The pacific and wise policy of our Government kept us in a state of neutrality during the wars that have at different periods since our political existence been carried on by other powers; but this policy, while it gave activity and extent to our commerce, exposed it in the same proportion to injuries from the belligerent nations. Hence have arisen claims of indemnity for those injuries. England, France, Spain, Holland, Sweden, Denmark, Naples, and lately Portugal had all in a greater or less degree infringed our neutral rights. Demands for reparation were made upon all. They have had in all, and continue to have in some, cases a leading influence on the nature of our relations with the powers on whom they were made. Of the claims upon England it is unnecessary to speak further than to say that the state of things to which their prosecution and denial gave rise has been succeeded by arrangements productive of mutual good feeling and amicable relations between the two countries, which it is hoped will not be interrupted. One of these arrangements is that relating to the colonial trade which was communicated to Congress at the last session; and although the short period during which it has been in force will not enable me to form an accurate judgment of its operation, there is every reason to believe that it will prove highly beneficial. The trade thereby authorized has employed to the 30th September last upward of 30,000 tons of American and 15,000 tons of foreign shipping in the outward voyages, and in the inward nearly an equal amount of American and 20,000 only of foreign tonnage. Advantages, too, have resulted to our agricultural interests from the state of the trade between Canada and our Territories and States bordering on the St. Lawrence and the Lakes which may prove more than equivalent to the loss sustained by the discrimination made to favor the trade of the northern colonies with the West Indies.