it affords me sincere pleasure to be able to inform you that on the

of June su,t lthe lessee relinquished to the State his contract, and turned over to the Directors appointed under the act of May 7th, 1855, the prison buildings, grounds, and prisoners, as will more fully be seen by reference to documents herewith transmitted.

Since the Directors have taken charge of the convicts, they have, in compliance with the provisions of the said act, commeneed and completed a good and substantial wall around the prison, averaging twenty feet in height above ground: quite sufficient to confine and safely keep one thousand convicts, and rendering escapes in the future less frequent than heretofore, if not altogether impossible. The completion of this wall will not only secure the confinement and punishment of convicts, but materially diminish the number of guards and others heretofore necessarily employed in and about the prison, and of course greatly reduce expenses. The whole number of prisoners now confined in the State Prison is four hundred and twenty-seven.

In instituting a comparison between our present condition and that of January 8th, 1852, in regard to works and institutions of public necessity and utility, the asylum for the insane at Stockton is noted as not the least creditable to the State, whose beneficence has thus provided for the wants of those who have been bereft of the light of reason, far from home and friends. This splendid edifice, the work of our own artizans and mechanics, no less beautiful and ornate than useful and necessary, is at once an ornament to the city of Stockton and an enduring monument, attesting the progressive spirit and liberality of the State.

In a few days more, the official relations between the representatives of the people and myself will have ceased, and the cares and responsibilities of the Executive of a great State will have devolved upon another, and, although it will be with him that you will hereafter be called upon to co-operate in maturing such acts as are demanded by the wants and interests of our common constituents, I nevertheless deem it my duty to invite your attention to measures regarded by me as important to the whole people, many of which I have, from time to time, in various annual and special messages, urged upon the consideration of your predecessors.

Heretofore, during the past four years, I have esteemed it my duty, under the Constitution, to urge upon the attention of the people's representatives various measures, constituting in themselves a system for the more economical administration of the Government, and which, in a brief period it was confidently believed, would extinguish the indebtedness already incurred, and extricate the State from present and future financial difficulties.

While some of these recommendations have received from your more immediate predecessors proper consideration, and the measures suggested matured and received legislative sanction, others of equal importance have failed to secure that attention and action essential to give them force, form, and vitality as laws.

In this, my last official communication with your honorable body, and on the eve of retiring from public station to the quietude of private life, I do not consider it necessary to do more than briefly and respectfully refer you to the recommendations heretofore made by me, which have not as yet been acted upon; and while assuring you that my mind has undergone no change as to their policy, propriety and necessity, to express the hope that you will, at an early day, bestow upon them the careful consideration which their great importance to the interests and welfare of the people, whose agents you are, assuredly demands.

I have heretofore, as will be discovered on examination, repeatedly recommended more strict economy in legislative expenses, and beg leave again to invite your attention to this highly important item of State expenditures, that you may, at the outset of your responsible labors, avoid contracting the heavy

and unnecessary indebtedness heretofore incurred by your predecessors, more perhaps from carelessness and inattention to what has frequently been regarded as but small matters, than from lack of interest in what concerns the welfare of the State.

The expenses of the late Legislature for clerical services alone, exeeeded in the aggregate the enormous amount of one hundred thousand dollars-a sum more than treble the amount actually necessary, and nearly equal to the entire legislative expenses of many of the States of the confederacy.

The recommendations made during the sessions of '52-3-4 and 5, in relation to a reduction of expenditures in the several departments of the State government, are again reiterated, and your attention earnestly invited to the subject as one of much importance to the tax-payers of the State.

In response to recommendations made by me in the annual messages of 1853, '54 and '55, the last legislature matured and passed several amendments to the Constitution of the State. These amendments are all regarded by me with peculiar favor, as eminently proper and necessary, and it is hoped they will, ere your adjournment, receive favorable consideration. The most important of the amendments proposed, is that providing for biennial instead of annual sessions of the legislature.

This alone, if adopted, will save to the State annually, the large sum of one hundred and seventy-five thousand dollars, now needlessly expended under the Constitution.

As a measure therefore, of practical economy, and as one demanded alike by the voice of the people and the interests of the State, it is hoped it will not fail to receive your sanction, and be submitted to a vote of the people for their ratification.

The second, third, and fourth amendments proposed, are necessary in order to harmonize other provisions of the Constitution with that providing for biennial sessions of the legislature.

