gentlemen, and would respectfully suggest that your adopt such measures as may seem practicable for securing supplies to our own citizens first; and to reduce, if possible, the price of cotton yarn, which is so essential in supplying the hand looms of our farmers' wives.
In relation to ordnance stores I will mention that nearly a year ago a contract was made by my predecessor, under an act of the Legislature appropriating $10,000 for the purpose, with Messrs. Waterhouse & Bowes for the erection of powder mills. The money was expended, the mills erected, and soon afterward blown up and destroyed. Governor Clark agreed to furnish them the means to start again, and under a new contract they have erected other mills, and now are nearly ready to begin operations on a scale sufficient to make about 4,000 pounds per week. This, however, involved and expenditure of money beyond that appropriated by the act referred to, $12,000 having been advanced the contractors by Governor Clark and $8,000 by myself. Of these sums the money advanced by Governor Clark is to be refunded in four equal annual installments, and that by me by reserving 10 per cent. of the payments (as they become due) on powder to be furnished the State. The Confederate States will furnish the mills with about 3,000 pounds of niter per week. The department has contracted with manufacturers in the State for about 4300 new rifles per month, and arrangements have been made whereby, after the 1st of January, about 300 old rifles and muskets out of repair will be rendered fit for service, and it is hoped the department will soon be able to keep on hand a supply for 5,000 men. A detailed report of the operations of the adjutant-general's department is herewith appended. * The finances of the State will doubtless engage your anxious consideration.
The Board of Claims, in pursuance of Ordinance No. 20, section 5, passed in December, 1861, have made a report showing the debt of the State on the 30th of September, 1862, to be $20,983,361. 01, subject to be diminished by the amount of the sinking fund-at that time about $900,000; and the debt due to the State from the Confederate Government between $5,000,000 and $6,000,000. Still the State debt is very heavy, and the interest, at least, ought to be punctually paid. There are three distinct modes of supplying the requisite sum-one by taxation; a second by an additional issue of Treasury notes, and a third by getting from the Confederate Government the sum due to the State. Indeed, this sum, when received, ought to be applied forthwith to the extinguishment of the debt of the State as far as it will go, for it constitutes a part of the capital of the State debt, and ought to be applied, when returned, toward the extinction of that amount of its capital. Upon correct principles, therefore, of financial economy the debt ought not to be allowed to grow any larger if practicable to prevent it. And if the payment of the entire amount of interest cannot be provided for by taxation, as much, as least, as possible ought to be so raised. In regard to the subject of taxation-interesting at all times, and rendered doubly so at this eventful crisis-I have but few remarks to make. There has been such a disturbance in the industrial pursuits of the country within a very recent period that it is difficult for one who may not at once have been present in all parts of the State to fully realize it. You bring with you this knowledge, and can better apply it from what you have seen than from what I can recommend. I shall therefore venture but one suggestion upon the subject because of what I have heard.