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No report of the labors of the Geologist for the past season will be made to you, nor is any person authorized to complete or inplish the final report on the lower peninsula, which is understood to be nearly prepared for the press. Many valuable engravings have been procured for this work, and much expense has already been incurred. -I respectfully recommend to the Legislature, that such measures as their discretion may dictate, be taken to secure to the public, so far as it can be done, the full benefit of the materials in this department.

The expenses of the geological department, since its organization, including the salaries of officers, amount to $50,779 02. The exs penditures on the state salt springs, made under the direction of the department, in connection with the surveys, amount to the additional sum of $33,996 93.

The geological surveys have abundantly developed the resources of the state, and exhibited the fact that in agricultural and mineral wealth, and in all the elements of true prosperity, Michigan possesses advantages excelled by no other state in the Union. The embarrassed condition of the treasury admonishes ús, however, to avoid every expenditure not absolutely indispensable, and I submit to your consideration, whether the duties of this department are not now so far completed, as to render it expedient to bring them to a close, after making the necessary provision to preserve the information alre:dy obtained. The proper action on this subject, however, must depend much upon the condition in which the affairs of the department upon investigation shall be found. A continued examination of the mineral region of the upper peninsula may be found desirable, yet as the lineal surveys of the United States will unquestionably be continued, it is possible that an arrangement may be made, by which an examination can be had in connection with this service, at an expense comparatively trilling. The mineral region withir. our territorial limits the

upper Per ninsula, has, within the past year, assumed an increased importance in the public estimation. Much time, labor, and expense, must necessarily be required fully to develope the resources of this region, but with the limited information already possessed, it begins to be regarded as one of the richest mineral countries of the world. The mines already opened by individual enterprize have furnished the

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richest ores of iron, copper and silver. Their value and extent remain for future operations to ascertain. Enough is already known, to give additional interest to this section of our State, to open new fields for industry and enterprize, and to require the early attention of the legislature, to the important interests rapidly growing up in this weal. thy, yet hitherto uninhabited portion of the commonwealth.

From the best information to be obtained, there are remaining in the mining country, during the present winter, some three hundred men. This number will undoubtedly be increased on the opening of spring, and there is reason to believe that a permanent and constantly increasing population will soon be established there in the pursuit of mineral wealth. At present this whole region is within the jurisdiction of Chippewa county, for the administration of justice, yet in consequence of its great distance, from the county seat, and of the fact that there is not an officer of any grade appointed under the state authority, residing in the whole region on the South shore of Lake Superior, that county is deprived of the benefits of government. I would therefore respectfully recommend the organization of one county in this territory, or more, if found to be required by the public interest.

Although the lands in the Upper Peninsula have been ceded by the Indians to the United Stntes, the surveys are yet incomplete, and no portion of the territory has been offered for sale. The present occupants are understood to hold their rights under leases from the United States. The leasing by the general government of lands within the limits of Michigan, introduces a policy which may essentially affect our rights, involve us in questions of conflicting jurisdiction, and establish a permanent tenantry within our borders.

The power to grant such leases, depends, it is understood, upon the provisions of the act of Congress, approved March 3, 1807. This act applies to lead mines only, and is confined to those within the Indiana territory. It is difficult to conceive how the power to lease the copper, iron, and silver mines in this state, can be sustained by the provisions of this act.

The action of Congress, under the recommendation of the President, at its present session, will be looked for with great interest. A fair construction of the rights of the State, under the aet of June 15, 1836, admitting the sovereignty of Michigan over the territory in question, and reserving the right to sell the vacant and unsold lands within her limits, but providing, (with this exception) that the subject of public lands should be regulated by future action between Congress on the part of the United States, and the said State of Michi. gan, in my opinion, precludes the power of Congress to establish a system intended to retain the title in the lands in perpetuity, free from taxation, but occupied by tenants, without the consent of the State.

But without discussing the power of Congress in the premises, the injustice to the State, of such legislation, and its inexpediency so far as the interests of both parties are concerned, would seem to be a sufficient safeguard against it.

The recent experience of a neighboring State, in which large tracts of country are held under lease-hold tenures, admonishes us of the evils which such a system might entail upon us. If combinations to resist the laws of that State, were able for a time to set the authori. ties at defiance, and crimes of the deepest dye were committed for the accomplishment of such opposition, among a tenantry engaged in the quiet pursuits of agriculture, should we not have much niore to apprehend from a tenantry scattered over the mining district, pursu. ing a more hazardous business, fired with the spirit of adventure and engaged in the strife for wealth? The very genius of our government seeks to make every man a freeman, and a free-holder. The fact that the United States would be the lessor of such a tenantry, makes the matter still more objectionable. The title of the lessor would be exempt from taxation, while the property of the tenant would be subject to it. This divided interest, subject to taxation in part, and in part exempt from it, would present many questions of difficulty and embarrassment, which should be avoided.

