Soon after the achievement of our independence, the great and good men who conducted the revolution, met in Convention and entered upon the work of forming a Constitution, and establishing the government upon a permanent basis. In that convention it was discovered that great diversity of opinion existed, as to the proper form of the permanent government. Some very able and influential persons favored the plan of a limited monarchy, similar to that of Great Britain, or some other strong government which would consolidate the sovereignty of the States in the empire, and place the supreme power in the hands of the few. Many, who did not aspire to the throne in case of the establishment of monarchy, no doubt, looked for positions as ministers at court, or for dukedoms and other grades of noble hereditary distinction that would elevate them and their posterity to permanent ruling positions above the great mass of their fellow-citizens. This class of persons opposed the great doctrine of State Rights and sought to divest the States of their sovereignty, and virtually to convert them into mere provinces of a consolidated central power. The doctrines of this class of statesmen were, however, successfully combated in the convention by the great champions of the doctrine of State Sovereignty, who succeeded in procuring the sanction of the convention to a constitution, which, while it delegated to the general government such attributes of sovereignty as were necessary to conduct the foreign affairs of a confederation of States, and to regulate such internal affairs between the States necessary to the good of the whole as were beyond the control of a single State confederated with sister States, reserved to each State its inherent sovereignty, with power to exercise all its attributes except such as were expressly granted to the general Government, or such as were necessary to carry into effect the delegated powers.

After the adoption of the Constitution, a conflict again arose between the two classes of statesmen above mentioned. The one class, headed by the great statesmen of Virginia, contended that the federal government should, in practice, be confined to the exercise of the powers delegated to it by the Constitution, leaving to the States the exercise of all their reserved powers. The other class, headed chiefly by Northern statesmen, attempted, by a latitudinarian construction of the Constitution, to accomplish indirectly what they had failed to secure directly, and to consolidate the government by the assumption, in practice, of powers not delegated by the States. The conflict has lasted through a long series of years, and the fortunes of the two classes of statesmen at different times and under different names, have been as various as the ebbs and floods of popular sentiment under different influences and controlled by different interests, have been unstable. The statesmen of the original federal school, have, however, with the assistance of the tariff laws, navigation acts, fishery laws, and other legislation intended to build up and foster Northern interests at the expense of Southern industry, succeeded in directing the Northern mind into the consolidation channel. By the instrumentality of these laws, the government of the United States has poured the wealth of the productive South into the lap of the bleak and sterile North, and the people of the ice-clad hills of New England have grown rich and haughty upon the tribute which they have levied on the productions of the sunny South. The result has very naturally been, that they have learned to look up to the government which taxed our industry for their advantage and enriched them at our expense, as the great dispenser of all benefits; and they have sought to strengthen its hands and enlarge its powers, by weakening the hands and diminishing the powers of the States. They were willing to consolidate the government, if the government would, in turn, enrich them. They have used the slavery question to excite the masses and to place in power such men as would administer the government for their benefit.

The people of the Southern States, who have been the sufferers under the operation of the federal government, which has drawn from them the incomes of their labor to enrich their Northern neighbors, have very naturally opposed the consolidation of all power at Washington and have maintained the doctrine of State Rights as their only security against the encroachments of haughty and unrestrained imperial power. They endured wrongs and submitted to injustice till their wrongs were no longer sufferable. They again and again warned the people of the Northern States of the consequences of further aggression.—Their warnings were unheeded and their remonstrances were met with renewed acts of injustice. Seeing that there was no further safety for them in the Confederacy, each one of eleven States in its separate capacity as an independent sovereign power, asserted its original rights by resuming all the attributes of its original sovereignty. The government of the United States, is now in fact a consolidated military despotism, and its Executive who claims and exercises the right to suspend the writ of Habeas Corpus and to imprison in chains or take the lives of the citizens of the States of that government at his pleasure, denies the sovereignty of the States, contemns the doctrine of State Rights, claims that the States are as subject to the control of the federal government, (which is in fact their mere agent) as were the Colonies to the British Crown; and imitating the unwise and unjust policy of the British government in 1776, now attempts to coerce the eleven seceded States back into the Union, and by force of arms to subject them to the government and control of that despotism. To accomplish this wicked purpose and to secure our subjugation and degradation, he has made war upon us, blockaded our ports, and invaded our territory with large armies. In violation of every rule of modern warfare, he has permitted his soldiers to disregard the rights of private property and to inflict the most grievous wrongs upon unoffending women and children. By the assistance of the God of battles, we have met his hosts in the field, and against vast superiority of numbers and of preparation, we have repeatedly dispersed and driven them back with wild consternation and great slaughter. Still he persists in his wicked purpose of forcing upon us the choice between submission to tyranny and the vigorous prosecution of a protracted war. Our lives, our liberties, our wives, our children, our property, our all, are at stake in this contest. A gracious Providence has given us the resources in men, money and means, to live within ourselves and to maintain the war against the invader for a whole generation. But one alternative is left us and but one response can be given to the inquiry as to our future policy. That response is on the tongue of every freeman, it is felt from breast to breast, and heard from lip to lip, reverberating from the hill tops to the mountains and from the mountains to the vallies, Victory over the invader, or death to the last man sooner than acknowledge that we are vanquished.—The hearts of the whole people of the seceded States, are as the heart of one man, and that great heart beats responsive to the patriotic sentiment, that the enemy may exterminate us if he has the power, but conquer us, he never shall.

The act of the last Legislature authorized the Governor to call out ten thousand Volunteers, if necessary, for the defence of the State.

