The Bey of Tunis having made requisitions unauthorized by our treaty, their rejection has produced from him some expressions of discontent. But to those who expect us to calculate whether a compliance with unjust demands will not cost us less than a war we must leave as a question of calculation for them also whether to retire from unjust demands will not cost them less than a war. We can do to each other very sensible injuries by war, but the mutual advantages of peace make that the best interest of both.

Peace and intercourse with the other powers on the same coast continue on the footing on which they are established by treaty.

In pursuance of the act providing for the temporary government of Louisiana, the necessary officers for the Territory of Orleans were appointed in due time to commence the exercise of their functions on the 1st day of October. The distance, however, of some of them and indispensable previous arrangements may have retarded its commencement in some of its parts. The form of government thus provided having been considered but as temporary, and open to such future improvements as further information of the circumstances of our brethren there might suggest, it will of course be subject to your consideration.

In the district of Louisiana it has been thought best to adopt the division into subordinate districts which had been established under its former government. These being five in number, a commanding officer has been appointed to each, according to the provisions of the law, and so soon as they can be at their stations that district will also be in its due state of organization. In the meantime their places are supplied by the officers before commanding there. And the functions of the governor and judges of Indiana having commenced, the government, we presume, is proceeding in its new form. The lead mines in that district offer so rich a supply of that metal as to merit attention. The report now communicated will inform you of their state and of the necessity of immediate inquiry into their occupation and titles.

With the Indian tribes established within our newly acquired limits, I have deemed it necessary to open conferences for the purpose of establishing a good understanding and neighborly relations between us. So far as we have yet learned, we have reason to believe that their dispositions are generally favorable and friendly; and with these dispositions on their part, we have in our own hands means which can not fail us for preserving their peace and friendship. By pursuing an uniform course of justice toward them, by aiding them in all the improvements which may better their condition, and especially by establishing a commerce on terms which shall be advantageous to them and only not losing to us, and so regulated as that no incendiaries of our own or any other nation may be permitted to disturb the natural effects of our just and friendly offices, we may render ourselves so necessary to their comfort and prosperity that the protection of our citizens from their disorderly members will become their interest and their voluntary care. Instead, therefore, of an augmentation of military force proportioned to our extension of frontier, I propose a moderate enlargement of the capital employed in that commerce as a more effectual, economical, and humane instrument for preserving peace and good neighborhood with them.

On this side the Mississippi an important relinquishment of native title has been received from the Delawares. That tribe, desiring to extinguish in their people the spirit of hunting and to convert superfluous lands into the means of improving what they retain, has ceded to us all the country between the Wabash and Ohio south of and including the road from the rapids toward Vincennes, for which they are to receive annuities in animals and implements for agriculture and in other necessaries. This acquisition is important, not only for its extent and fertility, but as fronting 300 miles on the Ohio, and near half that on the Wabash. The produce of the settled country descending those rivers will no longer pass in review of the Indian frontier but in a small portion, and, with the cession heretofore made by the Kaskaskias, nearly consolidates our possessions north of the Ohio, in a very respectable breadth—from Lake Erie to the Mississippi. The Piankeshaws having some claim to the country ceded by the Delawares, it has been thought best to quiet that by fair purchase also. So soon as the treaties on this subject shall have received their constitutional sanctions they shall be laid before both Houses.

The act of Congress of February 28, 1803, for building and employing a number of gunboats, is now in a course of execution to the extent there provided for. The obstacle to naval enterprise which vessels of this construction offer for our seaport towns, their utility toward supporting within our waters the authority of the laws, the promptness with which they will be manned by the seamen and militia of the place in the moment they are wanting, the facility of their assembling from different parts of the coast to any point where they are required in greater force than ordinary, the economy of their maintenance and preservation from decay when not in actual service, and the competence of our finances to this defensive provision without any new burthen are considerations which will have due weight with Congress in deciding on the expediency of adding to their number from year to year, as experience shall test their utility, until all our important harbors, by these and auxiliary means, shall be secured against insult and opposition to the laws.

No circumstance has arisen since your last session which calls for any augmentation of our regular military force. Should any improvement occur in the militia system, that will be always seasonable.

Accounts of the receipts and expenditures of the last year, with estimates for the ensuing one, will as usual be laid before you.

The state of our finances continues to fulfill our expectations. Eleven millions and a half of dollars, received in the course of the year ending the 30th of September last, have enabled us, after meeting all the ordinary expenses of the year, to pay upward of $3,600,000 of the public debt, exclusive of interest. This payment, with those of the two preceding years, has extinguished upward of twelve millions of the principal and a greater sum of interest within that period, and by a proportionate diminution of interest renders already sensible the effect of the growing sum yearly applicable to the discharge of the principal.