There is reason to believe that the obstacles which have so long prevented rapid and convenient communication between the United States and Mexico by railways are on the point of disappearing, and that several important enterprises of this character will soon be set on foot, which can not fail to contribute largely to the prosperity of both countries.

New envoys from Guatemala, Colombia, Bolivia, Venezuela, and Nicaragua have recently arrived at this capital, whose distinction and enlightenment afford the best guaranty of the continuance of friendly relations between ourselves and these sister Republics.

The relations between this Government and that of the United States of Colombia have engaged public attention during the past year, mainly by reason of the project of an interoceanic canal across the Isthmus of Panama, to be built by private capital under a concession from the Colombian Government for that purpose. The treaty obligations subsisting between the United States and Colombia, by which we guarantee the neutrality of the transit and the sovereignty and property of Colombia in the Isthmus, make it necessary that the conditions under which so stupendous a change in the region embraced in this guaranty should be effected—transforming, as it would, this Isthmus from a barrier between the Atlantic and Pacific oceans into a gateway and thoroughfare between them for the navies and the merchant ships of the world—should receive the approval of this Government, as being compatible with the discharge of these obligations on our part and consistent with our interests as the principal commercial power of the Western Hemisphere. The views which I expressed in a special message to Congress in March last in relation to this project I deem it my duty again to press upon your attention. Subsequent consideration has but confirmed the opinion "that it is the right and duty of the United States to assert and maintain such supervision and authority over any interoceanic canal across the isthmus that connects North and South America as will protect our national interest."

The war between the Republic of Chile on the one hand and the allied Republics of Peru and Bolivia on the other still continues. This Government has not felt called upon to interfere in a contest that is within the belligerent rights of the parties as independent states. We have, however, always held ourselves in readiness to aid in accommodating their difference, and have at different times reminded both belligerents of our willingness to render such service.

Our good offices in this direction were recently accepted by all the belligerents, and it was hoped they would prove efficacious; but I regret to announce that the measures which the ministers of the United States at Santiago and Lima were authorized to take with the view to bring about a peace were not successful. In the course of the war some questions have arisen affecting neutral rights. In all of these the ministers of the United States have, under their instructions, acted with promptness and energy in protection of American interests.

The relations of the United States with the Empire of Brazil continue to be most cordial, and their commercial intercourse steadily increases, to their mutual advantage.

The internal disorders with which the Argentine Republic has for some time past been afflicted, and which have more or less influenced its external trade, are understood to have been brought to a close. This happy result may be expected to redound to the benefit of the foreign commerce of that Republic, as well as to the development of its vast interior resources.

In Samoa the Government of King Malietoa, under the support and recognition of the consular representatives of the United States, Great Britain, and Germany, seems to have given peace and tranquillity to the islands. While it does not appear desirable to adopt as a whole the scheme of tripartite local government which has been proposed, the common interests of the three great treaty powers require harmony in their relations to the native frame of government, and this may be best secured by a simple diplomatic agreement between them. It would be well if the consular jurisdiction of our representative at Apia were increased in extent and importance so as to guard American interests in the surrounding and outlying islands of Oceanica.

The obelisk generously presented by the Khedive of Egypt to the city of New York has safely arrived in this country, and will soon be erected in that metropolis. A commission for the liquidation of the Egyptian debt has lately concluded its work, and this Government, at the earnest solicitation of the Khedive, has acceded to the provisions adopted by it, which will be laid before Congress for its information. A commission for the revision of the judicial code of the reform tribunal of Egypt is now in session in Cairo. Mr. Farman, consul-general, and J. M. Batchelder, esq., have been appointed as commissioners to participate in this work. The organization of the reform tribunals will probably be continued for another period of five years.

In pursuance of the act passed at the last session of Congress, invitations have been extended to foreign maritime states to join in a sanitary conference in Washington, beginning the 1st of January. The acceptance of this invitation by many prominent powers gives promise of success in this important measure, designed to establish a system of international notification by which the spread of infectious or epidemic diseases may be more effectively checked or prevented. The attention of Congress is invited to the necessary appropriations for carrying into effect the provisions of the act referred to.

The efforts of the Department of State to enlarge the trade and commerce of the United States, through the active agency of consular officers and through the dissemination of information obtained from them, have been unrelaxed. The interest in these efforts, as developed in our commercial communities, and the value of the information secured by this means to the trade and manufactures of the country were recognized by Congress at its last session, and provision was made for the more frequent publication of consular and other reports by the Department of State. The first issue of this publication has now been prepared, and subsequent issues may regularly be expected. The importance and interest attached to the reports of consular officers are witnessed by the general demand for them by all classes of merchants and manufacturers engaged in our foreign trade. It is believed that the system of such publications is deserving of the approval of Congress, and that the necessary appropriations for its continuance and enlargement will commend itself to your consideration.

