REPORT of Committee of Ways and Means.

The committee of ways and means, to whom was referred " much of the Governor's message as relates to the finances of the State," with the accompanying documents from the Auditor General and State Treasurer, have had the same under attentive consideration, and respectfully report on the subject of the

Internal Improvement System, its resources, expenditures and debt.

At the time of the adoption of the constitution of this State, great importance was attached to the subject of Internal Improvement, arising in part, from the spirited examples of older States, and from a laudable desire to develope as rapidly as possible, the resources of our Peninsula. This feeling of the public mind was embodied in the 3d section of the 12th article of the constitution, as follows: "Internal Improvement shall be encouraged by the government of this State; and it shall be the duty of the Legislature, as soon as may be, to make provision by law for ascertaining the proper objects of improvement in relation to roads, canals, and navigable waters; and it shall be their duty to provide by law for an equal, systematic, economical application of the funds which may be appropriated to these objects."

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Encouraged by this clause of the constitution, and stimulated by the peculiar spirit of the times, the Legislature of 1837 projected a magnificent system of Internal Improvement, accommodating every section of our State, and embracing nearly 600 miles of railroads-upwards of 200 miles of canal, and the improvement of several rivers.

These works, according to the original estimates, were to cost about $10,000,000, but in all probability, they could not have been completed in a durable and s substantial manner, for double that sum. The system was "equal," geographically speaking, but far from "economical," as time has fully shown.

The very magnitude of the scheme, when compared with the resources of the state at the time of its adoption, would excite surprise, did we not know that our young and ardent population, in common

with other and older states, indulged in ideal visions of grandeur and wealth, which, when calmly reviewed at the present time, appear to our sober minds like the illusions of a dream, rather than the realities of the past.

It would be easy here to animadvert, in strong language, upon the conduct of those who have preceded us in the business of legislation, and whose acts established the "Internal Improvement System" upon a plan that has continually embarrassed the public treasury, and even rendered us liable, however unjustly, to the disgraceful charge of "repudiation." But it would not be generous, and we are not even sure that it would be just, to censure those who have gone before us. Our early legislation was sanctioned by public opinion at the time; and who will venture to say that, if placed under similar circumstances and surrounded by like influences, without the experience of the past to enlighten our minds, we would not fall into similar errors? We are informed that some of the older and more populous states of the Union are involved ir even greater pecuniary embarrassment than Michigan; but a knowledge of the fact that our neighbors are in difficulty as well as ourselves, affords only a negative kind of consolation, and will not justify delay in closely scrutinising and settling up, as far as practicable, our own affairs.

From a careful examination of official documents, it appears that we have had a large "Internal Improvement Fund;" by this, we do not mean a heavy amount on hand and in the treasury at any one time, but made up of various sums, appropriated at different periods, for purposes of Internal Improvement. This fund has usually been overdrawn, in anticipation of its receipts, which have seldom, or never, been equal to its drafts. Among its principal resources, were the partial amounts paid on the five million bonds of the state. Should time hereafter permit, your committee will report the particulars of the several negotiations growing out of the sales of these bonds: it is sufficient here to state, that under acts of March 21 and November 15, 1837, the legislature, under certain restrictions guarding the rights of the state, authorized the issue of said bonds, pledging the faith of the people for the regular payment of the interest as it should fall due, and for their final redemption. The bonds were made payable on the first of January, 1863, with interest at six per

cent, payable on the first of January and July in each year. Bonds amounting to $200,000, issued for the benefit of the Allegan and Marshall, and Ypsilanti and Tecumseh Railroad companies, were negotiated by the state, at the same time with a part of the $5,000,000 bonds, and have never been fully paid by those to whom they were sold. The total amount of cash received into the treasury of the state on the whole of these bonds is $2,560,630 72; and in order to make up the amount acknowledged as paid by the Auditor General, in his late report, we must add to the above, the sum of $58,820 00, which, although not paid into the treasury, is still a debt of the state as it was absorbed by the per centage, and various charges and expenses for negotiating the loan. By act of the legislature of 1843, certain bonds therein specified were recognized as paid in full, amounting to $1,387,000, and on surrender of the "coupons," or certificates for interest, from January 1st, 1842, to July 1st, 1845, inclusive, the Governor was authorized to issue new bonds for the interest which had accrued on the aforementioned acknowledged bonds.

In pursuance of this act, interest bonds for $363,324 50 have been issued, which fall due in January, 1850, and in addition to these, interest bonds are still to be issued on $14,000, to the amount of $3,712 80, making interest bonds issued, with those issuable at any moment when called for, in all $367,037 30, and these again draw interest.

We may here remark, that nothing but imperious necessity, and a magnanimous sense of strict justice, could have induced our state to pile interest upon interest, on a debt uncommonly large, when compared with the immediate income of the works of Internal Improvement for which it was created. But this is not all. The act referred to, contemplates a settlement for balance of outstanding bonds, amounting to $3,813,000, and on which we have received $1,232,450 72, leaving a balance unpaid of $2,580,549 28. On return of the" part-paid bonds," by which must be understood the whole of those for the above $3,813,000, and after deducting a just and reasonable amount of damages for violations of the contract with the state, there will still remain upwards of a million of dollars to be placed on the same footing with those bonds which we have already. acknowledged as paid in full.

Payment of interest on the "part paid bonds" may be delayed, even for a year or two longer, by the refusal of the holders to accept of our terms, but in the mean time accumulating interest will swell the mount, and render the interest on the whole more embarrassing when the day for payment arrives.

It is provided by the act of 1843, that the "net proceeds" of our public works, with certain reservations, shall be applied for the payment of interest upon our acknowledged bonds, and if such proceeds were found insufficient for this purpose, as ascertained on the 1st day of January, 1846, the balance must be raised by direct tax. Now as there is not the remotest probability of any part of this interest being met by "net proceeds," the Auditor General in compliance with his duty, has issued a circular to the several counties, notifying them to furnish their quotas of interest on $1,754,036 80, amounting to $52,621 10, being the half yearly interest due on the first of January of this month. As no tax can be assessed until the meeting of the County Boards in October, and as another semi-annual payment will fall due on the first day of July next, the whole annual interest, or double the above sum, must be added, under existing laws, to the ordinary assessment upon our counties.

That the people will pay this tax cheerfully, we do not believetheir hopes have been too long buoyed up with the flattering delusion that the income of our public works would go far to pay the interest on our public debt, without burdening them with a direct tax for that purpose. But what a high minded people ought to do under these circumstances, our intelligent and spirited citizens of Michigan will notshrink from.

The amount stated, as received on the $5,200,000 loan bonds of the State, is but a part of the sum expended or lost, in prosecuting our system of Internal Improvement. We must add to this large sum the following items:

1st. $174,224 17, or the total of the five per cent fund received from the United States for United States lands sold in this State, and to which we are entitled by act of Congress

2nd. $508,468 of Internal Improvement warrants now outstan-} ding on interest and to be paid in some way, but how, your commit, i tee cannot determine, unless in the land resources: