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Gentlemen of the Senate and House of Representatives :

I am happy to be able to congratulate you upon the prosperity of our State. During the last two years our people have enjoyed their usual good health and have secured reasonably abundant harvests. Labor has been well rewarded, and the products of labor have brought remunerative prices. The educational interests of the State are as prosperous as ever; and peace and good order within our borders, although on one or two occasions somewhat imperiled, have been maintained.

Let us render thanks to God for these blessings vouchsafed us during the existence of a desolating war, that has so scourged a large portion of our land.


Our State finances have never before been in a more healthy condition. Our entire State debt is only $622,295.75, consisting of loan from School Fund $122,295.75; loan of 1858 $200,000, and war loan of 1861 $300,000. Of the $800,000 of war Bonds authorized to be sold, $500,000 remain on hand-none have been offered since the $300,000 were sold; and it is believed no further sales will be necessary.

The report of the State Auditor shows that the moneys now in the Treasury, the delinquent taxes, the amount estimated to be due from the United States, and the taxes for 1863 and 1864, are sufficient to pay the estimated expenditures for the next two years, the outstanding Warrants on the Treasury, and our entire State debt, leaving a balance in favor of the Treasury of about $200,000.

Provision should be made for the redemption of the bonds issued in 1858 and 1861–2 as they fall due. I recommend that a sufficient sum be set aside, annually, for this purpose, and invested, with its accumulations, in United States or other good stocks. In my judg. ment, the amount due the School Fund should be perinitted to remain as a permanent debt of the State. The State is trustee of this fund and liable for all losses thereto; and there can be no safer mode of investing this amount of the fund, than the present.

The Report of the Auditor still shows a large amount of delinquent taxes. So much of this as is due upon real estate will be finally paid; but it is thought, a very considerable portion of the delinquency is due upon personal property, by persons not owning any real estate, much of which will be lost.

Under our revenue law real estate is assessed biennially, and personal property annually. The assessments are made between the 1st of January and the 1st of April; the levy is made in September, and the taxes become delinquent on the 1st of February of the next year. It thus happens that persons may bring into the State, for sale, or may buy within the State, large amounts of personal property, which are assessed to them for taxation; may keep and use the same, within the State, more than a year, and finally dispose of it before the tax becomes delinquent; and if such persons do not own real estate in the same County in which the personal property was assessed, there are no means of compelling payment of the taxes due. This defect in the law should be remedied in justice to the State, and to the owners of real estate, who already bear their full share of the public burdens.

I renew the following recommendations, made by me to the Ninth General Assembly :

“In order to make the revenue of the State more certain, I recommend that the County Treasurers be required by law to pay the State Treasurer, at fixed times, certain proportions of the amount of revenue due to the State, until the entire sum for each year is paid, whether the County Treasurers have received the entire amount of State tax or not. At present the State is wholly helpless as to its revenue. It has to depend wholly upon the officers of Counties for its collection and transmission, and if the County officers are inefficient, the State is remediless. Each County is now liable by law to the State for the amount of State tax assessed in it, but this liability, without any means of making it effective, is useless. If the Counties were required to pay the revenue due the State, whether collected or not, the County Supervisors would be stimulated to require of the Treasurer a strict performance of his duties; and if, in addition, you should so change the present law as to give County Treasurers in lieu of salary, a per centum on the amount of money collected and disbursed, or provide for township collectors, to be paid in the same way, our taxes would, in my opinion, be more punctually paid.”

“I also recommend that it be made the duty of the Board of Supervisors of each county to employ a competent accountant, once in each year, to examine the accounts of each county officer, and state an account between each officer and his county, and between officer and officer; and also that County Treasurers, and all other persons who receive public moneys, be prohibited, under severe penalties, from using them in any way, or placing them with others to be used, for their private benefit.”

