The Army is in a high state of discipline. Its moral condition, so far as that is known here, is good, and the various branches of the public service are carefully attended to. It is amply sufficient under its present organization for providing the necessary garrisons for the seaboard and for the defense of the internal frontier, and also for preserving the elements of military knowledge and for keeping pace with those improvements which modern experience is continually making. And these objects appear to me to embrace all the legitimate purposes for which a permanent military force should be maintained in our country. The lessons of history teach us its danger and the tendency which exists to an increase. This can be best met and averted by a just caution on the part of the public itself, and of those who represent them in Congress.

From the duties which devolve on the Engineer Department and upon the topographical engineers, a different organization seems to be demanded by the public interest, and I recommend the subject to your consideration.

No important change has during this season taken place in the condition of the Indians. Arrangements are in progress for the removal of the Creeks, and will soon be for the removal of the Seminoles. I regret that the Cherokees east of the Mississippi have not yet determined as a community to remove. How long the personal causes which have heretofore retarded that ultimately inevitable measure will continue to operate I am unable to conjecture. It is certain, however, that delay will bring with it accumulated evils which will render their condition more and more unpleasant. The experience of every year adds to the conviction that emigration, and that alone, can preserve from destruction the remnant of the tribes yet living amongst us. The facility with which the necessaries of life are procured and the treaty stipulations providing aid for the emigrant Indians in their agricultural pursuits and in the important concern of education, and their removal from those causes which have heretofore depressed all and destroyed many of the tribes, can not fail to stimulate their exertions and to reward their industry.

The two laws passed at the last session of Congress on the subject of Indian affairs have been carried into effect, and detailed instructions for their administration have been given. It will be seen by the estimates for the present session that a great reduction will take place in the expenditures of the Department in consequence of these laws, and there is reason to believe that their operation will be salutary and that the colonization of the Indians on the western frontier, together with a judicious system of administration, will still further reduce the expenses of this branch of the public service and at the same time promote its usefulness and efficiency.

Circumstances have been recently developed showing the existence of extensive frauds under the various laws granting pensions and gratuities for Revolutionary services. It is impossible to estimate the amount which may have been thus fraudulently obtained from the National Treasury. I am satisfied, however, it has been such as to justify a re-examination of the system and the adoption of the necessary checks in its administration. All will agree that the services and sufferings of the remnant of our Revolutionary band should be fully compensated; but while this is done, every proper precaution should be taken to prevent the admission of fabricated and fraudulent claims.

In the present mode of proceeding the attestations and certificates of the judicial officers of the various States from a considerable portion of the checks which are interposed against the commission of frauds. These, however, have been and may be fabricated, and in such a way as to elude detection at the examining offices. And independently of this practical difficulty, it is ascertained that these documents are often loosely granted; some times even blank certificates have been issued; some times prepared papers have been signed without inquiry, and in one instance, at least, the seal of the court has been within reach of a person most interested in its improper application. It is obvious that under such circumstances no severity of administration can check the abuse of the law. And information has from time to time been communicated to the Pension Office questioning or denying the right of persons placed upon the pension list to the bounty of the country.

Such cautions are always attended to and examined, but a far more general investigation is called for, and I therefore recommend, in conformity with the suggestion of the Secretary of War, that an actual inspection should be made in each State into the circumstances and claims of every person now drawing a pension. The honest veteran has nothing to fear from such a scrutiny, while the fraudulent claimant will be detected and the public Treasury relieved to an amount, I have reason to believe, far greater than has heretofore been suspected. The details of such a plan could be so regulated as to interpose the necessary checks without any burdensome operation upon the pensioners. The object should be two-fold: To look into the original justice of the claims, so far as this can be done under a proper system of regulations, by an examination of the claimants themselves and by inquiring in the vicinity of their residence into their history and into the opinion entertained of their Revolutionary services. To ascertain in all cases whether the original claimant is living and this by actual personal inspection. This measure will, if adopted, be productive, I think, of the desired results, and I therefore recommend it to your consideration, with the further suggestion that all payments should be suspended 'til the necessary reports are received.

It will be seen by a tabular statement annexed to the documents transmitted to Congress that the appropriations for objects connected with the War Department, made at the last session, for the service of the year 1834, excluding the permanent appropriation for the payment of military gratuities under the act of June 7th, 1832, the appropriation of $200,000 for arming and equipping the militia, and the appropriation of $10,000 for the civilization of the Indians, which are not annually renewed, amounted to the sum of $9,003,261, and that the estimates of appropriations necessary for the same branches of service for the year 1835 amount to the sum of $5,778,964, making a difference in the appropriations of the current year over the estimates of the appropriations for the next of $3,224,297.

The principal causes which have operated at this time to produce this great difference are shown in the reports and documents and in the detailed estimates. Some of these causes are accidental and temporary, while others are permanent, and, aided by a just course of administration, may continue to operate beneficially upon the public expenditures.

A just economy, expending where the public service requires and withholding where it does not, is among the indispensable duties of the Government.