and prevent their occupation of certain strategic points, which would have given them great advantages in the contest-a step which was justified not only by the necessities of self-defence on the part of the Confederate States, but also by a desire to aid the people of Kentucky. It was never intended by the Confederate Government to conquer or coerce the people of that State, but, on the contrary, it was declared by our generals that they would withdraw their troops if the Federal Government would do likewise. Proclamation was also made of the desire to respect the neutrality of Kentucky, and the intention to abide by the wishes of her people as soon as they were free to express their opinions. These declarations were approved by me, and I should regard it as one of the best effects of the march of our troops into Kentucky if it should end in giving to her people liberty of choice and a free opportunity to decide their own destiny according to their own will."

The other passages of most interest were the following:

"The condition of the Treasury will, doubtless, be a subject of anxious inquiry on your part. I am happy to say that the financial system already adopted has worked well so far, and promises good results for the future. To the extent that Treasury notes may be issued the Government is enabled to borrow money without interest, and this facilitates the conduct of the war. This extent is measured by the portion of the field of circulation which these notes can be made to occupy. The proportion of the field thus occupied depends, again, upon

the amount of the debts for which they are receivable, and dues, not only to the Confederate and State Governments, but also to corporations and individuals, are payable in this medium. A large amount of it may be circulated at par. There is every reason to believe that the Confederate Treasury note is fast becoming such a medium. The provision that these notes shall be convertible into Confederate Stock, bearing 8 per cent. interest, at the pleasure of the holder, ensures them against a depreciation below the value of that stock, and no considerable fall in that value need be feared so long as the interest shall be punctually paid. The punctual payment of this interest has been secured by the Act, passed by you at the last session, imposing such a rate of taxation as must provide sufficient means for that purpose.

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If we husband our means, and make a judicious use of our resources, it would be difficult to fix a limit to the period during which we could conduct a war against the adversary whom we now encounter. The very efforts which he makes to isolate and invade us must exhaust his means, whilst they serve to complete and diversify the productions of our industrial system. The reconstruction which he seeks to effect by arms becomes daily more and more palpably impossible. Not only do the causes which induced us to separate still exist in full force, but they have been strengthened, and whatever doubt may have lingered in the minds of any must have been completely dispelled by subsequent events.

"If, instead of being a dissolu

tion of a league, it were indeed a rebellion in which we are engaged, we might find ample vindication for the course we have adopted in the scenes which are now being enacted in the United States. Our people now look with contemptuous astonishment on those with whom they have been so recently associated. They shrink with aversion from the bare idea of renewing such a

connexion.

"When they see a President making war without the assent of Congress--when they behold judges threatened because they maintain the writ of habeas corpus, so sacred to freemen-when they see justice and law trampled under the armed heel of military authority, and upright men and innocent women dragged to distant dungeons-when they find all this tolerated and applauded by a people who had been in the full enjoyment of freedom but a few months ago, they believe that there must be some radical incompatibility between such a people and themselves. With such a people we may be content to live at peace, but the separation is final, and for the independence we have asserted we will accept no alternative.

as

"These gentlemen were much under the jurisdiction of the British Government, upon that ship and beneath its flag, as if they had been on its soil; and a claim on the part of the United States to seize them in the streets of London would have been as well founded as that to apprehend them where they were taken. Had they been malefactors, and citizens even of the United States, they could not have been arrested on a British ship or on British soil, unless under the express provisions of a treaty, and according to the forms therein provided for the extradition of criminals. But rights the most sacred seem to have lost all respect in their eyes.

"In conducting this war we have sought no aid, and proffered no alliances offensive and defen[S]

sive abroad. We have asked for a recognized place in the family of nations; but, in doing so, we have demanded nothing for which we did not offer a fair equivalent. The advantages of intercourse are mutual among nations, and, in seeking to establish diplomatic relations, we were only endeavouring to place that intercourse under the regulation of public law.

"Perhaps we had the right, if we had chosen to exercise it, to ask to know whether the principle that blockades to be binding must be effectual, so solemnly announced by the great Powers of Europe at Paris, is to be generally enforced or applied only to particular parties.

"When the Confederate States, at your last session, became a party to the declaration reaffirming this principle of international law, which has been recognized so long by publicists and Governments, we certainly supposed that it was to be universally enforced. The customary law of nations is made up of their practice rather than their declarations, and if such declarations are only to be enforced in particular instances at the pleasure of those who make them, then the commerce of the world, so far from being placed under the regulation of a general law, will become subject to the caprice of those who execute it or suspend it at will. If such

is to be the course of nations in regard to this law, it is plain that it will thus become a rule for the weak and not for the strong.

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Feeling that such views must be taken by the neutral nations of the earth, I have caused the evidence to be collected which

proves completely the utter inefficiency of the proclaimed blockade of our coast, and shall direct it to be laid before such Governments as shall afford us the means of being heard.

