vice upon citizens of the
United States, we must be prepared to do justice to foreigners. If the
existing judicial tribunals are inadequate to this purpose, a special
court may be authorized, with power to hear and decide such claims of
the character referred to as may have arisen under treaties and the
public law. Conventions for adjusting the claims by joint commission
have been proposed to some governments, but no definitive answer to the
proposition has yet been received from any.

In the course of the session I shall probably have occasion to request
you to provide indemnification to claimants where decrees of restitution
have been rendered and damages awarded by admiralty courts, and in other
cases where this Government may be acknowledged to be liable in
principle and where the amount of that liability has been ascertained by
an informal arbitration.

The proper officers of the Treasury have deemed themselves required by
the law of the United States upon the subject to demand a tax upon the
incomes of foreign consuls in this country. While such a demand may not
in strictness be in derogation of public law, or perhaps of any existing
treaty between the United States and a foreign country, the expediency
of so far modifying the act as to exempt from tax the income of such
consuls as are not citizens of the United States, derived from the
emoluments of their office or from property not situated in the United
States, is submitted to your serious consideration. I make this
suggestion upon the ground that a comity which ought to be reciprocated
exempts our consuls in all other countries from taxation to the extent
thus indicated. The United States, I think, ought not to be
exceptionally illiberal to international trade and commerce.

The operations of the Treasury during the last year have been
successfully conducted. The enactment by Congress of a national banking
law has proved a valuable support of the public credit, and the general
legislation in relation to loans has fully answered the expectations of
its favorers. Some amendments may be required to perfect existing laws,
but no change in their principles or general scope is believed to be
needed.

Since these measures have been in operation all demands on the Treasury,
including the pay of the Army and Navy, have been promptly met and fully
satisfied. No considerable body of troops, it is believed, were ever
more amply provided and more liberally and punctual