The fifth amendment, requiring a new Constitution, in case oné should hereafter be framed by a convention of delegates assembled for that purpose, to be submitted to the people, and by them adopted before being recognised as the fundamental law of the State, is one of great importance, and it is hoped will, with the others, receive favorable consideration and early action.

This amendment is necessary to supply a most important omission in the present constitution, which instrument, although it makes provision for the calling of a convention to revise the organic law of the State, does not require the Convention to submit the result of their labors to a vote of the people, but makes their action, for weal or for woe, final and binding upon the people of the State. This radical defect, and one capable of much injury and inconvenience to the people, is remedied by the fifth amendment, which secures to them the right of adopting or rejecting a new Constitution, after having been framed by e convention of delegates of their own choosing.

Deduct amount of Cash in Treasury,

Total amount of Civil Indebtedness, December 20th, 1855, exclusive of the School Fund,

Balance due from the sales of property made

in San Francisco,

$295,000 00

112,106 01

2,804,269 46

165,000 00

20,110 70

$480,110 70 $2,324,158 76

Amount of indebtedness unprovided for Dec. 31, 1855,
Amount of indebtedness unprovided for, January 1, 1852, (see

message of 1854,)

$2,294 830 66

As the civil debt of the State has been considerably increased during the year 1855, I deem it proper, in explanation, to give some of the more important items, and which are exclusive of the large amount paid for the erection of the State Prison wall, most of them being made to meet deficiencies.

These several amounts, although apparently constituting expenditures of the year 1855, were, with the exception of $10,000, actually applied in payment for indebtedness incurred before the first day of January of that year, as follows:Deficiency, Act of January 17th, 1855,

แ

"

$134,500 00 100,000 00 98,750 00

17,730 00

February 2d,
March 11th,

Congress having assumed the War Debt, and directed the sum of nine hundred and twenty-four thousand, two hundred and fifty-nine dollars and sixty-five cents, ($924,259 65,) to be paid into the treasury of the State of California, will unquestionably provide for the payment of the balance. Indeed, I have ever regarded the entire war debt as an appareut rather than real debt of the State: the general government being clearly liable for the payment of every cent of it.

In accordance with the requirements of an act passed at the last session of the Legislature, I transmitted to the Secretary of War a certified statement, setting forth the several amounts paid by the State of California during the years 1850 and 1851, in the suppression of Indian hostilities.

The statements were duly received, but the Secretary of War--as will be seen by reference to his letter, bearing date Washington City, July 18th, 1855, a by of which is herewith transmitted-declines payment of the amount appropriated, until placed in possession of the several vouchers upon which warrants and bonds were issued by the State of California, claiming, as it appears, the right to question the propriety of such payments, and, should he deem the vouchers unsatisfactory, to refuse to pay over to the State the moneys appropriated by Congress.

By reference to pages 582 and 583 of the United States "Statutes at Large," of 1854, it will be seen that the section numbered three (9) of the act making

appropriations for the support of the army, directs the Secretary of War "to examine into and ascertain the amount of expenses incurred and now actually paid by the State of California in the suppression of Indian hostilities within the said State, prior to the first day of January, A. D., 1854, and that the amount of such expenses, when so ascertained, be paid into the Treasury of the said State." In compliance with the provision of law above quoted, the act of last session was passed, and statements certified by the proper constitutional officers, duly forwarded by me to Washington City, under the impression that nothing further was necessary or requisite under the law of Congress to authorize the prompt and immediate payment into the State Treasury of the sum appropriated by Congress.

This impression, however, it seems, was incorrect, and the Secretary of War positively refuses to pay to the State the amount due and appropriated, until he shall have examined the accounts and vouchers on which the original warrants or bonds were issued.

These accounts and vouchers, it is proper here to remark, are a part of the Archives of the State, and, as such, are required to be kept at the seat of Government, as constituting not only a complete history and expose of the several Indian wars, but as the basis of the action of the Controller and Board of Commissioners of the War Debt, and, as such, their proper place is among the Records of the State.

Under the law no officer of the Government has the right, if he so desired, to remove them, without express legislative authority, either for the satisfaction or information of an officer of the Federal Government, or for any other purpose whatever.

