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When the vessels now building and purchased, of every class, are armed, equipped, and ready for service, the condition of the navy will be as follows:

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Making a total of 264 vessels, 2,557 guns, and 218,016 tons. The aggregate number of seamen in the service on the 4th of March last was 7,600. The number is now not less than 22,000.

CONSTRUCTION OF NEW VESSELS.

Most of the public armed vessels being of such size and draught of water that they could render only imperfect blockading service, immediate measures were taken by the department to carry into effect the policy of the government, in advance of the special session of Congress, by contracting for the construction of twenty-three steamers, which should be of light draught, but heavy armament. Congress, at the regular session, had authorized the building of seven screw steamers, and as there were four yards, in each of which two might be built, the department, in the existing emergency, and in anticipation of the action of Congress when it should convene, directed the construction of eight, dividing them into two classes of about one thousand and fourteen hundred tons, respectively. At the special session, Congress not only sanctioned the action of the department in the construction of these thirty-one steamers, but it authorized the further construction of twelve side-wheel steamers of light draught, and of six of larger capacity, to be modelled and built specially for speed. Many of those first ordered are already in commission, and the others are in rapid progress towards completion. If, with those above enumerated, we include three iron-clad, or armor steamers, which are being built from the money appropriated for that purpose at the special session, there will be under these several arrangements an addition, when they are completed, of fifty-two new steamers, peculiarly adapted to the required blockade or coast guard duty, added to the navy. No sailing vessels have been ordered to be built, for steam, as well as heavy ordnance, has become an indispensable element of the most efficient naval power.

PURCHASE OF VESSELS.

The public vessels and the public yards, in their capacity of construction and repair, were, however, totally inadequate to the demands that are now pressing on this branch of the government, and the department was compelled to resort to the commercial marine to make good the deficiency. Vessels of every class and description were promptly tendered by sellers and their agents, who, in many instances, became dissatisfied when their offers were not accepted.

This new necessity of the government, involving a large expendidure, and the purchase of suitable vessels, imposed an important responsibilty; and the task of making suitable arrangements to insure the prompt and systematic purchase, on the best and most reasonable terms for the government, of a large number of vessels most suitable for its use, was attended by peculiar difficulties, and received mature consideration. The purchase might be made directly by the department, or by boards of officers under its control at the principal ports where the vessels were to be bought, and especially at the great central point of supply for such a demand, the port of New York.

But to both these methods of procedure the briefest trial disclosed serious objections. It was manifest from the first that the depart

ment, charged suddenly with the organization and superintendence of new and arduous naval operations on a large scale, in addition to its current business, could not possibly itself devote to the numerous details of each case of purchase the time and attention needful fully to protect the interests of the government. It was equally clear that boards of officers, acting in a mere mercantile capacity, new to them, and for which they had neither been practically trained nor professionally commissioned, would be subjected to great embarrassment and disadvantage in their dealings with sellers of ships and professional ship brokers, in a market suddenly pressed by a heavy and peremptory demand. Yet the department could rely, and it did rely, with the fullest confidence upon the professional judgment and ability of its ordnance officers, naval constructors, and engineers, all acting under the responsibility of their commissions, to investigate and determine the whole question of the adaptation, in all respects, of each ship offered, and of its capacity to be by alteration fully adapted to perform the particular service required by the government. This work, with the corresponding authority of selection and rejection of all vessels, was therefore exclusively committed to boards consisting each of an experienced naval constructor and engineer and an ordnance officer, convened and stationed for the purpose at New York, and the other principal cities. The mere mercantile part of the business-the making of the best bargains possible for the gov ernment in each case, with the care of averting all intervention of third parties, which might embarrass the attainment of that result was considered by the government to be placed most properly in the hands of a mercantile agency of a high and established character for integrity, experience, and capacity. Obvious reasons, including the consideration that it is individual responsibility which is always felt most keenly, and that several agents, all acting separately for the government at the same places, would necessarily compete with each other to its disadvantage in the market, indicated that this agency should be tendered to a single, properly qualified individual, upon the distinct understanding that he should devote his whole time, attention, and ability to the work; that he should in no case make any charge against the government for his service; that he should deal always directly and exclusively with the owners of the vessels purchased, thus permitting no brokerage fees, or agents' commissions, between himself and the owners; and that, finally, his own commission, payable always by the seller, should in no case exceed the regular mercantile percentage fixed by the Chamber of Commerce of New York, and established by the custom of merchants in that city as the rightful and legal rate of remuneration for such services rendered by any person acting between the sellers and purchasers of vessels.

