REPORT.

.

SIR-I herewith transmit my report of the transactions in this office from November first, one thousand eight hundred and sixty-four, to December thirty-first, one thousand eight hundred and sixty-five, inclusive, embracing a period of fourteen months, since the adoption of the State Government.

The interest, and so much of the public debt of the State, including that assumed from the Territory of Nevada, as became due during that time, were promptly paid on demand.

In accordance with the "Act to encourage enlistments, and to provide bounties and extra pay for our volunteer soldiers called into the service of the United States," the Secretary of State and myself, as Commissioners to negotiate the sale of bonds under the Act, advertised for proposals for the same, both in Virginia and San Francisco, for a reasonable length of time, but without receiving any communications on the subject. This was doubtless owing to a decision of the Supreme Court to the effect that the tax of twenty-five cents on each one hundred dollars of valuation, levied for a sinking fund for the redemption of these bonds was in conflict with section twenty-four of article seventeen of the Constitution.

The result of this failure is seen in the large amount of floating indebtedness accrued under the Act. (See Exhibit H.)

To preserve the credit and standing to which we are as a State justly entitled in view of the past, it is only necessary to promptly meet and keep inviolate all contracts entered and assumed. The exhibits made will, I think, show that, with a due regard for economy, our finances can be maintained in a prosperous condition.

It will be noticed that the expenses of the State should be materially reduced for the year one thousand eight hundred and sixty-six, not only on account of a shorter session of the Legislature, but also because a considerable portion of the expenditure of the year just closed was incidental to the organization of the State government.

The tabular statements prepared are as follows:

"A." Showing the total receipts into the Treasury. "B." Showing the disbursements.

"C."

Recapitulation and statement of balances. Showing the total transactions in each fund. "E." A detailed statement of sales of stamps and expenses attending

"D."

the same.

"F" Statement of transactions in legal tender notes.

"G." An abstract, as required by law, of proceedings under the Act entitled "An Act to provide for carrying out in part the provisions of section seven, article seventeen, of the Constitution of the State of Nevada," approved February fourteenth, one thousand eight hundred and sixty-five; also, under an Act supplemental to, and amendatory of the same, approved March tenth, one thousand eight hundred and sixty-five. "H." An exhibit of the entire debt of the State.

In reference to the debt of the State, I will, with your permission, make some suggestions as to the best manner of providing for it, so as to insure its extinguishment, within a reasonable time, without increasing the burden of taxation.

These suggestions are the result of inquiries made both in San Francisco and New York, and I only express the unanimous opinion of those of whom I have made them, when I say that, if practicable, a loan should be obtained in New York, or other eastern cities, sufficient to take up our entire indebtedness not otherwise provided for, and to place the finances of the State upon a cash basis.

I will add here that I expect to receive from parties in New York, before the first of February, full details as to the feasibility of negotiating a loan there, in reply to a memorandum statement of our financial condition, forwarded in November last.

The first thing to be done is to provide means to meet our immediate liabilities; also, sufficient, in connection with other sources of revenue to meet the current expenses of the State for the balance of the fiscal year, or until a loan can be effected on favorable terms for a series of years.

This temporary loan can probably be negotiated on the same basis as the loan under the Act of January fourth, one thousand eight hundred and sixty-five.

With the money obtained, the amounts on Exhibit H, numbered one, five, six, seven, nine, ten, thirteen and fourteen, amounting in all to one hundred and twenty-eight thousand nine hundred and seventy-nine dollars and seventy-nine cents, could be paid, leaving a balance for present expenses.

The amounts numbered eleven and twelve are already provided for by money in the Treasury.

The amounts numbered eight and fifteen, are also provided for from the tax of twenty.five cents on each one hundred dollars of valuation levied for the Territorial debt.

The amounts numbered two, three and four, in all one hundred and twenty-five thousand dollars; and the amount numbered sixteen, say seventy-one thousand dollars, remain unprovided for.

The bonds ($125,000,) will not become due this year, but they bear interest at the rate of eighteen per cent. per annum, and are due at such times and in such amounts as may possibly be inconvenient for the State; and I think that all considerations of policy and economy should urge us to obtain the money with which to retire them, at a lower rate of interest and for a long time.

I will add that under the law authorizing their issuance, the Treasurer has power to purchase them for the amount of principal and interest due at the time of purchase.

The amount of principal and interest of these bonds payable on the first of February, one thousand eight hundred and sixty-six, added to payments heretofore made, is eighty-two thousand two hundred and fifty dollars, which will then have been paid out of the State Treasury for interest and principal of Territorial bonds. This amount should be refunded.

Having in view, then, that provision of the State Constitution of questionable expediency, limiting the debts and liabilities of the State to three hundred thousand dollars, I propose the following as a basis of a bill authorizing a loan to be negotiated, principal and interest payable in gold coin of the United States, in the city of New York:

First. The raising of an amount sufficient to retire the outstanding Territorial bonds, and to repay to the General Fund of the State Treasury the amounts heretofore, and any amounts which may hereafter be, advanced on Territorial bond account, in all say two hundred and twenty thousand dollars.

Second. An additional amount, sufficient to pay the floating indebtedness incurred under the Act to encourage enlistments, etc., passed March eleventh, one thousand eight hundred and sixty-five, say seventyfive thousand dollars.

Third and last. A further amount for State purposes sufficient, in connection with the amount of the proposed repayment to the General Fund for money advanced, to take up any temporary loan which may be authorized. Also, to pay cash through the year, say one hundred and seventy-five thousand dollars.

The plan proposes the raising, in all, of four hundred and seventy thousand dollars, and may seem a large amount at first sight, but on consideration, it will be noticed that it will include our entire indebtedness, not amply provided for, and that our finances will be on the basis upon which it is eminently desirable to place them.

I suggest the time for which these bonds should run as fifteen years. To provide for the payment of the principal and interest of this loan, it certainly seems safe to calculate on an average valuation during that time, on which taxes can be collected, of twenty-five millions of dollars. This cannot but be considered fair when it is reflected that the Pacific Railroad, when completed across the State, will, of itself, add millions to our taxable property.

I propose, then, that thirty cents be levied annually on each one hundred dollars of valuation, and pledged for an interest and sinking fund for the proposed bonds, and that the law contain all provisions which may make them desirable as an investment.

It may be more feasible to sell a larger amount of bonds than four hundred and seventy thousand dollars, to produce that sum, bearing a low rate of interest, and sold at a discount of not exceeding twenty cents on the dollar; but this would make no difference to the State in the end, as the debt, though nominally larger, could still be made equiv alent to a debt of four hundred and seventy thousand dollars, bonds sold at par, but bearing a higher rate of interest.

If this plan is successfully carried out, there will be in the Treasury at the end of the year, after allowing thirty cents tax for the sinking fund of this debt, and five cents for school purposes, the balance of the one per cent tax, which we are authorized to levy for this year and for

one thousand eight hundred and sixty-seven. The proceeds of this balance, sixty-five cents per hundred dollars, will be unappropriated, and ought to be amply sufficient, with other sources of revenue, to carry us through one thousand eight hundred and sixty-seven.

I think we can confidently anticipate being able, within one or two years, not only to reduce our rate of taxation, but also to do away with those sources of revenue which are also sources of vexation.

The vital importance of this subject to the welfare of the State, and the necessity for immediate and comprehensive action, are my apologies for this somewhat lengthy report, and I submit it with the hope that its suggestions may be of some little value with regard to a matter in which we feel a common interest.

Very respectfully, your obedient servant,

E. RHOADES,

Treasurer.