ounted to $14,556,158 and the expenditures
to $13,694,728, leaving a surplus of receipts over expenditures of
$861,430. Progress has been made in restoring the postal service in the
Southern States. The views presented by the Postmaster-General against
the policy of granting subsidies to the ocean mail steamship lines upon
established routes and in favor of continuing the present system, which
limits the compensation for ocean service to the postage earnings, are
recommended to the careful consideration of Congress.

It appears from the report of the Secretary of the Navy that while at
the commencement of the present year there were in commission 530
vessels of all classes and descriptions, armed with 3,000 guns and
manned by 51,000 men, the number of vessels at present in commission is
117, with 830 guns and 12,128 men. By this prompt reduction of the naval
forces the expenses of the Government have been largely diminished, and
a number of vessels purchased for naval purposes from the merchant
marine have been returned to the peaceful pursuits of commerce. Since
the suppression of active hostilities our foreign squadrons have been
reestablished, and consist of vessels much more efficient than those
employed on similar service previous to the rebellion. The suggestion
for the enlargement of the navy-yards, and especially for the
establishment of one in fresh water for ironclad vessels, is deserving
of consideration, as is also the recommendation for a different location
and more ample grounds for the Naval Academy.

In the report of the Secretary of War a general summary is given of the
military campaigns of 1864 and 1865, ending in the suppression of armed
resistance to the national authority in the insurgent States. The
operations of the general administrative bureaus of the War Department
during the past year are detailed and an estimate made of the
appropriations that will be required for military purposes in the fiscal
year commencing the 1st day of July, 1866. The national military force
on the 1st of May, 1865, numbered 1,000,516 men. It is proposed to
reduce the military establishment to a peace footing, comprehending
50,000 troops of all arms, organized so as to admit of an enlargement
by filling up the ranks to 82,600 if the circumstances of the country
should require an augmentation of the Army. The volunteer force has
already been reduced by the discharge from service of over 800,000
troops, and the Departm