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$19,500, for the Revised Statutes, was temporary and will not be again required. The amount appropriated for past indebtedness of the Penitentiary, $38,500, has nearly paid that indebtedness, and but a nominal sum will be needed for that purpose. The amount appropriated for the general support of the prison has been so well managed that the amount thereof unexpended is deemed by the Warden sufficient for the next two years, so that the amount of $35,000, appropriated at the last regular session for that purpose need not be renewed iu whole or in part. Of the amount of $75,000 appropriated at the last session for finishing and furnishing the Center and East wing of the Insane Asylum, about $18,000 remain unexpended, which balance, with $20,000 now asked for, is deemed sufficient to complete the whole building. So that the appropriation needed for construction account in that institution, may be $55,000 less than at the last session. The Blind Asylum at Vinton is now under cover, and not liable to injury from the weather, and if you should deem it advisable not to make any appropriation for its present completion, $10,000 may be deducted from the amount of the

appropriation of the present session as compared with that of the last. There has been paid during the last two years to Agricultural Societies, the sum of about $18,000. If you think it advisable to withhold any appropriation for this purpose for the next two years, this sum may be saved. The foregoing sums, amounting in the aggregate to $176,000, are the expenditures for the objects named for two years, and if withheld will be a saving of $8,000 per annum from the amount of State taxes. This amount, I doubt not, may be increased by a careful examination of our State expenditures and strict economy to $100,000, and if a proportionate reduction of county and township expenses can be made, the entire amount of the tax required by the General Government can be raised without increasing our present taxation. I commend the matter to your most earnest and careful examination.

In order to make the revenue of the State more certain, I recommend that the County Treasurers be required by law to pay the State Treasurer, at fixed times, certain proportions of the amount of revenue due to the State, until the entire sum for each year is paid, whether the County Treasurers have received the entire amount of State tax or not

. At present the State is wholly helpless as to its revenne. It has to depend wholly upon the officers of Counties for its collection and transmission, and if the county officers are inefficient, the State is remediless. Each county is now liable by law to the State for the amount of State tax assessed in it, but this liability, without any means of making it practicably effective, is useless. If the Counties were required to pay the revenue due the State, whether collected or not, the County Supervisors wonld be stimulated to require of the Treasurer a strict performance of his duties; and if, in addition, you should so change the present law as to give County Treasurers, in lieu of salary, a per centum

on the amount of money collected and disbursed, or provide for township collectors to be paid in the same way, our taxes would, in my opinion, be more punctually paid.

I also recommend that it be made the duty of the Board of Supervisors of each County to employ a competent accountant once in each year to examine the accounts of each County officer, and state an account between each officer and his County, and between officer and officer, and also that County Treasurers and all other persons who receive public moneys be prohibited, under severe penalties, from using them in any way, or placing them with others to be used for their private benefit.

The law of Congress imposing a direct tax for the support of the General Government gives to any State the privilege of collecting the amount of tax assessed upon its people, and allows such State to retain fifteen per cent. of the amount, on condition the State shall assume the payment of the balance of the tax. Thereupon arises the impurtant question: What shall the State do in the premises ? It must be remembered that if the State assumes the tax, the entire amount, less fifteen per cent., must be paid by the State, whether the State collects the tax or not. Keeping this in recollection, let us ascertain as near as may be our precise position. This State has expended for the General Government about $450,000, and has been repaid the sum of $80,000. The State has sold her bonds to the amount of about $200,000. The proceeds of said sale, $184,000, and the $80,000 received from the General Government, have been applied to paying the expenses incurred by the State, leaving unpaid and due wholly, I believe, to our own people, about $186,000, for which they hold or can receive warrants drawn on the War and Defense Fund. If the amount expended by the State, which is to be reimbursed by the General Government, be $450,000, there is now due the State $370,000, and if the Federal tax should be $650,000, and the State should assume it, there would be due the general Government the sum of $182,500, being the entire amount of the tax, less the amount now due the State, and the fifteen per cent. for assumption and collection, which must be assessed upon and paid by our people.

But we must provide also for the payment of the amount due our own citizens. This must be done by assessing the amount as a tax, and by either actually collecting the money and paying it to the holders of the Warrants, or by authorizing those holding warrants to surrender them to the Auditor, and receive in lieu of them other warrants of the amount of five dollars each, which shall be receivable in payment of the Federal tax. These warrants being of small amounts, and being all receivable during the present year for taxes, would be nearly or quite at par, and would be much moro valuable to the holders than the present ones. Should this course be deemed advisable, it will

be necessary in order to meet the demand made upon us by the Federal Government, to levy a tax of about $368,

500, of which $182,500 must be collected in money, and $186,000 may be paid in the warrants outstanding against the War and Defense Fund. Our State debt will have been increased by $200,000, and we will not have any money in our Treasury wherewith to meet further military expenses, should they be necessary.

It will be observed that the sums given are generally estimated. Absolute precision could not in some cases be arrived at, but it will be found the estimates approximate very nearly the truth. If this should not be deemed advisable, we can present our claim against the General Government, receive the amount due the State, pay the outstanding warrants in the hands of our people, and either collect in money the Federal Tax and pay it to the General Government, retaining the 15 per cent. for so doing, or allow the General Government to collect the whole without interference on our part. In view of the actual condition of our affairs and the want of promptitude with which our taxes are paid, I am inclined to favor the plan first recommended. If I had assurance that our taxes would be paid as they should be, I would much prefer the second.

