pen until 1864. It was evident that the State would sustain a great loss by the delay in the construction of the shops, and accordingly the Board of Directors convened in this city in February last, and myself and other State officers invited to be present for consultation; and after full consideration of the subject, it was believed by all to be clearly to the interest of the State that the work of construction of the shops should be commenced at the earliest moment, provided the contract could be let at fair prices, and the contractor, being fully advised of the condition of affairs, should be willing to await the action of the Legislature for his pay. The Board of Directors then proceeded to advertise for proposals for the work, and a public letting was had. I directed Mr. John B. Stumph, of this city, reputed to be an honest and capable builder, to be present at the letting, and see that the contract was properly made, and in accordance with the plans and specifications before that time adopted by the State for the construction of the shops. The contract, I have every reason to believe, was fairly made, upon terms, as I am informed, fifteen per cent. below the original contract for the same work, and at least twenty per cent. below what the same work could now be let for in cash. The shops have been completed, and Mr. Stumph was again directed to examine and measure the work; his report of the letting, quality and measurement of the work is herewith submitted. In view of the early completion of the shops, the Board of Directors were able to lease the labor of the convicts upon terms highly favorable to the State. business is a proper subject for Legislative investigation, which I hope will be promptly made, and that means will be speedily provided to pay the contractor the amount which shall be found to be honestly due.

This

The report of the Board of Directors, together with that of the Warden and Superintendent, are herewith submitted. The general administration of the affairs of the prison have been satisfactory, and the Board of Directors have manifested much zeal and ability in the discharge of the important duties entrusted to them.

The report of the Board of Directors and Warden of the Southern Prison, at Jeffersonville, is herewith submitted. The affairs of this Prison, I believe, have been well managed, and I know of no just grounds for complaint. I recommend, however, that the management, condition and wants of both Prisons receive the early and thorough consideration of the Legislature.

UNITED STATES ARSENAL AND ARMORY.

At the last session of Congress an act was passed, appropriating $100,000 for the purchase of grounds and construction of buildings, and necessary machinery for an Arsenal and Armory to be located in this city.

The grounds have been purchased and the construction of the buildings will be commenced, as soon as the Legislature shall have

relinquished the jurisdiction over such grounds, so far as required by the laws of the United States.

CONGRESSIONAL DONATION.

On the 2d day of July, 1862, the Congress of the United States passed an act donating to each of the States not in rebellion against the Government, an amount of public lands equul to 30,000 acres for each Senator and Representative in Congress, to which the States are respectively entitled by the apportionment under the census of 1860. This entitles Indiana to 390,000 acres. Whenever there are public lands in the State, subject to sale at private entry at $1.25 per acre, the quantity to which the State is entitled shall be selected from such lands, but if there are no such lands in the State. or not enough the Secretary of the Interior is to issue to the State land scrip for the requisite number of acres. This scrip cannot be located by the State to which it is issued, but must be sold; but the purchasers may locate it upon any of the unappropriated lands of the United States subject to sale at private entry at $1.25 or less per acre.

There being no public lands in this State for sale at private entry, held by the Government at $1.25 per acre, Indiana is entitled to receive her donation in scrip.

This donatoin is made upon the following conditions: FirstThat all moneys derived from the sale of lands or scrip shall be invested in stocks of the United States, or of the States, or some other safe stocks yielding not less than five per centum per annum, on the par value.

Second-That the monies so invested shall constitute a perpetual fund, the capital of which shall never be diminished, except as hereinafter stated.

Third-The interest on the stocks to be inviolably appropriated by the State, to the endowment and support of at least one College in which the leading object shall be, without excluding scientific and other classical studies, and including Military Tactics, to teach such branches of learning as are related to Agriculture and the Mechanic.

arts.

Fourth-If any portion of the fund thus invested shall by any contingency be lost, it shall be fully restored by the State.

Fifth-That no portion of the said 'fund shall be applied to the purchase, repair, or erection of any building, but that a sum not exceeding ten per cent. of the original amount may be expended for the purchase of sites or experimental farms.

Sixth-No State shall be entitled to the donation, unless the Legislature shall express its acceptance thereof, within two years from the date of the approval of the Act by the President.

I recommend that the Legislature promptly express its acceptance of the grant, pledging the faith of the State for the performance of the conditions upon which it is made.

The necessity for scientific instruction in agriculture, is generally acknowledged, and Congress intended by this magnificent donation to provide means for the permanent establishment of at least one efficient Agricultural College in each State.

The question presents itself as to the disposition which shall be made of the grant. Shall it be given to the State University, or apportioned among all the Colleges in the State, upon such terms and conditions as the Legislature may prescribe; or shall a new Institution be created expressly designed to carry out the will of Congress? It may be difficult now to determine the question from the fact that we cannot know how much may be realized from the sale of scrip. If an amount should be realized large enough to endow respectable and successful Professorships in each of the Colleges now in the State, attaching to them experimental farms, it would perhaps be the best disposition of it that could be made. But if it should not be large enough for such division, which I apprehend will be the case, then I recommend that it be applied to the establishment of an Institution for Agricultural and Military instruction, to which the children of soldiers who shall die in the service during this war, shall be admitted free of charge.

ATTORNEY GENERAL.

On the 10th day of October, 1861, the Hon. James G. Jones, Attorney General, resigned and accepted a commission in the military service. I immediately appointed the Hon. John P. Usher to fill the vacancy, who served until the 17th day of March, 1862, when he resigned, having been called to the Department of the Interior as Assistant Secretary. The vacancy thus created I filled by the appointment of Hon. John F. Kibbey, who served until his successor was elected and qualified. These officers discharged their duties with ability.

