The cession of territory made by the late treaty with Mexico has greatly extended our exposed frontier and rendered its defense more difficult. That treaty has also brought us under obligations to Mexico, to comply with which a military force is requisite. But our military establishment is not materially changed as to its efficiency from the condition in which it stood before the commencement of the Mexican War. Some addition to it will therefore be necessary, and I recommend to the favorable consideration of Congress an increase of the several corps of the Army at our distant Western posts, as proposed in the accompanying report of the Secretary of War. Great embarrassment has resulted from the effect upon rank in the Army heretofore given to brevet and staff commissions. The views of the Secretary of War on this subject are deemed important, and if carried into effect will, it is believed, promote the harmony of the service. The plan proposed for retiring disabled officers and providing an asylum for such of the rank and file as from age, wounds, and other infirmities occasioned by service have become unfit to perform their respective duties is recommended as a means of increasing the efficiency of the Army and as an act of justice due from a grateful country to the faithful soldier. The accompanying report of the Secretary of the Navy presents a full and satisfactory account of the condition and operations of the naval service during the past year. Our citizens engaged in the legitimate pursuits of commerce have enjoyed its benefits. Wherever our national vessels have gone they have been received with respect, our officers have been treated with kindness and courtesy, and they have on all occasions pursued a course of strict neutrality, in accordance with the policy of our Government. The naval force at present in commission is as large as is admissible with the number of men authorized by Congress to be employed. I invite your attention to the recommendation of the Secretary of the Navy on the subject of a reorganization of the Navy in its various grades of officers, and the establishing of a retired list for such of the officers as are disqualified for active and effective service. Should Congress adopt some such measure as is recommended, it will greatly increase the efficiency of the Navy and reduce its expenditures. I also ask your attention to the views expressed by him in reference to the employment of war steamers and in regard to the contracts for the transportation of the United States mails and the operation of the system upon the prosperity of the Navy.