Monterey was, and is, as yet, the capital of the country, contains about two thousand inhabitants, principally natives and old established families of foreigners, who have not neglected to improve opportunities of making themselves rich. The soil in the neighborhood is good--the climate a hundred per cent. better than that of San Francisco. The situation of the town is very picturesque. On the North side of the Bay lie the Mission and town of Santa Cruz, with a rich soil abounding in water and timber, as in its neighborhood, in the mountains, there are six saw-mills in operation. Building timber is easily and cheaply obtained here; land for building lots can be also procured at moderate prices. It is an excellent spot for mechanics to settle upon, as the sea offers them facilities for sending the produce of their hands into any portion of the country, while at the same time living is cheap, for everything in the way of provisions can be produced in the town. Pueblo de San Jose is another old settlement, and has more than a thousand inhabitants within its jurisdiction, and is growing rapidly. By its position, in a magnificent valley, seventy miles in length at the head of the Bay of San Francisco, approachable by water to vessels as large as brigs, being a thoroughfare between the North and South of the country, possessing a rich soil, a mild and salubrious climate, beautiful landscape, and every facility for cheap and comfortable living, it cannot but grow rapidly; and we have no doubt that in a few years, when California shall be a little more settled and organized, it will become the seat of the State Government, being a more central and accessible point from all parts of the country than Monterey. The town of South San Francisco, about three miles South of the city of San Francisco, possesses the same advantages of the harbor as the latter, for all classes of vessels, with the superiority of being more sheltered from the prevailing winds and of having an abundant supply of water, not only for the use of its inhabitants, but for the shipping. The same depth of water extends along the shore from one town to the other. The country is picturesque, the site of the town is more regular than that of San Francisco; it commands a quarry of stone suitable for buildings, and it lies on the road from San Francisco to Pueblo de San Jose. Had the original settlers of San Francisco exercised their judgment before settling on that windy spot, they would have put their houses on the site of South San Francisco.--We have no doubt but it will soon have its share in the commerce of the Bay.