per cent as compared with those of the previous year and leaving an
excess of expenditure over the revenue for the last fiscal year of
$4,557,462.71.

The gross revenue for the year ending June 30, 1863, is estimated at an
increase of 4 per cent on that of 1861, making $8,683,000, to which
should be added the earnings of the Department in carrying free matter,
viz, $700,000, making $9,383,000.

The total expenditures for 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