Amount of revenue on an assessment of $100,000,000 at sixty

$600,000 00 125,000 00

60,000 00

50,000 00

75.000 00

26,000 00

2,000 00

2,000 00

$940,000 00

160,000 00

$780,000 00

From a close investigation of the subject, I am inclined to believe, that the estimated receipts are at least one hundred thousand less than will actually be collected before the close of the present fiscal year, and have every reason to expect that the total receipts will vary but little from eight hundred and eighty thousand dollars.

The cash receipts into the General Fund from December 27, 1853, to April 15, 1854, inclusive, are estimated by the Comptroller of State at one hundred and seventy-five thousand dollars, which sum, together with the amount realized in cash from the sales of property made by the city of San Francisco, on the 26th of December, 1853, presumed to be about two hundred thousand dollars-can be applied in payment of accruing expenses of Government.

To provide the amount of means necessary for the speedy payment of the existing Civil Debt, I recommended, at the commencement of the last session of the Legislature, an Extension of the Water Front, and the sale of the State's interest in all property within the limits of the city of San Francisco.

The Legislature having adjourned, however, without passing a law authorizing the extension, as then recommended, I deem it my duty, again to invite attention to the question, and to implore you to give to the subject early and favorable consideration. Every consideration of honor, patriotism, and fidelity to our constituents, imperiously calls upon us, at this time to apply all the means, legitimately at our disposal, in payment of the existing State debt.

Since the adjournment of the Legislature the question of Extension has been discussed, and examined in all its bearings, and it gives me pleasure to assure you that the project has now, comparatively, few opponents.

That the title to this property is in the State of California, and that her agents alone have power to dispose of it, seems now to be generally conceded. Indeed, it cannot be even plausibly questioned, that the moment the right of sovereignty vested in the United States, they took upon themselves merely the right to hold the municipal eminent domain in trust for such new States, as might be organized with in the acquired territory; and upon their admission into the Union, to invest them with it, to the same extent and in all respects, as the other States of the Confederacy

The Supreme Court of the United States, at its January term, in the year 1845, declared that "The power of Congress over navigation and its power to make all needful rules and regulations, for the sale and disposition of the public lands, conferred no power to grant lands, below high-water mark, in any State admitted into the Union; that the shores of all navigable waters, and the soil under them were not granted by the Constitution, but were reserved by the States respectively, and that the new States have the same rights, svereignty and jurisdiction as the original States." It cannot therefore, be doubted, that on the admission of California into

the Union, the exclusive right to dispose of all the lands below "high-water mark" within her limits passed to the State.

The Supreme and Circuit Courts of the United States, it may be proper here to remark, have also well settled the principle that no separate or exclusive right, adverse to the sovereign and public right, is acquired by a city or town to the tidewaters or the soil under them, by virtue of an Act of the Legislature, merely extending the limits of such town or city over such waters. An Act extending the bounds of a city or town, over a bay, merely for the purpose of jurisdiction, is no evidence of a grant of property in the " soil covered by water." Numerous decisions could be here cited in support of this position, but it is not deemed necessary.

Permit me, in this connection, however, to suggest, that in carrying into effect the recommendation to extend the Water Front of the city of San Francisco, it would be advisable to provide for the appointment of a Board of Commissioners, with such checks and limitations as may be necessary, and that without prescribing an arbitrary line, authority be given them to extend at such points, and to such distance, as may, after careful examination, be deemed proper and expedient; provided, that at no point shall the extension exceed a given number of feet; and further, that the said Board be required to provide for as many slips, to be kept free and unobstructed, as may be necessary for the wants and requirements of commerce.

It is believed that extension can be made at various points, and in such manner as will not only cause no injury to the harbor, but result in positive benefit. By providing proper slips to be kept open and unobstructed for the convenience of commerce, sufficient drainage can be obtained, and the expense and inconvenience inci-' dent to a change of the present grade of the city avoided.

The practicability of this measure cannot be questioned, and the fact that from a judicious sale of the property within the limits of the proposed extension, sufficient means will be realized to pay the State debt, and relieve our people from the burthen of onerous taxation, must commend it to the favorable consideration of the Representatives of the people. And, as these facts are better understood and appreciated by the citizens of San Francisco, there can be no doubt that they will hail the extension, not only as an act beneficial to themselves, but as imperiously demanded by the future wants and interests of the great and populous emporium of the Pacific.

The consummation of the measure of extension, in the manner contemplated, in truth, must result directly to the advantage of the residents of the city of San Francisco, and, indirectly, benefit the whole people of the State.

The limited space now occupied by the business portion of the city, demands extension for the accommodation of her present commerce, which is now in its infancy, and small, indeed, compared with that which, we have every reason to believe will, at no remote period, be centered in the harbor of San Francisco. To assume that that commerce can be conveniently, or advantageously, transacted with, in the present contracted limits, or that it will recede from, rather than encroach upon the water, is alike contrary to well matured public opinion and past expe rience.

