campaign, as originally projected. Unfortunately, the communications on which our General relied for receiving his supplies of munitions were interrupted by extraordinary floods, which so swelled the Potomac as to render impassable the fords by which his advance had been made, and he was thus forced to a withdrawal, which was conducted with deliberation, after securing large trains of captured supplies, and with a constant but unaccepted tender of battle. On more than one occasion the enemy has since made demonstrations of a purpose to advance, invariably followed by a precipitate retreat to intrenched lines on the approach of our forces.

"The effective check thus opposed to the advance of invaders at all points was such as to afford hope of their early expulsion from portions of the territory previously occupied by them, when the country was painfully surprised by the intelligence that the officer in command of Cumberland Gap had surrendered that important and easily defensible pass without firing a shot, upon the summons of a force still believed to have been inadequate to its reduction, and when reinforcements were within supporting distance and had been ordered to his aid. The entire garrison, including the commander, being still held as prisoners by the enemy, I am unable to suggest any explanation of this disaster, which laid open Eastern Tennessee and South-western Virginia to hostile operations, and broke the line of communication between the seat of government and Middle Tennessee. This easy success of the enemy was followed by an advance of General Rosencrans into Georgia, and our army evacuated Chattanooga and availed itself of the opportunity thus afforded of winning on the field of Chickamauga one of the most brilliant and decisive victories of the war. The signal defeat of General Rosencrans was followed by his retreat into Chattanooga, where his imperilled position had the immediate effect of relieving the pressure of the invasion at other points, forcing the concentration, for his relief, of large bodies of troops withdrawn from the armies in the Mississippi Valley and in Northern Virginia. The combined forces thus accumulated against us in Tennessee so greatly outnumbered our army as to encourage the enemy to attack. After a long and severe battle, in which great carnage was inflicted on him, some of our troops inexplicably abandoned positions of great strength, and by a disorderly retreat compelled the commander to withdraw the forces elsewhere successful, and finally to retire with his whole army to a position some twenty or thirty miles to the rear."

The President complained with some bitterness of what he characterized as the "unfriendly" conduct of the neutral nations of Europe, saying:

"I regret to inform you that there has been no improvement in the state of our relations with foreign countries since my Message in January last. On the contrary, there has been a still greater divergence in the conduct of European nations from that practical

impartiality which alone deserves the name of neutrality, and their action, in some cases, has assumed a character positively unfriendly. "You have heretofore been informed that, by common understanding, the initiative in all action touching the contest on this continent had been left by foreign powers to the two great maritime nations of Western Europe, and that the governments of these two nations had agreed to take no measures without previous concert. The result of these arrangements has therefore placed it in the power of either France or England to obstruct at pleasure the recognition to which the Confederacy is justly entitled, or even to prolong the continuance of hostilities on this side of the Atlantic, if the policy of either could be promoted by the postponement of peace. Each, too, thus became possessed of great influence in so shaping the general exercise of neutral rights in Europe, as to render them subservient to the purpose of aiding one of the belligerents, to the detriment of the other. I referred, at your last session, to some of the leading points in the course pursued by professed neutrals, which betrayed a partisan leaning to the side of our enemies; but events have since occurred which induce me to renew the subject in greater detail than was then deemed necessary."

The President then, at some length, reviewed the conduct of the British Government with regard to the blockade, and added:

"It is not in my power to apprise you to what extent the Government of France shares the views so unreservedly avowed by that of Great Britain, no published correspondence of the French Government on the subject having been received. No public protest nor opposition, however, has been made by His Imperial Majesty against the prohibition to trade with us, imposed on French citizens by the paper blockade of the United States, although I have reason to believe that an unsuccessful attempt was made on his part to secure the assent of the British Government to a course of action more consonant with the dictates of public law and with the demands of justice towards us."

He then went on :—

"The partiality of Her Majesty's Government in favour of our enemies has been further evinced in the marked difference of its conduct on the subject of the purchase of supplies by the two belligerents. The difference has been conspicuous since the very commencement of the war. As early as the 1st of May, 1861, the British Minister in Washington was informed by the Secretary of State of the United States that he had sent agents to England, and that others would go to France, to purchase arms, and this fact was communicated to the British Foreign Office, which interposed no objection. Yet in October of the same year Earl Russell entertained the complaint of the United States Minister in London, that the Confederate States were importing contraband of war from the island of Nassau, directed inquiry into the matter, and obtained a report from the authorities of the island denying the allegations,

which report was enclosed to Mr. Adams, and received by him as satisfactory evidence to dissipate the suspicion naturally thrown upon the authorities of Nassau by that unwarrantable act.' So, too, when the Confederate Government purchased in Great Britain, as a neutral country (and with strict observance both of the law of nations and the municipal law of Great Britain), vessels which were subsequently armed and commissioned as vessels of war, after they had been far removed from English waters, the British Government, in violation of its own laws and in deference to the importunate demands of the United States, made an ineffectual attempt to seize one vessel, and did actually seize and detain another which touched at the island of Nassau, on her way to a Confederate port, and subjected her to an unfounded prosecution at the very time when cargoes of munitions of war were being openly shipped from British ports to New York to be used in warfare against us. Even now the public journals bring intelligence that the British Government has ordered the seizure, in a British port, of two vessels, on the suspicion that they may have been sold to this Government, and that they may be hereafter armed and equipped in our service, while British subjects are engaged in Ireland by tens of thousands to proceed to the United States for warfare against the Confederacy, in defiance both of the law of nations and of the express terms of the British statutes, and are transported in British ships, without an effort at concealment, to the ports of the United States, there to be armed with rifles imported from Great Britain, and to be employed against our people in a war for conquest. No Royal prerogative is invoked, no executive interference is interposed against this flagrant breach of municipal and international law on the part of our enemies, while strained constructions are placed on existing statutes, new enactments proposed, and questionable expedients devised, for precluding the possibility of purchase by this Government of vessels that are useless for belligerent purposes, unless hereafter armed and equipped outside of the neutral jurisdiction of Great Britain..

