erection of a Prison and wall for the safe-keeping of convicts; one hundred and fifty thousand dollars for the Insane Asylum Building and furniture; thirty thousand for furniture for the Capitol, last year, and twenty-three thousand seven hundred and eighty-one dollars and eighty-two cents in 1851; Sheriffs for guarding prisoners in 1851, forty-six thousand and thirty-one dollars; ten thousand for rent of State Offices for the year 1855; not less than sixty thousand for previous years; and other equally important expenditures not necessary here to specifically enumerate, amounting in the agregate to a sum but little less than the entire indebtedness of the State at the present time.

Notwithstanding the difficulties which surrounded and seriously embarrassed the State Government in its incipiency, aud which to some extent still exist, the credit of California, abroad and at home, has been well sustained by the promptness with which outstanding bonds have been redeemed, at maturity, in every instance, and the punctuality which has always characterized the payment of interest when due.

A comparison of the financial condition of California with that of other Western States, can be favorably instituted-the States of Missouri, Iowa and Wisconsin alone, having a smaller amount of indebtedness than California; the others much larger. The State debt of Indiana is eleven millions forty-eight thousand dollars; that of Illinois, sixteen millions seven hundred and twenty-four thousand one hundred and seventy-seven dollars; that of Alabama, three millions nine hundred and eighty-three thousand six hundred and ten dollars; that of Michigan, two millions six hundred and sixteen thousand nine hundred and eighty-one dollars and seventy-eight cents; and Texas, six millions eight hundred and twenty-seven thousand two hundred and seventy-eight dollars.

It should moreover be remembered that all of these States, except Texas, were provided for a series of years with a Territorial Government, the expenses of which were paid from the National Treasury, and neither was compelled, as was California, to organize an expensive State Government before the condition of the country fully prepared her people to sustain the same. It is also true that neither of the States named was called upon to interpose and expend from its own coffers in less than three years so large a sum as one million two hundred thousand dollars in support of the unfortunate sick, insane and destitute.

These are a few of the causes which have necessarily contributed to the accumulation of the existing State debt, and their recital thus briefly is deemed sufficient to absolve the Government and its administrators from the charge of undue extravagance or reckless indifference to the interests of the people.

The annual expenditures of the Government, rendered unnecessarily large by a Constitution framed at so early a period in the history of a people assembled on these shores from all the States of the Union and nearly every nation of Europe, have prevented the cancellation of this heavy debt cast upon the State at the very inception of its organization, and in fact before it was fully completed. Though not disposed to cast censure upon the officers of the Federal Government for failing to meet the crying wants of our people on these shores, I cannot refrain from expressing the opinion that to the neglect of the authorities at Washington to provide a territorial organization for California, at a time, too, when they were levying duties upon our citizens for the support of that Government, we may look as the cause of many of the evils our people have suffered and of the excessive burthens they have been compelled to bear.

Having thus briefly touched upon some of the more important of the many causes which laid the foundation of our existing State debt, and which have up to the present time rendered necessary the levying of high rates of taxation, it affords me sincere gratification to be enabled to assure you, that in all the elements of substantial prosperity and real wealth, the State, during the past year,

has progressed to an extent unequalled by that of any former period in our history. The soil has yielded to the labors of the husbandman a most plentiful return, and with a productiveness unparalleled either here or elsewhere. The harvest of 1855 has firmly established the claims of our young State to a high and decided pre-eminence over any other in the Union, in point of extreme fertility and agricultural productiveness. No longer, as of yore, do we look alone to our rich placers and mountain gulches for wealth and the means of sustaining our world-wide commerce and our own prosperity-but the abundant aud no less wonderful products of a most prolific soil have excited the admiration and attracted the notice, not only of our sister States, but of all the nations of the civilized world. No longer are our cities the mere receptacles of foreign products and our merchants the agents through whose hands is passed the glittering ore in exchange for articles raised and manufactured abroad.

Our capacious warehouses and well filled granaries, our stores, shops and buildings of every character are teeming with the home products of the agriculturist, the mechanic and the artizan.

While we are no less proud of the unparalleled wealth of the mountain and river side, and still boast of gold as the great staple of California, it is a source of gratification that it is not alone to that we look as the basis of enduring wealth and prosperity, but also to the boundless agricultural resources each day being developed.