Early in the Spring, I divided the State into four sections or Brigades, intending, if necessary, to raise one Brigade of Volunteers in each section, and appointed one Major General and two Brigadier Generals, with a view to the prompt organization of one division in case of emergency. The position of Major General was tendered to Gen. Henry R. Jackson, who has lately gained a very important victory over a greatly superior force of the enemy in North Western Virginia, who declined it in favor of Colonel Wm. H. T. Walker, late of the United States Army, and a most gallant son of Georgia. I then, in accordance with the recommendation of Gen. Jackson, and the dictates of my own judgment, tendered the appointment to Col. Walker, by whom it was accepted. The office of Brigadier General was tendered to and accepted by Col. Paul J. Semmes, for the second Brigade, and to Col. William Phillips for the fourth Brigade. With a view to more speedy and active service under the Confederate Government, General Walker and General Semmes resigned before they had organized their respective commands. About this time, our relations with the Government of the United States assumed so threatening an aspect that I ordered General Phillips to organize his Brigade as rapidly as possible, and to throw the officers into a camp of instruction for training, that they might be the better prepared to render effctive those under their command. This camp of instruction was continued for about two weeks, and the officers sent home to hold their respective commands in readiness. This was the condition of our volunteer organization early in June when the United States troops crossed the Potomac, and invaded the soil of Virginia. Not knowing how soon a similar invasion of our own soil might be made, by a landing of troops upon our coast, I ordered General Phillips to call his whole Brigade into camp of instruction, and hold them in readiness for immediate action, should emergencies require it. This order was promptly obeyed by the energetic and efficient officer to whom it was given. General Phillips, assisted by Adjutant General Wayne, and Major Capers, the Superintendant of the Georgia Military Institute, pressed forward the instruction and preparation of the troops with great activity and energy. The troops remained in camp from the 11th of June till the 2d of August. They were a noble, patriotic, chivalrous band of Georgians, and I hazard nothing in saying, military men being the judges, that no Brigade in the Confederate service was composed of better material, or was better trained at that time for active service in the field. The season having so far advanced that it was not probable that our coast would be invaded before cold weather, I tendered the Brigade to President Davis for Confederate service in Virginia. The President refused to accept the tender of the Brigade, but asked for the troops by regiments. Believing that a due respect for the rights of the State should have prompted the President to accept those troops under their State organization; and if any legal obstacle, in the way of accepting a Brigade existed, that it should have been removed, by the appointment of the General who had trained the men, and who was their unanimous choice, to continue to command them in active service; I, at first, refused to disband a State organization, made in conformity to the statute, and tender the troops by regiments; more especially as the President only demanded the two regiments which would have left the three Battalions to be disbanded or maintained as Battalions, through the balance of the season, by the State. Finally, the President agreed to accept the Battalions and Regiments, and in view of the pressing necessity for troops in Virginia, I yielded the point, accepted General Phillips' resignation, and permitted the troops to be mustered into the Confederate service by Regiments and Battalions.

About the time these troops left, the Secretary of War also ordered out of the State, the Regiment of Regulars under Col. Williams, and the 2d Regiment of volunteers commanded by Col. Semmes, both excellent Regiments, well drilled and armed. This left the coast almost entirely defenceless. By that time I had permitted nearly all the arms of the State to go into the Confederate service, and it has been a very difficult matter to get arms enough to supply the troops since ordered to the coast.

At the time Fort Pulaski was, by an ordinance of our State Convention turned over to the Confederate Government, the number and size of the guns in the Fort were very inadequate to its successful defence against a fleet with heavy guns, and as the Secretary of War made no pro vision for the proper supply of guns or ammunition, I deemed it my duty to purchase with funds from the State Treasury the necessary supply, which was done at a cost of $101,521,43. In this estimate is included the freights paid on the supply, and a number of heavy guns sent to other parts of the coast together with work done on gun carriages, &c. During the months of August and September, our climate was considered a sufficient protection of our coast against invasion. But an attack was reasonably looked for, so soon as the advanced stage of the season would render the health of an army on the coast secure.—I had petitioned the Secretary of War to send a larger force to our coast, prior to the order by which I called out Gen. Phillips' Brigade, and had offered to supply, promptly, any number of troops needed in obedience to a requisition from the War Department, and had mentioned five thousand as the number which I considered necessary. He replied, declining to order so many, and I felt it to be my duty to hold State troops in readiness to meet any contingency until the period when the climate would be a sufficient protection.

Early in September, I visited the coast and inspected the fortifications and batteries which had been thrown up by Confederate authority. I was fully satisfied that the number of troops upon the coast in the Confederate service, was entirely inadequate to its defence, and as no requisition was made upon me for any increase of the force, I felt it to be my duty to call out State troops and increase the force as soon as possible. It is true the State was not invaded, but the danger was considered so imminent as to admit of no further delay, and I was of opinion that my action was justified by both the letter and spirit of the Constitution of the Confederate States.

In the early part of September last, I appointed Gen. George P. Harrison, of Chatham county, a Brigadier General, under the act of the last session of the Legislature, and ordered him to organize a Brigade of volunteers, armed as far as we had the means with military weapons and the balance with good country rifles and shot guns, and to throw them into camp of instruction near the coast where they could readily be used when needed. Gen. Harrison has pressed forward the organization with his characteristic promptness and energy, and now has a fine Brigade under his command. I have also, within the last few days appointed Maj. F. W. Capers, a Brigadier General and ordered him to take command of the second Brigade now about organized.

When I permitted nearly all the State's guns to go out of the State in the summer, I entertained the hope that such number of the troops with the guns as might be needed, would be permitted to return to our coast in case of necessity during the winter. Considering the danger imminent, I lately requested the Secretary of War to order back to our coast, five Regiments of armed Georgia troops. This request was at the time declined by the Secretary, who agreed, however, to supply the Confederate General in command at Savannah with one thousand of the Enfield Rifles lately imported.

As very little expenditure has been made by the Confederate Government to place Georgia in a defensive condition, and as the number of Confederate troops upon the coast is not sufficient to meet the necessities of the service, and as the enemy's fleet is now off our coast, I am of opinion that the State will be compelled in a very great degree to take her own defences into her own hands, and I, therefore, recommend such additional legislation as the General Assembly may think necessary for that purpose, together with such appropriations of money as may be required for a bold and vigorous defence of our beloved State against the aggressions of a wicked and powerful foe. Should we have to continue our troops in the field, which I think quite probable, during the winter, an appropriation of less than $3,500,000 will be insufficient to meet the exigencies of the service for the ensuing year.