The sale, from time to time, as deemed expedient, of such an amount of water property, adapted as it is to the wants and requirements of commerce, must exercise a wholesome influence in regulating rent-charges, which, in the increased price of goods, are eventually paid by consumers throughout the State.

The harbor of San Francisco, from its position and capacity, is of more importance to the commerce of the world than any other within our confederacy, and it is therefore hoped, that Congress, during the present session, will adopt the necessary measures to protect and render it perfectly secure.

By an Act of the Legislature, approved March 26th, 1851, property owned by the State, known as the "Beach and Water Lot property, was released to the city of San Francisco, for the term of ninety-nine years, the city to pay into the State

Treasury twenty-five per cent. upon all moneys arising from the disposition made of the property after the passage of the Act. On the first day of May, 1851, another Act was passed, relinquishing to the city certain Beach and Water Lot property, upon the express condition that certain titles which had been theretofore granted by Justices of the Peace, should be confirmed. The requirement to confirm grants made by Justices of the Peace, up to March 12th, 1853, the date of the repeal of the Act of May 1st, 1851, had been wholly neglected, and up to the 25th December, 1853, comparatively but a small sum had been paid into the State Treasury under the provisions of the second section of the Act of March 26, 1851.

I would therefore recommend that the Act approved May 18, 1853, entitled "An Act to provide for the sale of the interest of the State of California in the property within the water front of the city of San Francisco, as defined in and by the Act entitled "An Act to provide for the disposition of certain property of the State of California," passed March 26, 1851, be so modified as to authorize the Board of Commissioners appointed under the Act aforesaid, to dispose of the State's remaining interest in said property, in such manner and at such times as they may deem proper and expedient.

The right of the State to dispose of the reversionary interest in the property released to the city by Act of 26th March, 1851, it is believed, cannot be questioned, and although owing to the fact that the property has been released to the city for a long term of years, the sum realized on each lot may be small, in the aggregate it will constitute an important item in meeting demands upon the State Treasury.

Persons who have purchased heretofore from the City of San Francisco, in good faith, cannot reasonably object to the sale, because by obtaining the State's remaining interest, a perfect title to their property may be acquired. On the contrary, it is presumed that they will eagerly embrace the opportunity thus offered, of extinguishing an interest adverse to their own, and which each year increases in importance, while the value of their own tenure is being as constantly decreased.

In addition to the amount derivable from the sale of lots within the limits of the proposed extension, the Government Reserves, and the State's remaining interest in the property released to the city, and sold in accordance with the provisions of the Act of March 26th, 1851, the sum of $298,437 acorues to the State as her portion of the amount realized from sales made by the city, of this description of property, on the 26th day of December, 1853. Add to the above, the $47,475, realized from sales of property made by the State Commissioners, and we have the sum of $771,912, of which amount, at least $650,000 can be applied, as received, in part payment of the Civil Debt of the State.

From all these sources the amount which will be realized, it is confidently believed, cannot be less than SEVEN MILLIONS OF DOLLARS, an amount sufficient to pay the entire debt of the State, civil and war, and leave in the Treasury a balance of more than THREE AND A HALF MILLIONS.

Before dismissing the subject, I would remark, that it may not be necessary, or adviseable, to sell immediately the whole of the property within the proposed extension, but only so much as may be required to liquidate the existing State Debt; leaving the surplus to be disposed of as the future wants of the State may demand. If, however, the prosperity of the city, and her rapidly increasing commerce, should demand the immediate sale of the whole of the property, I would respectfully suggest that the balance derived, after the payment of the Public Debt be invested in the United States six per cent. Bonds. The annual interest on the surplus of three and a half millions, as estimated, would, at six per cent., amount to $210,000.

This sum judiciously expended annually for necessary public works, at San Francisco in removing obstacles to the safe navigation of our rivers above ports of entry, and in improving public highways, and building bridges where necessary for

the public convenience throughout the State, in a few years, would effect a mighty change in the condition of California.

Judicious legislation alone is now wanting to secure all that is claimed, and in the premises, more than realize the expectations of our common constituents.

To meet the accruing interest on the Civil Debt, the sum of one hundred and sixty-five thousand eight hundred and fifty-five dollars and twenty cents, must each year, until the debt shall have been paid, be collected in cash from the people of the State.

The amount of interest accruing annually on the War Debt is $67,495 69, which added to the interest on the Civil Debt, amounts to the sum of $233,350 89. With the ample resources legitimately within your reach, and to which I have directed your attention, it is hoped that you will, without unnecessary delay, adopt measures to secure the liquidation of the entire debt, as rapidly as the outstanding bonds of the State can be advantageously called in and cancelled.

With sufficient funds in the Treasury, the indebtedness of the State, it is believed, can be discarged on favorable terms by advertising for "sealed proposals for the surrender of bonds," in the manner prescribed in the ninth section of the Funding Act of 1852, and thus relieve the people from the annual payment of an onerous special tax.

