unforeseen by the Government and unintended may in some cases
have been inflicted on the subjects or citizens of foreign countries, both
at sea and on land, by persons in the service of the United States. As
this government expects redress from other powers when similar injuries
are inflicted by persons in their service 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 princi