The prosperous energies of our domestic industries and their immense production of the subjects of foreign commerce invite, and even require, an active development of the wishes and interests of our people in that direction. Especially important is it that our commercial relations with the Atlantic and Pacific coasts of South America, with the West Indies and the Gulf of Mexico, should be direct, and not through the circuit of European systems, and should be carried on in our own bottoms. The full appreciation of the opportunities which our front on the Pacific Ocean gives to commerce with Japan, China, and the East Indies, with Australia and the island groups which lie along these routes of navigation, should inspire equal efforts to appropriate to our own shipping and to administer by our own capital a due proportion of this trade. Whatever modifications of our regulations of trade and navigation may be necessary or useful to meet and direct these impulses to the enlargement of our exchanges and of our carrying trade I am sure the wisdom of Congress will be ready to supply. One initial measure, however, seems to me so dearly useful and efficient that I venture to press it upon your earnest attention. It seems to be very evident that the provision of regular steam postal communication by aid from government has been the forerunner of the commercial predominance of Great Britain on all these coasts and seas, a greater share in whose trade is now the desire and the intent of our people. It is also manifest that the efforts of other European nations to contend with Great Britain for a share of this commerce have been successful in proportion with their adoption of regular steam postal communication with the markets whose trade they sought. Mexico and the States of South America are anxious to receive such postal communication with this country and to aid in their development. Similar cooperation may be looked for in due time from the Eastern nations and from Australia. It is difficult to see how the lead in this movement can be expected from private interests. In respect of foreign commerce quite as much as in internal trade postal communication seems necessarily a matter of common and public administration, and thus pertaining to Government. I respectfully recommend to your prompt attention such just and efficient measures as may conduce to the development of our foreign commercial exchanges and the building up of our carrying trade.

In this connection I desire also to suggest the very great service which might be expected in enlarging and facilitating our commerce on the Pacific Ocean were a transmarine cable laid from San Francisco to the Sandwich Islands, and thence to Japan at the north and Australia at the south. The great influence of such means of communication on these routes of navigation in developing and securing the due share of our Pacific Coast in the commerce of the world needs no illustration or enforcement. It may be that such an enterprise, useful, and in the end profitable, as it would prove to private investment, may need to be accelerated by prudent legislation by Congress in its aid, and I submit the matter to your careful consideration.

An additional and not unimportant, although secondary, reason for fostering and enlarging the Navy may be found in the unquestionable service to the expansion of our commerce which would be rendered by the frequent circulation of naval ships in the seas and ports of all quarters of the globe. Ships of the proper construction and equipment to be of the greatest efficiency in case of maritime war might be made constant and active agents in time of peace in the advancement and protection of our foreign trade and in the nurture and discipline of young seamen, who would naturally in some numbers mix with and improve the crews of our merchant ships. Our merchants at home and abroad recognize the value to foreign commerce of an active movement of our naval vessels, and the intelligence and patriotic zeal of our naval officers in promoting every interest of their countrymen is a just subject of national pride.

The condition of the financial affairs of the Government, as shown by the report of the Secretary of the Treasury, is very satisfactory. It is believed that the present financial situation of the United States, whether considered with respect to trade, currency, credit, growing wealth, or the extent and variety of our resources, is more favorable than that of any other country of our time, and has never been surpassed by that of any country at any period of its history. All our industries are thriving; the rate of interest is low; new railroads are being constructed; a vast immigration is increasing our population, capital, and labor; new enterprises in great number are in progress, and our commercial relations with other countries are improving.

The ordinary revenues from all sources for the fiscal year ended June 30, 1880, were—

From customs - $186,522,064.60

From internal revenue - 124,009,373.92

From sales of public lands - 1,016,506.60

From tax on circulation and deposits of national banks - 7,014,971.44

From repayment of interest by Pacific Railway companies - 1,707,367.18

From sinking fund for Pacific Railway companies - 786,621.22

From customs fees, fines, penalties, etc - 1,148,800.16

From fees-consular, letters patent, and lands - 2,337,029.00

From proceeds of sales of Government property - 282,616.50

From profits on coinage, etc - 2,792,186.78

From revenues of the District of Columbia - 1,809,469.70

From miscellaneous sources - 4,099,603.88 -

THE END