In consequence of the difficulties which have existed in the way of securing titles for the necessary grounds, operations have not yet been commenced toward the establishment of the navy-yard at Memphis. So soon as the title is perfected no further delay will be permitted to intervene. It is well worthy of your consideration whether Congress should not direct the establishment of a ropewalk in connection with the contemplated navy-yard, as a measure not only of economy, but as highly useful and necessary. The only establishment of the sort now connected with the service is located at Boston, and the advantages of a similar establishment convenient to the hemp-growing region must be apparent to all. The report of the Secretary presents other matters to your consideration of an important character in connection with the service. In referring you to the accompanying report of the Postmaster-General it affords me continued cause of gratification to be able to advert to the fact that the affairs of the Department for the last four years have been so conducted as from its unaided resources to meet its large expenditures. On my coming into office a debt of nearly $500,000 existed against the Department, which Congress discharged by an appropriation from the Treasury. The Department on the 4th of March next will be found, under the management of its present efficient head, free of debt or embarrassment, which could only have been done by the observance and practice of the greatest vigilance and economy. The laws have contemplated throughout that the Department should be self-sustained, but it may become necessary, with the wisest regard to the public interests, to introduce amendments and alterations in the system. There is a strong desire manifested in many quarters so to alter the tariff of letter postage as to reduce the amount of tax at present imposed. Should such a measure be carried into effect to the full extent desired, it can not well be doubted but that for the first years of its operation a diminished revenue would be collected, the supply of which would necessarily constitute a charge upon the Treasury. Whether such a result would be desirable it will be for Congress in its wisdom to determine. It may in general be asserted as true that radical alterations in any system should rather be brought about gradually than by sudden changes and by pursuing this prudent policy in the reduction of letter postage the Department might still sustain itself through the revenue which would accrue by the increase of letters. The state and condition of the public Treasury has heretofore been such as to have precluded the recommendation of any material change. The difficulties upon this head have, however, ceased, and a larger discretion is now left to the Government.