1846.

No. 7.

SALE OF RAIL ROADS.

Report from the Finance Committee.

The Committee on Finance, to whom was referred so much of the Governor's message as relates to the finances of the state, including a sale of our public works, together with the Report of the State Treasurer and Auditor General, and Commissioner of Internal Improvement, as to the right of way, and forms of conveyance executed for the same; being unable to agree upon a report thereon, the undersigned member of that committee, under leave of the Senate, would respectfully submit the following minority report:

That whilst the undersigned has no disposition to shrink from any responsibility imposed upon said committee, by a reference of the above momentous matters, still he cannot but feel the weight of that responsibility to be onerous, and the discharge of his duty to be alike difficult, laborious and painful. Difficult, because the above references, as a whole, would seem to imply a radical change of financial policy; laborious, because, in effecting such change, a new system has not only to be devised, but the consequences of past official indiscretion and mismanagement may have to be, either met or averted; and painful, because a review of those consequences may seem to require censure, if not open rebuke.

The committee on finance have not, as yet, fully examined into the general financial condition of the state. They have felt called upon, after glancing somewhat hastily over the several funds, their resources and liabilities, to devote their first researches to the project of a sale now agitated before the people. The undersigned may be permitted, however, to remark in passing, that assuming the recent official reports in his possession to be correct, he can find nothing at all alarming in the condition of any department of the Treasury, with the exception of the General and Internal Improvement funds. And of the former of these two, he is happy to state, that for all legitimate drafts for its own liabilities, its resources would seem to be ample without any increased taxation, and that too under the large trans

fers already made to it, of the liability of other funds. Its standing debt is mostly funded, with twelve or fifteen years to run before maturity. As this fund has, during the past four years, not only met the calls upon it, but taken up and cancelled some $400,000 of the state indebtedness, including over $100,000 of unconstitutional scrip issued under the administration of Governor Woodbridge, so with its present resources and the incoming tax of 1845, the undersigned deems it adequate to meet the current government expenses, to pay the annual interest upon its funded debt, and some fifty thousand dollars upon the liabilities of other funds, and should the bill already reported from the finance committee become a law, the annual receipts of said fund, under the present state tax of two and a half mills would be somewhat increased.

The undersigned also believes that the general fund bonds and interest thereon, now held by, and due to the United States, should be reduced in about the sum of $50,000, by a set off to be claimed and insisted upon by the state, not only for monies expended at the Sault Ste Marie, but also in defending the supremacy of the laws in the controversy about the Southern boundary of Michigan.

The undersigned reluctantly turns from this pleasing aspect of our financial affairs to the more forbidding one presented by the internal improvement fund. Again, assuming the recent official reports to be correct, we here find an indebtedness of $4,121,720 79 principal and interest to July 1, 1845, acknowledged to be valid and outstanding, but subject to the drawback of 25 per cent. (by way of damages) upon the unpaid instalments of the five million loan. That such deduction should be made, was not only deemed just by the legislature of 1842, but was unequivocally directed by positive law. Should any individual now attempt to calculate the actual damage sustained by the state in consequence of the failure to pay those instalments, he would find it greatly in excess of the amount thus fixed by the legislature. If, then, the sums contained in the Auditor General's report be correct, the amount to be deducted from the above aggregate of indebtedness, including interest thereon, from July 1, 1841, to July 1, 1845, (with an allowance of 24 per cent. by way of commission, even,) will not fall far short of $700,000, leaving our debt on the first of July last, about $3,421,720, the annual interest of which would be something less than $206,000.

Of the above amount, some three-fourths has, from four to seventeen years to run before maturity. The residue has not been funded, is now due, and for the annual interest provision should be promptly made. For the main portion of the above funded debt, taxation, to meet the interest has already been provided by law, giving that portion what would seem an unjust preference.

The lands belonging to that fund, at the estimate of our State officers, may be valued at five or six hundred thousand dollars. This estimate, however, is based in part upon a hypothetical valuation of about 7,500 acres yet to be located in the Upper Peninsula, and which they value at ten dollars per acre. Bu if, aside from section sixteen in each township, the state possesses the full right to seat those lands where they please in that region, then they are worth incalculably more; for developments already made, render it certain that many single tracts of one mile square, will prove to be worth one hundred thousand dollars each. The contracted policy which dictated the selection, from the ordinary farming lands of the Lower Peninsula, of the whole 500,000 acres donated to the state, with the pitiful exception of 7,500 acres, if not reprehensible, is much to be regretted; the more especially as the importance of a reservation of 30,000 acres for mineral locations was, by the committee of the House in 1842 and the state geologist, distinctly brought to the notice of the proper authority.