From one end of the State to the other-from San Diego to Siskiyou, every valley and plain evidences the gratifying fact that our people are fast turning their attention to agricultural pursuits. The farm-houses dotting our river sides -the ranches of our mountain slopes-the innumerable herds of the southern plains all evince not only the happiness, contentment, and prosperity of our people, but also the permanent character of our settlements, and progress in industrial and peaceful pursuits. Immigrants hither, come not now to sojourn a brief period and then leave our shores forever, but they come with their wives, children and parents, to remain as permanent citizens: to surround themselves with all the comforts, blessings, and endearments of home, and adding their mite to the general prosperity, to lay the foundation of the future greatness awaiting this young State. These are the elements-the forerunners of enlightened civilization, and to the harmonizing influences of home, of friends, and the fire-side circle, must we look for future wealth and enduring progress in the paths of peace, happiness and prosperity.

The past year has given gratifying evidences not only of the unequalled fertility of our soil, and the adaptability of our climate to the culture of the staples and luxuries of commerce, but also of the interest manifested in agricultural pursuits, and the skill, science and learning even now employed in our midst, in the improvement and invention of machinery and farming implements.

The State Fair of the Agricultural Society of California, held in Sacramento during the month of September, while serving to stimulate our farmers to renewed exertions, and affording an opportunity of exhibiting the wonderful and varied products of our soil, was, I am pleased to say, attended with complete success, and such annual exhibitions are eminently conducive to the best interests of the State, and deserving the highest consideration, as well as your fostering care and eucouragement.

Nor have we been neglectful of the wants and necessities of the rising and future generations, but with a liberal hand the State has, while providing for present wants, laid the foundation of a vast fund, devoted to the support and maintenance of a system of Common Schools.

During the year just closed, institutions of learning have been organized at several points in the State, under the most flattering prospects of future success.

Three Colleges have already been incorporated, and under the conduct of experienced professors give promise of becoming institutions worthy of California.

Our public Schools-the deserving objects of your unceasing and peculiar care and support, are, I am pleased to say, in a most flourishing condition, and daily extending their ramifications throughout the cities, towns, villages and hamlets of every county of the State, placing within the reach of all, irrespective of class or condition, the unequalled blessings of a free and liberal education.

As our population becomes more and more settled and permanent-as families come in daily among us—and homes arise on every side-it is the part of wisdom as well as of duty, to see that ample means are provided for fitting the children of the State to become educated and properly trained citizens, well informed as to their rights, duties and responsibilities, after they shall have been called upon to partake of the privileges and blessings, and to bear the barthens of freemen in this highly favored land.

Intelligence is rightly esteemed as the impregnable bulwark and safeguard of American institutions, without which our liberties can neither be defended against the assaults of ignorance and superstition, nor properly appreciated in the hearts of the people. It is therefore, no less our duty than it should be our endeavor to sustain by every legitimate means, all systems for the education of our youth, and all institutions designed to promote the moral aud intellectual well-being of those embryo citizens and statesmen who will soon be called to take part in the busy affairs of life, and assume in our stead the reins of republican government

Thus only can the civil and religious liberty bequeathed to us as a heritage from our fathers, be transmitted pure, unsullied, and undefiled, to our children through all future generations.

It is, in fact, worthy of sincere and heartfelt congratulation that, although as late as January 8th, 1852, the date of my first inauguration, we had no system of common schools, and were not possessed of a dollar of school fund, we can now boast of a system scarcely inferior to that of any of our sister States, and a fund in the treasury of over half a million, inviolably devoted to the mainte nance and support of that system and the education of the children of the State. A detailed statement, containing statistics and important suggestions relating to this highly interesting subject, will soon be transmitted for your consideration by the Superintendent of Public Instruction. From his report, it will be seen that the number of public schools now in actual operation is 221; teachers, 304; the number of children in attendance, 25,398.

Until within the last year, the State has been entirely dependent on the good faith and ability of private citizens for the safe keeping and punishment of criminals sentenced to the State prison, that institution having been placed under the control of a single individual by virtue of a contract made in 1851. It is, perhaps, needless to refer to the numerous escapes of prisoners, and the consequent fears, at times, entertained by our people, or to adduce reasons why that institution should at all times be under the direct control of the State through agents responsible to the people.

The events of the last fifteen months have conclusively settled that point, and it affords me sincere pleasure to be able to inform you that on the of June su,t the lessee relinquished to the State his contract, and turned over to the Directors appointed under the act of May 7th, 1855, the prison buildings, grounds, and prisoners, as will more fully be seen by reference to documents herewith transmitted.

Since the Directors have taken charge of the convicts, they have, in compliance with the provisions of the said act, comme need and completed a good and substantial wall around the prison, averaging twenty feet in height above ground:

quite sufficient to confine and safely keep one thousand convicts, and rendering escapes in the future less frequent than heretofore, if not altogether impossible. The completion of this wall will not only secure the confinement and punishment of convicts, but materially diminish the number of guards and others heretofore necessarily employed in and about the prison, and of course greatly reduce expenses. The whole number of prisoners now confined in the State Prison is four hundred and twenty-seven.