Statement C, which is herewith transmitted, has been compiled with much care, and exhibits the important fact, that during the past four years, the average annual expenditures of the several Departments, collectively, and which includes the legitimate expenses of the State Government, have been five hundred and fifty-three thousand nine hundred and sixty-three dollars and ninety cents.

The receipts in the Treasury for the fiscal year, ending June 30th, 1854, are estimated at $780,000; being an excess of $226,000 over the average annual expenditures as exhibited by statement .C.

These facts prove conclusively that by the adoption of the proposed reforms, the Government will be enabled to meet, and in cash, accruing demands on the Treasury, and justify a great reduction of the taxation now bearing so heavily on the people. In my annual message, at the commencement of the last session, the attention of the Legislature was invited to the importance of making an efficient effort to obtain from the General Government, the entire amount of the "Civil Fund," the collection of which was begun in the early part of the year 1847; and a few days before the close of the session, I transmitted important papers in relation to the disposition made of this fund, [see document No. 53, appended to Senate Journal,] and again urged the Legislature to give the subject thorough investigation, and to transmit, without delay, the result of their researches to our delegation in Congress.

This fund, amounting to more than one million dollars, rightfully belongs to the State of California, and would not, it is confidently believed, be longer withheld, if all the important facts connected with its collection and disbursement were carefully prepared and forwarded to Congress.

The condition of California at the time when the collection of this fund com menced, it may be proper here to remark, was indeed peculiar. Congress had failed to legislate for the country, and the President of the United States and Secretary of the Treasury, it is understood, had both, in official communications, admitted the want of power in the proper department of the Government to collect revenue in California; and, the officers in command on the Pacific coast, could not, under their instructions, permit foreign goods to be landed without the duties having been first paid, though there was at the time a pressing demand for them in the country.

In the absence, however, of law on the subject, the civil governor assumed the responsibility, of permitting the goods to be landed, and of receiving the amount of duties fixed by the Act of 1846; and the people of California, controlled by their necessities, though without a voice in the councils of the nation, quietly acquiesced in this novel exercise of the taxing power.

This fund, collected from the people of California before the revenue laws of the United States were extended over the country-collected, in fact, without authority of law, and long before we were allowed representation at Washington, it is contended, belongs to the State of California, and should at once be refunded. The subject is commended to your consideration with the hope that an expression of opin on on the question, as well as the important facts in the case, will be carefully prepared and forwarded to our delegation in Congress.

The great necessity and importance of providing means to liquidate, and as speedily as possible, the civil debt of the State, having been urged upon your early consideration, and measures recommended which, if adopted, in a comparatively short period of time, will enable the agents of the State to effect that desirable object, permit me to recommend co-operation on the part of the Legislature, with our delegation in Congress, in securing the assumption by the General Government, in some form, of the existing war debt, which now amounts to the sum of $924,259 65.

No provision has, it is true, been made for the payment of the accruing interest on the war debt, but the State, by solemn acts of legislation, stands pledged for the payment of the whole amount, principal and interest.

The present, for various reasons, is regarded as a propitious time to demand justice in the premises, at the hands of the General Government. In addition to the fact that there is now a large amount of surplus money in the treasury of the nation, and the bright promise of future increase, the immense importance of the Pacific country to the commerce, not only of the Atlantic States but of the whole eastern world—an importance now universally conceded-cannot fail, it is conceived, to commend our rights and interests to the immediate consideration of the General Government.

There are, however, many other and cogent reasons too, why the General Government should promptly not only assume the entire war debt, principal and interest, but also refund the whole amount of the civil fund, except, perhaps, the sum expended in defraying the expenses of the Constitutional Convention, held at Monterey in September and October, 1849.

The important fact that California contributes annually, more to the national treasury, in proportion to population, than any other State in the confederacy, certainly entitles her to increased consideration in making disbursements from the national coffers.

The amount of revenue collected at the several ports within the State during the fiscal year ending June 30, 1853, exceeds two millions three hundred and fifty thousand dollars, an amount equal to one-sixteenth of the whole sum heretofore annually required to defray the expenses of the national government. And, the receipts of the first quarter have been so much increased as to warrant the belief that the present fiscal year the revenue collected at the different ports in California must considerably exceed three millions, being equal to an annual tax of eleven dollars and thirty-four cents upon each man, woman and child, within the limits of California. The amount thus indirectly collected in the other States of the Union, averages only two dollars and thirteen cents to each man, woman and child.

It will be seen from the report of the Comptroller of State, that he estimates that the expenditures for the fiscal year ending the 30th day of June, 1854, at nine hundred and sixty thousand four hundred and fifty dollars and fifty-one cents. This estimate, though regarded as sufficiently high, is in the aggregate, only equal to onethird the amount annually contributed by the people of California for the support of the national government, and is an average tax of only three dollars and sixtythree cents on each man, woman and child within the State. Whilst State taxation is the subject of general complaint, as being exorbitant and oppressive on our people, not a murmur is heard in relation to the indirect exactions of the General Government, though three-fold greater than the amount collected for State purposes.