Grand Rapids Herald-Review Newspaper, January 14, 1899, Page 3

iz ' } | | } « j t | ' a GOV. LIND’S FIRST MESSAGE THE EXECUTIVE MAKES SOME IM- PORTANT RECOMMENDATIONS. Whe Subject of Taxation Is Exhaust- ively Discussed and Suggestio; Are Made Looking to a More Equitnble Levy—Taxation of Rail- roads Cores in for a Fair Share of Attention and Important Changes in the Law Are Urged— Wisconsin’s Plan for the Care of the Insane Is Favored—Practice of Issuing Railroad Passes Should Be Stopped — Direct Legislation Receives Consideration, The following is Gov. Lind’s message: Gentlemen: of the Senate and House of Representatives: Among the important duties which you have been commissioned by the people of this state to discharge, and one that cannot be delegated or de- ferred, is to provide the necessary monies for defraying the expenses of govern- ment, and for the support of our schools and state institutions. Pursuant to law, the sta uditor has submitted his esti- mate of enue receipts for the ensuing biennial period, based on a tax levy of one and one-half mills. This rate, accord- ig to the estimate, will produce $2,569,000 in the first year, and leave a surplus of 000 over and above estimated dis- burssments; in the second year, $2,655,000 ‘vith a surplus of $110,000. The estimated surplus for the two years, aggregating $289,000, limits your appropriations for new buildings and other original expendi- tures to a ‘sum within those figures. ‘While it is conceded that this estimated surplus is not excessive in view of the urgent necessity for increased facilities in scme of our institutions, I venture the prediction that the rate suggested will produce a much larger amount than esti- mated under a stricter administration of cour tax laws governing the return and as- sessment of personalty. A reform in that even though you should not see ange existing law, is imperatively y. Besides, there is an extensive in for a legitimate and material in- crease in the revenues of the state in a ner which will not impose any new ens on our people, or on industry, as will be su ted farther on. If you avail rsel of these sources, I feel confi- \dent that you can safely reduce the levy by 3-10 of a mill, and the state still realize \in excess of the estimate. The taxpayers j@re entitled to a reduction in view of the h of the state in population .and wealth, and I earnestly recommend that it be made. This recommendation is not made in a spirit of indifference to the de- m ig of at liberal progressive policy cteristic of our people in views neerning public expendi- but because it is earnestly believed t the adoption of the measures for additional revenues, and of reform in the adn on of our state institutions, herein recommended, will result in in- creased revenues on the one hand, and a reduction of expenses on the other, and by that means leave a larger sum availa- ble for new undertakings than would re- sult wi the practices now in vogue. Taxation. The subject of (nxation is one so vital to the state, so important to the people that it always merits the most earnest consideration of both legislaure and ex- ‘the observations submitted are i ief and lacking in detail, but in a general way the views tive as required by the con- they exp: of the execu stitution. ‘The state, which under our institutions is tho people in their organic capacity, prescribes the conditions upon which the individual shall take, hold and enjoy pri- vate property. One of these conditions is that the state may appropriate from welfare, part of such property public good. ion by the state of the property of the individual. It is only justified when ex- ercised for public purposes, and in pur- suance of express law. ‘The question in behalf of what objecis state taxation should be imposed presents few lifficul- ties. As to our public schools, the admin- istration of justice and of public affairs, our dependent and reformatory institu- tions, public buildings and highways, and many otber public objects, we feel in- stinctively that they are mattess of public ; concern, and that reasonable appropria- for thosa purposes are for the public performed when w rroper objects for the equally important that quired for these purpo: hall be levied and taken from sucb sources that its col- lection, in itself, will not be a detriment and menace to the public welfare. A good cnd does not justify questionable means. In our generous public-spirited haste to provide for the many meritorious objects of the public care, we have been so intent on the end that we have over- looked the me The truth of the mat- ter that our state is to-day exacting taxes on the little stock, tools, imple- ments—the means of subsistence—of num- bers of our citizens who are struggling to support themselves and their families, while thousands who possess great wealth escape. Besides the inherent injustice of this, the state can ill afford to have those already battling for an independent exist- ence loaded with additional burdens which will sooner or later transfer many of them into the dependent classes. That this condition of affairs exists, the most cursory investigation of the subject will show. It is no more just or candid to charge ‘this to the depravity of the wealthier members of the community than it is to cry demagogy whenever the subject is brought up. It is in my judg- ment a condition resulting from the new forms that wealth has assumed under the remarkable progress and the economic changes which have taken place in this century. It is not a subject for a decla- mation or invective, but for patriotic, speedy solution, now and here, and as rapidly as the forms of our institutions permit. In the early days of the republic, when the principles were formulated which still control our methods of taxation, visible property constituted the property