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Receipts into the State Treasury, for the year 1854, were, 610,699.97 Out Standing Warrants,
Total available means, -
Balance in the Treasury, Nov. 30th, 1854,---- 553,004.08 The funded and fundable debt of the State, not due Nov. 30th, 1854, was,..
2,531,545.70 Amount due trust funds, at the same time,..
681,699.73 The specific taxes, for the year 1853, were,
105,374.40 1854, “
113,255.20 The account above stated embraces all the funds of the State, and shows all its financial transactions for the fiscal years of 1853 and 1854.
The interest upon our State debt is promptly paid as it becomes due. There is now a large surplus in the Treasury, and it will doubtless continue to increase, unless some provision shall be made to absorb it by liquidating the State indebtedness.
A large surplus in the Treasury should be avoided. It is not politic to tax the people to obtain money to loan to banks, or lock up in the treasury vaults; it would be safer in the people's hands, and likely to be more prudently and profitably managed by them. The State indebtedness, except to the Trust Funds, is not due, and as our Bonds are above par in the market, none are likely to be surrendered for payment, nor can they be purchased under our laws. I therefore recommend that Act No. 173 of 1848, be so amended as to provide that interest upon our part-paid Bonds, which shall not be surrendered within a specified time, after proper notice, in pursuance of the provisions of that act, shall cease.
The law of 1848 was amended in 1853, so as to provide that when funded, these bonds shall be made redeemable at the pleasure of the State within the time fixed for the maturity of the original bonds; and the amendment now proposed would probably induce a surrender of that class of bonds, and provide a way for absorbing the surplus funds in the liquidation of our State indebtedness.
If this shall be done, and a provision be made for purchasing our full paid bonds at their market value, when there shall be a surplus in the Treasury that cannot otherwise be properly used, it will then become important, as it is now obligatory, to provide by law a sinking fund in accordance with the provisions of the constitution. Without the amend
ment or provision proposed, a sinking fund as required by the constitution, would add to the evil of a large surplus fund. There can, I think,
I be no doubt that the State has a legal and equitable right to change the Act of 1848 as proposed. The Act is but a proposition in the form of a law, “ that upon the surrender at the Treasury of this State of any of the said part paid five million loan bonds still outstanding, the holker of the same shall be entitled to receive from the Governor of the State certificates of stock or bonds," at a rate therein mentioned. This proposition; until accepted by the bond-holder by a surrender of his bonds according to its provisions, may be rightfully altered by the State. Neither would it be a hardship to the bond-holder to change the proposition as recommended; it only requires him, virtually, to receive his money if he desires it, or if he prefers the State to keep it for him, not to demand interest upon it.
The policy of allowing banks to be the depository of the surplus funds of the State, I think is very objectionable ; but if that policy is to be pursued, I recommend that Act No. 63, of 1853, be so amended as
I to require the payment of interest on the deposits, at the rate of not less than five per cent per annum, and that the Governor be constituted one to approve the security to be given by the banks.
I believe it to be the true policy of the State to use the trust funds towards paying our State debt; the State may as well pay interests to these funds as to bond-holders. By pursuing this policy until the public debt shall be paid, no loss will accrue by loans insufficiently secured, nor delays occur in the payment or collection of interest. This policy was doubtless contemplated by Art. 14 of the constitution, which provides, that “All specific State taxes, except those received from the mining companies of the Upper Peninsula, shall be applied in paying the interest upon the primary school, university, and other educational funds, and the interest and principal of the State debt, in the order herein recited, until the extinguishment of the State debt, other than the amounts due to educational funds, when such specific taxes shall be added to, and constitute a part of the primary school interest fund.”
By an Act of 1853, the law in relation to the assessment and collection of taxes was revised, and important amendments made thereto. This law was at first objected to by some, who seemed to think it was a material change of the principle of assessment and taxation con
tained in the old law. The amendment did not change the principle of taxation; but in its detail, more effectually provided for the assessment of large amounts of property that had escaped taxation under the old law, and for assessing property more nearly to its cash value. The aggregate value of real and personal estate for the year 1851, as assessed in the State, was but $30,976,270 18. For the year 1853, the first assessment under the new law, it was $120,362,474 35.
The change has produced a marked, and it is believed beneficial effect, and little if any amendment to the law is required.
By a joint resolution of 1853, the Contingent Fund, then amounting to $9,872 61, was transferred to the General Fund, except $1,000 00, of which $607 65 has been expended during the last two years. It is believed that the sum of $1,000 00 will be sufficient for the ensuing
Under the Constitution, “Corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes." The Legislature has heretofore neglected to pass a law under which Railroad corporations may be formed. I think it should no longer be neglected, and that it should be among the first subjects to which your
attention shall be directed. But while such a law should afford every reasonable facility for the construction of railroads, great pains should be taken in guarding it against the power of abuse.