"But although we should be benefited by the enforcement of this law, so solemnly declared by the great Powers of Europe, we are not dependent on that enforcement for the successful prosecution of the war. As long as hostilities continue, the Confederate States will exhibit a steadily-increasing capacity to furnish their troops with food, clothing, and arms. If they should be forced to forego many of the luxuries and some of the comforts of life, they will at least have the consolation of knowing that they are thus daily becoming more and more independent of the rest of the world. If, in this process, labour in the Confederate States should be gradually diverted from those great Southern staples which have given life to so much of the commerce of mankind into other channels, so as to make them rival producèrs instead of profitable customers, they will not be the only or even the chief losers by this change in the direction of their industry.

"While the war which is waged to take from us the right of self-government can never attain that end, it remains to be seen how far it may work a revolution in the industrial system of the world, which may carry suffering to other lands as well as to our own.

"In the meantime, we shall continue this struggle in humble dependence upon Providence, from whose searching scrutiny

"Liberty is always won where there exists the unconquerable will to be free; and we have reason to know the strength that is given by a conscious sense not only of the magnitude but of the righteousness of our cause."

The 37th Congress of the United States met at Washington on the 2nd of December. President Lincoln sent his Message, from which we extract the following as the most important passages:

In the midst of unprecedented political troubles we have cause of great gratitude to God for unusual good health and most abundant harvests.

"You will not be surprised to learn that, in the peculiar exigencies of the times, our intercourse with foreign nations has been attended with profound solicitude, chiefly turning upon our own domestic affairs. A disloyal portion of the American people have, during the whole year, been engaged in an attempt to divide and destroy the Union. A nation which endures factious domestic divisions is exposed to disrespect abroad, and one party, if not both, is sure, sooner or later, to invoke foreign intervention. Nations thus tempted to interfere are not always able to resist the counsels of seeming expediency and ungenerous ambition, although measures adopted under such influences seldom fail to be unfortunate and injurious to those adopt. ing them.

"The Rebel invocation of Foreign Aid.

"The disloyal citizens of the United States, who have offered the ruin of our country in return for the aid and comfort which

they have invoked abroad, have received less patronage and encouragement than they probably expected. If it were just to suppose, as the insurgents have seemed to assume, that foreign nations in this case, discarding all moral, social, and treaty obligations, would act solely and selfishly for the most speedy restoration of commerce, including especially the acquisition of cotton, those nations appear as yet not to have seen their way to their object more directly or clearly through the destruction than through the preservation of the Union. If we could dare to believe that foreign nations are actuated by no higher principle than this, I am quite sure a second argument could be made to show them that they can reach their aim more readily and easily than by giving encouragement to by aiding to crush this rebellion it.

"The Question of International Commerce.

"The principal lever relied on by the insurgents for exciting foreign nations to hostility against us, as already intimated, is the embarrassment of commerce. Those nations, however, not improbably saw from the first that it was the Union which made as well our foreign as our domestic commerce. They can scarcely have failed to perceive that the effort for disunion produces the existing difficulty, and that one

strong nation promises more durable peace, and a more extensive, valuable, and reliable commerce, than can the same nation broken into hostile fragments. "The Revenue Receipts to June last.

"The revenue from all sources, including loans, for the financial year ending on the 30th of June, 1861, was 86,835,900 dollars 27 cents, and the expenditure for the same period, including payments on account of the public debt, were 84,578,034 dollars 47 cents, leaving a balance in the Treasury, on the 1st of July, of 2,257,065 dollars 80 cents. For the first quarter of the financial year ending on the 30th of September, 1861, the receipts from all sources, including the balance of July 1st, were 102,532,509 dollars 27 cents, and the expenses 98,239,733 dollars 9 cents, leaving a balance on the 1st of October, 1861, of 4,292,776 dollars 18 cents.

"The Estimates for the forthcoming

year, &c.

"Estimates for the remaining three-quarters of the year, and for the financial year 1863, together with his views of the ways and means for meeting the demands contemplated by them, will be submitted to Congress by the Secretary of the Treasury. It is gratifying to know that the expenses made necessary by the rebellion are not beyond the resources of the loyal people, and to believe that the same patriotism which has thus far sustained the Government will continue to sustain it till peace and union shall again bless the land.

"The Acts of Congress to be condensed into one or two volumes.

"I am informed by some whose opinions I respect that all the Acts of Congress now in force, and of a permanent and general nature, might be revised and rewritten, so as to be embraced in one volume, or at least two volumes, of ordinary and convenient size, and I respectfully recommend to Congress to consider the subject, and, if my suggestion be approved, to devise some plan as to their wisdom shall seem most proper for the attainment of the end proposed.

"Civil Justice suppressed by the Rebellion.

"One of the unavoidable consequences of the present insurrection is the entire suppression in many places of all ordinary means of administering civil justice by the officers and in the forms of existing law. This is all the insurgent States; and as the case, in whole or in part, in our armies advance upon and take possession of parts of these States the practical evil becomes more apparent. There are no courts nor officers to whom the citizens of other States may apply for the enforcement of their lawful claims against citizens of the insurgent States, and there is a vast amount of debt constituting such claims. Some have estimated it as high as 200,000,000 dollars, due in large part from insurgents in open rebellion to loyal citizens who are even now making great sacrifices in the discharge of their patriotic duty to support the Government.