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Receipts into the General Fund from all sources,
from January 10th to December 1st, 1862†..$577,629 00
Amount drawn by the previous Administration
from County Treasurers, from December 15th,
1861, to January 10th, 1862, which properly
belonged to the regular income of February
and May, 1862*...

251,705 34

Total revenue of General Fund from January 10th to
December 1st, 1862, had no payments from County
Treasurers been anticipated....

Expenses of present Administration, from
January 10th to December 1st, 1862; paid.. $283,060 061
Additional Expenses for same period; not paidt 455,057 70

Excess of Receipts over Expenses during present Admin-
istration, from January 10th to December 1st, 1862......

$829,334 34

* See Treasurer Ashley's Report to the Legislature of March 15th, 1862.
† See Controller Warren's Report to the Legislature of December 17th, 1862.

738,117 76

$91,216 58

It will be seen from the foregoing figures that, had the present Administration entered upon its duties with the General Fund untrammelled by the incubus of a debt of more than half a million of dollars, the receipts into that Fund, during its term from January tenth to December first, eighteen hundred and sixty-two, would have been sufficient to pay all the accruing demands upon it, and leave a surplus of ninety-one thousand two hundred and sixteen dollars and fifty-eight cents ($91,216 58.)

While the State is generally prosperous in all its real sources of greatness and wealth, as proved by the assessment list, which has been augmented during the year some thirteen millions of dollars, and while the current expenses of the Government have been much reduced from those of former years, yet it will be seen that the General Fund, out of which all the current expenses of the State Government are to be paid, is largely behind. There is, however, an improvement in this Fund of some five hundred thousand dollars ($500,000) for the year eighteen hundred and sixty-two, as compared with the years eighteen hundred and sixty and eighteen hundred and sixty-one, during which years the General Fund run behind, an average of four hundred thousand dollars a year. On the fifteenth of December, eighteen hundred and fifty-nine* there was a balance in this Fund of two hundred and seventy-eight thousand six hundred and fifty dollars and twelve cents ($278,650 12), 'while on the tenth of January, eighteen hundred and sixty-twot, the same Fund was in debt five hundred and thirty-five thousand six hundred and three dollars and ninety-three cents ($535,603 93), making a total deficiency in the Fund during the two years immediately preceding the present year, of eight hundred and fourteen thousand two hundred and fifty-four dollars and five cents ($814,254 05.)

* See Treasurer Findley's Report, December 15th, 1859. † See Ante.

This exposition of our financial affairs leads to the conclusion that the necessary expenditures of the State have been made upon an indefinite credit, that could but largely increase them; and that this embarrassing and injudicious condition of affairs must continue until provision is made to pay off this floating indebtedness, bequeathed to us by our predecessors. The Controller estimates that an increase of twenty-three cents on the hundred dollars will be sufficient to liquidate this debt within the coming year. But it is my belief that the Controller has made too low an estimate. That additional percentage upon the present assessable property of the State, even with the close economy that has been practiced during the past year, would yield a sum barely sufficient, without taking into account delinquencies and deductions for collecting, which are at least twenty-five per cent. I would therefore recommend, unless other sources of revenue can be devised, that, after a careful consideration of the whole subject by the Legislature, a percentage be added to the rate of taxation that will produce revenue sufficient, after deducting commissions and delinquencies, to put the Treasury upon a strict cash basis, believing, as I emphatically do, in the pay as you go system, wherever it is practicable.

A careful perusal of the Controller's and Treasurer's Reports will show that this heavy increase in taxation would not be necessary, were the revenues due to the State from other sources properly collected. If by stringent laws and the imposition of severe penalties upon those officers, county or State, who neglect or fail to perform their duty in collecting the revenues, it were possible to secure a better and more faithful discharge of their obligations to the State, then such laws should be passed. The most apparent dereliction of duty is in the collection of poll taxes, which in some counties is almost entirely neglected.

This might be remedied by a registry law, requiring before voting at an election, that the person offering his vote should have had his name registered so many days, in the proper locality, and requiring, as a condition of registry, the payment of his poll tax.

The Treasurer and Controller of State, in their reports, refer at length to the matter of the first payment made of the State's quota of direct tax apportioned to California by Act of Congress, passed August fifth, eighteen hundred and sixty-one. As their views and conclusions differ from my own, and are not warranted by the law, I append herewith copies of the only correspondence had in the premises, marked A, B, C, and D.

