The aggregate valuation of property in the state in 1845, was $28,932,097 59. Ehe state tax levied for that year, was $72,305 23. This amouut will be due to the treasury after the first of February next, and will, when received, go into the general fund.

The aggregate of county taxes levied in the state the last year,

was

Half mill school tax,

Road tax,

$159,753 34

14,463 15 180,789 70

The debt due from the internal fund, including interest to July 1, 1845, is $4,121,720 79.

The resources of the state which are properly applicable to the indebtedness of this fund, consist of the Central and Southern Rail Roads, with their stock and fixtures, which, with ten per centum added for interest during construction, amounts to Unsold internal improvement lands,

$3,343,284 92

357,089 38

Balance of 500,000 acres yet to be selected, 7,495 59

100th acres, valued at $10 per acre,

74,955 90

Salt spring lands, 72 sections, average value $2,50 per

acre,

115,200 00

Asset lands, appraised and for sale at land office,
Other assets, received of state bank, &c., say

26,172 41

10,000 00

$3,928,702 61

The value of some of the items here stated, it will be perceived, is obtained by estimate only, and cannot therefore be considered as entirely accurate. The above statement of the indebtedness of this fund, includes the ontstanding internal improvement warrants, which

amount to

Warrants payable in land only
Treasury notes or scrip,

$508,463 00

25,991 62 52,360 00

It also includes on the unadjusted internal improvement bonds the sum of $1,232,450 72, with interest on the same to July 1, 1845. The total amount of these unadjusted bonds, is $3,813,000, upon which the sum of $1,607,593 12 only, including interest, has been received. An act of the legislature, approved March 8, 1843, proposed certain terms for an adjustment of the amount actually due on these bonds, but no final disposition of the matter has yet been made. By the same act the proceeds of all the public works of the state, were

pledged to the payment of interest on the adjusted internal improvement indebtedness of the state, except so far as they had been appropriated for certain work on the roads, and so far as the same might be necessary to purchase locomotives and cars, to redeem the outstanding state scrip, and to pay the interest on certain domestic debts; and the law further provided, that if their proceeds should be insufficient for the purpose of paying such interest by the first of January, 1846, and there should be no other sufficient means in the treasury, not otherwise appropriated, the deficiency should be provided for by taxation. For reasons alledged in the report of the commissioner of internal improvement, the revenue of these public works was found on the first of the present month to have yielded no surplus to be applied in discharge of the interest on the bonds, and there were no other unappropriated funds for that purpose in the treasury. In accordance with the duty imposed by the statute last mentioned, the Auditor General has therefore issued his circular to the Board of Supervisors of the several counties, requiring the necessary tax for that purpose to be levied. The amount of the instalment now to be levied is $52,621 10.

The total valuation of property in the state, is $28,922,097 59, upon which, the above sum will require a tax of about one mill and four-fifths on the dollar. The instalment which falls due in July next, will require the levy of an equal amount, if there should be no other means of payment.

The terms of the act last mentioned, are understood to have been satisfactory to the bond holders. Although the interest has not been realized from the works of internal improvement, as was anticipated, yet the promptness with which means have been taken to raise the amount, in the manner provided by the act, must, at least, show a determination in good faith, on the part of Michigan, to redeem her pledge in regard to these obligations. The relation of debtor and ereditor imposes the duty of payment on the former, as a moral and civil obligation which cannot be avoided. Under a deep sense of this obligation, and under the express pledge given by our statute, it is confidently believed every citizen will heartily and cheerfully co-operate in keeping our plighted faith inviolate. Taxation, always objectionable, should be avoided if possible, yet when necessary and

kept within reasonable limits, it is infinitely preferable to the disgrace and self-abasement of repudiation. The debts of the state must and will be paid. A sense of justice to rightful creditors, our own interests as a new commonwealth, inviting population and capital within our borders, and our duty to ourselves as an industrial community, alike demand of us the adoption of a policy which shall tend to their discharge at the earliest possible moment. The resources of the state already designated for that purpose, should be strictly applied to that object. The increase of property within her limits, and the general prosperity of her citizens, afford confident assurance that the whole duty of Michigan will be cheerfully performed.