There is due this State, from the United States, for expenses incurred by the State in raising and equipping troops, and sending them to the field, and for other purposes growing out of the rebellion, the estimated amount of $300,000. There is much difficulty in procuring an adjustment of this claim at Washington. When these moneys were expended by the State, there was no law of Congress, or regulation of the Federal Government, prescribing the form in which proof of the expenditures should be taken; and the General Assembly of this State provided, by law, for such proofs and vouchers as were deemed sufficient, both for the protection of the State and the United States. Upon presentation of these proofs and vouchers to the proper Department at Washington, they are found not to comply, in form, with regulations since adopted by that Department; and it is doubtful whether they will be allowed without some legislation by Congress. Some portions of these expenditures, thus made, are also objected to as not coming within the letter of existing laws of the United States. Among these are the sums paid by the State for the subsistence and pay of the troops that went from this State to Missouri, at the request of United States officers, under the command of Colonels EDWARDS and MORLEGE.

There is, also, an unsettled claim against the United States, for expenditures by the State, for the protection of our people during the two winters following the massacre on our north-western frontier, by Ink-pa-du-tah and his band. The United States are also, in my judgment, justly liable for the amounts expended by this State in protecting our people on the north-western and southern borders since the commencement of the rebellion. I recommend the appointment of an agent of the State to proceed to Washington to press the adjustment of these claims, and to secure, if necessary, additional legislation by Congress for that purpose.

The expenditures of the State on the north-western and southern borders are made payable, by law, out of the War and Defense Fund. This fund was found to be insufficient, and, in June last, a large amount of warrants on that fund were outstanding and drawing interest for want of means to pay them. There was, at the same time, a large amount of ordinary revenue in the Treasury not needed for ordinary expenses, and the Auditor and Treasurer, upon consultation with me, decided to apply the ordinary revenue to the payment of the War and Defense Fund warrants, so far as it could be done without interfering with the payment of ordinary revenue warrants as presented. This was done to the amount of about $159,000, and thereby a considerable amount in interest was saved to the State. As some doubt exists as to the strict legality of this course, the matter is laid before you that you may take such action as may be necessary. If the amount due from the United States could be recovered, it would, probably, be sufficient to reimburse the revenue fund and redeem all outstanding warrants and claims on the War and Defense Fund.

In my judgment, all real estate should be carried on the tax books in the name of the true owners; and this result can be effected with very little labor and expense, by requiring the Treasurers to furnish the Assessors with complete lists of the names of all real. estate owners, as shown by the last tax book; to correct the names erroneously entered, whenever such error is shown upon the payment of taxes, and by requiring all deeds to be presented to the Treasurer for the transfer of the real estate therein described to the new owner, before the same can be recorded.

I recommend the enactment of a law for receiving the new national currency, and a modification of the present law for receiving the notes of branches of the State Bank, that both may be available in payment of taxes. As the law now stands, the notes of said branches cannot, legally, be received after any one of them shall have suspended specie payment. A change of the law so as

to authorize the receipt of these notes, so long as they shall be redeemed in legal tender notes of the United States, would, in my judgment, be wise and proper.

I cannot leave this subject without special mention of the Board of Auditing Commissioners. I am well satisfied, that, to their faithful and impartial discharge of their duties, the State is largely indebted for its protection against improper claims, and, consequently, for its healthy financial condition.

THE SCHOOL AND UNIVERSITY FUNDS. The situation of these funds demands your earnest attention. You are their guardians and and custodians. Upon their management depends, to a great degree, the educational interests of the State ; and upon the proper education of our youth depends the welfare and safety of our Government.

I cannot approve the system by which these funds are now managed. The principal, received by the State in cash, has been distributed among the counties, to be loaned to individuals by certain county officials ; at one time by the School Fund Commissioners, at another by the County Judges, and now by the County Clerk, subject to a limited control by the Board of Supervisors. Would any of you, having a large amount of money to lend, lend it through those agencies? If not, is it right to do so with the public money? Is it not right and proper that you should do, in regard to these funds just what you would were they your private property? The present system is, in my judgment, a bad one, for two reasons. In the first place, it must happen in many cases that the County Clerk is not fitted, by previous business training, to make safe and judicious investments ; especially, he may not have the necessary legal knowledge to enable him to determine, accurately, the sufficiency of the title to real estate offered as security for a loan. In the second place, the money may be used to promote personal or political objects. A corrupt Clerk will use, and an honest but weak one, will be sorely tempted to use his power to lend these moneys to secure his own political interest or that of his party friends. The system, in my opinion, is wrong in theory, and that it is unsafe in practice is clearly shown by the large amount of insufficiently secured principal and delinquent interest. I therefore earnestly recommend that the lending of any portion

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