The sagacity of powerful European nations has long since directed their attention to the commercial importance of that Province, and there can be little doubt that the moment the United States shall relinquish their present occupation of it and their claim to it as indemnity an effort would be made by some foreign power to possess it, either by conquest or by purchase. If no foreign government should acquire it in either of these modes, an independent revolutionary government would probably be established by the inhabitants and such foreigners as may remain in or remove to the country as soon as it shall be known that the United States have abandoned it. Such a government would be too feeble long to maintain its separate independent existence, and would finally become annexed to or be a dependent colony of some more powerful state. Should any foreign government attempt to possess it as a colony, or otherwise to incorporate it with itself, the principle avowed by President Monroe in 1824, and reaffirmed in my first annual message, that no foreign power shall with our consent be permitted to plant or establish any new colony or dominion on any part of the North American continent must be maintained. In maintaining this principle and in resisting its invasion by any foreign power we might be involved in other wars more expensive and more difficult than that in which we are now engaged. The Provinces of New Mexico and the Californias are contiguous to the territories of the United States, and if brought under the government of our laws their resources--mineral, agricultural, manufacturing, and commercial--would soon be developed.

Upper California is bounded on the north by our Oregon possessions, and if held by the United States would soon be settled by a hardy, enterprising, and intelligent portion of our population. The Bay of San Francisco and other harbors along the Californian coast would afford shelter for our Navy, for our numerous whale ships, and other merchant vessels employed in the Pacific Ocean, and would in a short period become the marts of an extensive and profitable commerce with China and other countries of the East.

These advantages, in which the whole commercial world would participate, would at once be secured to the United States by the cession of this territory; while it is certain that as long as it remains a part of the Mexican dominions they can be enjoyed neither by Mexico herself nor by any other nation.

New Mexico is a frontier Province, and has never been of any considerable value to Mexico. From its locality it is naturally connected with our Western settlements. The territorial limits of the State of Texas, too, as defined by her laws before her admission into our Union, embrace all that portion of New Mexico lying east of the Rio Grande, while Mexico still claims to hold this territory as a part of her dominions. The adjustment of this question of boundary is important.

There is another consideration which induced the belief that the Mexican Government might even desire to place this Province under the protection of the Government of the United States. Numerous bands of fierce and warlike savages wander over it and upon its borders. Mexico has been and must continue to be too feeble to restrain them from committing depredations, robberies, and murders, not only upon the inhabitants of New Mexico itself, but upon those of the other northern States of Mexico. It would be a blessing to all these northern States to have their citizens protected against them by the power of the United States. At this moment many Mexicans, principally females and children, are in captivity among them. If New Mexico were held and governed by the United States, we could effectually prevent these tribes from committing such outrages, and compel them to release these captives and restore them to their families and friends.

In proposing to acquire New Mexico and the Californias, it was known that but an inconsiderable portion of the Mexican people would be transferred with them, the country embraced within these Provinces being chiefly an uninhabited region.

These were the leading considerations which induced me to authorize the terms of peace which were proposed to Mexico. They were rejected, and, negotiations being at an end, hostilities were renewed. An assault was made by our gallant Army upon the strongly fortified places near the gates of the City of Mexico and upon the city itself, and after several days of severe conflict the Mexican forces, vastly superior in number to our own, were driven from the city, and it was occupied by our troops.

Immediately after information was received of the unfavorable result of the negotiations, believing that his continued presence with the Army could be productive of no good, I determined to recall our commissioner. A dispatch to this effect was transmitted to him on the 6th of October last. The Mexican Government will be informed of his recall, and that in the existing state of things I shall not deem it proper to make any further overtures of peace, but shall be at all times ready to receive and consider any proposals which may be made by Mexico.

Since the liberal proposition of the United States was authorized to be made, in April last, large expenditures have been incurred and the precious blood of many of our patriotic fellow-citizens has been shed in the prosecution of the war. This consideration and the obstinate perseverance of Mexico in protracting the war must influence the terms of peace which it may be deemed proper hereafter to accept. Our arms having been everywhere victorious, having subjected to our military occupation a large portion of the enemy’s country, including his capital, and negotiations for peace having failed, the important questions arise, in what manner the war ought to be prosecuted and what should be our future policy. I can not doubt that we should secure and render available the conquests which we have already made, and that with this view we should hold and occupy by our naval and military forces all the ports, towns, cities, and Provinces now in our occupation or which may hereafter fall into our possession; that we should press forward our military operations and levy such military contributions on the enemy as may, as far as practicable, defray the future expenses of the war.

Had the Government of Mexico acceded to the equitable and liberal terms proposed, that mode of adjustment would have been preferred, Mexico having declined to do this and failed to offer any other terms which could be accepted by the United States, the national honor, no less than the public interests, requires that the war should be prosecuted with increased energy and power until a just and satisfactory peace can be obtained. In the meantime, as Mexico refuses all indemnity, we should adopt measures to indemnify ourselves by appropriating permanently a portion of her territory. Early after the commencement of the war New Mexico and the Californias were taken possession of by our forces. Our military and naval commanders were ordered to conquer and hold them, subject to be disposed of by a treaty of peace.