posite fund, amounting to the sum of $165,841 47, which sum exceeds the balance of debt against the State $9,177 34.

The school fund and the United States deposite fund may, not improperly, be regarded as portions of the capital of the State. The accounting officers of New York and Ohio, and perhaps other States, have treated them as capital. The United States deposite fund for the State of Vermont is

and the State school fund,*

$669,086 79

181,926 99 $851,013 78

From which deduct whole amount of State debt, $208,594 42, and we have a balance of $642,419 36, applicable to the purposes of education, after the extinguishment of the entire debt of the State.

The United States deposite fund, with the exception of $14,424 39, which has been left in the Treasury by various towns, and which is now merged in the State debt, has been distributed to the several towns in the State.

The State school fund was commenced by act of the Legislature, passed in Nov. 1825, and since that period has been accumulating, from sources of revenue, which, but for that act, would have flowed into the Treasury, to be disbursed for the ordinary purposes of government. It is hoped, that the late action of the Legislature, upon the subject of this fund, may be admitted as an apology for adverting to that subject, in the following brief remarks. The act constituting this fund provides, that, "until the same shall amount to a sum, which shall yield an annual interest or income, sufficient to defray the current expenses of keeping a good free common school, in each district in the several towns, for a period of two months," it shall not be expended or appropriated to the use of common schools. Admitting the number of towns in the State to be 240, and allowing 17 districts to each town, and $58 82 as the expense of keeping a good free common school for two months in each year, and it would require a capital of $4,000,000, yielding an interest of six per cent. per annum, making no deductions for loss or expense of managing the fund, before the people of this State could expect to re

*There has been a computation of the interest on school fund notes, which shows the amount falling due in October 1842 to be $3,000, and to be added.

alize any of the benefits, contemplated in the establishment of this fund. The Auditor's report in the Treasury department, in Nov. 1841, showed the fund, in round numbers, to be $164,000. It had then been accumulating sixteen years, and it would require fifty-five years more, before that sum, at compound interest, making no allowance for loss or expense, would amount to $4,000,000, or very nearly. This sum would be required, to yield the necessary amount of annual interest. In this calculation no allowance is made for increment of population, though at the rate of increase, as exhibited by the census, for the last twenty years, it would have accumulated more than twenty per cent. This possible increment of population, and the indefinite sum required to keep a school two months in the year, may possibly outrun the yearly additions made to the fund, and thus much farther delay the period, designated for the distribution.— This fund may be regarded as in an incipient state, subject to the control of the Legislature; so much so, that the act itself may be repealed, by the same power which enacted it. In this view of the subject, the fund may not improperly be regarded as part of the capital of the State, though sequestered, like the United States deposite fund, to a particular purpose.

The action of the Legislature, at the last session, by no equivocal indications, called in question the wisdom of hiring money to carry on the necessary operations of the government, while applying the ordinary resources of the State to swell a fund, to be enjoyed by future generations, who will doubtless be exempted from the burdens, which press upon the men of the present times. It cannot have escaped the notice of the Legislature, that in the condition of the finances of this State, from the commencement of the fund down to the present time, its origin was, and its accumulation has continued to be, dependant on direct taxation. The State had no surplus revenue, but all expenses of government were met by direct taxes. The purpose of the founders of the fund was to ensure the education of future generations, exempted from the burden of direct taxes. It is believed that the surest guaranty, for the education of posterity, is the present diffusion of knowledge to the greatest practicable extent; while the purpose of avoiding the taxing of a generation, more than fifty years hence, results in imposing a direct tax

upon the men of the present times, as much greater than the tax prevented, as the whole amount of losses incident to the fund and the expense of keeping it on loan.

Besides, were the fund now accumulated to $4,000,000, the amount assumed to be necessary, before, by the provisions of the act, the avails of the fund could be applied to their destined purpose, it might occur here, as it frequently has in Europe, that it would be difficult to keep so large a fund safely and constantly invested, at six per cent. interest. Should the State continue to be debtor to this fund, for coming years, in a proportion increasing with the fund, as for years past it has done, the subject would soon assume an interest of fearful importance. The interest of the loan could not probably be paid without a resort to direct taxes, in which event the very evil, designed to be avoided, would be encountered by future generations, in a form far more exceptionable. To carry on the operations of the government, and pay off the entire debt of the State, during the coming year, leaving the State school fund and the United States deposite fund untouched, would require a tax of 13 cents on the dollar on the grand list of 1841; and to cancel the debt of the State to the school fund, which must be done, should the Legislature enact to distribute it, would require a tax of 10 3-10 cents on the dollar, including 3 cents for the support of government.

The school fund, when regarded as a mere financial operation, is obnoxious to very serious objections. The three sources of revenue, sequestered to swell this fund, have never been sufficient to defray the ordinary expenses of government, but resort has always been had to direct taxes to supply the deficiency of the Treasury. The expense of collecting a direct tax is never less than seven cents on the dollar, and it may be more. The losses, necessarily incident to a fund on loan, and the expense of its management, could not be reasonably estimated at less than three per cent., provided it could always be safely invested at six per cent. on a long loan. But even this is not to be expected. According to this calculation there is a direct loss of ten cents on the dollar, on the entire amount of the fund, so that at the period, when by the calculation, the people of Vermont may expect to realize some of the contemplated benefits of the fund, they will have sunk $400,000 in the accumulation and management of the fund; in other words they will have expended $4,400,000, and will

have a fund of $4,000,000 only for the support of schools. The whole system, in its inception and progress, is founded on principles, which must necessarily eventuate in loss. Few would perceive the wisdom of the man, who should devote a long life, to accumulate a reservoir of water, above its natural level, by means of manual labor, to be used by his descendants for hydraulic purposes. All would see, that the project was founded in error and would result in loss; that the dreams of the visionary would be finally dissipated, by the imprisoned waters seeking and finally finding their natural level, and probably with disastrous results. And still there are many points of resemblance between the school fund and such a visionary project.

The interest of the State debt will be $12,515 66 for the coming year, and the sum of the receipts, from the three sources of revenue, sequestered by the act constituting the school fund, for that purpose amounts to $10,238 27 only, leaving the sum of $2,277 39 to be met by a direct draught on the Treasury, to pay the interest of the State debt.

Whether if the fund were accumulated to its contemplated amount, it would be promotive of the best interests of education, has been seriously doubted; but it would seem, that there could be but one opinion as to the policy of accumulating money in large masses, to be put afloat on the current of time, in the hope, that by possibility, it might reach and finally benefit a generation to be born half a cer.tury hence. While it is sure to hold out a lure to peculation, to ambition and corruption, the fund is always liable to be suddenly dissipated, as, to a considerable extent, was the case with the Smithsohian bequest.

Should the wisdom of the Legislature decide to apply the school fund to extinguish the State debt, as was in contemplation at the last session, at no distant period a diminution of taxes might be expected, and the losses and expense necessarily incident to a fund kept on loan, of course prevented.

SERGEANT-AT-ARMS.

Agreeably to the requirement of the resolutions of Nov. 1841, an account was opened with the Sergeant-at-arms, in which he was charged with the amount of stationery, furniture and other property which was found on inventory to belong to

4

the State in and about the State House, at the close of the session of the Legislature; and it is gratifying to be able to state, as I now do, that the whole has been satisfactorily accounted for.

STATE'S ATTORNEYS AND COUNTY CLERKS.

It has not been in the power of the auditor to open satisfactory accounts with the various State's Attorneys and County Clerks in the State, as contemplated in the resolutions of Nov. 1841. The embarrassments, which have prevented the desired purpose, have resulted from the imperfections of the existing laws. These have been adverted to in my report to the Legislature, on the proposed modifications of those laws. By the 54th section of chapter XI. Revised Statutes, each State's Attorney is required annually, on or before the 15th day of October, to exhibit his accounts to the Treasurer for settlement. Since 1837, there should have been seventy returns, made to the Treasurer by State's Attorneys of various counties. The whole amount of returns, made at the Treasurer's office, since that time, is forty-one, leaving a deficit of twenty-nine-seventieths to be accounted for. No returns of an earlier date than 1837 have been found, nor do the Treasurer's books show any account opened with a State's Attorney anterior to that period, and but few accounts since 1835, and those so impefect as to render it wholly impossible to determine, from the books merely, the amount of State funds. outstanding in the hands of those officers, though from the books and other evidence, it cannot be doubted, that the amount not accounted for must be very considerable.

The sum paid into the State Treasury by State's Attorneys during the year ending on the 30th of Sept, 1842, is

and by County Clerks,

$5,711 83 431 94

$6,143 77

VERMONT STATE BANK.

The concerns of this institution have been brought nearly to a close.

There has been collected during the past year as principal,

and as interest,

$814 97

113 65