tention to his duties, and great energy, has rendered it of very great service already to the State, as his valuable and interesting report demonstrates, and to which your attention, and especially that of the farmers of the State is most respectfully attracted.

BANKS AND BANKING. - The acts incorporating a State Bank and authorizing free banks in this State, were severally accepted and ratified by the people at an election held for that purpose. The State Bank was organized on the 28th of October, 1858. There are now 12 branches established at the following points: Muscatine, Dubuque, Keokuk, Mount Pleasant, Davenport, Iowa City, Des Moines, Oskaloosa, Lyons City, Washington, Burlington and Fort Madison, with an aggregate Capital of $460,450, paid in specie, and a circulation of $563,836. There are other important statistical facts bearing upon the condition of these branches contained in a consolidated statement published by the President, Chester Weed, Esq., for the information of the public, on the 5th of last month, which makes it, perhaps, unnecessary to embrace them in this communication. There are applications pending for four more branches, and the probability is that the number will be increased to twenty in all in the course of this year, which will be able, it is thought, to supply the wants of the legitimate business of the State for some years. If these branches have not accomplished all that the public expect of them, it is gratifying, at least, to know that they have done a cautious and safe business; commanding the confidence of the people, whilst they have in no small degree subserved the interest of the community at large in relieving the reasonable wants of its business

men.

It the very extraordinary financial pressure in the midst of which they commenced their business, has limited their operations on the one hand, it has, upon the other, imparted a degree of caution and prudence in the management of their business, which is worthy of all praise, and cannot fail to commend them to the confidence of the public. In this connection I will be pardoned for suggesting, that inasmuch as the State has lent to this institution its name and participates to some extent in managing and directing its operations, through three Directors of its own appointment, it should by the passage of an act express its willingness to receive the issues of these branches in payment of taxes.

Standing in this intimate relation to these institutions, it is but

just that the State should, in this way, add its confidence to that of the public, which is an element of such vital importance to their successful operations. I need not add that this policy, in my judgment, would greatly subserve the interest and conven ience of the tax-payer, whilst it would tend to drive much of the foreign free bank money out of our State, and fill its place with our own issues.

I beg to say, that I desire to be held alone responsible for this recommendation, as it does not emanate from the request or even suggestion of any of the parties interested in the banks.

I have not understood that any banks have been established under the Free Banking Law. I have heard it suggested that it was too stringent and ought to be modified. I doubt whether an ap. plication of this kind ought to be entertained should one be made. It is the want of these stringent provisions in the Free Banking systems of Illinois and Wisconsin that have flooded those States and Iowa with their irredeemable paper. It is infinitely better for the people of this State to have no free or State banks, if their paper cannot be redeemed on demand in specie.

Under the 73d section of the present Revenue law, the Auditor has and is saving a large proportion of the expense attending the collection of the State revenue under the former system. The allowance of mileage to the County Treasurers, as formerly done, was an expensive mode and less reliable than the one now adopted. From the more populous counties of the State the revenue is now paid into the nearest branch of the State Bank, and is thence forwarded to the State Treasury, at the Capitol, at the risk of the bank and upon economical terms.

I am of the opinion that the State can further economize the system of receiving and disbursing the public revenue by a slight modification of its laws. It may legitimately make the bank, to some extent, the fiscal agent of the State. The revenue being first moved from the populous counties to the Capitol, must be moved back again in large part, in disbursements, for the use of the public institutions in different parts of the State, and to pay off their officers.

A considerable amount has now to be paid in New-York, semiannually, for interest on the outstanding State loan; and the rates of exchange as well as the transportation of specie, which must be

paid by the State, are less from the river counties, than from the interior.

If the Auditor should be authorized by your legislation to direct the payment from any county, to be made at any Branch of the State Bank, to be designated by him, and thence ordered into the State Treasury, as now-or thence disbursed on warrants directed to such Branch, in his discretion, it would save the transportation, both ways, of a large part of the revenue, and save time in reaching the public creditor. He is already authorized to have it paid into Bank in transit to the treasury. The additional power requisite is to disburse on warrants directed to the bank. This system would prevent any large accumulation of money at one point, and would also avoid some risks of loss inevitably attending double transportation of the funds; while the security of the State would be equal if not superior to that of the official bond. These reasons, together with the financial economy secured by it, commend it to your consideration.

REGISTRY LAW. -I renew the recommendation of my predecessor, for the enactment of such a law, and earnestly commend to your attention the suggestions and remarks which he had the honor to submit to the last General Assembly upon this subject.