By reference to the Report of the Treasurer you will find a statement of the accounts upon which the $1,000,000 appropriated as a military fund for the past year has been expended. The Report of John Jones as Quarter-master General to the 18th day of May, and of Ira R. Foster as Quarter-master General since that date, will afford a detailed statement of the expenditure of the several sums charged in the Treasurer's Report to account of that department of the public service. The three Reports together with the Reports of the Quarter-master and Paymaster of the regular army while in the service of the State, afford, it is believed, all the information necessary to a complete understanding of the entire disbursement of the whole sum.

The Act of the last General Assembly of the State which appropriated one million of dollars as a military fund for the year 1861, made provision for raising the money by the sale of Six per cent. State Bonds. At the time of the passage of the Act, our Six per cent. bonds were above par in the market and were eagerly sought after by capitalists.—Soon after the dissolution of the United States Government, bonds and stocks of all kinds were greatly depreciated in the market and it became impossible to raise money at par on any securities bearing only six per cent. interest. The Government of the Confederate States fixed the rate of interest on its bonds at eight per cent. and persons having money to invest preferred these bonds to the six per cent. bonds of any State. I was consequently unable to raise money on the bonds bearing the rate of interest fixed by the statute without putting them upon the market at a considerable discount. After some negotiation, most of the Banks of this State agreed, each in proportion to the amount of its capital stock, to advance to the Treasury at seven per cent. such sum as might be necessary to conduct our military operations. This advance was made upon a statement placed upon the Executive Minutes and a copy forwarded to each, by which I agreed to recommend the Legislature when assembled, to authorize the issue of seven per cent. bonds to each for the sum advanced, payable at the end of twenty years, the interest to be paid semi-annually and the State to reserve to herself the right at her option, to redeem the bonds by paying to the holders the principal and interest due at the end of five years. Upon this agreement, a copy of which is herewith transmitted together with a statement of the sum advanced by each Bank, the wants of the Treasury were relieved and such sums have been advanced from time to time as the necessities of the State required. It is proper that I mention in this connection, that the Central Rail Road and Banking Company through its able and patriotic President, the Hon. R. R. Cuyler, tendered to the State one hundred thousand dollars and took Six per cent. bonds in payment before any other Bank had acted, and at a time when money could not be commanded in the market at that rate. This conduct was alike liberal and patriotic and was followed by agreement on the part of several other Banks, each to take ten per cent. upon its capital stock, to which the six per cent. bonds were issued accordingly. I do not think it right that these last named Banks should be permitted to sustain loss on account of their liberality; and I therefore, recommend that the six per cent. bonds issued to each Bank in this State on account of these sums advanced, be taken up, and that seven per cent. bonds be substituted in their place and also, that seven per cent. bonds be issued to all the other Banks for the sums advanced by them in accordance with the agreement upon which they made their respective advances. This would place all the Banks upon an equality and do justice to each of them.—The part of the loan which has been taken amounts to $867,500. Of this sum $25,000 of the six per cent. bonds were issued to Sharp's Manufacturing Company, of Connecticut, in part pay for carbines purchased from the Company, leaving the sum of $842,500 taken by the Banks of this State upon which only $305,000 of bonds have issued, the balance having been advanced without the issue of bonds upon the contract above mentioned. While nearly the whole amount of the military appropriation had been expended prior to the end of the fiscal year, the receipts from the State Road and from other sources have been such as to meet the ordinary expenses of the government, as well as the extraordinary appropriations of the last Legislature; also to pay part of the drafts upon the military fund, and to leave in the Treasury at the end of the fiscal year, a net balance of $324,099 86. As this sum in the Treasury was not appropriated for military purposes, but is mostly appropriated for other purposes and undrawn, I had no right under the Constitution to draw upon it, and as the military fund was lately exhausted and the perilous condition of the State required large expenditures and prompt action for the defence of the Coast, it became necessary for me to negotiate a further loan with the Banks of Savannah to meet the emergency, till an appropriation could be made. This I thought better than to convene the Legislature in extra session, a very short time previous to the regular session. Under this arrangement, I have received from the Banks of Savannah through G. B. Lamar, Esq., whose services have been of great value to the State both in New York prior to the secession of Georgia from the old Union, and in Savannah since that time, such sums as the service required for the repayment of which it will be necessary to provide out of the military fund to be appropriated at the present Session. The amount advanced is not yet large, but it will become necessary to increase it daily till an appropriation is made to meet the heavy expenditures now being incurred to sustain our troops in the field. I earnestly solicit for this subject the early attention of the General Assembly.

On account of the blockade of our ports, our planters are unable to sell their cotton, which is the great staple production of the State, and brings into the State the money which stimulates and sustains every other branch of industry. The taxes of the people, including the Confederate war tax, must necessarily be far more burdensome this year, than they have been any previous year, in the present generation. Unless something can be realized by the sale of, or by an advance upon Cotton, it will be next to impossible for our people to raise the money with which to meet this heavy burden. Such is the patriotism of our people, and such their zeal in the glorious cause of our independence, that all seem perfectly willing to submit to any amount of taxation, necessary to sustain the Government, if they can raise the money by sale of the products of their labor; but they are not willing to have large amounts of valuable property sacrificed under the Sheriff's hammer, to raise small sums of money to meet their taxes. In this state of things it is the duty of the Government to do all that can be done, to afford relief.

As the best mode of relief which occurs to my mind, I recommend the appointment of an officer of ability and experience, with a competent salary, which will enable him to devote his whole time to the work, who shall be authorized, on receiving satisfactory evidence that any planter has deposited his cotton in any ware house in any interior town of this State, and has insured the same against loss by fire for twelve months, with any solvent Insurance Company in the State, to advance to such planter two thirds of the market value of his crop, to be paid in Treasury notes of this State, secured as above proposed, which are to be received in payment of all public dues, and funded with eight per cent bonds when presented for that purpose, redeemable at the option of the State after a short period.