In instituting a comparison between our present condition and that of January 8th, 1852, in regard to works and institutions of public necessity and utility, the asylum for the insane at Stockton is noted as not the least creditable to the State, whose beneficence has thus provided for the wants of those who have been bereft of the light of reason, far from home and friends. This splendid edifice, the work of our own artizans and mechanics, no less beautiful and ornate than useful and necessary, is at once an ornament to the city of Stockton and an enduring monument, attesting the progressive spirit and liberality of the State.

In a few days more, the official relations between the representatives of the people and myself will have ceased,, and the cares and responsibilities of the Executive of a great State will have devolved upon another, and, although it will be with him that you will hereafter be called upon to co-operate in maturing such acts as are demanded by the wants and interests of our common constituents, I nevertheless deem it my duty to invite your attention to measures regarded by me as important to the whole people, many of which I have, from time to time, in various annual and special messages, urged upon the consideration of your predecessors.

Heretofore, during the past four years, I have esteemed it my duty, under the Constitution, to urge upon the attention of the people's representatives various measures, constituting in themselves a system for the more economical administration of the Government, and which, in a brief period it was confidently believed, would extinguish the indebtedness already incurred, and extricate the State from present and future financial difficulties.

While some of these recommendations have received from your more immediate predecessors proper consideration, and the measures suggested matured and received legislative sanction, others of equal importance have failed to secure that attention and action essential to give them force, form, and vitality as laws.

In this, my last official communication with your honorable body, and on the eve of retiring from public station to the quietude of private life, I do not consider it necessary to do more than briefly and respectfully refer you to the recommendations heretofore made by me, which have not as yet been acted upon; and while assuring you that my mind has undergone no change as to their policy, propriety and necessity, to express the hope that you will, at an early day, bestow upon them the careful consideration which their great importance to the interests and welfare of the people, whose agents you are, assuredly demands.

I have heretofore, as will be discovered on examination, repeatedly recomrended more strict economy in legislative expenses, and beg leave again to invite your attention to this highly important item of State expenditures, that you may, at the outset of your responsible labors, avoid contracting the heavy and unnecessary indebtedness heretofore incurred by your predecessors, more perhaps from carelessness and inattention to what has frequently been regarded as but small matters, than from lack of interest in what concerns the welfare of the State.

The expenses of the late Legislature for clerical services alone, exeeeded in the aggregate the enormous amount of one hundred thousand dollars—a sum more than treble the amount actually necessary, and nearly equal to the entire legislative expenses of many of the States of the confederacy.

The recommendations made during the sessions of '52-3-4 and 5, in relation to a reduction of expenditures in the several departments of the State government, are again reiterated, and your attention earnestly invited to the subject as one of much importance to the tax-payers of the State.

In response to recommendations made by me in the annual messages of 1853, '54 and 55, the last legislature matured and passed several amendments to the Constitution of the State. These amendments are all regarded by me with peculiar favor, as eminently proper and necessary, and it is hoped they will, ere your adjournment, receive favorable consideration. The most important of the amendments proposed, is that providing for biennial instead of annual sessions of the legislature.

This alone, if adopted, will save to the State annually, the large sum of one hundred and seventy-five thousand dollars, now needlessly expended under the Constitution.

As a measure therefore, of practical economy, and as one demanded alike by the voice of the people and the interests of the State, it is hoped it will not fail to receive your sanction, and be submitted to a vote of the people for their ratification.

The second, third, and fourth amendments proposed, are necessary in order to harmonize other provisions of the Constitution with that providing for biennial sessions of the legislature.

The fifth amendment, requiring a new Constitution, in case oné should hereaf ter be framed by a convention of delegates assembled for that purpose, to be submitted to the people, and by them adopted before being recognised as the fundamental law of the State, is one of great importance, and it is hoped will, with the others, receive favorable consideration and early action.

This amendment is necessary to supply a most important omission in the present constitution, which instrument, although it makes provision for the calling of a convention to revise the organic law of the State, does not require the Convention to submit the result of their labors to a vote of the people, but makes their action, for weal or for woe, final and binding upon the people of the State. This radical defect, and one capable of much injury and inconvenience to the people, is remedied by the fifth amendment, which secures to them the right of adopting or rejecting a new Constitution, after having been framed by e convention of delegates of their own choosing.

Deduct amount of Cash in Treasury,

Total amount of Civil Indebtedness, December 20th, 1855, ex

112,106 01

clusive of the School Fund,

2,804,269 46

Balance due from the sales of property made

in San Francisco,

$295,000 00