ually lessening, owing to the increased population and prosperity of the kingdom. The attempts made to adjust and compensate this loss have not been successful; but it is believed that the difficulty will be removed by allowing Prussia to levy, for her own exclusive benefit, the transit duties on cotton and other commodities, without any material change in the general system.

The net revenues of the association have increased from about twelve million thalers, collected in 1834, the year of its first establishment, to upward of twenty million, the present amount, exclusive of the expense of collection, amounting to twelve and a half per cent.; a prodigious increase, and mainly owing to the rapidly increasing prosperity, and consequently augmented consumption, of the German states associated in the league.

With Hanover, the United States have recently concluded a treaty of commerce and navigation, through the agency of Mr. Wheaton, Minister of the United States at Berlin, which has been ratified. This treaty differs from our commercial treaties with Prussia, the Hanseatic towns, and Denmark, by confining the indirect trade to the productions of the kingdom of Hanover, and of any other country of the confederation, on the one side; and, on the other, to the productions of the United States, and of the North and South American continent and West India Islands. It gives us the right of carrying to Hanover in our vessels the productions of the United States, and of the North and South American continent and islands, in exchange for their right of bringing in Hanoverian vessels to the United States the productions of Hanover and the countries composing the confederation, and may be regarded as favorable to our navigation.

Several states of the league have manifested a disposition to form treaties with the United States upon a similar basis; but it is not intended, on this occasion, to express any opinion upon the policy of establishing the principle of entire reciprocity in commercial treaties with the minor states of Europe.

One of the advantages already acquired by the negotiations of our minister at Berlin is a considerable reduction of the duties on rice, which, under a resolution of the House of Representatives of the 11th of June, 1838, he was instructed to en

deavor to procure. This important object has been gained, and the consequences, as foreseen, were immediately beneficial to all parties. A great increase in the importation of Carolina rice, which took place as soon as the reduction of duty on the article became known, was followed by a correspondent increase of revenue drawn from its increased consumption in Germany. The success of this experiment encourages the belief that a like course in respect to other important staples would be followed by similar results.

The tobacco duties, however, serving as they do the twofold purpose of raising revenue and of protecting the culture of the tobacco of native growth in Germany, still find formidable obstacles in the way of their removal or modification. The state of the negotiations on this subject, up to the session of 1839 and 1840, is sufficiently explained in the correspondence transmitted to the House of Representatives with the President's message of the 14th of April, 1840.

Several of the states of the Germanic Association have no natural outlet to the sea. Their commerce, therefore, is carried on through rivers, the mouths of which open to the ocean in the territories of other powers. This shows the importance of the union to all the states composing it; but as the union itself is not a government, commercial stipulations and conventions must be made with the states of the union in their political capacities. By a paper annexed, marked A, it will appear that, in March last, Great Britain entered into a convention of commerce and navigation with Prussia, Bavaria, Saxony, Würtemberg, Baden, the Electorate of Hesse, the Grand Duchy of Hesse, the states forming the customs and commercial union of Thuringia, Nassau, and Frankfort; and similar arrangements with these states might probably be accomplished by the gov ernment of the United States.

Such being the general nature of the association, and such our commercial intercourse with it, it becomes matter of interest to consider how far our relations with its several members might be beneficially extended; and if it be thought advisable to enter into commercial treaties with them, or any of them, it

This convention, and the declaration afterwards alluded to, are omitted as not being necessary to the understanding of Mr. Webster's report to the President.

will remain to be determined whether powers for such a purpose should be conferred upon the Minister of the United States at Berlin, or some other diplomatic agency adopted; the general object being to seek the means of enlarging the consumption of the staples of the United States in Germany, and of securing all practicable benefit to their navigation.

There is another part of the subject of our connection with Germany, which, though of less consequence than those that have been pointed out, is, nevertheless, one which deeply concerns the numerous German emigrants who are constantly selling their property to proceed to the United States, as well as our naturalized citizens, natives of Germany, inheriting property in that country. Throughout Germany the droit d'aubaine and the droit de détraction exist in the shape of a tax, payable on the withdrawal from the country of personal property which has been inherited by will or succession, or which forms the proceeds of real property inherited in the same manner. In the United States, as all know, no such tax exists.

