The entire Civil, School and War Debt of the State, existing at the close of the Fiscal Year, June 30th, 1853, was $3,193,081 30-and up to Dec. 20th is $3,464,815 70 The debt to the School Fund ($463,360) is, however, owned by the State, and does not constitute a real demand for which she is to provide, other than for the payment of seven per cent. interest on the amount accruing from sales of School Lands-$9,576 25 of three per cent. per month bonds remain unredeemed at this date, noth aving been presented for payment at the Treasury. It is confidently believed that our War Debt will be assumed by the General Government (See article on "I..dian War Claims" in a subsequent part of this report.) The State Prison Bonds will be nearly absorbed for State property by the 1st of January, 1854. The joint proceeds of the Interest Tax of 1851 and 1852, (35 cents on the one hundred dollars valuation of real and personal property,) is not only paying our interest on our seven per cent. Civil Bonds issued in 1851 and 1852, and payable in 1855, 1861, and 1870-but has redeemed (as will be seen by the subjoined table) $96,000 to this date. Although the interest tax would afford a surplus, annually. in amount sufficient to to redeem these bonds at or before maturity; still it is not probable that it will be required for this purpose much longer, as the sales of State property, pledged to their redemption under the Act authorizing their issue, will, from present indications, redeem the whole of these outstanding liabilities at no very distant period. Up to date of December 29th, sales of State property in the City of San Francisco, the results of which accrue to the "Sinking Furds" of 1851 and 1852, amounted to four hundred and niuety four thousand one hundred and seventy five dollars, sufficient to cancel all the seven per cent. Civil Bonds due in 1855, 1861, and a portion of those due in 1870. Other sales, it is believed, will, in the course of a few months, absorb the remainder of these obligations. The large revenues derived from taxation, and the 25 per cent. of amounts received from sales made by the City of San Francisco, on the 26th of December, giving the State about three hundred thousand dollars in addition to the sales of State property, must, it is confidently believed, defray current expenses hereafter. DELINQUENCIES. The sum due the State from L. A. Besançon, and Robert Semple, surety, has not been collected. Mr. Besançon, died in the State of Louisiana some months since. The judgment against D. J. Woodlief, has not yet been satisfied. The suit against the absconded treasurer of Calaveras county and sureties, instituted in 1851, also remains unsatisfied. The above suits were for defalcations occurring in 1850 and 1851, and it is not probable that the State will ever realize any thing therefrom. For particulars with regard to each of the foregoing suits and defalcations, see report of the Comptroller, dated December 1852. The whole amount due the State by A. C. McDonald, treasurer of Sonoma county, has been paid over by his sureties, and the judgment satisfied. On the 10th of December, 1852, the Comptroller directed a suit upon the official bond of John H. Philips, deceased, late treasurer of El Dorado county, after full trial, it has been decided against the State. On the 5th of December, 1853, a letter stating the history and progress of said suit was received at this office from the District Attorney of that county, which is now on file. In view of the facts therein disclosed, the Comptroller directed a suspension of further proceedings in said suit, unless ordered by the Legislature. The case was before the District Court at three several terms, and having been decided against the State, it was believed unnecessary and oppressive to prosecute it any further. am informed by the District Attorney of Shasta county, that the whole amount due from William Bonnifield, treasurer of that county, has been collected and paid to the present treasurer, for the State. GENERAL REMARKS. During the past year large accessions have been made to the general wealth of our State. And its resources, agricultural and commercial, especially agricultural, have been much more fully developed than in any former year. The product of gold has also increased over the preceding year, many millions. Property has acquired a more stable and fixed value, not only in our cities and towns, but throughout the State. Although our assessments show an increase over any former year, still it is certain that the grand list of assessments is, in amount, far below the actual valuation of real and personal property, which should legitimately be embraced among the objects of taxation. Could the titles to lands meet with a speedy adjudication and settlement, much property now paying little into the State treasury, would be reached, and afford the basis of a large and constantly increasing revenue. Collecting Officers. Partly from the fact that Collecting Officers have this year been better paid than heretofore, it is expected that the revenue will not only be greatly increased over any former year, but will be much more uniformly and promptly collected and paid over. In past years the remuneration to this class of officers was so small that in the mountain regions, they were unable in many cases to pay even their ordinary current expenses, while engaged in the performance of their duties-consequently no uniformity existed in collections. The change made in this particular, in the revenue law of the last session, was salutary and has been attended with beneficial results. State Credit and Increase of Revenue. The indications of a yearly increase of revenue gives future promise of success and credit to our Finances, provided, proper, prudent and economical legislation shall hereafter diminish the heavy draughts upon the Treasury which has to this period characterised our legislation, thereby enabling the State to practice a rule equally as necessary in public as in private policy of meeting expenditures with a certain income. The financial embarassments and debts which have been so burthensome and humiliating to other States, carrying them in some instances to the verge of repudiation, have generally been the result of using their credit for obtaining the means to carry on systems, or perfect schemes of internal improvements, and the agents who were instrumental in their creation, claimed the credit of having contemplated the construction of some great work having permanency, and from which they anticipated such income and profits, as would not only reinburse the expenditure, but eventually lighten the burthen of taxation. Our debt, however, has accumulated for ordinary expenses and temporary purposes, with few exceptions, such as for for an Insane Asylum, State Prison, &c. As has been shown in the preceding statements, our Civil, War and School Debt amounted, in the aggregate, to $3,193,081 31. on the 30th of June, 1853, and although a large sum to have accrued within the period of four years, still no cause of alarm exists with regard to our ability to meet it, provided it is not increased by further funding-requiring additional interest tax for its security and payment. Chief causes of our indebtedness. Notwithstanding the errors which may have occurred, as a State we are entitled to the just and charitable inferences which must be drawn from an examinatien of the various causes which, in the main, have created our indebtedness. We had no territorial existence, but organized a State government with the |