STATE ARMS AND VOLUNTEER CORPS.-The quota of arms drawn by each State is in proportion to its representation in Congress. This provision of law operates to the disadvantage of the new States, whose population usually is much in advance of such representation. Thus far our supply has been wholly inadequate to the demand. A chivalrous spirit pervades the minds of our young men, and many highly creditable companies have heen organized in the State, although we have had no military law, the enactment of which should now engage your serious attention.

The reception, custody, and distribution of the public arms, coupled with the large correspondence that necessarily grows out of it, makes this branch of the public service both burthensome and expensive to some extent, which should be provided for by law. The duties connected therewith have been for the last two years very efficiently and promptly performed by the present Adjutant General of the State, Gen. Jesse Bowen, whose compensation has borne no proportion to his official obligations and labors. STATE HISTORICAL SOCIETY. - A communication from the Executive Committee of this organization will be laid before you, exhibiting a most satisfactory account of the condition and prospects of the Society; than which it is believed no similar association in the whole land has accomplished so much in the same time.

In the hands of its present friends it promises to add great honor and credit to the State.

For further information in relation to its history, progress and tims, I refer you to the communication already alluded to; and also to the report of the Treasurer of this Society, the vouchers of whose disbursements are filed in my office, accessible to any committee your respective bodies may appoint to examine the same. I cordially concur in the appropriation asked for by the Executive Committee.

FRONTIER DIFFICULTIES.-Congress made an appropriation of $20,000 in behalf of the citizens of Minnesota and Iowa, to defray the expenses of their various expeditions against Ink-pa-du-tah and his band, for the murders committed at Spirit Lake in the spring of 1857. It was required that these expenses should be proved up before Major Cullen, Superintendent of Indian Affairs at St. Paul. This was done, and the amount allowed the Iowa expedition under Major Williams, was $3,612.43, which is now being disbursed to the privates and officers composing the same.

Under the act authorizing the Governor to raise a company of mounted men for the defence and protection of our frontier, approved Feb. 9th, 1858, I beg to say, that a company of thirty such men, known as the Frontier Guards, armed and equipped as required, were organized and mustered into service under the command of Capt. Henry B. Martin, of Webster City, about the first of March then following, and were divided into two companies, one stationed on the Little Sioux River, the other at Spirit Lake. Their presence afforded security and gave quiet to the settlements in that region, and after a service of four months, they were duly disbanded.

Late in the fall of the same year, however, great alarm and consternation was again felt in the region of Spirit Lake and Sioux River settlements, produced, as represented to me, by the appearance of large numbers of Indians on the border, whose bearing was insolent and menacing, and who were charged with clandestinely running off the stock of the settlers. The most urgent appeals came to me from these settlers, invoking again the protection of the State. From the representations made to me of the imminence of their danger, and the losses already sustained, I felt it my duty to summon into the field once more the Frontier Guards, adding ten more men to their number. After a service of four or five months they were again discharged, and paid in the manner prescribed in the act under which they were called out.

It is believed that this company afforded the needed protection, and saved, it may be, our hardy border settlements from another inhuman butchery.

The expense of these two expeditions has cost the Treasury of the State $19,800 paid, and about $1,200 or $1,500 unpaid, of contingent expenses, which did not seem to be provided for in the • law, growing out of services rendered in procuring the necessary equipments and outfit, and the transporting and disbursing the money, &c., &c.

These cliams, duly authenticated, have been placed in the hands of our Representatives in Congress, to the end that the State may be reimbursed. It is understood that this can only be done by getting through Congress a special act for that purpose.

I need not say that I opened a correspondence, both with the President of the United States and the Secretary of War, upon the subject of our exposed frontier, explaining to them the character of our difficulties, and respectfully solicited that protection which the Federal Government is bound to extend to the whole line of our borders. I received strong assurances from the President that this should be done, and a partial promise from the Secretary that he would establish a garrison at some point between Fort Ridgley and Fort Randal, that should sufficiently guard and protect our frontier. Whether this has been done or not, I am not advised.

RAIL ROADS.-The establishment, at as early a day as practica ble, of a system of railway locomotion over the State, uniting county with county, and one neighborhood with another, and thus linking together not only the four corners of the State with bands of iron, but putting us in connection with all the States east and south of us, is a matter of so much importance that few men, of any section or party, would wish to record themselves against it.

Their social and commercial advantages have been tested by millions in this country and in Europe, and they are forcing themselves upon the recognition of every civilized nation. We have a system of near 3,000 miles of railway projected, admirably adjusted

: