would be about $20,000, there would seem to be left a larger amount applicable as a sinking fund, than this department has ever ventured to suggest as desirable, or at least attainable, and more than would be necessary to totally extinguish our state debt by the time of its maturity.

That however is an evil not so much to be apprehended, or that would work as much, if any injury, as the present want of adequate provision being made for a tax equal to the annual interest accruing on our part-paid bonds, until funded; and which, if we mean to keep our state debt from increasing annually, should be raised, and the amount applied, until these bonds are surrendered for new bonds, in the extinguishment of an equal amount of our other state indebted. ness. If it is urged as an argument against creating any such surplus over what is actually wanted to meet the interest on that portion of our debt now adjusted and funded, that we have, (after the redemption of the interest bonds due Jan., 1850,) no more bonds which mature before 1856, and therefore no state indebtedness which we could take up until then, it may be answered, that the legislature of 1848, in authorizing the funding of Internal Improvement warrants, reserved the privilege of calling in any of the bonds issued for them after Jan., 1850, and that they also made provision by another act, [Act No. 200, 1848,] for the application of any surplus, if we should ever be fortunate enough to have any beyond our existing liabilities, in the purchase of outstanding state stocks not at the time due or past due.

The expenses of the state government for one or two years longer are estimated at about $75,000, after which they may, and probably will be reduced, by the action of the Convention to revise the Constitution, to about $50,000 a year. Until more of our part-paid bonds are funded, the annnal interest on our state debt, including the interest accruing upon them, and on the sums due the school and university funds, will be about $110,000. In order to keep our state debt from increasing, we ought therefore, for the next year or two to have a state revenue of about $185,000. Estimating our income from other sources than direct tax, at about $40,000 a year for the next two years, which is probably full as much as will be realized, we ought therefore to have a direct state tax of about $145,000, instead of about $105,000, which is all that we should have under existing

provisions of law, unless more of our part-paid bonds should be funded before the apportionment of the tax for interest on our internal improvement debt, under Acts No. 73, 1843 and No. 173, 1848, in September next. It is anticipated that some now outstanding of those bonds will come in to be funded before that, but perhaps not any very large proportion of them.

If our part-paid bonds should however all be funded before 1851, the annual interest on our state debt would then be about $130,000; and estimating the expense of the state government after that, at $50,000, we should then require a revenue of about $180,000 to barely pay interest of our debt and current state expenses. And if intended, as it ought to be, to extinguish our state debt in twenty or twenty-one years at furthest, we ought to commence with a sinking fund of $30,000 to $50,000, (see table M. in last Annual Report.) As our revenue in 1852 and thereafter, from specific state taxes and other sources, apart from a direct state tax, is estimated at about $70,000, we might, by having a direct state tax annually of about $140,000, and with an economical state government, have a surplus of at least $30,000 to commence with as a sinking fund. It may look rather hard and discouraging to us, as it no doubt does, and may well do, that about two-thirds or three-fourths of our whole state revenue should be used up in meeting the interest and paying up the principak of an outstanding state debt, incurred mostly for objects from which we have derived but comparatively little benefit;-but at the same time, it may not be void of some degree of consolation, to remark, (as will be seen to be the case by reference to the statements contained in table O.,) that even if we submit to a rate of taxation sufficient to pay the interest, and extinguish the principal of all our state debt in about twenty years, we shall then be more lightly taxed than any of our adjoining and sister states, having any state indebtedness to provide for. As our direct state tax, to accomplish the above result of extinguishing our state debt, within a period but little longer than our state government has already been in existence, and constituting but a brief period in the history of a state, or even in the average lifetime of an individual, need not exceed at any time over $140,000, being a tax even now of only 33 cents a head, and constantly decreasing, as our population inereases, and only about half per head of what is now borne by the people of Ohio and Penn

sylvania, or two-thirds of what is raised per head in Indiana and Illinois: we certainly ought not to think ourselves unable to bear it. The object of obtaining for ourselves and our posterity, an entire freedom from state debt, and as a consequence thereof, an entire exemption from any necessity for a direct state tax, forever afterwards, as our other revenues would then be ample for the support of the state government and the interest on what might be due to the school and university funds, is surely an object worth making some sacrifice for; even if paying one-half or two-thirds as much state tax, as the tax-payers in adjoining states have to bear, should be felt and considered as such. And in making a comparative estimate of the rate of taxation per head upon our population, it should also be borne in mind, (as will be seen by reference to table N.,) that about nineteen per cent of our taxes are collected from non-resident lands, a large proportion of which are owned by citizens of other states. If the holding of non-resident and unimproved lands, especially for the purpose of speculating upon the prospective increase in value caused by the labor and improvements of actual settlers, is all wrong in principle and injurious in its results to any country affected by it, as well as a very unprofitable investment generally to those concerned, as it must certainly be admitted to be, by every one who has witnessed its effects or watched its results, yet there is at least this one small advantage in it, if no other, that the owners can be made to contribute something towards defraying the state, county and town expenses, although never probably half enough to counterbalance the drawback upon the growth and prosperity of the neighborhood of their lands, in consequence of their being withheld from settlement and improvement.