of the community. Wealth meant houses, lands, implements and _ cattle. Franchises, bends, stocks and securities were prac- tically unknown. To-day they constitute according to conservative estimates por- haps 89 per cent of personalty wealth. They are owned by the wealthy. As a rule, they escape taxation, not because they are the property of the rich, but because the assessor cannot get his cycs on them. The producer, on the other hand, ‘cannot ccnceal his stock. or the implements of his trade, and they are taxed. The patriotic desire to voluntecr tribute to the state is probably no great- er in the on@ than in the other. To illu: trate, let me cite you to the last pub- lished report of our state auditor. The Icans and credits of the private banks, brokers and stock jobbers in the state were returned and assessed at $383.636, while the sewing rachines were valued at nearly twice that sum. All the bonds and stocks, other than bank stocks, were re- turned and valued at a less sum than the yeerling calves, and less than double the Nalvation of the dcgs over six months ave selected te’s care. It is the money re But your duty and mine is only } i old. Judging by comparison and by data from other states, it is safe to assume that the value of the personal property in this state is nearly as great as that of the realty. As returned for taxation, the figures are in rourd numbers: real prop- erty, $500,000,000; personalty, $100,000,000. To get at the remaining personal prop- erty, or to substitute some other method of obtaining revenue more just and efti- elent than the present antiquated system of taxing personalty, is the problem. To solve this, I believe with my predecessor that a commission should be appointed. If action were taken by you in that be- half at once, a repert might be obtained in. time for consideration at this session. Corporate Taxation. . Akin to the question discussed, but sep- arate and distinct from it, and not in arywise dependent upon its disposition is the subject of licensing and taxing corpo- rations. By wise and well considered leg- islation on this subject, you can obtain an amount of revenue that will more than make up for the proposed reduction in the tax levy and which will, with other corporation taxes, in the course of time increase the permanent revenues of the state to such an extent that a direct tax for the revenue fund can be dispensed with. Our law now requires the payment of a minimum incorporation fee of $50 to obtain a corporate charter, and in ad- dition, one-tenth of 1 per cent on the capitalization in excess of $50,000. ‘Thts~ provision is bringing large sums of money in to the treasury annually. It can and should be extended to foreign corpora- tions doing business in this state. This would only be a measure of justice to ourselves and to «ur own business in- terests. The license lee should be nni- form with that imposed on our domestic ccrporations and may then be collected en the entire capital stock of the foreign corporation, or on that portion of the capital engaged in bvsiness in this state, as is the law in New York. Either course is valid, and has been sanctioned by the courts of last resort, both state and federal. Much of the time of our courts, especially in the rural districts, is occupied by litigation brought by for- eign corporations, who in the past have contributed nothing tothe expense of government. This license.fee, like that collected upon the issuance of a domestic charter, would be payable only once. In addition to this, many of our sister states levy and collect an annual fran- chise tax upon corporations. Domestic corporations and foreign corporations do- ing business in the state are alike subject to it with such exceptions as the legis- latures have chosen to make. This, it seems to me, is one of the most available as well as legitimate sources that you can turn to for revenue without burden- © ing the individual citizen. The tax, in itself, is a just one, both on economic grcunds and from the standpoint of public policy. It is one of the easiest taxes to collect; practically self-enforcing. If a domestic corporation refuses to pay, such refusal can be made cause of the forfeiture of the charter. In case of the foreign cor- porations, they can be denied the process of our courts. This is the law in New York. What has been said with reference to domestic corporations applies with greater force to the numerous foreign corporations doing a large and lucrative business in this state; such as the various machine companics, the loan companies, the various trusts, and mining companies in the northern part of the state. It is not necessary that all corporations should be subjected to the tax. ‘Those in regard to which the state has adovted a special method of taxation should be ex- cepted. New York also excepts manu- facturing companies which carry on the business of manufacture wholly within the state. But these are matters of de- tail to'which it is not deemed necessary to further call your attention, ‘The legislation now in force for taxing express, telegraph, telephone and sleeping! car companies in this state is in my judg- ment radically defective and should be revised. The rate imposed of 3 per cent on gross earnings computed solely on lo- cal business—“‘originating and ending within she state’’—is grossly inadequate. Most of the railroad companies pay 3 per cent of their gross earnings including the interstate as well as the local. The earn- ing capacity and rate of profit on the actual capital invested in the monopolies ; referred to are certainly greater than in time to time, as required by the public | paiiroading, and there is no good reason for the | Taxation is such appropria- ! why the state should not collect a fair proportion of its revenues from that source, It is not alone