The law should give the State the control of the Cotton till sold, and make ample provision for the repayment to the Treasury of the principal advanced, with eight per cent interest, the rate paid by the State, when the blockade is removed, and the Cotton sold. This would enable our planters to realize upon their crops, a sufficient sum, to meet their current expenses, and to pay all taxes required of them for the necessary expense of the war, and the support of the Government. I think our people have a right to expect some such relief as I have proposed at our hands; and I most respectfully, but earnestly invoke for this subject the attentive consideration of the General Assembly.

In connection with the foregoing subject, I may remark that my views on the subject of Bank suspensions and stay laws, having been frequently promulgated, are well known to the people of this State.

In ordinary times, and under ordinary circumstances, I believe all such laws are wrong in principle, corrupting in practice, and in violation of that good faith which should characterize all commercial transactions between man and his fellow man. Hence I have, on all previous occasions, withheld my assent from all such enactments; believing that they generally have their origin in unjust speculations; and that they are used by the designing, to wrest from the hardy sons of toil, the just incomes of their daily labor.

But these are no ordinary times. We are in the midst of revolution, and your predecessors have authorized the suspension of the Banks, and have stayed the collection of debts till 1st December next. Our Ports are blockaded so that our planters cannot send their Cotton and other produce to market, and it is impossible for our Banks to import specie at any price, with which to redeem their bills. In this state of things, to require them to resume, is to require an impossibility. It occurs to me therefore, that the most that can be done, is to guard, by proper legislation, as far as possible, against over issues and abuse of their privileges by our Banks during the suspension, so as to cause them to do justice to the people, and prevent their insolvency when they shall, at a future day, be called upon to resume specie payment.

It is also absolutely necessary to extend the stay law between other debtors and creditors. Should creditors be permitted in the midst of the present crisis, by legal process, to bring the property of debtors to sale by the Sheriff, who is required by law to sell for cash, the results would be deplorable. Money is so scarce, that property forced to sale for cash, would not probably bring more than one third to half as much as it would have brought twelve or eighteen months since, when the debt was contracted. This would enable a few heartless speculators, who happen to have funds at their command, to buy up the property of poor debtors, at almost nominal prices; and would cause an immense amount of suffering among helpless women and children, whose husbands and fathers, never anticipating the present state of things, contracted debts when money was plentiful, and the country prosperous, which, had that state of things remained, they could easily have paid; but which their whole property, if forced to sale by the Sheriff, would now be insufficient to satisfy. Many of these debtors, leaving a very small amount of property for the support of their families at home, are now in the Military service of the country, risking themselves, and sacrificing all the pleasures of home, in defence of our lives, liberties and families. I can imagine no greater cruelty, than to permit the creditor in the absence of the soldier, to take from his family, the small pittance left for their support. It is true, few creditors might be so cruel as to attempt this, but the law should make ample provision for the protection of the weak and the helpless, against those who might be prompted by avarice, to disregard the dictates of humanity. I therefore in view of our necessities, waive for the present, all my objections to this character of legislation, and recommend the enactment of such laws, as will continue the suspension, and protect the poor and unfortunate from the grasp of the avaricious and the powerful, till the establishment of our independence shall have relieved us from the embarrassments which have grown out of the revolution.

It is a matter of the most profound regret in the present eventful crisis, when the whole energies of our people are being exerted to the utmost capacity in the cause of our independence, and when thousands of our fellow citizens who have but little except their services to give, have nobly responded to their country's call and rallied to her standard in the field, leaving helpless families behind with but little means of support except their daily labor, that combinations have been formed by hard-hearted and unpatriotic speculators, to buy up and engross almost the entire supplies of the necessaries of life without which neither the families of soldiers nor others, can subsist. So soon as these unprincipled public plunderers have obtained the control of any necessary commodity, they have not only robbed the government by demanding, and compelling it to pay the most enormous profits, but they have wronged our soldiers in the service, by compelling them to pay two or three prices for articles which were absolutely indispensable to their health and comfort, and have raised the prices of many necessary articles of provision at home, till the families of absent soldiers and others who labor for a livelihood, are obliged to live upon the most stinted allowance if not to endure actual suffering, on account of their inability, by their labor, to purchase the necessaries of life. If I have not misconceived the true objects of government, the soldiers in the field from this State, the helpless families of many of them at home, and all others who have suffered by the wicked avarice of these Shylocks, have a right to demand at the hands of the General Assembly, the enactment of such laws as will afford all the relief possible against such cruel imposition in future.

Large amounts of provisions and other military supplies must be furnished to our army during the the ensuing year. If the State submits to these impositions, the prices which she pays will become the ruling prices in the market; and others, however needy or unable, must pay as much as the State pays, or they cannot procure the articles of prime necessity.

I therefore recommend the enactment of a law authorizing the Governor of this State, or any military officer under his command, by his dirrection, (or such other officer as the the legislature may designate,) to seize and appropriate any provisions or other supplies of any character, necessary for the subsistence or comfort of our troops, or for their efficiency in the service, wherever to be found, in the hands of manufacturers, speculators or traders, and to pay or tender to such manufacturers, speculators or traders, reasonable and just compensation therefor, to be fixed by competent valuing agents. The price fixed as the market value of the articles needed by the State, which are also the principal articles needed by the community, would very soon become the general market prices in the State, as the authorities could, on information, seize supplies for the State in the hands of such persons as refused to sell at reasonable prices, and thus bring down those above, to medium rates.

This legislation would not only be compatible with the dictates of humanity and the plainest principles of natural justice, but it would violate no constitutional right of the speculator. The constitution expressly authorizes the government to “take private property” for “public uses,” by paying “just compensation;” and does not require the government, in such cases to pay exorbitant and unreasonable prices.

I commend this subject to your serious consideration, not doubting that you will do all in your power to protect both the State and her citizens against the wicked and cruel designs of those, whom avarice leads to turn a deaf ear alike to the dictates of patriotism and humanity, and who are ready to sacrifice all that is dear to a people to satisfy their own inordinate desire for gain.