Intimately connected with the subject of taxation and revenue, is the question as to the kind of money which shall be received for taxes. Under our present laws, specie only is receivable for public dues. In view of the recent suspension of specie payments by the General Government and the Banks of the Eastern States, it becomes a question of great importance whether we can collect our revenue in coin. I do not believe we can, and I urgently recommend to you such change in our law as will allow the payment of taxes with United States Treasury notes and the notes of the State Bank of Iowa. It is true the United States Treasury notes are not payable in specie, but it is the interest of all loyal States and of all loyal citizens to keep them at par, and the receipt of them for taxes by the loyal States would tend much to that end. The State Bank of Iowa is required by the law creating it, at all times, to redeem its circulation in coin, and I believe it expects and is fully prepared to meet that requisition. If, as it seems to me, we must and should receive for revenue the United States Treasury Notes not redeemable in specie, I cannot see the wisdom or justice of refusing to receive the notes of our own Banks, that are so redeemable, especially when by so doing, we make the payment of taxes more easy to our people and more certain to the State, and at the same tinie aid to some extent in keeping in circulation among us a currency, which has, and in my judgment, deserves the confidence of the people.

MILITARY AFFAIRS.

The Report of the Adjutant General, herewith submitted, shows the number and description of troops raised in this State for United States service, to be Sixteen Regiments of Infantry, Four of Caralry, Three Batteries of Artillery, and One Independent Company of Cavalry for Frontier service. Of these the Fifteenth and Sixteenth Regiments of_Infantry are not fully organized. In addition, Col. Koch and Col. Rankin are engaged in raising Regiments of Infantry, which if completed, will make the Seventeenth and Eighteenth Regiments of that arm of the service.

It is a matter of gratitication to me that our State has thus promptly responded to the demands made upon it by the United States for aid in this perilous crisis of our country's history, and it is also a matter of great pride to me that the troops of our State, whether tried in the exhausting service of the camp, the march, or in the firery ordeal of the battle-field, have never been found wanting, but have by their cheerful endurance of unaccustomed hardship and their indomitable valor, won for themselves and our State a name which may well cause us to feel an honest pride in claiming in any part of our broad land, that our homes are in Iowa.

At the Extra Session of 1861, what was supposed ample provision was made, to furnish the necessary funds for raising, clothing and equipping the Volunteers that might be required from this State, by authorizing the issue and sale of our State bonds. Immediately after the close of that session, the necessary steps were taken to put our boods in market, but betore they could be offered in New York, the faith and credit of our State were most wantonly and unjustly attacked by certain papers in that city, so that when, under the law, the bonds were offered for sale, it was found entirely impossible to effect sales at the prices fixed by the Board of Commissioners appointed for that purpose, or which would have been ruinous to the State. No sales were therefore made in New York, and an appeal was made to our own people to take the bonds and furnish the means necessary to meet the large expenses consequent upon raising the troops called for from this State. The Report of the Loan Agents herewith submitted will show you the amount of bonds sold by them in the State, and the amount of money received therefor. It will be seen that much the larger proportion of the bonds was taken by persons to whom the State was indebted, and that but a small share was sold for cash. The result was that the officers charged with the duty of raising troops as required by the General Government, were much embarrassed for want of means, being compelled to operate wholly upon credit, consequently to great disadvantage Whatever could be furnished by our people was promptly furnished on the credit of the State, but without means it was impossible to procure arms, clothing, and such other articles as our own people did not produce. After providing clothing for the 1st, 2nd and 3rd Regiments, I found it utterly impossible to provide for those subsequently raised, and although it was a matter of much mortification to me, to be compelled to allow our troops to leave our State un-uniformed and un-armed, yet I am induced to believe the result has been as well for the troops and for the Government. The troops

who left our State without uniform, left at a season of the year when but little clothing was needed for comfort, and they were provided with uniforms in Missouri as speedily and more cheaply than I could have provided for them. The Regiments which have left the State more recently, have been furnished with good clothing by the General Government before leaving. I have not purchased for the State the arms contemplated by the law passed at the Extra Session, for the reason that arms could be had only for money, and I had not the money wherewith to pay. Soine arms have been furnished by the General Government, but not sufficient for the security of the State, and I recommend the subject to your careful consideration.

On several occasions during the past season when the Rebels had or appeared likely to get control in Northern Missouri, much uneasiness existed along our Southern border, lest they should attempt an invasion of our State, which, for want of arms, our people were not properly prepared to resist. Immediately after the close of the Extra Session of the General Assembly, I appointed Col. John Edwards and Col. Cyrus Bussey my Aids, with large discretionary powers, to act for the preservation of tranquility in the Southern border counties. I was well satisfied the peace of our State would be more easily preserved by preventing invasion than by repelling it, and therefore while I could not order our State troops beyond our State line, I instructed Colonels Edwards and Bussey, and through them the troops under their command, that if at any time the loyal men of Northern Missouri were in peril and called upon them for assistance, they had as full authority as I could give them to lead their men into Missouri to the aid of the loyal men there, and my promise upon their return that my power should be used to the utmost extent to protect them, if called in question for so doing. Under these circumstances, and in some cases at the instance of officers of the United States, Colonels Edwards and Bussey and Col. Morledge of Page county, at different times led bodies of Iowa troops into Missouri and kept them in service there until their presence was no longer needed, and I am well assured their services were highly valuable, not only in preserving the peace of our border and protecting our own people, but in supporting and strengthening the Union men of Missouri. The expenses incurred in these expeditions are, in my judgment, properly chargeable to the General Government, and I am now seeking their reimbursement.

Great uneasiness also existed on our Western and Northern border lest the Indians in Dacotah and Minnesota might be led by designing men to take advantage of the troubled state of public affairs, and commit depredations on our people in that region. The great distance of that part of the State from the place where my other duties compel me to keep my head quarters, and the want of the means of speedy communication therewith, either by Railroad or Telegraph, rendered it in my judgment absolutely necessary that

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