political condition of the inhabitants, and we should make reasonable allowances for the difficulties inseparable from this task.  We desire that the islands may maintain their independence and that other nations should concur with us in this sentiment.  We could in no event be indifferent to their passing under the dominion of any other power.  The principal commercial states have in this a common interest, and it is to be hoped that no one of them will attempt to interpose obstacles to the entire independence of the islands.

The receipts into the Treasury for the fiscal year ending on the 30th of June last were, in cash, $48,830,097.50, and in Treasury notes funded $10,833,000, making an aggregate of $59,663,097.50; and the expenditures for the same time were, in cash, $46,798,667.82, and in Treasury notes funded $10,833,000, making an aggregate of $57,631,667.82.

The accounts and estimates which will be submitted to Congress in the report of the Secretary of the Treasury show that there will probably be a deficit occasioned by the expenses of the Mexican War and treaty on the 1st day of July next of $5,828,121.66, and on the 1st day of July, 1851, of $10,547,092.73, making in the whole a probable deficit to be provided for of $16,375,214.39.  The extraordinary expenses of the war with Mexico and the purchase of California and New Mexico exceed in amount this deficit, together with the loans heretofore made for those objects.  I therefore recommend that authority be given to borrow what ever sum may be necessary to cover that deficit.  I recommend the observance of strict economy in the appropriation and expenditure of public money.

I recommend a revision of the existing tariff and its adjustment on a basis which may augment the revenue.  I do not doubt the right or duty of Congress to encourage domestic industry, which is the great source of national as well as individual wealth and prosperity.  I look to the wisdom and patriotism of Congress for the adoption of a system which may place home labor at last on a sure and permanent footing and by due encouragement of manufactures give a new and increased stimulus to agriculture and promote the development of our vast resources and the extension of our commerce.  Believing that to the attainment of these ends, as well as the necessary augmentation of the revenue and the prevention of frauds, a system of specific duties is best adapted, I strongly recommend to Congress the adoption of that system, fixing the duties at rates high enough to afford substantial and sufficient encouragement to our own industry and at the same time so adjusted as to insure stability.

The question of the continuance of the subtreasury system is respectfully submitted to the wisdom of Congress.  If continued, important modifications of it appear to be indispensable.

For further details and views on the above and other matters connected with commerce, the finances, and revenue I refer to the report of the Secretary of the Treasury.