Although this department has, as shown by the foregoing figures, procured by manufacture and purchase an immense quantity of supplies, the whole course of the war, but particularly of the past year, has most forcibly shown the bad policy, indeed the danger, of relying too much on private parties, no matter how large their resources, for the principal munitions of war. It is impossible for them to control fluctuations of the market in labor and material; and no private establishment can afford to keep large stocks of ordnance stores on hand, such as are required by the Government to meet its sudden wants. This can only be done by the Government itself; and to be able to meet all emergencies this department should have under its control ample means not only to supply but also for manufacturing all the principal munitions in its own shops. Warned by repeated lessens, energetic measures are now being taken to enlarge several of the principal arsenals, namely, Watertown, Watervliet, Allegheny, Saint Louis, Washington, and Benicia, Cal., so that the evils alluded to may be in future avoided.

During the past year large supplies of foreign manufactures have been procured, but much less than during the preceding year, owing to the increased development of our own resources. It is the intention of the department to procure, if possible, in this country every article required, whether in the crude or manufactured state, and with the exception of such articles as sulphur and saltpeter, there is no reason to doubt that this plain can be fully carried out; thus saturating to our own people the benefit of our large expenditures, and rendering us independent of foreign nations.

The supply of saltpeter reported as on hand at the date of the last annual report remains intact, the department having found no difficulty in procuring ample supplies of gunpowder without having recourse to this reserve stock; and at as been made to our supply of sulphur, rendering it ample for present wants.

As regards small-arms, we may now consider ourselves perfectly independent of foreign aid. The supply from the Springfield Armory alone for the coming year is estimated at not less than 250,000, while from private parties there will probably be received at least 250,000 more. Of carbines, for cavalry, the present capacity of established manufactories is not less than 100,000, and of pistols not less than 300,000, under contract to the department.

The wisdom of the measure adopted by the War Department in September, 1862, for the purpose of procuring a supply of iron suitable for manufacture of muskets and other fire-arms, the product of our own manufactures, avoiding the necessity of resorting to a foreign market, has been fully demonstrated. Iron of a quality fully equal to the celebrated irons manufactured in England and Norway is now produced in ample quantity to meet all our present wants, and the product can be increased to any desirable extent, thus relieving us entirely from our former dependence on European producers for this indispensable article.

In this connection I desire to call your attention to the entire inadequacy of the provision made for arming the militia of the States by the law of April 23, 1808, which appropriates annually $200,000 for this purpose, and the disbursement of which has since that time been under the control of this department. When this law was passed the entire population of the United States was 6,853,038, and the number