It is impossible to bestow too much praise upon our gallant troops now in service. Those of them who have had an opportunity to meet the enemy, have not only sustained the high character of Georgia, but have covered themselves with unfading glory; and many of them, sealing their offering upon their country's altar with their life's blood, have transmitted their names to posterity upon history's brightest page. I have not the slightest fear that we have a single Regiment or Company in the field from this State, that will ever falter in the face of the enemy, or fail to perform the highest deeds of heroism, when occasion is offered for such display. It is a matter of profound regret that a body of such troops as we have sent to the field, should ever lack for anything necessary to their comfort while in service. I have rendered all the aid possible with the limited means at my command, in clothing and making them comfortable; but it has not been in my power to do half as much as I wished to do. He who will consider that our military appropriation for the year just closed was but $1,000,000, and that in addition to the purchase of ordnance, ammunition and other military stores, and the large sums expanded in the organization of the Georgia Regular Army, the State has more than 40,000 troops in the field, over half of whom she has fully armed, accoutred and equipped, besides furnishing valuable supplies to Regiments not armed by her, and paying the expense of some twenty-five hundred of these troops for nearly two months in camp of instruction, will readily see why it has not been in my power to do more.

I cannot close this reference to the condition and wants of our troops, without calling your attention to the necessities of our sick and wounded soldiers in Virginia. We are informed that their suffering has been very great for want of proper nursing and hospital accommodations. A most patriotic association of Georgians has been formed for the purpose of alleviating the sufferings and supplying the wants of the sick and wounded. This association has established hospitals in Virginia and collected large sums of money from our citizens by donations, to sustain these institutions; but the sums which will be required for the ensuing year, will be greater than the association can reasonably expect to raise by voluntary contribution. I contributed out of the military fund $5,000, to assist in the establishment of the Hospital at Richmond; and I recommend such liberal appropriation for the purpose of sustaining these institutions in future, as will secure to the troops wherever they may be, when confined by affliction, all the attention and comfort which can possibly be afforded to persons in their condition.

So great are our necessities for arms and such the difficulties attending their importation, that I again call the attention of the General Assembly to this important subject, and suggest the propriety of either establishing a State Foundry for their manufacture, or of guaranteeing to such Company as will engage to manufacture them, such an amount of patronage as will secure success. I am informed that Col. Isaac I. Moses, a citizen of Columbus, of sufficient capital and great energy of character, acting in conjunction with Mr. John D. Gray, of Catoosa county, whose reputation for energy and enterprise is well known to our people, is perfecting preparations to manufacture at Columbus, excellent Rifles in large numbers, within the next two or three months. It is said they have already made considerable progress in their enterprise and that Mr. Gray can furnish stocks quite rapidly, and that with his aid Col. Moses will soon be able to turn out the guns complete. Should it be found on a thorough investigation of this subject by the military committee, that the enterprise of Col. Moses and Mr. Gray will be successful, I recommend that a contract be entered into with these gentlemen, or with any others who may be prepared to furnish the arms, for such supply as the future necessities of the State may require.

In accordance with the recommendations of a convention of Gun Smiths held at Atlanta, I have appropriated a part of the forges in the machine shop of the State Road, to the purpose of forging gun barrels, and a number of hands are now engaged there in that business. I have also ordered to be procured boring and rifling machines and turning lathes, and will be prepared in a few weeks to make rifle barrels complete. These barrels are to be given out to the gun-smiths, who, under contracts for that purpose are to finish the guns after the pattern of the Harper's Ferry rifle.

Soon after the State seceded from the Union, in view of our perilous condition, and the great scarcity of salt petre and sulphur in the State, and indeed in the South, I felt it my duty to use every exertion in my power to procure the material, without which it would be impossible to make the supply of powder absolutely necessary to our safety and the success of our common cause. After much exertion and great risk, I succeeded in procuring a supply sufficient to make several hundred tons of powder; which was landed in the State a very short time prior to the commencement of the blockade of our ports. A short time after its importation, I offered the powder material and the steamer Huntress to the Secretary of War for the common cause, at their original cost to the State without even charging interest on the money, during the time intervening, between the purchase by the State, and the proposed sale. This proposition was declined by the Secretary. At a later period in the season, I renewed the proposition, with the alternative that if the Secretary refused to take the steamer, which had been purchased by order of the State Convention, and which was no longer needed by the State, the Confederacy having assumed the control of our naval affairs; he could have the powder material without the steamer at its market value. This latter proposition was accepted and the market value of the powder material fixed by the Secretary himself at fifty per cent upon original cost. It was at the time worth in the market, over three hundred per cent upon the original cost, but as it was no part of my purpose to speculate for the State on that which was essential to the success of our common cause, I permitted the Secretary of War to take it at his own price. The State Treasurer had advanced the money to purchase the material at my request, without warrant, and after the sale, as no warrant had passed, I refunded to the Treasury the amount of money advanced by the Treasurer. By this transaction I not only obtained and turned over to the Confederacy at a price several hundred fold less than it could have been elsewhere obtained, a supply of material of very great value, but also made a clear profit of $22,133 70 for the State. As the drafts upon the military fund were much heavier than was anticipated when the appropriation was made, I found it necessary to use this net profit which I had made for the State, in the purchase of provisions and other necessary supplies for our troops. I therefore paid it over to the Quarter Master General of the State, and took his receipt for the amount, which he has expended for the use of our troops, and for which he will account in his report. I have ordered this receipt to be recorded on the Executive minutes and the original to be filed subject to the inspection of any committee, or other person interested.

You are referred to the report of Col. James A. Green, the active and energetic Principal Keeper of the Penitentiary, for a statement of the operations of that Institution, during the past fiscal year. It will be seen that after the payment of all its indebtedness for the year, it has a handsome sum to its credit; and that no appropriation is asked for its assistance or support for the ensuing year.

For a statement of the condition and wants of the Lunatic Asylum, Academy for the Blind, and Institution for the Education of the Deaf and Dumb, you are respectfully referred to the reports of the officers in charge of these Institutions.