the rate of taxa- tion imposed upon these monopolies (I use the term monopoly in its economic sense) that needs revision. It is the b: for computing. it which is wrong. Situ- ated as is our state on the highway of commerce between two oceans, with our large centers of population near the state lines, it is but a smaijl proportion of our business that is strictly local, that is to originating and ending within the boundaries of the state. Un- der these circumstances, the business done wholly within the state is manifestly no eriterion by which you can judge either of the actual intrinsic value of the prop- erly subjected to taxation, or the actual amount of revenue derived from its use, both of which items are, factors in making a proper estimate of its value and of the revenue which should be exacted by the state. Besides, this basis for com- puting taxation is necessarily capable of gross abuses. Our law was evidently copied from the Wisconsin law. Un- der the Wisconsin law, which lim- its taxation on sleeping car com- panies to the gross earnings from busi- ness originating and ending wholly with- in the state (the same as ours), the com- panies ‘have adopted a rule by which they refuse to sell sleeping car tickets from a point within the state to a point near the state line when there is a city beyond the state line, but insist for instance, on sell- ing a ticket for Madison to Duluth to pas- sengers going to Superior, as I discovered by personal inquiry. A system that leads to such subterfuges cannot be reformed tco speedily. To impose a percentage tax, or any tax levied directly on the gross earnings, state and interstate, of these monopolies, would be held a violation of the federal con- stitution. The tax, whether it be a 3 per cent or a greater rate, should be comput- ed on a yaluation of the corporation’s property employed in its business in this state. The method for arriving at such valuaticn, and the only plan by which a proper rate of taxation can be fairly and legally imposed, is according to the provisions of chapter 10) of our !aws for 1897. This act appears to have been care- fully drawn, is in admirable form, and similar legislation has been upheld by the supreme court of the United States on appeals trom the statas of Maine, Penn- sylvania, Indiana and Ohio. A change in the basis for computing these taxes to that prescribed in the chapter referred to, and which I earnestly recommend, would inerease the revenues of the state from this source alone not less than §75,000 over the auditor's estimate. Railroad Taxes, Another branch of taxation that de- mands your earnest attention and well considered action is that of the franchises and property of corporations engaged in transportation by railroad in this state. I believe it has been the practice since the ear days of the commonwealth to cov- er taxes derived from this source into the state revenue fund. I deem this a wise plan, and believe that it should not be de ed from. There are several { methods ip vogue for taxing this class of ' property in the different states in the Unien. One is on the basis of a valuation arrived at substantially in the same way as other property is valued for taxation purposes. The other, and the mode which has always prevailed in this state, is by levying a certain percentage on the com- pany’s gross earnings. The latter mode, it seems to ma, is the more just to the raflroads, as the earning capacity of a property of that character is necessarily the dominating factor in determining its value for any purpose, as well as for as- certaining the share of the public burden which should equitably and justly be as- signed to it. The total amount of taxes paid on the gross earnings of the railroads in this state for the year ending Dec. 31, 1897, Was $1,127,950.24. The mileage is some- thing over six thousand miles. A valua- tion of the railroad property in the state, in the same proportion that other prop- erty is valued, would probably not fall below $10,000 per mile on an average At this low valuation, a rate of taxation, the same as is imposed on other property in the state, 24 mills on the dollar, would have brought $1,440,000 for the current year. So it will be seen that our rate of taxation on railroad property on the basis of valuation is only about two-thirds that of the other property in the state. You will also find upon investigation that our rate of taxation by percentage on the gross earnings is much below the rate that prevails in our sister states, which are within the domain of the systems transacting most of the business in our state. All of our railroads, with the ex- ception of possibly one, are interstate reads and are not operated with reference to state lines but as systems. The com- panies do not keep separate xccounts in each state. For the purpose of taxation théy"Apportion the gross earnings of the® system among the several states through which they run in proportion to the mile- age in each. This is the only practicable way and is approximately correct and fair. So far as our railroad traffic is con- cerned, we are to all intents and purposes one jurisdiction wita Northern Illinois, Iowa and Wisconsin, and to some extent with the states west of us. This group of states are on the whole traversed and dominated by the same systems, and the business of each system operating within the group is treated as a unit. Our state is therefore (aside from the need of rev- enue) interested In seeing to it that it obtains substantially as large a propor- tion of the earnings of these companies for the support of its government and in- stitutions as is taken by the other states in the group. If we do not insist upon this, we simply compel our people to help pay taxes in the other state. If our rail- roads were confined in their business oper- ations wholly