just inferences only to be drawn from a careful examination of the various causes which have, to a very great extent, laid the foundation of our indebtedness.

It will be remembered that California, unlike other new States of the confederacy, never received the fostering care of the General Government, and had no Territorial organization,-that wise provision, aptly termed the period of probation and tutelage, during which the agents of a young community are expected to develop the latent resources of the future State, become acquainted with the wants and requirements of its people, and learn that experience so necessary to judicious and proper legislation; and that, too, without feeling the blight of onerous taxation to support a cumbersome and perhaps unnecessary State Government. But from the date of its first settlement to its admission into the Union, California had been denied the fostering and protecting care of Congress, and only felt the rigor of its laws in the collection of revenue for the support and maintenance of that Government which had failed to make provision for the wants and necessities of her people.

The failure of Congress to provide a territorial Government for California compelled her people to institute and set in motion all the machinery of an expensive State Government without a dollar in the treasury to pay the expenses attendant upon its inauguration and maintenance.

With an empty treasury, the members of the first Legislature assembled, and upon them devolved not only the onerous duty of providing for the payment of indebtedness already incurred and for the immediate and accruing demands of the government, but at the same time to give form and vitality to the chaotic elements, which it was requisite to mould to the genius of our people and the character of our republican institutions. Thus surrounded by circumstances calculated to dampen the ardor and depress the spirits of a body of men less determined to complete the work of organizing a new State, the members of that Legislature cast about for the means of carrying on the new government. The plan finally adopted, although believed by many to be ruinous in its consequences, and at the time so regarded by myself, was the issuance of bonds known as the three per cent. bonds, bearing an interest at the rate of three per cent. per month. Although the policy of this measure has been doubted by some, and unequivocally condemned by others, it is still true that the peculiar condition of affairs at that time, the urgent necessity for funds, and pressing circumstances with which the representatives of the people were surrounded, would seem to offer an excuse, if not a justification, for its adoption.

However that may be, and it is perhaps unnecessary here further to inquire into the policy or necessity of this measure, certain it is, that it laid the foundation of our present indebtedness, and to it may justly be ascribed much of the debt at present existing For although the amount of three per cent. bonds issued was comparatively small, they remained outstanding a long time, with interest fast accumulating, and not until 1854 had the whole issue been entirely redeemed by cash payments from the treasury, and not until after the interest had exceeded the whole amount of the principal

The State was consequently compelled to defer cash payments for other objects until bonds bearing such a ruinous rate of interest, had been redeemed and cancelled. Thus, mainly by this act, was forced upon us the scrip system, the results of which, it need hardly be said, after our too long experience, are so fatal to the financial credit of a State, and proper economy in the administration of its affairs.

The State, thus commencing its operations, devoid of funds or the immediate means for assessing and collecting revenue, was compelled, to pay most extraordinary prices for service performed or material furnished. Without necessary public buildings for the Legislature, State officers, and Courts, large

appropriations were requisite in payment for office rents. There was no prison for the safe keeping of convicts, and large amounts were expended in the pursuit, detection, conviction, and punishment of offenders against the laws.

The sick and destitute arriving in a strange land, far removed from friends and family, after undergoing the toils, hardships, and privations of a long, tedious, and perilous journey, were to be cared for at the public expense, and in answer to the dictates of common humanity. Large sums (in the aggregate about one million two hundred thousand dollars,) were appropriated, not only to sustain hospitals for the afflicted already within our borders, but to aid and assist the immigration of two successive years.

Destitute of money at the organization of the Government, and necessary expenditures every day increasing, with little or no revenue coming into the coffers of the State, our bonds and warrants on the treasury greatly depreciated in value, and it was not until a much later period that they commanded over sixty cents on the dollar. Thus was the State compelled for every service performed, for salaries of officers, for work done or materials furnished, to add nearly one hundred per cent. to the price for which the same could have been had if the treasury had not been entirely depleted, or rather, empty from the beginning. The Constitution, too, provided for a Government on too grand and expensive a scale to admit of an economical administration of its affairs. Many offices were thus created, unnecessary at the time, and causing a vast outlay of money in their organization and support; annual instead of biennial sessions of the Legislature were authorized; in a word, so cumbrous and expensive was the machinery of Government thus provided for, that many and important alterations. in that instrument have already been suggested, in view of greater economy in future, and still others are demanded by the condition of the treasury and the requirements of the people.

At that day, too, there was a marked difference in the condition of the country from that presented now. The first immigration, and that of several succeeding years came hither not as settlers, but as adventurers, seeking to better their condition from the rich gold fields of California, and then speedily return to their homes on the other coast. Few, if any, brought with them their families, their farming implements, or their household gods; but equipped with those modern and novel implements of progress, the pick and rocker, wandered along the golden placers of our rivers, or delved in the rugged mountain side, in search of the glittering ore, which was to take back light, and comfort, and joy, to hearth-sides far away, where expectant fathers, mothers, wives, and children awaited the coming of the wanderer.

The consequence of this was a state of society unparalleled in the history of States, and unsettled in its character. Each one roaming at large in quest of new discoveries, taxes could neither be levied nor collected, and taxable property of course was rare.

Our fertile valleys and boundless plains, now yielding their rich products to the husbandman and contributing so largely to the support of the State, were then desolate the sod unturned by the plowshare, unadorned by the farmhouse. The revenue collected for the first three or four years was for these reasons far inadequate to meet the repeated and necessary demands on the Treasury.

Each year, hoping to abolish the scrip system and assume cash payments, the floating indebtedness of the State was funded, and bonds bearing an interest of seven per cent. per annum issued in its stead,-rendering it necessary to impose additional taxation upon the people in order to meet accruing interest and provide for the gradual redemption of the bonds thus issued.

The foregoing, however, are not the only facts connected with the debt of the

State worthy of consideration, in estimating the many and extraordinary causes which have rendered necessary the expenditure of large sums over and above the revenue received into the Treasury.

Of the existing State debt, about one million two hundred thousand dollars were expended in providing for the necessities of the sick, destitute and insane; one hundred and twenty thousand for Census of 1852, taken in accordance with constitutional requirement; three hundred and fifty thousand dollars in the 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, insaue 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 agricul turist, 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 burthens 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 mainteance 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