As required by the Statute, I transmit herewith the Report of the Trustees of the State University. So large a number of young men, who would otherwise have been pursuing their Collegiate studies, have volunteered, and gone to the army, that the number of students in the University must be expected to be materially diminished during the ensuing year.

I apprehend I need enter into no argument in the present eventful period of our history, to satisfy the General Assembly of the great utility and importance of the Military Institute to the State and to the South. The friends and patrons of the Institute have much reason to be proud of the results of their labor. Most of its graduates hold useful and important positions in the service of the State, or the Confederacy, while some have already sacrificed their lives on the battle field gallantly leading their followers in the hour of victory. I am happy to be able to state that the prospects of the Institute are at present very flattering. Feeling that the State needed the services and military skill of Maj. Capers, the Superintendent during the winter upon the Coast, I have given him a commission as Brigadier General, and assigned him to the command of the second Brigade of Georgia State troops. As it is not probable that the campaign upon the Coast will last for more than six months, it is hoped that General Capers may be able to resume his position in the Institute before the commencement of the next summer. Considering his services of great importance to the State in conducting the military education of our youth, the Board under whose supervision the law has placed the Institute, could not willingly consent that General Capers accept such military commission as would carry him out of the State, and sever his connection with the Institution where his services are so highly appreciated.

To sustain the Institute and place it upon a solid basis it will be necessary that such appropriations be made to endow it as will place the professors' salaries beyond contingency. I commend the Institute to the enlightened statesmanship, and fostering care of the General Assembly.

The annual appropriation of one hundred thousand dollars, and the dividends from the Bank Stock belonging to the State, and the interest upon the educational bonds, amount in the aggregate, to $145,054 00 for the past year. This will be distributed among the Counties for school purposes, unless the Executive shall be otherwise directed by legislation anterior to the day fixed by law for the distribution. While our financial embarrassments growing out of the war may be very considerable, I entertain the opinion that it would be better for the people to submit to the additional taxation necessary to raise this sum, than to withhold it from those entitled under existing legislation to participate in its benefits.

The new Constitution proposed by the State Convention on the 23rd day of March last, while in session at Savannah, was, by my proclamation, submitted to a vote of the people of the State for ratification or rejection, on the first Tuesday in July last. The vote cast was quite a small one, owing doubtless, to the fact, that the thoughts of our people were so much engrossed with the war, that little attention was given to any other subject; and as the Constitution had received tne sanction of the Convention, composed as it was of so many of the brightest intellects, and best men of the State, the people were, it would seem, generally willing, to ratify their action without serious opposition. The election returns received at the Executive Department, show the following result:

After the result was known, on the 20th day of August last, I issued my proclamation, as required by the resolution of the Convention, declaring the proposed Constitution to be the Constitution of this State.

For a statement of the condition of the Western and Atlantic Railroad, the General Assembly is referred to the report of the late able and faithful Superintendent, Dr. John W. Lewis, whose resignation took effect with the end of the fiscal year of the Road, on the 30th of September. Maj. John S. Rowland, of the county of Cass, who has been appointed Superintendent, is energetically and faithfully engaged in the discharge of his duties. The other able officers of the Road generally remain in their positions as heretofore. Their past fidelity and efficiency, together with the well known character of the Superintendent for honesty, integrity, practical business sense, and financial ability, are, I trust, sufficient guaranty that the future management of the Road will be faithful and successful. If the Blockade is continued so as to prevent all exports of produce, the falling off of freights during the ensuing year will probably seriously affect the income of the Road.

At the last session of the Legislature, a resolution was adopted, directing me to re-open negotiations with the authorities of the State of Florida, in regard to the boundary line between the two States, and to urge the adjustment of the disputed line, so as to “protect the rights of citizenship of the people residing near the line, who have been recognized by the laws and constitution of this State, as being citizens of Georgia, and so as also to protect the titles of citizens to the lands which they hold under grants issued by the State; and to have, if practicable, the boundary fixed so as to retain and keep the fractional lots of land sold by Georgia, within the jurisdiction of this State.” Owing to the fact that the energies of both States were taxed to their utmost capacity by the existing war, and that the official term of Gov. Perry was near its expiration, I delayed action till after the inauguration of Gov. Milton, when I transmitted to him a copy of the resolutions of our last Legislature, and invited his attention to the subject. He replied, that he would lay the resolutions before the Legislature of Florida. I transmit herewith a copy of the correspondence, which is all that has transpired since the adjournment of the last session. Should I receive notice of any action on the part of the Legislature of Florida on this subject prior to your adjournment, you will be promptly informed of the fact.

The twenty-fourth section of the Act passed by the Congress of the Confederate States for the collection of a War Tax, is in these words:

“If any State shall, on or before the first day of April next, pay, in the Treasury notes of the Confederate States, or in specie, the taxes assessed against the citizens of such State, less ten per centum thereon, it shall be the duty of the Secretary of the Treasury to notify the same to the several tax collectors in such State, and thereupon their authority and duty under this Act shall cease.”

In a previous part of the Act, provision is made for the appointment of Assessors by the Confederate Government, and the valuation of taxable property in each State. It would seem, therefore, that there is no way of ascertaining the amount which each State is required to pay till this assessment is made. After this is done, and the sum for which the State is liable is known, each State may pay this sum into the Treasury, in gold and silver, or Confederate Treasury notes, less ten per centum, and thereby prevent the collection of the same by Confederate officers. While I would have greatly preferred that Congress should have apportioned the sum to be raised among the States, without the intervention of Confederate Assessors, it is much better, in my opinion, that we at least prevent the Confederate Tax-Gatherers from making their appearance among us, when we can save ten per centum upon the whole sum by collecting it under State authority, and paying it into the Confederate Treasury; and I think it would be more satisfactory to our people that they be visited by the Tax-collecters of but one Government. I therefore recommend such legislation as may be necessary to secure the collection of Georgia's quota by her own State Collectors, either those who collect the State tax, or others to be appointed by State authority for that purpose, and its payment, when collected, into the Confederate Treasury. The State Collectors could afford to do the labor for a very small per centum on so large a sum. While the State, by the adoption of this policy, would act upon a principle alike compatible with her dignity and sovereignty, she would save to her Treasury a very considerable sum in the difference between the actual cost of collection, and the sum allowed her on that account. Should it become the policy of the Confederate Government in the future, to abolish our tariff system, with all the expense and corruption that attended the system in the old Government, such a course might greatly lessen the expenses of the Government, and cause the people to hold their public servants to a much more strict accountability for wasteful expenditures; and in that event, I am of opinion that the amount necessary to the support of Government, should be justly apportioned among the States, and each State should be permitted, by her own Collectors, if her people prefer it, to raise her own quota, and pay it into the Treasury, without the intervention of Confederate Collectors.