within the boundaries of this state, the rate of taxation imposed would perhaps not be so material, for a high rate of taxation would necessarily in the course of time, be | reflected in higher transportation rates; so also a lower rate of taxation would have a tendency to produce lower trans- portation rates, but inasmuch as we are part and parcel of the states referred to for transportation purposes, we cannot in justice to ourselves be governed by any such considerations, unless they are also heeded by other states in the group. Iowa and Illinois have already secured materiaily lower transportation rates than we have. If we continue to also per- i mit them to exact higher rates of taxa- | it . siderations that will commend this sub- tion from the railroads which operate in those states, and in ours, than we collect, manifest injustice will be done to our people. The maximum rate of gross carn- ings tax in Illinois is 7 per cent; in Wis- consin 4 per cent, in Iowa 4 per cent, in our own state 3 per cent. The average rate actually collected in the several states is 2.8 per cent in Minensota, 3.5 per cent in Wisconsin, 3.6 per cent in Iowa, 6 per cent in Illinois, as appears by the statement fernished by the board of railroad and warehouse commissioners. The average rate of gross earnings tax collected in the three states named is over 4.3 per cent; more than one-third higher than the rate imposed in this state. In other words, if the railroads had been subjected to the same rate of taxation in this state as the average of the rates in Iowa, Wisconsin aid Lilinois, we would have received last year ove! $1,700,000, instead of something over $1,100,000. This is a condition of affairs which neither the legislature nor the ex- ecutive can ignore. I am also advised that notwithstanding the fact that Wis- consin already collects a much larger rate than we do, and on a ‘ess volume of business, the executive of that state will urgently recommend to the iegislature at the ensuing session to increase the rate now in force, to keep pace with the in- crease in ths rate of taxation upon other property in the state. That, also, is a feature that should not be lost sight of, for increased taxation and higher civili- zaton go hand in hand. That some action be taken by your body upon this subject at this session is imperatively necessary. This, for the reasons stated, as well as for the fact that the laws now in force are unequal and unjust in that they discriminate be- tween the different companies in the state. The Chicago Great Western railway, which is operating under an old territo- rial charter, which fixed the rate of taxa- tion at 2 per cent on the gross earnings, has not accepted the provisions of the “Stillwater act,”” undes section 1 of chap- ter Il., of the General Laws of 1887 and therefore contends that it is liable to pay only 2 per cent. As we have no general provision of law imposing the 3 per cent gross earnings tax, it is probably right m its contention, at least, it has prevailed with the state authorities up to this time, and it is therefore imperatively necessary that legislation should be en- acted to cover this case. I am fully aware that the argument will be used before you that it is unsafe to attempt any revision of the gross earnings tax law in this state; that by so doing you will jeopardize the benefits that the state now derives from that method of taxation. From the facts stated, you may conclude that these ben- fits are not on the side of the state. It will also be well to bear in mind that the same argument was made in opposition to the Anderson bill. It should be at a discount by this time, There is no question but that the com- panies will much prefer to pay a reason- able gross earnings tax than to have their property and franchises taxed upon a valuation. They have chosen that coursa in Wisconsin and other states, though the rate as I have shown is much higher than the rate that prevails here. But if it is feared that any company might re- sist the payment of a higher gross ear- nings tax than is now levied on the ground that it is in violation of federal law to impose a tax upon the income from interstate commerce, and as a pre- caution, you can readily obviate this dif- ficulty by also enacting an alternative mode of taxation, providing: That in the event that any railroad company, subject to the payment of taxes in this state, shall refuse to adopt and abide by the rates of taxation on gross earnings which you establish in commutation of other forms of taxation, then the property and franchises of such corporation shall be taxed upon valuation the same as other property in the state, and at the average rate of taxtation in the state; thus leav- ing it to the corporations themselves to determine whether they will pay taxes on a valuation, the same as other prop- erty in the state, or accept your gross eurnings commutation plan in lieu of that form of taxation. You could go one step farther and authorize the companies to fix their own valuation with the proviso that the valuation so fixed should, be the valu- ation and basis for determining transpor- tation rates as well as for taxation. With such an alternative before them, you need have no fears that they would reject any reasonable gross earnings rate. They understand, as well as every law- yer in your body, that they cannot escape payment in one form or the other, and they will be glad to avail themselves of the gross earnings tax as the least bur- densome. Otherwise, it means the more money for the state treasury. Thus far, I have only discussed matters relating to the better adjustment of the burdens of taxation and the sources to which you can look for additional revenue to meet the growing wants of our pro- gressive state without further burdening persens or property directly