As this matter has provoked much discussion in the public prints, I content myself with simply remarking further that I was entirely unadvised, previous to the payment, of the course adopted.

THE CHINESE TAX.

Another principal cause of deficiency in the Revenue Acts of the last Legislature, is the decision by the Supreme Court of the unconstitutionality of the Act of twenty-sixth of April, eighteen hundred and sixtytwo, entitled "An Act to protect free labor against competition with Chinese coolie labor, and discourage the immigration of the Chinese into the State of California." From the operation of this law, a large revenue was anticipated. The principal, and evidently controlling reason, that influenced the Court to the conclusion to which it arrived, was doubtless that the Act was construed as an intended prohibition of Chinese immigration into California.

The law itself, in some particulars, was, probably, not judicious; but,

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if possible to avoid the constitutional objections raised by a majority of the Court, but from which the Chief Justice dissented, I trust you may find it advisable to provide a substitute that may reach the true object desired, which is, the discouragement of Chinese immigration, and not its total prohibition. On another occasion I discussed the question of Chinese immigration, and as my opinion, then expressed, remains unchanged, I here reiterate what I then said':

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By our constitution the Chinese cannot become citizens-by our laws they are incapacitated from testifying in courts of justice against citizens, or those who may become such. This state of things induces oppression, of which they are the victims; and as they are entirely cut off from the right of suffrage, they are denied, among us, the benefits of freedom, and are compelled to taste, in part, the bitter fruits of oppression and slavery. It is not humane-it is not in accordance with the principles of justice and of right, that we should invite or encourage the immigration of a people regarded so unfavorably by our fundamental law. And while this is the case, it is my belief that we should endeavor, by all honorable means, to stop the human tide that is setting from the western toward the eastern shore of the Pacific.

"This end may be attained without hardship, by giving timely notice to those who may desire to come among us, and at the same time without oppressing those who are already here. While our laws regard the Asiatics as inferiors, we should not forget that to nearly the extent that they settle among us and perform labor, they exclude, and withdraw inducements for the immigration of, those who would be most desirable citizens.

"The great inducement for immigration is labor and its reward. If, then, it is acknowledged that the laborer is worthy of his hire, and that he shall enjoy the fruits of his labor, it is undeniable that to nearly the extent that we admit a class who may be called cheap laborers, we exclude the higher and more enterprising and labor-creating class.

"There is no argument advanced in favor of the cheap labor of a class who are denied the rights of citizenship and the equal benefits of the laws, and who are compelled to bear burdens of taxation not borne by those who make the laws, that has not ever been advanced in favor of slavery, and that was not advanced at the time when the institution that has resulted in such direful consequences was first planted upon the free soil of America, and that has not been advanced to maintain it. "Let us not, because at the present time the demand for labor seems to be greater than the supply to be had from free white citizens, be false to the great and ennobling principles which should actuate us-those principles of free labor and of free society for which we now strive în our efforts to uphold the Government and to preserve the Union.

"We know not to what extent the immigration from China may be carried, with the present, and probably to be increased, facilities for its continuance; but we do know that about one sixth of the population of our State is of that class, notwithstanding the great difficulties and discouragements they have had to encounter in order to make their way to a foreign shore and among a people of a different race."

REPORT OF THE ATTORNEY-GENERAL.

The Attorney-General sets forth, in strong language, the ill effects of denying the privilege of testifying in our Courts to certain classes because

of their color, and observes that the question is not a political one, but one that touches the interests and rights of all.

This subject is one of great importance, as it pertains directly to the administration of justice and the order and peace of society; and whatcver objections there may be to allow Pagans to testify, who can only be very imperfectly examined through an interpreter and without the solemnity of an oath, they do not apply to those of a Christian faith, whose language is the same as our own.

The Attorney-General also refers to the practice of carrying concealed weapons, and attributes most of the homicides that so painfully afflict society and disgrace the annals of our State to this pernicious habit. If possible to remedy so crying an evil by the enactment of laws that will reach it, the subject should receive the earnest consideration of the Legislature.

REPORT OF THE SECRETARY OF STATE.

