $9,126,439. 08.

The amount of the public debt, including Treasury notes, on the 1st of the present month was $24,256,494.60, of which the sum of $17,788,799.62 was outstanding on the 4th of March, 1845, leaving the amount incurred since that time $6,467,694.98.

In order to prosecute the war with Mexico with vigor and energy, as the best means of bringing it to a speedy and honorable termination, a further loan will be necessary to meet the expenditures for the present and the next fiscal year.  If the war should be continued until the 30th of June, 1848, being the end of the next fiscal year, it is estimated that an additional loan of $23,000,000 will be required.  This estimate is made upon the assumption that it will be necessary to retain constantly in the Treasury $4,000,000 to guard against contingencies.  If such surplus were not required to be retained, then a loan of $19,000,000 would be sufficient.  If, however, Congress should at the present session impose a revenue duty on the principal articles now embraced in the free list, it is estimated that an additional annual revenue of about two millions and a half, amounting, it is estimated, on the 30th of June, 1848, to $4,000,000, would be derived from that source, and the loan required would be reduced by that amount.  It is estimated also that should Congress graduate and reduce the