EXPENSES STATE PRISON.

The expenditures of this institution, over and above the earnings of the convicts, during the last fiscal year, it will be seen, have been much higher than were estimated in the last annual report from this office. This excess arises from more having been expended on the centre-building, now completed or nearly so, than was then anticipated for the past year, and in part also, it would seem by the vouchers forwarded here for allowance, since March last, from paying up arrearages of indebtedness left outstanding by the late Agent, whose

term then expired. Amongst the last vouchers forwarded here by Mr. Titus, the late Agent, were several which I did not feel authorized to allow, for reasons which will best appear from the letter written to him at the time, and a copy of which is therefore appended to this report, marked A. It is only necessary to state, in addition thereto, that Mr. Titus did not make his appearance before the Board of Auditors, nor send any reply, so far as I know, to the communication then addressed to him.

It is to be hoped, after the completion of the centre-building, which I am informed by the present Agent, is all that will be required for the use of the prison for a long time, unless it may be some additional cells in the wing now up, that the prison may be able, at least to support itself, if not, as in some states, even to yield some revenue over and above its expenses.

STATE DEBT AND RESOURCES.

In table E., I have given a full and complete view of our state indebtedness, so far as known or to be ascertained at this office; and I am not aware of any source, from whence any addition is to be anticipated to it unless it be from not extinguishing annually an amount of our indebtedness equal to the annually accruing interest on our part-paid bonds, until they are all funded.

It is gratifying to be able to remark that the items grouped under the first class in the above table, which last year amounted to $85,115 57, have this year been reduced to $47,776 45; and but for the advances to the U. S., on account of the regiment of volunteers raised in this state during the late war with Mexico, which offsets the interest on bonds held by them, would be but about $30,000; and not one item of this arises either from inability or unwillingness on the part of the state, to meet it when called for.

Of the school-moneys on hand, $4,328 84 is on account of receipts since the last apportionment, and $6,853 15 is on account of a transfer from the General Fund, for interest from May 1, to Nov. 30, inclusive, on the amount due to the principal of the school fund from the treasury. This, together with the receipts from time to time, until May next, and the interest due from the state, from Dec. 1, to April 30, 1850, must lay over of course, until the ensuing annual apportionment of school moneys in May next. The outstanding

treasury notes, or scrip, of 1841, was all called in, and the interest stopped in July, 1847; and the outstanding General Fund Warrants were called in about a year ago, and the interest stopped Dec. 23, 1948. The other items of surplus and redemption moneys, due individuals, and the Michigan C. R. R. deposits, are and always have been on hand at any time subject to the order of those entitled to them, whenever the proper vouchers are presented to authorize their rayment at the state treasury.

In the table of our funded debt, given in my last annual report, a small error occurred, not in the aggregate amount of that class of indebtedness, but in the amount of outstanding Interest bonds, due Jan., 1850, at $1,000 too much, and the full-paid five million loan bonds due Jan., 1863, at the same amount too little. This arose from grouping (in the report, not upon our books,) a $1,000 Interest bond, paid in by the S. R. R. Co., along with some full-paid five million loan bonds, paid in at the same time; and was not discovered until after the printing of the report, upon a revision of our books, for the purpose of drawing off statements of our outstanding bonds, upon a rew register prepared during the last fiscal year. The $10,000 Palmyra and Jackson R. R. stock, past due Nov. 1842, and outstanding last year, has been taken up and cancelled, and the back interest from Nov. 1841, to the time of cancelment, all paid up. Since the proceeds of the last annual tax-sales began to come in, finding that the State Treasurer would probably, and as it is much to be hoped that he will be able to take up nearly all the $49,979 20 of interest bonds, due in January next, outstanding last year, and deeming it good policy to stop the interest on them as soon as possible, I notified the holders of most parcels of them, so far as known here, that the Irincipal of the bonds would be paid by a draft on New York, including interest from July 1st last, to the time of their surrender here, if forwarded to the State Treasurer before the first of January next. Under that call however, only $2,652 have been received up to this date, (Dec. 1st,) leaving still outstanding to be met next January, at the Phenix Bank in New York, (if not forwarded here this month,) the sum of $47,327 20.

Since the close of the last fiscal year, the S. R. R. Co. has paid in on account of the semi-annual instalments and interest due from them, $35,000 in full-paid five million loan bonds; and $50,000 of the part