The law of Congress, which was intended to govern the action of the Secretary of War, in my opinion, does not require his examination into the propriety or necessity of any or all of the expenditures of the State, in the suppression of Indian hostilities; but directs him to "examine into and ascertain the amount of expenses incurred and actually paid," and upon such ascertainment, to pay the same into the Treasury of the State of California; provided such amount should not exceed the sum of nine hundred and twenty-four thousand two hundred and fifty-nine dollars and sixty-five cents, ($924,259 65.)

The Secretary of War, however, has deemed it his duty to require the original. vouchers and papers, and to refuse payment of the amount appropriated, until they shall have been furnished.

Although fixed in the belief that so far as the State of California is concerned, the requirements of the law of Congress on the subject have been, on her part, fully complied with, and that the Secretary of War, having from statements authenticated by the proper State officers "ascertained the amount actually paid," should, without further question or delay, in accordance with the law of Congress, have paid the amount appropriated, "into the treasury of the State of Califor nia," it is neither my intention nor desire, in this communication, to call in question or advert to the propriety or justice of the action of the Secretary of War in the premises, further than to dissent from the correctness of his decision, as being, in my opinion, unwarranted by the language of the act of Congress making the appropriation, and also to express sincere regret that months of delay in payment, must, under the circumstances, necessarily ensue, burthening the State with a large sum in the shape of interest on the outstanding War Bonds and Warrants.

Without further comment, the whole subject is commended to your careful consideration, for such action in the premises as, under all the circumstances, may by you be deemed proper and necessary to secure to California the prompt payment of the amount long since ordered by act of Congress into the treasury of the State.

SAN FRANCISCO WATER FRONT.

Although fully satisfied that the rapidly increasing commerce of San Francisco will, in a few years, require for its accommodation an extension of the entire water front of the city, and that it can be consumated without the least injury to the harbor, it would, perhaps, for the present, be desirable to do no more than make it the duty of some agent of the State to watch over it and prevent it from passing into the hands of individuals without the payment of its value to the State. The right of the State to dispose of this character of property, when it can be done without injury to commerce, is clear and unquestionable, and the interest of the State in this rich heritage, if carefully guarded and judiciously disposed of, will, as soon as there is a demand for it, command an amount greatly exceeding the existing indebtedness of the State. With the foregoing recommendation relative to the selection of an agent to guard the interests of the State, in the premises, but vesting no power to transfer or dispose of this immensely valuable property, the subject is commended to your consideration.

AMENDMENTS TO THE CONSTITUTION.

As it is incumbent upon us in the present financial condition of the State to search out every avenne to economy which does not encroach upon principle or true policy, I deem it proper to invite your attention specially to two amendments to the Constitution, recommended in my annual message of 1853.

The first section of the ninth article should be repealed, and the duties of Superintendent of Public Instruction devolved on the Secretary of State. The great States of New York, Pennsylvania, Massachusetts and Illinois, have in this way merged the duties of the two offices.

As a distinct Department, it is of very questionable necessity, and if in the States above named, the duties can be performed by the Secretary, there certainly exists no good reason for incurring the expense of a distinct and separate Department of Instruction in California.

Reasons similar to those which obtain in the case of the Superintendent of Public Instruction, induce me to renew the recommendation to repeal the 15th Section of Article 5th, which provides for the election of a Surveyor General. The duties of this office can, without detriment to the public interest, be devolved on the several county surveyors, with a requirement to report annually to the Goveruor or State Comptroller, instead of the Surveyor General, as at present. The duties of the office of Quarter-master General, can, without inconvenience or embarrassment, be assigned to the Deputy Secretary of State, and the amount which is now needlessly expended in support of that office saved to the State. The Board of State Prison Directors can also be abolished, leaving the Warden, in connection with the Governor, Secretary of State, State Comptroller and State Treasurer, as a Board of Prison Inspectors, to manage all its affairs. Now that the Prison building is securely enclosed with a substantial wall, so that convicts can be safely employed inside of it, the warden with less than one-half of the number of guards heretofore employed, can safely control and direct every thing connected with the prison.

The proposed reduction in the number of the Board of Directors and guards, if carried into effect, will annually save about thirty-two thousand dollars, and in the aggregate, the several constitutional amendments and statutory changes, will each year reduce the expenditures of the Government not less than fifty thousand dollars.

These changes, it is proper here to state, in order to prevent misapprehension, are recommended as measures of practical economy, and not because the duties of