its ports of the Isthmus and to levy a passenger tax upon our citizens
arriving in that country, whether with a design to remain there or to
pass from ocean to ocean by the transit route; and also a tax upon the
mail of the United States transported over the Panama Railroad. The
Government of New Granada has been informed that the United States would
consider the collection of either of these taxes as an act in violation
of the treaty between the two countries, and as such would be resisted
by the United States. At the same time, we are prepared to discuss these
questions in a spirit of amity and justice and with a sincere desire to
adjust them in a satisfactory manner. A negotiation for that purpose has
already been commenced. No effort has recently been made to collect
these taxes nor is any anticipated under present circumstances.

With the Empire of Brazil our relations are of the most friendly
character. The productions of the two countries, and especially those
of an agricultural nature, are such as to invite extensive mutual
exchanges. A large quantity of American flour is consumed in Brazil,
whilst more than treble the amount in value of Brazilian coffee is
consumed in the United States. Whilst this is the case, a heavy duty has
been levied until very recently upon the importation of American flour
into Brazil. I am gratified, however, to be able to inform you that in
September last this has been reduced from $1.32 to about 49 cents per
barrel, and the duties on other articles of our production have been
diminished in nearly the same proportion.

I regret to state that the Government of Brazil still continues to levy
an export duty of about 11 per cent on coffee, notwithstanding this
article is admitted free from duty in the United States. This is a heavy
charge upon the consumers of coffee in our country, as we purchase
half of the entire surplus crop of that article raised in Brazil. Our