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To His Excellency,

Governor of the State of California :

SIR :--The period has again arrived for me to submit to your Excellency my annual report. Much that was suggested in my last avnual report may, with

propriety, be omitted at this time, not only from the fact that it has been sufficiently often alluded to by myself and predecessors, but that it involves the calling of a convention to revise the constitution of the state; a policy that I cannot recommend at this time, for the reason, among many others, that, after an effort of more than eight years, we have but just succeeded in reducing our expenditures for ordinary purposes within our revenue, and have the flattering prospect of being in receipt of sufficient revenue, in addition, to meet the interest on our funded debt, without increasing the burthen of taxation--a state of things that the people should enjoy, at least for a season, before incurring the expense inseparably connected with the revision of the organic law of the state. In

my last annual report I stated that the enactment of “ an equitable and efficient revenue law, is perhaps the most difficult task of legislation," etc. The experience of two years has confirmed me in the opinion then expressed ; and although the amendments to the revenue law enacted by the Legislature at the last session have greatly added to its efficiency, yet it is still radically imperfect in many of its provisions.

There is no provision of the Amended revenue law of 1857, that has had a more salutary effect than that requiring the Comptroller to deduct, as forfeited to the state, the mileage and commissions of all county treasurers who may fail or neglect to make their settlements at the time prescribed by law.

Within the last six months this penalty has been inflicted in but one or two instances, and judging from the effect produced, it is unlikely that it will have to be repeated with the same parties, and I would suggest that it would be well to extend a similar provision to all county officers having to do with the assessment or collection of the revenue; or having as a part of their duty to make reports to any county or state officer, or to the Legislature.

In this connection, I would direct special attention to section 29 of the revenue law of 1853, which is still in force, and requires that county auditors "sball make out and cause to be transmitted by mail or otherwise, to the Comptroller of State, on or before the first day of November of each year, a complete abstract of the property listed in his county; the valuation thereof; the number of polls ; the amount of each kind of tax, and the aggregate thereof in the county, as also the rate of each kind of tax assessed.” I regret to say that this plain and simple,



the paper

and I may add, very important duty, is greatly neglected, many omitting it altogether, others making their reports so long after the time prescribed, as to be of little value for the purposes designed. I would suggest that a law be enacted, withholding the compensation of county auditors for the performance of all duties connected with the revenue, until such time as they can present the receipt of the Comptroller of State, that they have duly made such report.

It has been intimated that an effort will be made to repeal the law of 1857, which divides equally between the state and county the proceeds of the sales of state licenses. It is to be hoped, however, that this will not be done, as the law as it now stands is eminently equitable, especially when it is considered that the state is at the sole expense of printing and transmitting the licenses to the various counties.

Section seven of article three of the collated revenue laws reads as follows: “ Bankers and dealers in exchange shall be divided into five classes,” etc. There are bankers who do not deal in bills of exchange, and it is contended by them that they are not subject to a license tax, and in some instances they have refused to take out a license. This may be an untenable position, and, to avoid all controversy, I would suggest that the law be amended by the word “or” for “and.”

The one hundred and thirteenth section of the revenue law of 1854 reads as follows: “The amounts allowed and paid to the sheriffs, assessors, and auditors shall be appointed [apportioned would be a better term] by the county auditor in proportion to the amount received into the county treasury for state purposes, and charged to the state or county, ratably in said proportions; and the auditor shall forward to the Comptroller of State, a certificate statement of the amount so apportioned against the state, and the Comptroller shall credit the Treasurer therewith."

Although the phraseology of the above statute is reasonably plain, yet great difficulty frequently arises in settling with county treasurers, owing to imperfections in the auditor's certificate. Thousands of dollars are annually paid out of the funds belonging to the state upon the mere statements of the county auditors, the law not requiring them to furnish any data by which their correctness may be computed by the Comptroller.

I would suggest that the law be so amended as to require all allowances made to county officers for services required by law to be performed in connection with the collection of the revenue, which are to be paid by the state, to be made by the board of supervisors upon an account made out by the auditor, giving the items or matters of charge with proper date, apportioning the amount to be paid by the state on each item, and that the auditor be required to forward to the Comptroller a certified copy of the account so made out and allowed, stating particularly that the amounts apportioned to be paid by the state are correct, and that they have been paid by the county, also forwarding therewith a certified copy of the order of the board of supervisors directing their payment by the county treasurer. The reasons for the above suggestions are so obvious that it is deemed unnecessary to state them here. Section twenty-nine of the revenue law of 1857, imposing a duty of one

e-half of one per cent. on the amount of all sales made by auctioneers, has hitherto been almost entirely unobserved. I am not fully advised of the reasons that prompt to its resistance.

It will be observed that the statute requires that " on the first Monday of each month, each and every auctioneer shall make out, under oath, a correct statement of all goods, etc., sold by him during the month last preceding," and generally to make an expose of the whole of his business. This, it must be admitted, is a delicate point. It is to be presumed that every one engaged in the business of an anctioneer is anxious to have the public believe that he is doing a good business

in his calling, for on this, to a certain degree, depends its actual extent. Hence their repugnance to making a detailed and truthful disclosure.

As a matter of palliation, it may be urged that all parties who are required to procure a license, in order to pursue their particular calling, are taxed in proportion to the amount of business done by them. It must, however, be remembered that the amount is given in the aggregate as property to the assessor; and it is well known to most of us that there are many who take it with great complacency to be considered rich by all save the assessor.

I therefore submit to the wisdom of the Legislature the propriety of taxing auctioneers as merchants are now taxed, which if done would be more productive of revenue than the present system. I am informed they will cheerfully acquiesce.

It will be seen by reference to receipts from the sale of stamps, that the revenue from that source is falling off. This is attributable to the fact that remittances are now being made by shipping coin and bullion instead of by bills of exchange. I would therefore suggest that the law be so amended as to require the stamps to be attached to all bills of lading, either for coin or bullion.

There is no necessity for the employment of an extra clerk in the office of the Secretary of State, in connection with the issuance of stamps. The additional labor imposed on that officer by the stamp act can be performed within one or two days for an entire year. If some means could be devised to impress the stamps upon

of the various instruments designated in the law, it would add greatly to the neatness of their appearance, and to the convenience of those using them; and it would be a great saving of labor, as well as an additional security against fraud.

It was, doubtless, the intention of the Legislature, at its last session, to repeal the law imposing a tax for military purposes. The act of 1855 imposed a tax of twenty-five cents; that of 1856 increased it to fifty cents; and the act of 1857 repealed that of 1856, leaving the act of 1855 still in force. A tax of twentyfive cents will not pay the cost of printing and distributing the blank receipts, and the law should either be repealed or the amount increased.

I had, from time to time, made notes and collected data, preparatory to more extended remarks upon the financial condition of the state, but being aware that your Excellency has been, for a long time, with commendable diligence, engaged in like manner, and that the result of your labors will be embodied in the communication that you will make to the Legislature about to convene, I have deemed it advisable to make this communication as brief as possible.

The term for which your Excellency was chosen to preside over the destinies of our young and growing state, as well as that of all the state officers who came into ofice with you, is fast drawing to a close. During that brief period, events of no ordinary character have transpired, some of them calculated to occasion lasting pain and regret. Among these, however, will not be reckoned the fact that, within that period, the expenditures of the state for governmental purposes have been reduced nearly one-half, leaving a large surplus in the treasury.

Hoping that your future may be crowned with eminent success, I subscribe myself, Your obedient servant,

G. W. WHITMAN, SACRAMENTO, January 1, 1858.

Comptroller of State.

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