engaged in production. Intimatcly connected with this inquiry and equally important is the subject of utilizing to the greatest ad- vantage to the people of the state, the monies raised by taxation. By well considered legislation, the state may be able to so utilize its different re- sources for raising revenue by taxation that the rate may be reduced and still an increase secured in the revenues. But it is idle in a young state like ours with a constant and rapid growth in population to speak about decreased expenditures. What we can reasonably hope for, and what we should insist upon attaining, is not necessarily a reduction in aggregate expenditures, but a system of manage- ment and administration in all public af- fairs that will give the people the great- est possible efficiency and the largest pos- sible returns for the money expended. This is as true with reference to our schools as it is in to our correc- tional and charitable institutions. Education. The educational interests of the state have kept pace with the other factors in its growth and development in a most gratifying degree, as appears by the re- port of the superintendent of public in- struction, which, with the recommenda- tions therein contained, I commend to your attention. The cause of education is so close to the heart of the patriotic Minnesotan, and has so continuously re- ceived generous treatment at the hands of our citizens, both in the legislature and without, that it is not deemed neces- sary for me to specially solicit your eon- sideration for this subject, as I am sure that you are already determined to exert your every power and resource to extend its efficiency and benign influence. I would merely caution you that in alli leg- islation and appropriations for this sub- ject, it is as necessary, as it is in every other deyartment, that your liberality be prudent, and that you look to the future as well as to the present. : Our university has continued to pros- per. All the colleges embraced. in it are making. latidable. progress in the extent and methods of their work. Its growth and increase im attendance has been more rapid than its most sanguine friends an- ticipated. The enrollment in the year 1897-8 was 2,890, an increaso of 432 over the previous year. This rapid growth will necessitate mew buildings, and ad- ditional facilities. The report of the presi- dent and of the board should receive your careful consideration. In addition to the specific recommenda- tions submitted by the superintendent of public imstruction, all of which merit the earnest consideration of both legis- lature and executive, I would specially commend to yeur consideration the sub- ject of preparing and publishing on state account the school books required in con- nection with our free text book system. it seems to me that ‘there are many con- ject to your favorable action, First and foremost, on the sccre or economy. ‘The prices exacted by the school book trust are simply exorbitant. The present sys- tem with its well known practices and abuses is corruptive of public morals and destructive of that absolute confidence in the integrity of school officers and teach- ers that should prevail to give their work and word the greatest efficacy. The typo- graphical and mechanical work imcident to the publishing of our own text books by the state would be in itself a great help to our labor. By the co-operation of the intelligent educators of the state, a system of text books for the primary and grammar grades, at least, could be prepared at comparatively small expense, that would be indefinitely better adapted to our situation and our scholars than matter compiled in the Hast or elsewhere outside the state. State Institutions. It is not deemed necessary to call your attention specifically to the reports of the various state institutions. The manage- ment of the state prison shows most gratifying results. The net gain in earn- ings over expenditures is a phenomenal showing, and there is no reason to be- lieve, so far as I am advised, that the result has been obtained at the sacrifice of any obligation that society owes the unfortunates in that insiitution. The binding twine industry, successfully intro- duced and carried on in that institution, at least so far as production is con- cerned, has been as salutary and bene- ficial to the farming interests as it has to the prisoners in furnishing work, and to the state, as a means of revenue for their support. The output of binding twine for the past season was about five million pounds; the board estimates the requirements of the whole state at about seventeen million pounds. It will thus: be seen that there is ample room for the expansion of this industry, and I be- lieve that it can now be safely and profit- ably extended, and without the risking of loss incident to experiment in new under- takings. What has been regarded, just- ly or unjustly, as a scandal in connec. tion with the sale of the product during the last season should not prejudice your minds against the industry on that ac- count. Under proper administration, and needed legislation for facilitating the sale and distribution of the product among the farmers, such occurrences can read- ily be averted in the future. I recom- mend this subject to your careful atten- tion. The state reformatory at St. Cloud is deserving of your attention in as great degree as any institution in the state, The superintendent's recommendations in respect to groviding employment for the population of that institution and his suggestion as to the efficiency and cor- rective infl~ences of farm work are well worthy of your consideration. The need of the other correctional and charitable institutions are set out in the several reports, and excapt as to the hos- pital for the insane will not be farther commented