The contest in which we are engaged must, it is admitted by all, result in our political independence. But our deliverance from political bondage will be of little advantage if we remain in a state of commercial dependence. If our exchanges at the end of the war, are still to be made through New York and other Northern Ports; our Cotton shipped upon Northern ships by way of New York to Europe; taxed with increased freights, insurance, commissions, wharfage, and other incidental expenses incurred upon that route; and our goods imported over the same line burdened with the usual expense to us, and profits to the Northern merchant, which must result from indirect importations; we shall remain in fact, subject to Northern rule, and our political destinies will soon be controlled by those who have our commercial interests under their power. This evil can only be prevented by the inauguration of a system which will secure direct trade and direct exchanges with Europe. It is a question well worthy the consideration of Congress, whether this object cannot be better accomplished by the establishment of free trade with all the world. Your predecessors, at the last session, duly appreciating the importance of this question, passed an act incorporating the “Belgian American Company,” and authorizing the Governor to pledge the State to secure to the Company what was considered reasonable profits on the amount invested in a line of steamers to run direct between Savannah and some commercial point in Europe, provided the guarantee of the State should not exceed one hundred thousand dollars, per annum, for five years. The act also made it the duty of the Governor to appoint a Commissioner to Europe to negotiate an arrangement for the line. In obedience to this requirement of the statute, I appointed the Hon. T. Butler King, Commissioner, and sent him to Europe early in the Spring. I have received but a single dispatch from Mr. King since his departure. In this, he informs me that he has forwarded several others which I have not received.

As it is imposible to foretell what may be the result of Mr. King's mission, I beg leave to call the attention of the General Assembly to the fact that an association of Georgians of high character, and well known financial and commercial ability, is now being formed, for the purpose of establishing at as early a day as possible, a line of steamers between Savannah and such commercial port in Europe, as offers the greatest inducements and facilities for direct trade and intercourse.

If the legislature will incorporate the company and subscribe, for the State, $200,000 to its capital stock, and grant to it a subsidy of fifty thousand dollars per annum, for five years, I am informed that the whole capital stock will be at once taken, and the ships purchased, ready to be placed upon the line immediately after the removal of the blockade. This would cost the State less than she has proposed to guarantee to a foreign company. And as the line in this case, would be owned jointly by the State, and an association of her most enterprising citizens, there would seem to be weighty reasons, why our people should prefer it, to any line controlled by foreign capitalists, who would have no preference for a Georgia port as the American terminus of the line, if superior inducements should at any future time be offered by any other Southern city.

He who has read history attentively, and studied carefully thetheory of Government, can have but little difficulty in arriving at the conclusion, that a Republican Government can only be maintained upon the basis of domestic slavery. The assertion, so often repeated, that our people are competent for self government, is no doubt true when properly qualified; but if it is intended by the term, “people,” to include the whole people, and to permit all of every class white and black indiscriminately to exercise political rights, it is then doubtless untrue. The capacity of the people for self-government, depends upon their virtue and intelligence, and the experiments made in France and other enlightened countries, where domestic slavery is not tolerated, have shown that sufficient virtue and intelligence never exist to enable the people to perform the task, when the whole mass of the people of every class are permitted to participate actively in the affairs of the State. Hence, the general rule, that a country which does not tolerate domestic slavery, is governed by monarchy. It is admitted that the opposite of the rule is not always true, as some countries, like Brazil and Spain, tolerate domestic slavery, and are governed by monarchy. Nor is the rule itself probably without a single exception, as in the case of Switzerland, which, on account of its peculiar locality and condition, is tolerated as a republic by the other governments of Europe.

Take, as an illustration, the people of the Confederate States, and of the United States. We say the people of the Confederate States are competent to govern themselves. This is true in the sense in which the expression is used; but if we use the term “people” in its broadest sense, and embrace the four millions of negroes as a part of the people, entitled to exercise political rights, then it is not true. The people of the United States are intelligent and enlightened, but the whole people, including menial servants, imported paupers, and free negroes, all under their theory possessing and exercising equal rights and equal power at the ballot box, are certainly incompetent to govern themselves. Hence that government must soon terminate in monarchy.

Intimately connected with the above cause, is another that must tend to hasten the result. I allude to the irreconcilable conflict, which, under their domestic system, exists, and must continue to increase, between CAPITAL and LABOR. There, the capitalist who desires to employ labor has no interest in the person of the laborer, but only an interest in his day's work. He is under no obligation other than the common dictates of humanity to provide for the wants of the laborer or his family in case of sickness or other misfortune. It follows that it is the interest of the combined capitalists of the North to depress the price of labor and procure work as low as possible. On the other hand, the laboring class is interested in keeping up the price of labor. In this conflict, if the laboring class strike for higher wages, when prices are no longer remunerative, the competition for employment which will be produced by the annual importation of very large numbers of foreign paupers, will give the capitalists greatly the advantage in their-efforts to maintain low prices. This, together with the consequent necessities of the laboring class, will naturally foster the agrarian feeling already engendered, and the conflict will become constant and bitter. The laboring class including the lowest menial servants, and naturalized foreign paupers, being voters will naturally have the advantage at the ballot box, on account of their superiority of numbers. This will induce the capitalists, on the other hand, to use their money freely to influence the elections which will be productive of increased rottenness and corruption in the body politic. Riots and mobs will grow out of the contest, till thinking men, discovering the tottering basis upon which society rests, and the insecurity of property, will naturally be induced to seek protection in a stronger form of government.

