statesmen, who despaired of her recovery from the universal
bankruptcy, which swept over the country. At the close of
the fiscal year of 1863, her sinking fund had increased to
such an extent as to justify a large reduction of the taxes,
and her Treasury contained more than a million of surplus
over and above her legitimate wants. It may he gratifying
to the people of the State to know that the whole increase of
the permanent debt, referable to the expenditures of the war,
owing to the healthy condition in which the Treasury was
found, and the aids furnished by taxation, does not exceed
up to this time $501,000, and our claim upon the General
Government, should the war debt of the States be assumed
by Congress—a measure not unlikely to be reported during
its present session, will amount to $5,000,000 and upwards.
in referring to this subject, at the present tme, it is not my
purpose to venture, to any great extent, suggestions and re-
commendations, in advance of the official reports of the Comp-
troller and Treasurer, which belong more appropriately to
the business of the regular session. The brief period, clur-
ing which I have been connected wi[h the Executive office,
and the undeveloped results of measures inaugurated by the
new Constitution, would render necessary a more thorough
and detailed examination into the general subject of the Fi-
nances, before I should feel justified in asking your co-opera-
tion in plans which would be subject to modifications and
changes, by events yet to transpire. How the annual receipts
of the Treasury may be affected hereafter, by the change in
our system of labor, and the reorganization now going for-
ward, will be fully ascertained and reported before the next
stated meeting of the General Assembly.

EXEMPTION OF BOUNTY BONDS FROM TAXATION.
Tho Act of February 6th, 1864, Chapter 15, passed at your
last session, appropriating four millions of dollars, to be used
in bounties to the Mar land troops enlisting under the last
cal] of President Lincoln, has failed to answer the object ot
the Legislature. The Treasurer, after advertising for a por-
tion of this loan, deemed it advisable, from the inadequacy
of the bids, to suspend further action until the Legislature
could be convened, anti the subject brought again to their
consideration. It could hardly have been expected that, in
competition with Government and other securities offering the
strongest temptation as to soundness at much more favorable
rates of interest, the Bonds of the State of Maryland could be
thrown upon the market, unless at great disadvantage. The
bounties paid by the Comptroller, up to the present time,
have reached $3,678,600. I would recommend that the
Bounty Act be so amended as to exempt these Bonds from
both State, County and Municipal taxation, before another