upon. The problem of properly caring for the insane has become so pressing that absolutely demands solution at you hands at the present session. The im- portance of the subject, by reason of th great number and helpless character o: the unfortunates, as well as the great cost to the public for their care and maintenance upon the lines heretofore and now in vogue in this state, ca hardly be overestimated, and justifi all the care and consideration that I am sure you will give it: Hospitals for the Insane. On July 31 last, the insane population in this state confined in our hospitals was 3,265, a gain of 321 during the preceding two years. The rate of increase during the current biennial period was 6% per cent, while in the preceding bienntal period, it was not far from 7 per cent. The report of the board of trustees esti- mates that this rate of increase will prob- .ably continue until the percentage of in- sane in this state reaches the average level prevailing in the country, which is about one insane person to each 500 in- habitants. They also express the convic~ tion that the maximum rate in this state is not likely to exceed. 1 in 480. There is one feature in our present system of caring for the insane that is in marked contrast with the practice prevailing in a majority of the states, and which in my judgment is unwise, and I might add, demoralizing. Our state assumes the entire burden of the maintenance and treatment of those ad- mitted to our hospitals at state expense, In most of the states the rule ts differ. ent. In many of them the indigent insane are maintained at tho joint expense of the state and of the county of whicli they were residents. In some the estate of the patient, or relatives bound in law fon his support, are made to contribute a portion of the expense. That our law by which the state assumes the entire cost of maintenance and treatment of the in- sare has a tendency to und #y increase the number of commitments to our asy- Tums, is self-evident. In fact, ft. seems to me that our present law practically olds out a premiurt to the different coun- ties for loading down the state with the care and m#£tenance of the indigent who are suffering from any mental disorder or weakness in the slightest degree. This is certainly bad policy and should be re- formed. Such other recommendations as I may submit, being merely the views resulting from study and observation ex- tending over a limited time and sphere, may not be entitled to great weight in your consideration, but on this one ques- tion, my convictions are clear and posi- tive and the result of years of observa- ton. It is my judgment that whatever plan we adopt for the future, for the care of our insane population, it is vital to the proper solution of the problem that the expense should be horne jointly by the state and by the county or municipality in which the patient was settled at the time of commitment, and I most earnest- ly recommend that as a first step to the solution of the question in this state, our Jaw be so amended that each county, or municipality, be required to contribute to the state at the rate of $1.50 per week toward the care and maintenance of all settled patients committed from it. The salutary effect that such a law would have upon county avthorities in making commitments cannot be overestimated. The governor strongly disapproves of the present plan of keeping the acutely insane and the chronic in the same insti- tution. A human being,” says the gov- ernor, “cannot be content without some means of employment; as the instincts and eravings of the mentally crippled in this regard are the same as those of sane people, it seems to me that the dictates of interest and humanity alike will com- pel you to abandon hospital extension in this stvte upon present limes, and to adopt a methe@ which will also utilize such elements of officiency for produc- tion and self-support as they possess. As to what this plan should be the board of trustees and the board of corrections and charities do not agree. The board of trus- tees recommends what is termed the “‘col- ony system,” which could be inaugurated by erecting inexpensive buildings at both Anoka and Hastings. They say that the overcrowded condition of the other hos- pitals could thus be relieved from time to time by transferring to these colonies, which should be im charge of competent physicians whose sole time should be de- voted to their care. They further suggest that in carrying out this plan farms should be purchased within stiort dis- tances from the present hospitals, to which the clironic insane could’ be trans- ferred and cared for under the same staff of officers who now conduct our hospitals, and that this latter method {is the best and most economical that can be adopted. The board of corrections and charities, on the other hand, recommend what is known as the “Wisconsin plan” to relie the congested condition of our presen hospitals and to provide a humane and economical method of caring for the chronic insane. Under it any county that may so elect should be authorized and empowered by the legislature to erect and furnish a suitable buildi for the maintenance and care of the chronic insane, under such restrictions and safeguards as they point our and sug- geste the state to pay the county £1. week for each inmate cared for. plans have this in common: that they are better calculated to place tae chronic in- sane under natural c itions and’ thus insure their greater comfort and nappi- ness, and also that they will, thoush in a differing degree, utilize the productive ca- pacity of the inmates toward thcir self- support. As between the two: plans, my judgment us led me te favor the Wisconsin plan, and I recommend its adoption without esitancy or reserve. Management of State Institutions. Another subject that will