This Report shows a satisfactory condition of affairs under this officer's control. He represents that in consequence of the increase in the number of counties and towns in the State, there is an insufficient number of copies of the statutes furnished his office to supply the increased demand, and recommends that an additional hundred copies be ordered for the ensuing year. It also appears from the Secretary's Report, that the earlier archives of the State are in a deplorable condition, causing a vexatious delay, oftentimes, to find a required document connected with the earlier years of the State Government; and he wisely suggests that an appropriation be made to defray the expense of collating and indexing them. Two thousand dollars is the estimated cost of doing the work in a proper

manner.

The Secretary also calls attention to the expense of enrolling the laws, and the imperfect manner in which it is often done. He shows that the copying of the enrolled laws, with the tables required by law to be published with them, cost in his office but four hundred and fifty dollars, while as done by the Legislative clerks, the cost amounted to more than six thousand dollars. The Enrolling Committees are properly responsible for the correctness of the copies which are subjected to their supervision. Their duties are of an important character, and require constant care to prevent mistakes. It is no doubt traceable to the neglect or carelessness of an Enrolling Committee that the difficulty and uncertainty regarding the Constitutional Amendments have chiefly arisen. To guard against these errors in future, I refer you to suggestions embodied in the Secretary's report.

WAR BONDS.

The report of Samuel B. Smith, War Bond Commissioner to Washington, is presented for your information. The claims allowed by California amount in the aggregate to four hundred and forty-nine thousand six hundred and five dollars and seventy-four cents, ($449,605 74.) To pay which the General Government have allowed the sum of two hundred and twenty-nine thousand nine hundred and eighty-seven dollars and sixtyseven cents ($229,987 67) only. To properly apportion the amount allowed, to the various bonds, is, I am assured, a difficult task, requiring much labor and care. This is being performed by Mr. Phelan, Clerk of the Commission. For a full detail of this whole subject, you are referred to the instructive exposition embodied in the report of the Treasurer of State.

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I regret to inform you that during the year just passed, Indian disturbances, depredations, and murders, have been of frequent occurrence through an extensive portion of the State. General Wright, commanding the Department of the Pacific, to my requests for protection to our citizens, promptly responded to the extent of his ability with such military force as the exigencies of the occasion seemed to demand. But it is generally the case that the assistance reaches the scene of hostilities after the most serious occurrences are over, though it may be the means of preventing still further outbreaks. There should be absolute protection to our citizens from these repeated incursions of hostile Indians; and this, I believe, might be accomplished at far less expense than the General Government now incurs under its miserable management of Indian affairs in California.

The Indians are a distinct people, under the care and subject to the control of the General Government, and, when located upon Reservations, are beyond the reach of our State laws or authority. The appropriations now annually wasted upon Reservations in this State, with a portion of the sums exhausted in military expeditions employed in attempting to subdue the Indians, or ineffectually trying to guard the lives and property of our citizens against sudden and unlooked for attack, would, without doubt, upon one Reservation, thoroughly guard all the Indians of the State, and make their condition far more comfortable. In addition to the appropriation direct for the Reservations, and the expense of military expeditions, there are also, from year to year, enormous, and at the same time just, claims presented against the General Government by our citizens for damages to property. These claims for spoliations during the past year will, no doubt, be large.

I commend this subject to you as one involving the lives and property of our citizens, and would urge upon you to make such representations to Congress as you may consider the importance of the subject demands.

REPORT OF THE ADJUTANT-GENERAL.

It appears from the report of this officer that there are about one hundred and fifty thousand men in our State liable to military duty. Of these, some five thousand are armed and disciplined, and ready for service. It will be seen from these figures that we have the numerical force, if properly armed and equipped, to protect ourselves against any land force that could be brought to menace our soil. Do not the merest dictates of prudence and the economy of wise forethought urge the necessity of putting our militia upon such a footing that in any emergency they may prove equal to the defence of our property, our homes, our lives, and our State?

The terrible ordeal through which our country is now passing should teach us a salutary lesson. Had the militia of the country, at the breaking out of the present war, been efficiently organized, armed, and equipped, is it too much to believe, in view of their overwhelming numbers, that they would have been a force at the command of the President sufficient to have crushed the rebellion in its infancy? And more than that, had the militia in the loyal States been upon a proper footing, is it not probable that the knowledge of this fact would have deterred the Southern traitors from their insane purpose? If so, the enormous expense, the

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