The Port Huron and Lake Michigan Railroad Company was chartered in 1847, with a capital stock of only two millions of dollars. It is represented by the officers of this company, that eight millions of dollars will be required to construct and equip the road in such manner as is proposed, and that capitalists, able to build and equip it, are ready to do so as soon as the capital stock shall be increased to that amount. To the proposed increase I can see no objection; the State would be largely benefitted by the construction of the road, and the specific tax which the increased capital would bring into the Treasury, would be a large item in its annual receipts.
The Act of 1853, to authorize the formation of corporations for mining and other purposes, limits the capital stock of each corporation to five hundred thousand dollars, and the shares to twenty-five dollars each. It is represented that this restriction has prevented the investment of a large amount of capital in the Upper Peninsula. The business of mining copper is very expensive, and a large capital is frequently requisite to carry it on profitably. The business of mining, unlike that of banking, is calculated to develop the resources of the country, and add to its wealth—and I can see no objection to allowing as much capital to be used by any company in the business, as may reasonably be desired. Every facility should be afforded for the development of the rich resources of the Upper Peninsula. I therefore recommend that the law referred to be amended, so that the capital stock of any such corporation may be increased to two millions of dollars, and the shares to one hundred dollars each.
The policy of enacting a law for Banking purposes at this time, I very much doubt. That a General Banking Law may be enacted under the restrictions of our Constitution, that would be as safe as the banking system of any of our sister States, I have no doubt. That money may be made and saved to many of the people of our State, by an investment of capital for banking purposes therein, is equally clear; but how much many of our people may lose by such investment, in the sequel, the teachings of the past, as well as of the present period, render much less certain. The passage of such a law is less objectionable however, by reason of the constitutional provision, that before it shall take effect, it must be submitted to a vote of the electors of the State, at a general election, and be approved by a majority of them. Before such an election would take place, time would be given to discuss the provisions of the act, and the propriety of making it effectual.
I believe it would be wise policy to prohibit by law, the circulation thin the State, of bank bills or notes of a less denomination than five dollars. There is now, and will continue to be at periods, while banking shall be tolerated, a vast amount of bank bills in circulation, as money, within the State and throughout the country, either worthless or of doubtful value. It is impossible for our people to deal in this trash without suffering certain loss. This loss, which is great every year, falls in a degree more heavily upon the laboring classes, who cannot be expected to take and read bank detectors, or keep watch of the improvident or fraudulent conduct of many of these banks and their hirelings. This bank paper takes the place of specie and small change, and drives both from the country, or beyond the reach of our producing classes. Should all the States of the Union adopt the measure proposed, the evil here complained of, as well as over bank issues, expansions and contractions in the money market, would to a great extent be checked, and the raging and dangerous spirit of speculation so common to the people of our country, be much guarded against.
I believe the adoption of this measure by our own State would be very beneficial. In its adoption other States have preceded us, and others would probably follow.
Some of the old Banks, chartered many years ago, which commenced, but are not now doing business, and have failed, it is claimed have legal banking powers.
The Legislature has heretofore attempted to repeal these charters, but in a careless, and in some cases it is claimed, ineffectual manner. The Erie & Kalamazoo Railroad Bank, (the charter of which the Legislature attempted to repeal) since the last session of the Legislature, claimed to have legal existence, commenced doing business, issued a large amount, and finally failed. It is believed, the bill-holder has no security. Soon after this bank attempted a resuscitation, I requested the Attorney General to examine the question of its legal existence, and if in his opinion it had not legal banking powers, then to take such steps as would be necessary to immediately stop its doing business. The Attorney General expressed his opinion that the Legislature had failed to effect a legal repeal of its charter. I recommend a careful examination of all these old bank charters, and that where they have not been, they be now effectually repealed.
Since the last session of the Legislature, a complete list of the Swamp Lands, has been transmitted to me by the Secretary of the Interior, and I have requested a Patent to be issued therefor, in pursuance of the Act of Congress granting these lands to the State, --Patents for a large portion of them have been already issued, and received, and others will soon be issued for the remainder.
Lists, and plats, of all these lands are deposited in the State Land Office. This grant contains 5,879.811 21-100ths acres, and amounts to a much larger number than all other grants heretofore made to the State, for whatever pose, and is estimated to be worth from two to four, millions of dollars. By the terms of the grant, these lands are made subject to the disposal of the Legislature of the State, under the follow