prominently be called to your attention by the able report of our state auditor is the man- agement of our state institutions, It pre- sents the question whether we shail con- tinue the present plan of a separate board for each institution, with a board of cor- rections and charities to. supervise: and moderate their actions, or whether we shall adopt the plan of one central board: of control for the management of all the institutiens. Both plans are in operation in our sister states. A change for the mere sake of change or novelty is a dangerous experiment. It is safer to be somewhat conservative. The institutions of the state are apt to: be in the main the outgrowth, I might say, evolution, of peculiar local conditions that ‘brought them into existence. We have, of course, copied; but we have also differ- entiated from the system in other states, Our board of corrections and charities, while not peculiar to the state, has done and is doing exceedingly valuable work, and is exercising a wholesome control over the institutions. I believe that by strengthening its hands and paying greater heed to its recommendations we will have the advantages of the best feat- ures of both systems. Agriculture. In the realm of production, our gmeatest interest continues to center about the farm. While we can point with pride to our manufacturing, lumbering, and min- ing industries, it is after all the condi- tion of the Minnesota farm that marks our progress. It is the barometer of our prosperity, and it commands for us the proud position which we oceupy among eur sister states. Its interests are our interests. Its needs, our greatest con- cern. The same leaven of invention and progress which is making itself felt in other fields of production has invaded ag- viculture. arming is no longer a mere routine trade; is rapidly becoming an art in which success is conditioned upem intelligent skill as well as industry. Our farmers have the industry. It is the province of our state to provide the means \,...-.. will enable them to acquire that art and skill which mere practice on the farm does not afford. We have already made great ad- vances im that regard; we are in the front rank among the states. Our agricultural college anu experimental farm stand at the head of all similar institutions in this country both as to quality and the ex- tent of their work. The value of the education and training ‘afforded to our young people in the agricultural college cannot be overestimated. Its work is not only along the lines most conducive to a high degree of culture im the individual, but most beneficent in its effects upon the state and society. The criticism has been made that our institutions for ‘higher learnimg have di- rected the attention of our youth from the sphere of the practical duties of life and created a passion for the pursuit et leisurely occupations, which if ad- ministered to and aggravated, may be- come a menace to society. With refer- ence to our agricultural college, the con- ditions are entirely different. The stu- dents are kept in touch with our phys! eal environments at every turn. They are taught to observe and veason. very- thing acquired is capital for future in- vestment in the proper and intelligent asicharge of all the duties and responsi- bilities of a self-supporting imé@ependent American manhood and womanhood. The requests made in behalf of that department of the state university, I am sure, will receive your generous con- sideration. ‘The experimental station is equally valuable and useful. Our farmers have learned to look to it for sound “advice on many subjects of vital interest in their calling. ‘tion of crops. The station make; new varieties of wheat and of otber crops whioh yield better than those heretofore used. It teaches how to increase the profits of the farm by the proper rota- Its experiments demon- { strate how better profits can be made ’ | Trem snéep, swine, Deer ana aaify carte. ~ \ It has extended ite work by sub-stations ; Which are worthy of your consideration. The dairy industry which has } already attained an importance in the state second only to ie wheat ; ¢rop and more profitable than the latter ! can be best aided by a liberal treatrrent of this insti ution and a continuance of the institute work. Scientific inquiry and methods have already in a large degree solved the problem of making butter that will bear transportation into tropical cli- mates in air-tight packages. Ample means should be provided for such work and ex- periments. ‘ Without making any specific recommen- dation, it seems to me that in view of the record made by our creameries at the re- cent Omaha exposition, the time haa come when Minnesota creamery butter should mean what the name imolies. This, I think, can only be accomplished by authorizing the state food and dairy department, in conjunction with the fae- ulty of the college of agriculture, te adopt rules regulating the sanitary com ditions that must be observed in the man- agement, and the character and quality of the product that must be produced in a given creamery to entitle it te be styled a “Minnesota Standard Creamery” and its product and packages to be called and known as “Minnesota Creamery Butter.” Such legislation, I believe, would prove very valuable to the industry, especially in the foreign market. It has eome to my knowledge within the last few days that all the firms engaged in: the manu- facture and sale of creamery supplies in’ the Northwest, with the exception of one concern, have formed a trust. Such being, the case, I suggest for your consideration the advisability of undertaking the manu- facture of creamery supplies in the state prison on state account, to be soli to creameries and farmers at cost. Good Roads, The subject of good roads is sufficiently prominent in the public mind at