Experience has vindicated the wisdom of the political theory adopted by the statesmen of the revolutionary era. Within a period comparatively brief in the history of governments, the American Union has attained a prominent rank among the nations of the earth; and New-York, the feeble and bleeding colony of 1776, has become a great and powerful commonwealth, holding a high place among the States of the confederacy. Under the beneficient operation of free principles, our progress has been rapid beyond example. The blessings of liberty and security have stimulated the best energies of our people and developed their capability for moral, intellectual and physical improvement.

A system of education by which knowledge is placed within the reach of all, and our youth are taught to comprehend the rights and duties of citizenship; the supremacy of law and order; a rapid proficiency in the arts which multiply the enjoyments and elevate the character of society; artificial communications. connecting the ocean with the lakes beyond our borders, and dispensing to every section of the State the benefits of easy intercourse; the consequent advancement of every agricultural, mechanical and commercial interest, are results which serve to demonstrate the advantages of free institutions, and the capacity of our people to preserve them in their original vigor and integrity.

When we contemplate a scene so gratifying, and reflect upon the progress that has been made by the inhabitants of this continent in the short space of two centuries, in advancing the welfare of mankind, the mind is filled with gratitude towards the Supreme Ruler of the world, whose moral government guides the destiny. of nations.

In the discharge of my obligation to communicate to the Legislature information respecting the condition of the State, I would first invite your attention to the situation of the finances.

The amount of the State debt at the close of the last fiscal year, September 30, 1851, was as follows:

Canal Debt,....

General Fund Debt,..

$15,301,109 16

6,389,693 32

$21,690,802 43

Shewing a reduction of principal in the past year of $840,000. It is believed that the amount of the debt, as now reported by the financial departments, cannot be materially varied by the unliquidated claims existing anterior to the creation of the Sinking Funds by the Constitution of 1846.

At that time large sums were due to citizens on canal contracts partly executed, and for private property taken for canal purposes. These claims constituted in fact part of the public debt then subsisting, and the Legislature afterwards made them expressly chargeable upon the Canal Sinking Fund. But as the amount due on them was uncertain, and could not be ascertained until a final adjudication by the Canal Appraisers or the Canal Board, this portion of the liability was not included in the original or subsequent exhibits of the funded debt. Hence the payments made from the Sinking Fund on that class of obligations, though reducing the debt in reality, did not diminish the apparent amount as shown in the annual report of outstanding stocks. The most of the unliquidated claims have now been extinguished, and the. future reduction, by the operation of the Sinking Fund, will be regular and rapid, and more effective than heretofore upon the funded debt. It is safe to assume that the entire debt existing at the adoption of the present Constitution, will be discharged by the annual contributions from the eanal revenue to the Sinking Funds, within seventeen years.

The amount of money in the treasury on the 30th of Septem ber, belonging to all the funds was $1,897,048.25. The balance in favor of the General Fund on that day was, $15,753.87. It is estimated that the current revenues of the General Fund, during the present fiscal year, will be sufficient for all the ordinary expenses of government, including the special appropriations made by the last Legislature. This estimate does not include the moneys to be derived from the next tax sale, which is to be held before the close of 1852, and which will yield about $175,000;

nor the further amount due the treasury for arrears of taxes assessed on mutual insurance companies and certain Indian reservations, from which about $150,000 ought to be realized in the course of the coming year. Proceedings in relation to some of these taxes have been long pending in the courts, and it is hoped they will soon be brought to a final decision. In considering the various applications that will come before you for grants of money in aid of public enterprises, it is important to keep in view the actual condition of the treasury, and to limit the appropriatians within the reliable revenues of the General Fund. This fund is fully sufficient for all ordinary purposes, so long as our legislation is governed by correct views of economy; and the additional resources above referred to will enable you to make some provision for new objects of public utility.

In selecting those objects, you will doubtless exercise a just discrimination, independent of all extraneous influences; and in the ordinary appropriations it is believed that some reductions may be made without injury to the public service.

The act passed by the last Legislature, intended to compel the assessors to estimate taxable property at its full value, has resulted in a large increase of the valuation. In 1850, the entire real and personal estate was assessed at $727,494,583; in 1851, the total assessment was about $1100,000,000, being an increase of nearly $400,000,000. This produces a corresponding increase in the proceeds of the half mill tax, which is predicated on the entire valuation. The State tax ought not, under any circumstances, to be larger than is necessary for the support of a wise and economical administration. I would recommend a careful examination of the subject, with a view to determine whether the half mill tax may not safely be reduced to a smaller ratio. Notwithing the important amendments adopted by the last Legislature, it is believed that the assessment laws require some further modifications for the purpose of securing a more equitable distribution of the public burthens.

While real estate of every description is assessed at its full value, considerable masses of capital in other forms continue to escape taxation. This inequality should be removed. Justice

and good policy require that all property, having the protection of our laws, should be reached by assessment, and made to sus tain the public authorities, upon principles of uniformity, except in special cases where it may be deemed beneficial to the State to grant an exemption from taxation by express legislation.

The amount derived from the canal revenues during the last fiscal year was $3,722,163.11; being an increase of $235,990.81 over the receipts of the previous year. After deducting the expenses of superintendance and repairs, and contributing $200,000 for the support of government and $1,650,000 for payment of interest and reduction of principal of the State debt, there remained a surplus of $964,432.91 applicable to the completion of the Erie Canal Enlargement, and the Genesee Valley and Black River canals.

It should be remembered in this connection, that the increase of tonnage was in a larger proportion than the increase of revenue, the rates of toll on flour and wheat having been reduced 25 per cent. at the commencement of the last season of navigation.

Some progress has been made in the execution of the act passed July 10, 1851, "for the completion of the Erie Canal Enlargement and the Genesee Valley and Black River canals." In pursuance of its provisions, the Comptroller has issued six per cent. revenue certificates to the amount of $1,500,000, for which a small premium was realized. A portion of the proceeds has been expended in forwarding that part of the work which had previously been put under contract, as exhibited in the last annual report of the State Engineer and Surveyor. The Canal Board having first given the public notice required by law, have received proposals and awarded contracts for executing the remainder of the work at prices considerably below the Engineer's estimates, upon which the recent law was predicated; and the early completion of the three canals provided for by the Constitution, may now be regarded as a point definitely settled.

It is a subject of sincere congratulation that the measure adopted at the last session, to expedite the prosecution of the unfinished works, has received the sanction of public opinion, expressed in the choice of official agents whose views in favor of

the policy, and whose determination to co-operate in the vigorous execution of the law, were openly declared. While enlightened men of all parties have long seen and felt the importance of speedily perfecting our internal communications, on which so many millions have been' expended, it cannot be deemed surprising that honest differences of opinion should have existed as to the precise mode and manner of attaining the object. The spirited discussions of the last year appear to have produced a settled conviction in the public mind, that the plan adopted is the most feasible and judicious that could be devised, within the limitations established by the financial provisions of the Constitution. Happily for the public welfare, our internal improvements have been rescued from the strife of parties, and must now cease to be a subject of political controversy. I consider it a proud day for the Commonwealth, when its leading statesmen of both political parties, emerging from unfavorable antecedents, are found concurring in support of a wise and liberal policy, and vieing with each other in a spirit of generous emulation and patriotic zeal for the advancement of a work which had become so essential to the public prosperity.

Nothing remains but to proceed with united councils in carrying out the system which is now regarded on all hands as fixed and established. In our future deliberations on the subject, former prejudices are to be discarded and past divisions forgotten. Let us come together in a spirit of mutual confidence, and unite our efforts to guard and protect the public interests, in disposing of the various questions that must arise from time to time in the progress of this great undertaking. In this, as in the management of all our public concerns, especially those of a practical business character, party spirit should be banished utterly, as the worst enemy of the people.

The completion of the canals is predicated upon the surplus tolls set apart for that purpose by the Constitution. The revenue certificates authorized by the existing law operate, in effect, as a transfer of these surplus tolls, in anticipation of their receipt, without any obligation or guarantee on the part of the State for the redemption of the certificates from any other fund.