The agent thus selected was a merchant, who had been connected with one of the most successful and extensive commercial firms in this country-a gentleman of great business capacity, and of the most scrupulous and unquestioned integrity. Relinquishing all private engagements, and withdrawing from all business connexions of every

description, this gentleman has devoted his whole time and energies with untiring fidelity to the service of the department and the country. By the system thus adopted the very best vessels in the commercial marine have been secured for the naval service at moderate rates, and to the great advantage of the government. The course pursued in these purchases has extemporized a navy at less cost to the government, it is believed, than that required for the construction of the same or equally serviceable vessels; and a question which, at the commencement, was one of embarrassment and difficulty, has been disposed of, and in no particular has the country been better served.

Subjoined is a statement from the purchasing agent at New York, with a schedule giving the name, tonnage, price demanded, and cost actually paid of every vessel that has been bought by him, and also of all added to the navy since the change of administration in March last. There is abundant reason to congratulate ourselves that, on such a demand, in such a crisis, we were enabled to make so speedy and so large an acquisition to the naval service, and on terms so economical to the government.

The expenditure in fitting for sea service the vessels at the different navy yards, and repairing and equipping those returning from our foreign squadrons, has been large. Eleven thousand mechanics and laborers have been in the daily employ of the government at the different navy yards in building and preparing vessels, and equipping and arming them for service; but this large force has been unable to despatch the work with the rapidity demanded, and the department has been compelled in consequence to resort to private shipyards and outside labor.

ARMORED SHIPS.

To carry into effect the provisions of the act approved August 3, 1861, providing for the construction of one or more armored ships and floating batteries, I appointed Commodores Joseph Smith and Hiram Paulding and Captain Charles H. Davis, skilful and experienced naval officers, to investigate the plans and specifications that might be submitted. The subject of iron armature for ships is one of great general interest, not only to the navy and country, but is engaging the attention of the maritime powers of the world. Under the appropriation made by Congress, the department, on the favorable report of the board, has contracted for the construction of three fron-clad ships of different models, the aggregate cost of which will be within the limits of the appropriation. The difficulty of combining the two qualities of light draught and iron armor, both of which are wanted for service on our coast, could not be entirely overcome; but the board, in this new branch of naval architecture, has, I think, displayed great practical wisdom, and I refer to their very full and able report, which is appended, for a more explicit and detailed ex hibit of their inquiries and conclusions.

STEVENS'S BATTERY.

In pursuance of the joint resolution of Congress approved June 24, 1861, authorizing the Secretary of the Navy to appoint a board to examine the iron steam battery now building at Hoboken, New Jersey, and ascertain what will be the cost of completing the same, how soon it can be completed, and the expediency thereof, I appointed Commodores Silas H. Stringham and William Inman, Captain T. A. Dornin, Chief Engineer A. C. Stimers, and Joseph Henry, Esq., Secretary of the Smithsonian Institution, a commission, and directed them to assemble on the 1st of November to prosecute the examination. The department has information that the board convened, but has as yet received no report of its proceedings.

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The efficiency of the navy may unquestionably be largely increased by creating more grades, and I would recommend that the permanent organization of the line officers be as follows:

Flag officer-to command squadrons.

Commodore,

Captain,

Commander,

Lieutenant commander,

Lieutenant.

Master.

Passed midshipman.

Midshipman.

Cadet.

To command single ships.

The lieutenant commanders, a grade used during the revolution, may be employed as first lieutenants, and in the command of the smaller class of naval vessels.

The present rate of pay may be so apportioned among the different grades that in the aggregate there shall be no increase. Let no officer be advanced to any grade above that of passed midshipman except upon nomination of the President and confirmation by the Senate, after a board of officers shall have pronounced him morally, physically, and professionally competent to perform all his duties, both ashore and afloat.

The public service would also be promoted were some limit of age fixed by law for active service. I would, therefore, respectfully suggest that line officers be retired after having been forty-five years in the navy, excepting when called into active service by special appointment from the President. A generous pecuniary provision should be made for those who are retired after long and faithful service.

To satisfy the immediate demands of the public service, I recommend that a grade to be designated flag officer be established, and that the President, by selection from the present list of captains and commanders, appoint a number not exceeding seven, who shall each have command, irrespective of seniority or rank, of the squadron to

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