To defray the expenses of the proposed fortifications the States must, of course, resort to loans.

The effect produced by the competition of a principal with his own agents has already been illustrated by the embarrassments attending that system in the raising of volunteers and in the procuring of clothing and other supplies for them. To throw several of the Statearket in direct competition with the large loans necessary to be made by the General Government, especially under the discouraging influence which the publication of your letter may have on public credit, is an experiment which must lead to embarrassments similar in kind, but probably even more injurious. It is not doubted that provision for reimbursement would be made by law, for Congress at its last session promptly passed an act providing for the reimbursement of expense incurred by the States in raising volunteers for the defense of the United States. For that defense Pennsylvania has, in proportion to her population, furnished a larger and more effective force, and at a greatly less expense, than any other State, and her people are now freely contributing their money to the loans of the United States. Under the above-mentioned act of Congress the Government of the United States through its proper Department agreed to pay at once to the several States 40 per cent.of their expenditures as stated by their respective authorities, but this payment has thus far been withheld from Pennsylvania for the reasons, as given, that she is so wealthy a State and has expended so little money in proportion to the large material aid which she has furnished that she can wait till a more convenient season. In other words, that the economy of her government and the liberality of her people afford grounds for refusing to her the prompt, though partial, reimbursement which is made to other States, and while she would seem to have deserved, not less, but rather more, then they.

In regard to the final settlement of these accounts, I discover that a communication has already been received (backed by a certificate of a person holding a high official position at Washington) setting forth the necessity that the agent for settling them should possess a minute knowledge of all the laws and precedents applicable to such cases to be found in the past history of the Government, and adding that this knowledge and proper consultations with the accounting officers will be necessary to enable him to advise as to the best mode of making up and proving the accounts, may items of which must otherwise be rejected by the accounting officers. These circumstances lead me to express the hope that the next provision by Congress for the reimbursement of the States may be so arranged that some faith may be reposed in the accounting departments of the several States, and that (at least in cases where the amount claimed is so small in comparison with the services rendered, and with what they would have cost the United States directly, as to exclude the possibility of extravagance or prodigality) the actual expenditures made by the States may be refunded to them without the necessity of resettling and retouching the accounts under such formidable conditions. he best mode of attaining the end which you propose would be for the General Government itself to immediately undertake the fulfillment of its own duties in this regard, in which it will have, if necessary, the prompt, earnest, and zealous aid of the government and people of this Commonwealth. If, however, this course should not be assented to, then I have to say that Pennsylvania in any way that may be required will give her last man and