The total amount expended on the works of internal improvement during the past year, for which warrants have been drawn, is $141,805 47. Sixteen miles of the extension of the Central Railroad from Marshall to Kalamazoo, have been completed, and the unfinished portion, it is expected, will be ready for use in six or eight weeks. The expenditures on this road for construction, exclusive of iron and spike, during the year, amount to

$99,291 15

Unexpended balances of appropriations on some of these works still remain. The report of the board of Internal Improvement will present the details of their operations during the year.

Two only of the works of internal improvement in the state have yielded any income-the Central and Southern railroads. The receipts on the Central road during the past year have been $202,746 57, and the running expenses during the same time have been $104,118 09 showing a net income of $98,628 48. The receipts of the Southern road for the year have been $62,735 62, and the running expenses

$49,821 41, leaving a net income of $12,914 21. The cost of constructing the Central road, including ten per cent on cost of construction, and stock and fixtures, amounts to $2,238,289 72, and of the Southern road, the cost of construction, including the Tecumseh branch, is $1,125,590 65. The whole amount above stated as the net proceeds of the two roads, has been expended during the year, for iron, spike and transportation, for locomotives, cars, and pay of engineers employed in the construction of the road, excepting the sum of $600 which was paid into the treasury.

A project for the sale of the roads, was agitated by a former legis lature, and has been much discussed by the public. It is a subject of great difficulty and importance.

Two objects are proposed by the contemplated sale. The first is by a disposition of the works which were undertaken by the state, and a relinquishment of the internal improvement system, to separate the government from a business which has usually been the subject of individual enterprise. The conducting by the state, of such works, involves the ordinary hazards attending the ownerships of large amounts of property, the necessary risk of extensive business operations, and the employment of numerous officers, agents, and laborers, who are paid from avails belonging to the public treasury. The business of transporting passengers and freight by railroad, is clearly not within the ordinary designs of a state government, and it is believed that that system is best, which is the most strictly confined to its necessary and simple duties, and participates least in matters of ordinary business. A sale of these works, would have the effect to simplify the operations of the state, to reduce the number of officers and servants in its employ, and to render less complicated the whole machinery of government.

The proposition for a sale, however, is urged principally as a means of discharging in whole or in part the debt due from the internal improvement fund. For this purpose it must be regarded as a relief measure, and unless the amount received should be such as to cancel this debt, or to afford essential relief from it, the object of a sale would be defeated. To dispose of this property, and the right of enjoying it, on terms that would leave the debt still outstanding, without

essential diminution, would be to yield our means of payment, without ridding us of our embarrassments.

If a sale can be made on such terms as will secure essential relief from those embarrassments, the expedience of such disposal of them must depend much on the profits of those works, both present and prospective, to the treasury-the sum necessary to complete them so far as to put them in a state to yield the greatest amount of revenue, and the ability of the state to make such advances.

From the returns of the past year it is evident that the income from them in their present situation, can do nothing towards paying the principal of the debt. In fact, they have fallen far short of paying the interest on the original cost of their construction.

The bridges, and much of the superstructure on the Central road from Detroit to Dexter, some fifty miles, must in a short time be rebuilt, and the iron for that distance re-laid. If iron of the same size as that originally laid, should be used, the cost for this and other necessary repairs on this portion of the route alone, would not probably fall short of $200,000. The other portions of the road having been used for a shorter time, would require less repairs, but must still be a constant drain upon its proceeds.

The annual interest on the adjusted portion of the debt for which the whole proceeds of the two roads are pledged, by the act of March 8, 1843, is nearly $122,000, and the interest on the amount due on the unadjusted portion, to which the same pledge is by the act to be be extended when the same shall be adjusted, is nearly $100,000 annually. If the proceeds of the Central road are applied to the payment of this interest according to the terms of the last mentioned act, there will be nothing with which to re-build the road. If by subse quent provisions of law, the repairs are made out of the proceeds of the road, no resource is left to pay the interest, other than a tax upon the people; and it will be borne in mind that without the repairs above mentioned, the road must soon become useless.

The above estimate is upon the hypothesis, that the road is merely to be kept in a condition for doing business, by making the requisite repairs, and by re-building portions of it, in the same manner in which it was originally constructed. But a proper regard for the best interests of the public, if the roads should be retained by the