It is probable that an exemption from this tax might be obtained on the ground of reciprocity. Some of the states have intimated their willingness to enter into arrangements for that purpose. If there should be thought to be no other reason for a formal convention, this particular object might be effected by a simple official declaration, signed by the Secretary of State, under the seal of the department, certifying that the subjects and citizens of Germany enjoy this immunity in the United States; upon which there is reason to believe that an alteration in their own laws would be made by the states, or some of them, so as to make the right reciprocal. The form of a declaration, such as is stated above, has been adopted by the English government, as may be seen by a paper hereunto annexed, marked B.

All which is respectfully submitted.

TO THE PRESIDENT OF THE UNITED STATES.

DANIEL WEBSTER.

TREATY WITH PORTUGAL.

CONSTRUCTION OF THE TREATY BETWEEN THE UNITED STATES AND PORTUGAL RESPECTING THE DUTIES ON PORTUGUESE WINES.

On the 18th of November, 1841, M. de Figanicre e Morao, Minister Resident of Portugal in the United States, addressed a note to Mr. Webster, complaining that, by the provisions of an act of Congress approved the 11th of September preceding, by which the specific duties formerly levied on certain wines imported into the United States were changed to ad valorem duties, a discrimination was introduced unfavorable to the interests of Portugal. To this note Mr. Webster made the following reply:

Mr. Webster to M. de Figaniere e Morao.

Department of State, Washington, February 9, 1842. The undersigned, Secretary of State of the United States, has the honor to acknowledge M. de Figaniere e Morao's note of the 18th of November, and has given to it the consideration due to its importance, and to the friendly relations happily subsisting between the two governments.

The undersigned regrets that the government of Portugal should suppose that it has reason to complain, in any manner, of a law of the United States as being prejudicial to Portugal, or at variance with the amity and good-will subsisting between the two countries, and especially as inconsistent with the treaty obligations of the United States.

The law complained of was enacted on the 11th day of September, 1841; and its main provision was, to lay a duty of twenty per cent. ad valorem on all such articles as were at that

time free, or on which the duty was less than that rate, with certain exceptions. The wines of Portugal not being within the exceptions, and being subject at that time only to a specific duty, may fall under an increased charge or duty by the operation of this law.

The third article of the treaty subsisting between the United States and Portugal is in these words:

"No higher or other duties shall be imposed on the importation into the kingdom and possessions of Portugal of any article, the growth, produce, or manufacture of the United States of America, and no higher or other duties shall be imposed on the importation into the United States of America of any article, the growth, produce, or manufacture of the kingdom and possessions of Portugal, than such as are or shall be payable on the like article, being the growth, produce, or manufacture of any other foreign country.

"Nor shall any prohibition be imposed on the importation or exportation of any article, the growth, produce, or manufacture of the United States of America, or of the kingdom and possessions of Portugal, to or from the ports of the said kingdom and possessions of Portugal, or of the said States, which shall not equally extend to all other foreign nations.

"Nor shall any higher or other duties or charges be imposed, in either of the two countries, on the exportation of any articles to the United States of America or to the kingdom of Portugal, respectively, than such as are payable on the exportation of the like articles to any other foreign country.

"Provided, however, that nothing contained in this article shall be understood or intended to interfere with the stipulation entered into by the United States of America, for a special equivalent, in regard to French wines, in the convention. made by the said States and France on the fourth day of July, in the year of our Lord one thousand eight hundred and thirty-one, which stipulation will expire and cease to have effect in the month of February, in the year of our Lord one thousand eight hundred and forty-two."

M. de Figaniere e Morao thinks that the provision of this ar ticle is interfered with by the above-mentioned act of Congress. He illustrates his own view of the subject by putting a case in the following form: