The whole cost of managing this fund, and protecting the university lands for the fiscal year, was $1,047 60.

The disbursements from the fund for the relief of sick and wounded soldiers for the year ending December 31st, 1865, amounted to $6,101 91, at which date there was a balance in the fund of $22,050 84, which is much more than will ever be needed.

The disbursements from the Governor's contingent fund, for 1865, were $1,025 90; balance in the fund January 1st, 1866, $2,657 84:

WAR FUND.'

The receipts of the war fund for the last fiscal year were as follows:

There has been paid out of the state treasury for war purposes, since the beginning of the rebellion to the 1st day of January, 1866, not less than $3,900,000.

There has been raised by counties, cities and towns for war purposes, up to June 1st, 1865, $7,752,505 67. Total expended by the state, $11,652,505 67, $762,403 09 of which has been reimbursed by the general government.

A large sum has also been paid by localities, by tax levied last year, of which the state has no account. In consequence of this vast expenditure of money for war purposes, the burdens of the people have been heavy. In all of our state affairs we should practice the strictest economy consistent with the public good. The people demand it, and will expect all in authority to comply.

Make no appropriations which are not entirely necessary, and insist that all who are empowered to expend the public money shall do so with an eye single to the public welfare.

The five per cent. due the state from the United States, on account of sales of land within this state, so long withheld in consequence of an unsettled claim against the state for money received by the territory of Wisconsin for lands sold, heretofore granted by congress to aid in the construction of the Rock River canal, has finally been paid and a full settlement obtained.

The amount received on the 17th day of May, 1865, as balance due to that date, was $148,784 06.

On the 18th day of November last $5,670 28 was received, being the amount which had accrued since the date of settlement, all of which has been placed in the proper funds.

TRUST FUNDS.

The state has the care and custody of the various trust funds, and it is its duty to so invest them that they may yield a yearly income. Until recently these funds were loaned to individuals, upon what was supposed to be the best class of securities, bond and mortgage upon real estate. But notwithstanding all the care which was exercised by the state officers, it was found, by actual experience, that large sums of money were lost each year, by reason of insufficient security. The reports of the commissioners of school and university lands shows a state of facts which may well cause you to seek for some other mode of investing these funds.

The safest, best and most convenient mode of investing them, is in the bonds of the state, which under existing laws is now being done.

Before our state bonds are all absorbed, which will be within this year, steps should be taken to so change the constitution of the state as to enable the State to constitute these funds, as they are received, an irredeemable and irrevocable debt, upon which the state shall forever pay interest, at the rate of seven per centum per annum.

This plan has the advantage of perfect safety for the funds, while that which has been heretofore followed certainly has not. No loss can possiIt is cheaper than any mode heretofore practiced. It has the further advantage of being a loan to each individual in the state in proportion to the amount of his taxes, instead of being distributed to a comparatively few persons. Being thus disposed of, these funds cannot. be used for political purposes; no party in power can use them to perpetuate its power. The amount in these funds will soon be so large as to be a dangerous element in the hands of any political party; larger, I think, than should be at the disposal of political officers, for the purpose of loaning to individuals.

This plan may be objected to, because of the extent of the state debt which would in time be created, and which would entail a large State tax yearly to pay the interest thereon. If the money was to be borrowed from abroad, and the interest paid to parties outside of our state, the objection would be a good one. But this will not be the case. The people would only borrow and use their own money. The state tax they would pay would be immediately distributed throughout the state and used for edu

cating their children, and it is entirely immaterial whether the citizens of the State pay the money required for educational purposes as a state tax, a county tax, or a school district tax.

The tax must be paid in any event. If any plan can be devised by which the whole people of the state can have the use of these funds, save them from loss, save the expense incident to their care, when they are loaned to individuals, and last, though not least, keep these large sums of money out of the reach of politicians, that plan should be adopted at as early a day as possible. The plan I have suggested, seems to me to be one more likely to produce the results sought than any other.

If it does not meet with the approval of the people, then I would recommend investing these funds in United States stocks, which the commissioners should now have authority to buy, whenever they cannot purchase our state bonds at par or less. No mode of investment can be found so unsafe as the one which the state has heretofore adopted. I earnestly recommend this matter to your careful consideration, believing that no more important question can be brought before you.

Chapter 282 of general laws of 1865, requires immediate payment of all dues to the state for lands or loans which, according to the terms of the contract, have been due for one year or more. This legislative action was required to enable the state to meet the unexpected demand upon the war fund, because of the large number of soldiers sent to the field in obedience to the last calls of the general government. Most of these soldiers were supporting families, and were entitled to receive from the state five dollars per month, extra pay. A sufficient amount was voluntarily paid into the treasury by persons indebted for lands or loans, to meet the requirements of the state, and the commissioners of school and university lands decided wisely not to render the law unnecessarily oppressive upon the people by declaring forfeited the lands of those who could not conveniently pay, consequently no land has been forfeited under that act, The exigency having passed, and the state having no further immediate use for these dues, I recommend the repeal of so much of the law cited, as requires their immediate payment.

Section 2 of article 10 of the constitution of this state provides that certain revenues accruing to the state shall be set apart as a separate fund to be called the school fund, the interest of which, and all other revenues derived from the school lands, shall be exclusively applied: 1st. "To the support and maintenance of common schools, in each school district, and the purchase of suitable libraries therefor;" and, 2d. "The residue shall be appropriated to the support and maintenance of academies and normal schools, and suitable libraries and apparatus therefor."

Section 6 of the same article, provides that" the proceeds of all lands that have been or may hereafter be granted by the United States to the state for a university, shall be and remain a perpetual fund to be called the university fund, the interest of which shall be appropriated to the support of the state university." The terms used in the sections I have quoted seem to be very plain.

By virtue of various laws enacted by the legislature the proceeds of these funds are used for purposes other than the support of common

schools and the state university. Large sums have been annually expended for clerk hire, printing, advertising, &c., expenses incident to the care of the lands and the management of the funds, all of which seems to be in direct violation of the provisions of the constitution of the state. Every interest of the people of the state is opposed to the diversion of either of those funds or the income thereof from the purposes for which they are so plainly and exclusively set apart. The state can very well afford to bear the expense incident to the care of the school lands and the management of the school fund for the sake of the children of the state, who are now deprived of a part of the means provided by congress for their education, and the state should be willing to pay all of the expenses incident to the care of the universily lands, and the management of the funds arising threfrom, even though there is no constitutional provision compelling it to do so.

The amount yearly expended from the university fund for expenses would not be much to the state of Wisconsin, but is of great importance to the university in its present financial condition. That institution has never cost the people of the state a single dollar, its lands having thus far paid all of its expenses. No funds should be more carefully guarded than those devoted to educational purposes. I therefore recommend that all laws which provide for, or authorize the use of any portion of either of these funds for the payment of the expenses incident to their care and management be repealed, and that provision be made for the payment of all such expenses from the general fund.

TAXES.

Suggestions are made in the report of the secretary of state as to the practical workings of the laws now in force providing for the assessment of property, and the collection of taxes, which, as they now stand, fail to meet the requirements of the people, work injustice, and admit of too much dishonesty.

Both of these laws are imperfect in several points, and should receive your careful attention, be made as perfect as possible, and then be permitted to remain long enough without amendment to enable the people to become thoroughly conversant with their requirements.

The whole amount of taxable lands in the state is 17,563,316.52 acres. The aggregate valuation of which is $91,453,693 54. Aggregate valuation of city and village property is $33,151,291 10. Aggregate valuation of all real property is $124,604,984 64.

On the 18th day of March last, there was transmitted from the office of the secretary of state, to the senate, a statement showing the amount of taxes for all purposes, which were collected throughout the state during the year 1863, and the cost of collecting the same. That statement was compiled from the reports of town, county and city clerks throughout the state, by which it appeared that there was collected $382,130 state tax, and $2,245,697 48 county, town and city tax. The total being $2,627,827 48. The whole cost of collecting these taxes was $230,995 73, being about nine per cent. Of this sum $160,000 were paid to town

treasurers.

During the year 1864 the taxes were very much greater, owing to the fact that in many localities large sums were collected for bounties to volunteers, in addition to the tax for ordinary purposes.

From the returns of the assessors, made pursuant to section 5, chapter 471, laws of 1865, it appears that the whole tax collected was not less than $7,000,000, the cost of collecting which was not less than $400,000.

This enormous expenditure for the collecting of our taxes seems to me to be unnecessary, either for the interest or convenience of the people, and some plan should be devised which will reduce it.

I suggest that some system be adopted which will inform the legislature each year of the amount of taxes levied in the different towns, cities and villages throughout the state, and for what purposes. This information, in possession of the legislature, it would undoubtedly follow that the rate of taxes for local purposes would be limited by law. The large sums paid to the various officers charged with the collection thereof, ean very easily be reduced, by the adoption of some system which will cause the whole tax levied in the county to be paid directly to the county treasurer, and that without serious inconvenience to the people.

AUDITING.

Section 29 of chapter 10 of the revised statutes, provides that, "the secretary of state shall, from time to time, require all persons receiving moneys or securities, or having the disposition or management of the property of the state, of which an account is kept in his office, to render statements thereof to him; and all such persons shall render such statements at such time and in such form as he shall require."

This section is virtually abrogated by the terms of the laws making ap propriations annually for the support of the benevolent institutions of the state, and for other purposes.

An account of the management of a large portion of the moneys so appropriated is not kept in the office of the secretary of state. That of ficer is directed by the laws to draw his warrant for the amounts, and knows nothing of the details of the expenditures.

The laws appropriating moneys for any purpose whatever, should provide that it be drawn upon the warrant of the secretary of state, and require vouchers to be filed with, and after careful investigation, audited by that officer; each voucher to show the article purchased and amount paid therefor.

With such laws in force, the account of management of all moneys expended for the state, would be kept in the office of the secretary of state, open for the inspection of the people, and convenient for the use of legis lative committees, to make such examinations as might be deemed necessary.

Intimately connected with this subject is the necessity for the creation of another state office, the incumbent of which shall be alone charged with the management of the financial affairs of the state, and of auditing and adjusting all accounts and claims due to or from the state. I deem it of the utmost importance that provisions be made by amending the con