Canal Fund, to the amount of $160,000. The natural consequence of this legislation, and this practice, has been the absorption of the Sinking Fund balances in the general expenditures. Thus, according to the Report of the late Auditor, there was, on the 15th November, 1855, an apparent balance, to the credit of the Sinking Fund, of $537,499 06. But it must be observed that this balance constituted part of the general balance of $703,370 08, said, by the Auditor, to be "awaiting legislative appropriation" to the discharge of "temporary outstanding liabilities," and "to the necessary expenditures" of 1855-6. I have already shown that the payment of the debts of 1854-5, incurred for current expenses, more than absorbed all that was available of this reported balance. In like manner the present Auditor reports a general balance, to the credit of the Sinking Fund, on the 15th November, 1856, of $481,749 06; while the same officer reports the total gencral balance, on that day, including the Sinking Fund balance, as $579,517 59, of which only the sum of $350,950 63 was then available; and this sum constituted the only fund for the payment of current demands of every description upon the Treasury.

In view of these things I think it my duty to recommend the levy of a sufficient rate upon the grand list to restore to the Sinking Fund the sums which have been transferred from it, or in any way diverted to other uses, and to increase it to the full extent of the constitutional requirement. And I also recommend such legislation as will ensure the future reservation of the entire fund from every use except that of paying the interest and principal of the Public Debt, and the safe investment of that part specially applicable to the reduction of the principal, until wanted for that purpose.

The chief sources of our Public Income are the Grand Levy; Charter Taxes of Banks; Proceeds of Public Works; Collections of Surplus Revenue loaned to Counties; Sales of School and Ministerial Lands held in Trust; Sales of Lands granted to the State in aid of Improvements, and otherwise acquired; Dividends of Stocks; Convict Labor; Payments by the General Government on account of the Three per cent. Fund; and Licenses and Auction Duties.

Some of these sources of revenue are nearly exhausted; others were never productive; and the receipts from others are in the nature of loans rather than of income.

Only about forty thousand acres of land in Ohio yet remain the property of the General Government. Very little more can be expected therefore from the State's three per cent. proportion of their sales. Not much land belonging to the State remains unsold. The amount of Surplus Revenue unpaid by Counties, is reduced to $206,349 77. The proceeds of convict labor are absorbed in the support of the Penitentiary, and avail nothing to the General Revenue. And the proceeds of the School and Ministerial Lands, as they accrue, become part of the Irreducible Debt, upon which the State is bound to pay six per cent. interest to the use for which they were granted.

These facts admonish us that for the expenses of the State Govern ment, of the Public Institutions, and for the payment of the State Debt, our main reliance must hereafter be upon the contributions of the people, in the form of Taxes. They require us to husband every remaining resource, and demand the strictest economy in every department of expenditure.

No means exist of ascertaining the quantity of lands remaining unsold, whether belonging to the State, or held in trust. I recommend the provision of such means.

I suggest, also, the expediency of such legislation as will expedite and ensure the reimbursement to the State of the unpaid baianees of Surplus Revenue, yet remaining with the Counties.

When Ohio came into the Union, she relinquished the right to tax the lands of the United States within her limits, in consideration, among other things, that not less than three per cent. of the proceeds of all sales, past or future, should be paid to the State, to be applied in laying out roads. This is the origin of what is known as the Three per cent. Fund. The General Government has only accounted for the State's proportion of lands sold since the compact, and sold for money. In my judgment, the spirit, if not the letter of the compact, entitles the State to the same proportion of the sum which would have been produced by the sale, at not less than the minimum rate of a dollar and a quarter an acre, of all lands granted for Military services, or granted or reserved to Individuals, Companies, and Corporations, for their own use and benefit. The quantity of such lands, according to the Commissioner's statement, herewith transmitted, is 10,642,540 acres. A large sum, therefore, if my view of the matter is correct, is due to the State from the General Government, and it is worthy of your consideration whether some measures

should not be adopted to secure the recognition and payment of this claim. Its equity is the more apparent, when it is considered that of all the land States, Ohio has been the least liberally dealt with by the Federal Government. Every other of these States has received much larger grants of land in aid of public improvements than Ohio. Nearly every other, instead of three per cent. of the proceeds of sales, has received five. Minnesota and all the new Territories, instead of one section in each Township for the use of schools, have received two. Ohio does not complain of this liberality to other States and Territories. By her Senators and Representatives she has sanctioned it. She only demands justice for herself.

After your adjournment in April last, I received from the late State Librarian a very interesting report upon the boundary between Ohio and Pennsylvania, made under an appointment by my predecessor, in pursuance of a resolution of a former General Assembly. I now lay the Report before you. It will be found to embody much valuable information concerning our Eastern boundary, which is a continuation from the Ohio to Lake Erie, of a due North line, drawn from the Western termination of Mason's and Dixon's Line between Pennsylvania and Virginia. It will be for the Legislature to determine what compensation, if any, shall be made to the late State Librarian for this special service.