The proposition to sell the lands to individuals, reserving the minos upon them, or a specified portion of the proceeds, would seem to be equally objectionable. It would bring with it voluminous legislation by Congress, on the new rights and duties thus created, and would lead to similar difficulties and embarrassments.

No law of the federal government has provided for a general reservation of lands containing minerals from sale, and no sale of lands

is belieyed, has been made, reserving the minerals thereon, or any part of them, to the government. On the contrary, lands containing iron, coal, lead, and probably other minerals, have been disposed of by sale, and patents given conveying 10 the purchaser an absolute title; and no reason can be conceived, why this portion of the public domain should not be disposed of in like manner.

The system of leasing the lead mines by the United States, so far as the experiment has been tried, has been found both unwise and unprofitable. For the four last years, the amount of receipts from this source, is reported at $6,354 74, while the expenses incidental to it have been $26,111 11. The lead mines in Missouri, were at one time leased, but remonstrance was made by that state, and, by an act of Congress of March 3d, 1829, the lands were subjected to sale, like other parts of the public domain.

It has been the intention of the state authorities to locate the balance of the lands already granted by Congress, and uot yet selected, on the more valuable portion of the northern peninsula. The system of leasing, in many instances before the surveys are completed, has the tendency to preclude the full benefit of choice selections in that region.

The territory contained in the mining region was ceded to the United States, by treaty concluded with the Chippewa and Otrowa Indians, October 4, 1842. The second article of this treaty provides that the Indians shall “retain the right of hunting on the ceded terri. tory, with the other usual privilegss of occupancy, until required to be removed by the President of the United States, and that the laws shall be continued in force in respect to the trade and intercourse with the whites until otherwise ordered by Congress.” The act of Congress regulating trade and intercourse with the Indian tribes, passed June 30, 1834, under the construction which has been given, and the regulations made by the war department, if valid, materially interferes with a full exercise of state jurisdiction within the ceded territory, although within our ackdowledged limits. The attention of the Legislature was called to this extraordinary provision of the treaty, before its ratification by the United States Senate, and a resolution was passed, January 24, 1843, instructing our senators to use. their exertions to have this objectionable clause expunged. And

again, after its' ratification, by a resolution of March 24, 1845, the desire of the state that all such jurisdiction might be terminated was expressed. Justice to the state, undoubtedly requires a removal by Congress, of all obstacles to the perfect enjoyment of a full exercise of sovereignty over our entire limits.

I respectfully commend these matters to your attention, in the belief that a proper representation of the views and interest of Michigan on these subjects, before any practical difficulty has arisen in regard to them, will secure such action by Congress as shall fully preserve every right and interest of the state, and prevent any question which may threaten to disturb harmony of feeling between the parties.

Legislation by Congress, of the character here indicated, relative to the mineral lands, need not, and should not be permitted to injure the interests of those who have already taken leases. Their rights may not only be protected by government, but interests may be secured to them without detriment to the public, which shall be more valuable than the brief and rent-tax tenures secured by their leases.

The reports of the Auditor General and State Treasurer, exhibit the fipances of the state, its expenditures and resources. The whole amount of receipts into the treasury, during the year, is $337,628,10, and the amount of expenditures is $355,160,26, The balance remaining in the treasury, at the end of the fiscal year, was $18,892 81, which consisted of $17,640 in treasury notes, and $1,252,81 in coin and current funds. The resources and liabilities of the State aro arranged under four general heads, viz: The general fund, the internal improvement fund, the trust funds, and the contingent liabilities of the State. The last two do not require present notice. The total amount due from the general fund, is

$272,789 37

The resources to meet the liabilities of this fund are as follows, viz: Unsold state tax lands, nominally $11,251, say

$4,000 00 Lands unredeemed, sold to state at tax sales of 1844-5, 68,561 04 Unpaid taxes of 1844 above balances due certain counties on account of same,

18,000 00 Due from sundry counties, besides taxes of 1844, return. ed and credited to them,

30,165 94 Interest past

due on unredeemed lands and unpaid taxes belonging to state,

15,000 00

Res'ces of gen. fund in addition to annual state tax,&c. $135,726 98

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