"The events of the last year have produced important changes in the condition of our southern neighbour. The occupation of the capital of Mexico by the French army, and the establishment of a provisional government, followed by a radical change in the constitution of the country, have excited lively interest. Although preferring our own government and institutions to those of other countries, we can have no disposition to contest the exercise by them of the same right of self-government which we assert for ourselves. If the Mexican people prefer a monarchy to a republic, it is our plain duty cheerfully to acquiesce in their decision, and to evince a sincere and friendly interest in their prosperity. If, however, the Mexicans prefer maintaining their former institutions, we have no reason to apprehend any obstacle to the free exercise of their choice. The Emperor of the French has solemnly disclaimed any purpose to impose on Mexico a form of government

not acceptable to the nation; and the eminent personage to whom the throne has been tendered declines its acceptance unless the offer be sanctioned by the suffrages of the people. In either event, therefore, we may confidently expect the continuance of those peaceful relations which have been maintained on the frontier, and even a large development of the commerce already existing to the mutual advantage of the two countries.

"The state of the public finances is such as to demand your earliest and most earnest attention. I need hardly say that a prompt and efficacious remedy for the present condition of the currency is necessary to the successful performance of the functions of Government. Fortunately, the resources of our country are so ample, and the spirit of our people so devoted to its cause, that they are ready to make any necessary contribution. Relief is thus entirely within our reach if we have the wisdom to legislate in such manner as to render available the means at our disposal.

"At the commencement of the war we were far from anticipating the magnitude and duration of the struggle in which we were engaged. The most sagacious foresight could not have predicted that the passions of the Northern people would lead them blindly to the sacrifice of life, treasure, and liberty, in so vain a hope as that of subjugating thirteen independent States, inhabited by many millions of people, whose birthright of freedom is dearer to them than life. A long exemption from direct taxation by the general Government had created an aversion to its raising revenue by any other means than by duties on imports, and it was supposed that these duties would be ample for current peace expenditures, while the means for conducting the war could be raised almost exclusively by the use of the public credit."

The Message then recapitulated the various measures of taxation that had been taken to raise the requisite revenue, and pointed out the causes and manner of their failure. "The issue of treasury notes has been increased until the currency in circulation amounts to more than 600 millions of dollars, or more than threefold the amount required by the business of the country." The Message proceeded :

"Whenever it shall be possible to execute our duty in all its parts, we must do so in exact compliance with the whole letter and spirit of the Constitution. Until that period shall arrive, we must execute so much of it as our condition renders practicable. Whenever the withdrawal of the enemy shall place it in our power to make a census and apportionment of direct taxes, any other mode of levying them will be contrary to the will of the lawgiver, and incompatible with our obligation to obey that will; until that period, the alternative left is to obey the paramount precept, and to execute it according to the only other rule provided, which is to make the tax uniform throughout the Confederate States."" The President concluded thus:

"The hope last year entertained of an early termination of the

war has not been realized. Could carnage have satisfied the appetite of our enemy for the destruction of human life, or grief have appeased their wanton desire to inflict human suffering, there has been bloodshed enough on both sides, and two lands have been sufficiently darkened by the weeds of mourning to induce a disposition for peace.

"If unanimity in a people could dispel delusion, it has been displayed too unmistakeably not to have silenced the pretence that the Southern States were merely disturbed by a factious insurrection, and it must long since have been admitted that they were but exercising their reserved right to modify their own Government in such manner as would best secure their own happiness. But these considerations have been powerless to allay the unchristian hate of those who, long accustomed to draw large profits from a union with us, cannot control the rage excited by the conviction that they have, by their own folly, destroyed the richest sources of their prosperity. They refuse even to listen to proposals for the only peace possible between us-a peace which, recognizing the impassable gulf which divides us, may leave the two peoples separately to recover from the injuries inflicted on both by the causeless war now waged against us. Having begun the war in direct violation of their constitution, which forbade the attempt to coerce a State, they have been hardened by crime, until they no longer attempt to veil their purpose to destroy the institutions and subvert the sovereignty and independence of these States. We now know that the only reliable hope for peace is in the vigour of our resistance, as the cessation of their hostility is only to be expected from the pressure of their necessities.

"The patriotism of the people has proved equal to every sacrifice demanded by their country's need. We have been united as a people never were united under like circumstances before. God has blessed us with success disproportionate to our means, and, under His divine favour, our labours must at last be crowned with the reward due to men who have given all they possessed to the righteous defence of their inalienable rights-their homes and their altars."

The close of the year, therefore, found the Confederates as resolute as ever to assert and achieve their independence. Their reverses only nerved them to fresh exertions, and to a still sterner determination not to vield in submission to the North. But the North appears to be equally resolved to pursue the contest to the bitter end; and the reconstruction of the Union is the object at which it perseveringly and unflinchingly aims. We believe that it will be disappointed, and that the result of the struggle will be the final separation of the United States into two great Republics, and the admission of the Confederate States into the family of nations.

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