or 1863 are estimated at $12,528,000, leaving an
estimated deficiency of $3,145,000 to be supplied from the treasury in
addition to the permanent appropriation.

The present insurrection shows, I think, that the extension of this
District across the Potomac River at the time of establishing the capital
here was eminently wise, and consequently that the relinquishment of
that portion of it which lies within the State of Virginia was unwise and
dangerous. I submit for your consideration the expediency of regaining
that part of the District and the restoration of the original boundaries
thereof through negotiations with the State of Virginia.

The report of the Secretary of the Interior, with the accompanying
documents, exhibits the condition of the several branches of the public
business pertaining to that department. The depressing influences of the
insurrection have been specially felt in the operations of the Patent and
General Land Offices. The cash receipts from the sales of public lands
during the past year have exceeded the expenses of our land system only
about $200,000. The sales have been entirely suspended in the Southern
States, while the interruptions to the business of the country and the
diversion of large numbers of men from labor to military service have
obstructed settlements in the new States and Territories of the Northwest.

The receipts of the Patent Office have declined in nine months about
$100,000.00 rendering a large reduction of the force employed necessary to
make it self-sustaining.

The demands upon the Pension Office will be largely increased by
the insurrection. Numerous applications for pensions, based upon the
casualties of the existing war, have already been made. There is reason to
believe that many who are now upon the pension rolls and in receipt of the
bounty of the government are in the ranks of the insurgent army or
giving them aid and comfort. The Secretary of the Interior has directed
a suspension of the payment of the pensions of such persons upon proof
of their disloyalty. I recommend that Congress authorize that officer to
cause the names of such persons to be stricken from the pension rolls.

The relations of the government with the Indian tribes have been greatly
disturbed by the insurrection, especially in the southern superintendency
and in that of New Mexico. The Indian country south of Kansas is in the
possession of insurgents from Texas and Arkansas. The agents of th