Amid this chaos and confusion, in the throes of revolution, some master spirit with great ability and ambition, will attract attention and win popular applause. This will place him in position to command, when appealing to the necessities of the capitalists he will engage to make his sword their protector, and to distribute the honors of the Empire among them, if they will make their gold the pillars of his throne. The result will be, that the country will seek repose in the downfall of Republicanism, and the establishment of Monarchy.

The very opposite of all this is true in the Confederate States. Here, domestic slavery is a fundamental part of our social system. We have over four millions of negroes who are the menial class of our society. They have no political rights and seek none; they take no part in the Government, but are a dependent class, generally contented and happy, having all their natural wants supplied by those who are responsible under our laws for their humane and kind treatment. In case of sickness, or permanent bodily infirmity, they are not left as are the paupers of the North, to the cold charities of the world, for the necessaries of life; but public opinion and the laws of the land, compel their owners to make provision for their wants and to treat them with humanity and kindness. Here the white class is the ruling class. When we say our people are competent to the task of self-government, we mean white people. But it may be said, the paupers of the North, who participate in the government, are generally white people. This is admitted, but many of them are white people of the lowest menial class; so low that there is no class below them, and they lack not only intelligence but pride of character. Hence their votes are bought and sold in the market. With us every white man, whether native or of foreign birth, feels and knows that he belongs to the ruling class, and that there is a menial class of millions of persons entirely below him. This inspires him with pride of character which fits him to participate in the political affairs of the State. If there are individual exceptions to this rule, they are not sufficiently numerous to be severely felt, or to affect materially the results in the choice of rulers. Again, instead of perpetual conflict under our social system between capital and labor, we have the most perfect harmony. We have few capitalists who are not slaveholders. Each slaveholder has an interest not only in the day's labor, or the week's labor, but in the person of the laborer; in his flesh and his blood, his muscle and his bone; in a word, the man is his. If, therefore, the labor of the man is worth one dollar per day, the man, himself, is worth one thousand to fifteen hundred dollars, and he who owns one hundred of these laborers is a rich man, and enjoys all the importance and position, which wealth gives in society. Reduce the price of labor to fifty cents per day, and you greatly reduce the value of the laborer in the market, and in like proportion, you reduce the value of the estate of the owner. If you reduce the price of labor to twenty-five cents per day, the laborer cannot, by his labor, comfortably support himself and family. In this case, as his labor is worth nothing to his owner, he is valueless, and the person who owns one hundred such laborers with the responsibilities attaching to the ownership, is not only poor, but has a heavy burden annexed to his poverty.

As most of our slaves are owned by men of capital, and as capitalists, like other men, look to their interests, and as the value of the estate of each slave-holder depends upon the value of labor, it becomes the interest of the combined capital of the country to keep up the price of labor to sustain the value of property. The poor white laborer is also interested in keeping up the price of labor, as he has to work to support himself and family, and if he is intelligent and examines this question, he cannot fail to see that the surest way to keep up the price of his own labor, is to sustain the institution of slavery. If the labor of the negro is worth in the market one dollar per day, the labor of the white man is worth more, or certainly as much; and while the institution of slavery is maintained, every capitalist in the country who owns slaves, is interested in, and will use his influence to keep up, the value of labor, and the poor white man gets the influence of his more wealthy and powerful neighbor in sustaining the price of his labor. On the other hand, if slavery is abolished, it becomes in the South, as it now is in the North, the interest of the combined capital of the country to depress labor, and get it as low as possible, as the capitalist would then be no longer interested in the person of the laborer, and the value of his estate would be no longer dependent upon the price of labor.—The interest of the capitalist in the last case, would be to get labor low, and as the negro would, when free, be placed nearer a state of equality with the white laborer, and would have a right to make his own contracts, he would come into direct competition with the poor white laborer, and would soon under-bid him, and reduce the price of labor to as low a rate as would sustain life. This would bring ruin upon the poor white man, and degrade his family far below their present condition. It is very clear, therefore, while the institution of slavery exists, that it is the interest of the rich man to sustain the price of the labor of the poor white laborer; and that it is, for the same reason, the interest of the poor white laborer to sustain and perpetuate the institution of negro slavery. In other words, the rich and poor are alike interested in sustaining slavery and in sustaining the price of labor. The slaves themselves are also interested, as they are more civilized, more christianized, and in a better condition than the like number of their race ever were in any other country or climate. If the price of labor is high, and the slave is worth a high price in the market, the owner has a heavy pecuniary interest in addition to the common sympathy of our nature to prompt him to treat the slave well, as his value to his owner depends upon the preservation of his life and health, and these depend much upon the manner in which he is clothed, and fed, and attended to in sickness.

From the foregoing reflections, it naturally follows, that our whole social system is one of perfect homogeneity of interest, where every class of society is interested in sustaining the interest of every other class. We have all the harmonious elements necessary to the perpetuity of that republican and religious liberty bequeathed to us by our fathers; with none of the distracting and conflicting elements which must destroy both in the Northern States, and which have already precipitated the country into a bloody revolution, and attempted to hurl to the ground the fairest structure ever dedicated to Liberty on the face of the Globe. To sustain this priceless heritage is the highest earthly duty of the christian and the patriot. Ruthless and bloody hands have been laid upon it. To wrest it from them may cost hundreds of millions of treasure, and many thousands of the most invaluable lives of the South. But he who would stop to count the cost, would do well to ask himself what is my property worth when I am a slave? or, What is my life worth, if, by saving it, I must transmit a heritage of bondage to my children? If we are conquered, our property is confiscated, and we and our children are slaves to Northern avarice and Northern insolence. Sooner than submit to this, I would cheerfully expend in the cause the last dollar I could raise, and would fervently pray, like Sampson of old, that God would give me strength to lay hold upon the pillars of the edifice, and would enable me while bending with its weight, to die a glorious death beneath the crumbling ruins of that Temple of Southern freedom which has so long attracted the world by the splendor of its magnificence.