WEALTH OF THE STATE.

The mineral resources of Indiana are but imperfectly understood. Nearly one-fourth of the whole area of the State is a coal-field, a large part of which is of the finest quality. Excellent iron ore is found in vast quantities in many counties, and although but little worked as yet will be the source of great wealth and prosperity in the future. Throughout the State, excepting a few small localities, the soil is rich and fertile, capable of producing all the grains and grasses in the greatest abundance. The State abounds in fine timber and living streams of water, and in every respect presents the facilities for an easy and profitable agriculture, while an abundance of coal and water power furnishes the means for manufacturing on the largest scale

and cheapest terms. From surveys, geological examinations, and every source of knowledge open, in reference to the topography and soil of Indiana, I think it safe to say that no State in the Union baying an equal number of square miles has less land not susceptible of cultivation. The State is traversed in every direction by lines of Railroad well managed and in successful operation. In 1860 there was in the State 2,125 miles of Railroad in operation, the construction of which is estimated to have cost $70,295,148; and it may not. be improper to remark that all these roads were built without the aid of grants of land by the Federal Government. Yet these roads do not furnish sufficient facilities for the accommodation of the traveling public and the transportation of the immense productions of the State. Some conception may be obtained of the magnitude of these productions by giving the statistics of a few leading articles as shown by the last census. In 1860 there were produced in the State:

69,641,591 bushels of corn. 15,219,120 bushels of wheat. 5,028,755 bushels of oats. 7,246,132 pounds of tobacco.

2,466,264 pounds of wool. 3,873,130 bush. of Irish potatoes. 635,322 tons of hay.

Although the population of Indiana has doubled in the last twenty years, and the general growth of the State in material wealth has been in a like ratio, yet we cannot doubt that the increase would have been far greater but for the operation of certain causes. In 1836 the State embarked in an extravagant and reckless system of internal improvements. To prosecute it large sums of money were required, and borrowed at heavy rates of interest, and the bonds of the State were in many cases squandered and passed into circulation without any adequate consideration having been received. Many canals, railroads, and turnpikes were surveyed and the construction commenced. But a bad system in the beginning, its prosecution was badly managed, and the result was that in 1846 the State found itself in debt to the amount of $11,090,000, and not a single work completed, the interest on the debt unpaid, and the credit of the the State utterly prostrated. In the mean time many of our citizens, seeing that the money of the State had been squandered while but little had been accomplished, believing that public improvements. had been indefinitely postponed, that a cloud was resting upon her reputation, and anticipating high taxes for many years to come, left the State and sought new homes elsewhere. The financial character of the State abroad had suffered greatly. Some supposed the State had repudiated her debts; others that she was hopelessly bankrupt; and others that to recover from her embarrassments her people must be heavily taxed for generations to come. By these notions, and the general bad impressions prevailing, the current of emigration was turned aside in great part, or swept over us to the States in the West.

In 1846 an arrangement was made with our creditors upon terms proposed by themselves, by which nearly one-half of the debt was

liquidated by the transfer of the Wabash and Erie Canal, and the State resumed payment of the interest on the other half; but it was not until many years of faithful discharge of her pecuniary obligations the credit of the State was entirely restored.

At the battle of Buena Vista an event occurred which exercised an important and pernicious influence on the growth and prosperity of the State. The Second Indiana Regiment, by the cowardice or incompetency of a single officer, was led into a false movement which resulted in a confused and disorderly retreat. The regiment was composed of as good and brave men as any other, but through the malice of the arch traitor, Jeff. Davis, who reported them to General Taylor as cowards, or the indifference and stupidity of those who should have vindicated them, they were publicly disgraced and with them the State to which they belonged. For years the Second Indiana Regiment was a by-word, and the valor of the State sneered at by the ignorant and thoughtless.

This affair, combined with the bad financial character of the State, led the uninformed abroad to regard her with aversion or contempt, and the emigrant was discouraged from coming within her borders to seek a home. When a man is about to seek a new home, very small causes will determine him to go to one State or another. The general good impression he has of one, or bad impression of another,

fixes his choice.

If one State is charged with bankruptcy, or a heavy debt, or suspected of heavy taxes, or the valor of the people spoken of lightly, he will go around it, or rapidly across it without stopping, to seek his new home in one beyond. It is worth while to pause a moment and reflect upon what trifling and irrelevant causes the progress and prosperity of a State will sometimes depend.

The disaster at Buena Vista, which should have disgraced but a single man, retarded the progress of a great State; and I am of opinion that but for the causes I have been considering the population of Indiana in 1860 would have been quite 2,000,000, instead of 1,339,000. Our disaster at Buena Vista has happened to others during this war, but the frequency of the occurrence seems to have diminished its importance. We are taught by this passage in our history, that the honor of a State should be jealously preserved. Whatever it may cost to preserve its faith, it will cost more if it be suffered to tarnish. The folly of the system of 1837 was only exceeded by that which subsequently permitted the interest on the Public Debt to remain unpaid for six years.

But now, through the progress of wealth and population, and the faithful performance of all obligations for many years, the credit of the State is entirely restored and placed upon a high and secure basis, while the valor of her sons has been vindicated upon an hundred battle fields, and may now justly challenge the admiration of the world.