The Report of the Board of Public Works will advise you fully in respect to the management of the important public concerns committed to their charge. The unusual drouth of the past season has greatly hindered the navigation of the Canals, in consequence of which the gross revenues have been reduced from $468,831 93 in 1854-5, to $427,813 09 in 1855-6. Much the greater portion of this diminution appears in the receipts of the Miami and Erie Canal, the reasons of which are fully stated by the Board. The nett result for 1855-6 is as follows:

Nett Receipts as returned to the Auditor of
State..

Disbursements for Repairing, Superintendence,
&c.

Estimated amount paid, but not properly charg

able to this year

Making current expenses for 1855–6.Showing a Surplus of Receipts over Current Expenditures of

$388,463 92

$401,498 00

75,833 56

$225,664 44

$62,799 48

It is the opinion of the Board that, notwithstanding the unfavorable results of the past year, the Canals cannot fail, under a system of energetic and economical management, to yield a very considerable nett revenue to the State. I respectfully commend their reasons in support of this opinion, and the several suggestions of their Report, to your favorable consideration.

The Report of the Directors of the Penitentiary presents a clear account of the condition of that Institution. It is gratifying to find that the working of the act of April 8, 1856, concerning the Penitentiary, has fulfilled, in most respects, your judicious and benevolent intentions. Some modifications are suggested by the Directors which deserve attention. Various other suggestions of this Report will doubtless attract your notice, and especially those which relate to the Accounts, Receipts and Revenue, and to the impolicy of employing convicts upon the New State House, or otherwise outside of the Penitentiary walls.

In pursuance of the statutory provisions in relation to insane convicts, and in the absence of any proper accommodations for such persons within the Penitentiary, I have suspended the sentences of six prisoners, ascertained, upon proper inquiry, to be insane, and have directed their transfer to the Asylums of the Districts within which they were respectively convicted.

For the annual history of the Lunatic Asylums and of the Asylums for the Deaf and Dumb and for the Blind, and for an account of their condition at the close of the year, I refer you to the reports of the several Boards entrusted with their management. These Reports will be found to contain very many interesting facts, and many judicious and important practical views. I do not doubt that you will cheerfully respond to the proper demands of these Institutions to the full extent permitted by a just regard to the financial condition of the State, and to other equal claims upon the Treasury. It is gratifying to observe that the expenses of each Institution during the year have been less than the appropriations for their support. I particularly commend to your attention the economical use of the appropriation of ten thousand dollars for a dormitory for the Deaf and Dumb, to be hereafter converted into workshops. The purpose of the appropriation has been most satisfactorily accomplished, and a balance of about four thousand dollars remains in the Treasury. This circumstance, doubtless, will have its proper weight with you when considering the expediency of entering without further

delay upon the construction of the new Asylum Edifice, the need of which has been so long acknowledged.

The Report of the Commissioners of the New State House will exhibit the progress of the work and the disbursements on account of it during the last year. It is with great pleasure that I direct your attention to the careful economy, thorough work and substantial progress which have distinguished their administration. Your own observations, now that your sessions are held in the new building, will satisfy you as to the character and condition of the work. The fact that of the ninety thousand dollars appropriated for this service, more than forty-six thousand remained unexpended at the close of the fiscal year, sufficiently attests the economy of the management.

The nature and magnitude of the trust committed to the Quarter Master General, and the manner in which the duties of his office have been performed during the past year, will appear from the Report of that officer. The suggestions of this Report, and particularly that relating to the construction of a State Arsenal, deserve your consideration. The proceeds of the old Penitentiary grounds may be advantageously applied to the purchase of a site and the erection of the necessary buildings; or the Legislature may direct the location of the arsenal upon a part of these grounds, and the application of the proceeds of the residue to construction. I recommend the discontinuance of the per diem allowed to the Quarter Master General, and the allowance of a fixed salary sufficient to compensate fairly for the time, attention and intelligence necessary to the proper performance of his duties.

In this connection I beg leave to direct your attention to the laws concerning the Militia. The known existence of an organized public force, competent to the enforcement of law and the defence of right, is among the surest guaranties of order and security. In all emergencies requiring military force, the States of the Union must rely on the patriotism of their militia. A wise regard to these considerations dictated the provisions of our State Constitution relating to this subject. To carry out these provisions and give them due effect, legislation is indispensable. For the want of it, the Militia of the State is in danger of total disorganization; the public arms, a valuable property, are exposed to danger and loss; and in contingencies, not impossible, various public interests may suffer serious detriment. I venture to express the hope that the necessary legislation