this time to justify me in the assumption that it will receive your earnest consideration without comment on the part of the ex- ecutive. Excessive Fees. There are certain offices in the state: That of clerk of the supreme court; oil inspector, and surveyor general of logs, in which the emoluments are measured by fees collected by the incumbents. It is commonly understood that the reve mues are so large that they cannot in any sense of the word be regarded as compensation. When the income of an office passes beyond the compensatory peint, it is plundering the people. It be- ‘eomes a power for corruption and a men- ace to good government. I recommend that the laws relative to these offices be amended so as to place the offices on a salaried basis. Railroad Passes. Our state enjoys the peculiar distinction’ of being the only one whose laws ex- pressly authorize the issuance of ratilro: passes. Under its sanction the practi of issuing passes to public officials and at the request of those prominent in publio life has become so common and appar- ently so cherished by the beneficiaries that the repeated recommendations of my, predecessors for its abclishment have not been heeded. I repeat the recommenda- tion that the practice be abolished root and branch in the hope that the legisla+ ture will not hesitate to give expression to the pronounced public opinion on the subject. Akin to this subject is the evil of the lobby, which, with the development of great special interests, has become so much of a factor in legislative bodies that the people, whether justly or un- justly, are very suspicious of the motives that guide and influence legisiation. The existence of such a sentiment is in itself an evil. It behooves us to adopt every precaution for its removal, as well as to avoid every influence that gives reason for its existence, Direct Legislation. Under the new economic conditions which have obtained and which have made capital, through organization, such a potent factor in society and in legisla- tion, it has become necessary that the in- dividual citizen should be given more efficient means for his protection. The exclusively representative method is nd longer a safeguard as has been so prom- inently demonstrated in the recent’ fran- ghise scandals in one of our sister states. Instances of similar character, though not so flagrant, are not wanting in our his- tory. The only remedy, it seems to me, against such abuses is to afford the people @ constitutional methodgby which they, can initiate needed reforms, by direct action, on the one hand, and exercise the veto power on questionable or corrupt legislation on the other. This involved the introduction of no new principles in our form of government. There are no stronger reasons for trusting the people to pass upon men than upon measures, We do not think so in regard to constitu- tional enactments, which is legislation in its highest and most important form. The people now have the power to initiatd reforms, and legislation in the matter of loeating county seats, and in some mu- micipal undertakings. This power, with proper restrictions as to the time and'fre: quency of its exercise, should be extended to other important questions. By the pro+ visions of our constitution the people-now have the veto i at the polls om any legislation by which it is proposed’ to ehange our present laws governing: rail- road taxation. We are therefore already committed to the principle involved in the second branch of the question: The constitution could, and, in my judgment, should be so amended as to enable a minority in the legislature by appropriat: action to refer enactments, at least suc! as extend corporate privileges or; author: ize the granting of franchises, to,.a vote of the people before becoming operative. The New Capitol. The work on our new capitol has pro- gressed as rapidly <s-conditions permitted, The exterior walls are built up to the floor of the first story and the. interior walls and steel floor beams are corre- spondirgly in place. The efficieney and good judgment with which the commission has carried on this important work, to date, cannot fall to command? your ap- proyal. A tax extending over a period of years has been levied to pyovide the money for its completion. Sound business principles dictate that the work should be carried forward as expadftiously aa possible. Every delay in the prosecution of a work of that character and magni- tude means logs.and expense. We should Profit by the unfortunate experience of the State of New York in which the ap- Propriatiom bills of successive legislatures have contained items for carrying on the work of construction, and: for repairs to the older parts of their capitol building. To enable the commissiomto carry on the work with the greatest economy and to the best advantage, thex should be given the power te anticipate the tax levy. The most economical way it which this cam be done im my judgment, is to authorizs the temporary use of ‘the trust funds now in the hands of the state for which the treasurer ‘has not been able to find desira- ble investment. Any interest whieh you might deem proper to allow for the use of such funds woul& in no sense be lost to the state. I cn Rardly think that a safe and well devised plan for such temporary use of the funds, when the means of re~ payment have already been provided, would be in violation of any constitutional provision. J In conclusion permit me to express the conviction that cordial co-operation be- tween the executive and the legislature is essential to the best interests of the state, and that it is my earnest desire to extend to you in the performaree of your many and arduous dutics every assistance t! the executive department can render and in the same spirit that I shall took te you for suygestion and ald. SS aan