this department sufficiently authentic to warrant any express recommendation, and for your guidance you must rely on knowledge of the subject that may be communicated from other sources.

By a joint resolation approved February 17, 1812, the board of internal improvement were autho.ized to pledge, for a term not exceeding five years, the net proceeds of the Southern railrord for the purchase of iron necessary for its completion to Hillsdale. The board have used every exertion on their part, but have been unable to obtain the iron on the terms prescribed. A quantity of iron sufficient for about ten miles, found in possession of the state and not required for immediate use, has been put upon this road, by which means, with the use of a few miles of wooden rails, it will hereafter be used with locomotive power between IIudson and Monroe, a distance of fifty-one miles. The whole track is now prepared for the iron to Hillsdale.

For a more detailed account of the works of internal improvement, you are respectfully referred to the annual report of the board.With the views presented in that report I generally concur, and recommend the same to your careful consideration.

With regard to the future policy of the state on this subject, 1 entertain the same views that were communicated to the legislature in my last annual message, and which I now repeat. The completion of the plan of internal improvement, as originally projected, can no longer be hoped, at least for many years to come; and, therefore, the present action of the legislature, having in view its further prosecution, should be restricted to such portion of the system, as will yield the greatest revenue to the impoverished treasury of the state, and, at the same time, afford facilities to the greatest number of our citizens. The first money that can be made available for that purpose, should, I think, be applied to the purchase of the iron nccessary to complete the Central road to Marshall, and the Southern road to Hillsdale. Thereafter accruing means will be expended with greatest advantage to the state, in the further construction of the Central road west of Marshall.

The indebtedness of the state on account of the five million loan and the loan of a hundred thousand dollars each to the Ypsilanti and Tecumseh railroad company, and to the Marshall and Allegan railroad company, for which consideration has been received, as ascertained by the Auditor General and State Treasurer, under the act of February 17, 1842, and the joint resolution of the same date, amounts. to $2,342,960 24; and taking this sum as the true amount due on account of those loans, our entire indebtedness is as follows:

Since the close of the last session of the legislature, information has been received by the State Treasurer, that enables him to furnish nearly a complete list of the holders of the bonds of the state now outstanding, and to discriminate those who have paid a consideration. The substance of that information is contained in a communication from that officer to me, of the date of the 6th of December last, and which is herewith transmitted. By that communication it will be seen, that of the bonds of the five million loan, $3,855,000 is yet the

property of the Bank of the United States, hypothecated, however, on terms not fully transpired, to various houses in Europe, of which a list is given, together with the amount and description of the bonds, that are held by each. The circumstances of the hypothecation warrant the belief, that the equity existing between the state and the bank, has been in no way affected by that transaction.

While our relation to our constituents makes it our first duty to protect their interests, we are equally bound to do justice to the pub lic creditor of the state. Every just claim should be acknowledged, and means of payment provided with the least possible delay. That state which resorts to its sovereignty to avoid pecuniary obligations, of which the justness is not denied, while it does not cancel its indebtedness, sets an example that tends directly to subvert all government. By the same rules that bind individuals, should states regulate their action; the same moral obligations that require in individuals the observance of good faith, require also its observance on the part of sovereign states. Michigan, while the virtue of her population remains, will never refuse acknowledgment of her just debts, nor fail to make payment when the means are within her power.— True it is that circumstances have rendered it impossible, for the time, to meet with promptness all just claims upon her treasury; but no disposition has ever been evinced by her constituted authorities to do injustice. Present inability and consequent temporary delay, should not be construed into refusal or wilful neglect. The works of internal improvement, constructed with the proceeds of the loans, for which the state is indebted, and its other property, are offered without reserve, in liquidation of its indebtedness; not, however, as a tender, but as an assurance of good faith, satisfactory it is hoped, to those who are disposed to await returning ability on the part of the state, and as the only means within our control with which to satisfy the claims of such as, without regard to circumstances, demand pay-. ment at the present time, And while at all times Michigan has so sincerely manifested an ardent wish to fulfil her engagements and

preserve her plighted faith inviolate, I regret that it is not in my power to lay before you some just and equitable proposition from the holders of the bonds of the state for which no consideration has been received, and which every principle of justice requires to be sur rendered.

By the act of February 11, 1812, the several railroad companies were authorized to discharge their liabilities to the state, on account of the loans contracted in their behalf, by a return of the bonds issued, or the payment into the treasury of an equal amount of other state securities. None of such corporations have, however, availed themselves of this provision, nor have they in any case provided for the interest that has accrued on the several loans negotiated for them by the state.

Of the whole indebtedness of the state, as shown above, $544,819 25, exclive of interest, is due to our citizens, the counties and the school and university funds. This domestic indebtedness, the payment of most of which was never intended to be delayed, should be cancelled as soon as possible, and in such manner as will satisfy all interested. The amount due the counties will be mostly paid by offsets for taxes, and that due the education funds, as has already been intimated, may be retained by the state on payment of interest. The warrants drawn against the internal improvement fund, being the greatest item, and nearly one-half of the domestic debt, and which is now most depreciated, it is believed, may be scon paid by the proceeds of the sales of the state lands and of the assets of the Michigan State Bank, or by an immediate exchange, at the option of the creditor.

The scrip was issued on account of the works of internal improvement and should properly be redeemed by that fund; but as by the law authorizing its issue, it was made receivable for all taxes and dues to the state, it has been redeemed in part by almost every fund created by law. It will of course be receivable for sale of state Jands and no further legislation on the subject of scrip is deemed ne

cessary, unless it be thought advisable to prohibit its re-issue alto gether. Nearly one-half of the amount oustanding was redeemed during the last year, and without further action of the Legislature, the remainder will soon be absorbed. Its re-issue for any other purpose than that now authorized by law, should not be allowed. Beyond question of doubt, it is precisely that species of currency which, by the Constitution of the United States, the States are prohibited from issuing, and I should deem it my duty to withhold my approval from any bill authorizing the issue of further sums or the re-issue of the present scrip beyond the requirements of the law by which it was created. Besides the objections of a constitutional character, the impolicy of resorting to paper issues for temporary relief has been so clearly demonstrated, by lessons of the past, that such a measure should never receive your sanction. The proposition to nd the scrip now outstanding, however desirable such a measure might be, is not believed to be feasible as suficient inducements cannot be offered for its surrender.

The collateral securities taken in 1910 from the Morris Canal aml Banking Company, should be surrendered on the adjustment of the five million log as contemplated in the act of February 17th, 1842; and any sums that, in the meantime, may be realized from them should be accounted for to the parties in interest. The nominal amount of these securities was $621,000, and at the time they were obtained were estimated by the late Treasurer, who procured them in behalf of the State, to be available for at least half a million of dollars. From information, however, more recently obtained, it is believed they are of but little value, and that, with the exception of the judgment of $10,000 upon the fixtures of the Long Island Railroad Company, whatever else is realized must be obtained by expensive proceedings at law. The late State Treasurer, as appears by his report, deposited these securities for safe keeping in the hands of an attorney in New York, to whom, for his assistance in obtaining them, he had paid a thousand dollars. For their safe keeping eigh