Aside from those lands, the only resource of the internal improvement fund to meet its pressing engagements consists of our public works. Of all those works, none can now be regarded as sources of revenue, or as having any determinate value, excepting the Central and Southern Railroads; unless the undersigned should further except the Clinton and Kalamazoo canal, a work, which a twelvemonth since, was distinguished by an especial mark of executive favor, forming the basis of an outlay during the past season of $17,320 63 upon which, together with a previous expenditure of about $375,000, the state had received, at the date of the report, $46 90, of which sum $22 60 have already been expended, and the further sum of $24 30 remains to be expended in repairs upon said work, under an existing arrangement therefor.

The Central and Southern Rail Roads have been regarded by a

large portion of our citizens, as promising an enduring resource upon which to draw not only for the interest of our debt, but the ultimate extinguishment of the principal. This impression, co-existent with the inception of those works, and deepened and strengthened by successive messages and annual reports down to a twelve month since, was at that time ripened into something much resembling certainty, by assurances from the same high sources, that the Central Rail Road, costing about $1,600,000 to Marshall, had paid during the four preceding months, over 6 per cent. on $2,000,000;—that the gross receipts for the coming season would reach to $100,000 upon the Southern, and to $275,000 upon the Central Rail Road: and this too, coupled with the further assurance that the Southern road had undergone thorough repairs, and was then reported "in good order," and could be continued in good condition "hereafter at a much smaller expense than has been heretofore required;" and stating of the Central road," the estimated expense of keeping the Central Rail Road in good repair the ensuing year, is thirty thousand dollars." Such were the prospects held out to us by those entrusted with our public works one year since. Now the same Board of Internal Improvement present to us sadly diminished receipts, and all absorbed in expenses of running-in repairs-construction and stock! No nett proceeds for the redemption of state scrip, and the interest thereon! No nett proceeds for the payment of principal or interest upon warrants to over half a million of dollars heretofore drawn on the Internal Improvement fund! And no nett proceeds to avert or reduce direct taxation to meet the interest upon the adjusted portion of our five million loan bonds, as provided by law!! What is the result? Why as to the last, the circular of the Auditor General is by operation of law, already searching for the tax-gatherer, whilst we are left to make provision for a superadded taxation for interest upon our domestic debt, or be guilty of the gross injustice of providing for the bond-holding credito abroad, at the expense of the laboring warrant-holder at home.

Were this the result of some sudden calamity-had the smiles of a benign Providence been averted, or the fruits of their toil been withheld from the producing classes, then indeed, our citizens would have been silent and submissive. But when in a season of plenty, there

are no nett proceeds, and when in the revolution of one short year, they are officially informed that their roads, reported in good order at the commencement, have not only swallowed up the nett proceeds, but have become entirely inadequate for the transaction of business, and are in a great measure useless and worthless to the State, unless speedily and entirely rebuilt, our citizens will most assuredly exercise their right of demanding an explanation, and such an explanation too, as the undersigned, with the lights before him, finds himself entirely unable to render.

It is not for him to invent reasons, where none are apparent. It is not for him to explain or extenuate the errors of any public officer. Neither is it any part of his present duty to apologize for any seeming want of either capacity or integrity. He can neither overlook nor reject the glaring discrepancies that sometimes appear in official reports. He cannot with propriety, be called upon to either affirm or deny that such reports do sometimes catch, chamelion like, the hue of changing policy. Regardless of any personal consequences, the undersigned is to deal with facts and figures, and if, measured by this standard, the recent reports or statements of any officer may seem to impugn or falsify preceding ones, the question of accuracy, as well as that of superior veracity, must, and doubtless will be correctly settled at another tribunal. There, merit in any and all of our public officers will be fully ascertained, acknowledged and rewarded; and there the scorching beams of public opinion, in glancing along the entire range of position, capacity, intelligence, fitness, honesty and industrious application, will pierce through the shield of hacknied glorification and glow in truthful light upon the motive of the man, whether the same be pure and elevated, or venal and corrupt.

Whilst then, the undersigned is disposed to submit the entire action of our outgoing officers to the test of public opinion, without censure or commendation, he may be permitted to give expression to the charitable hope that not one of them may hereafter have reason to regret either motive or conduct.

In view of the existing state of our affairs as developed by the documents submitted to the committee, the undersigned imagines he has fastened upon at least one "fixed fact," which he feels bound in all frankness to state; and that is, if the management of the past is to