Daily Democrat, Volume 5, Number 9, Decatur, Adams County, 10 January 1907 — Page 7

81-ENNIAL MESSAGE I OF THE GOVERNOR In addressing the members of the Siity-fifth General Assembly of the state of Indiana, Governor Hanly said: ? Gentlemen of the Senate and House of Representatives: The constitution imposes upon the executive a share in your deliberations. It devolves upon him the duty of giving you “information touching the condition of the state,” of recommending for your consideration such legislation "as he shall judge” the Welfare of the state demands, and of approving or disapproving your every enactment. To this extent he shares your responsibility and becomes a part of the legislative department. It is therefore important that relations of confidence and mutual helpfulness exist between you and him and that he have your counsel and good will. Impressed with the belief that nothing. short of this will enable either you or myself to discharge in full measure our duty to the people whose servants we are, I tender you my confidence and good will without reserve or qualification, and pledge you the limit of my power in every matter of public concern which may engage your efforts. Finances.—The state’s finances are especially satisfactory. The revenues accruing to the general fund for the fiscal year ending October 31, 1905, exclusive of transfer funds, aggregated $3,615,844.38. During the same year the expenditures were $3,465,250.91, leaving an excess of receipts of $150,593.47, and a treasury balance of $283,998.84. In this balance no advanced payments from county treasurers is included. On the 31st day of October, 1904, the balance in the treasury was $60,601.93, but to obtain this balance advanced payments from county treasures had been called, and the revenue for 1905 anticipated in the sum of $154,740. But for these advanced payments there would have been no treasury balance, but, instead, a deficit of $94,138.07. It is gratifying to know that at the close of the fiscal year this deficit was recouped and a clear balance of $283,998.84 left in the treasury, and that this was done without calling a single advanced payment dr anticipating the revenue of the next year a single dollar. For the fiscal year ending October 81, 1906, the revenues of the general fund, exclusive of transfer funds, aggregated $4,200,164.83. The disbursements were $3,800,037.91, leaving an excess of receipts over disbursements of $400,126.92, and a treasury balance of $507,654.60, in which there were no advanced payments whatever and tn obtain which the revenues of the present year were neither impaired nor anticipated. The revenues accruing to the general fund last year were Increased, however, not only from natural causes due to the increase in the value of taxables in the state, but from the transfer of the threecent sinking fund levy to the general levy; also from covering back into the treasury several substantial sums which had been theretofore unlawfully withheld therefrom by delinquent offlclals. Neither the revenues accruing to the general fund for the present fiscal year, nor for the year 1908 nor 1909, will equal those of last year. Those of this year, however, have been already augmented by the payment of $22,356.40 of insurance taxes by insurance companies which have been due the state since the expiration of the term of James H. Rice as auditor of state —more than twenty years. A conservative estimate of the revenues of the general fund for each of the three years named, is $3,726,650. Appropriations already made and available for the present fiscal year will leave a treasury balance of $266,309.29 at the end of the year. This sum, therefore, measures the limit of additional appropriations which may be made available for the present fiscal year without necessitating the collection of advance payments from county treasurers and a consequent impairment of next year's revenues, a result which, in my judgment, should be avoided with scrupulous care. If the income of the general fund for the fiscal year ending October 31, 1908, meets the estimate made and the regular appropriations /or the year are not increased beyond what now seems to be necessary aggregate for the transaction of the state’s business, there will be $1,010,000 available for specific appropriations for said year. For the fiscal year ending October 81, 1909, there will be substantially a like balance available for specific appropriations, except as it ma; be impaired by the expenses of the Sixtysixth general assembly, now estimated at $125,000. It seems, therefore, that la round numbers, $2,000,000 must be the limit of specific appropriations for the coming biennial period, if we are to keep within the revenues of the state and are to avoid the impairment of the revenues of the next biennial period. To do this it will be necessary to transfer the three-cent sinking fund levy from the sinking fund to the general fund for the year 1908, as was done for each of the years 1905. 1906 and 1907. Within the last two years we have paid $407,000 on the principal of the state debt, thereby cancelling all of the debt that is now payable. This leaves but SBOO,000 of foreign bonded indebtedness, none of which will be payable until January. 1910, and none of which will be due'until 1915. To meet this debt within the first year after the state s option to pay natures, it would be necessary to restore the three-oent

sinking fund levy to the sinking fund for 1908 and 1909. The fund derived from this levy would be more than sufficient, however, to retire the whole of the debt, as such a levy would by that time produce an annual revenue of something more than $500,000. I have been anxious that the debt should be paid at the earliest possible date and have hoped that it could be done in January, 1910, but necessity compels the completion of the institutions now under contract. The demand that they be completed is so imperative that J have been compelled to yield thereto, and I therefore recommend that the sinking fund levy of three cents be retained for the benefit of the general fund for the year 1908, and that it be restored to the sinking fund for 1909 and 1910. This will enable the state to retire $500,000 of the debt within a year after its option to pay matures, and the remaining $300,000 within six months thereafter. The necessities of the state absolutely require the completion of the institutions now under construction within the coming biennial period. The emergency is so great that I cannot urge upon you too strongly the importance of making adequate provision therefor. Defalcation in State Offices.—Tn the latter part of August, 1905, the executive was advised that the auditor of state had failed to make the semiannual settlement with the treasurer of ststfe due July 1, 1905. Upon investigation it was learned, through the admissions of the auditor himself, that he was short in his accounts to the extent of $145,000. Settlement was demanded, and later the auditor a res’gnation. September, 14, 1905, he resigned. Warren Bigler was immediately appointed to fill the vacancy, and suit was promtly begun upon the official bond of the ex-auditor. The amount, of the admitted defalcation, the magnitude of the public business passing through the office and the lack and necessity of accurate information touching the condition of the office impelled the executive to appoint a commission to examine and Investigate its affairs. From the report of this committee It appears that Mr. Sherrick's defalcation, principal and interest, aggregated, on the day of his resignation, $154,896.78. On March 1, 1906, final payment was received, with interest to that date, the total amount returned to the state treasury, principal and interest, being $156,367.31. Subsequent to his resignation Mr. Sherrick was indicted, tried and found guilty of embezzlement and sentenced and committed to the state prison. On November 16, 1906, the supreme court of the state reversed the judgment of the Marion criminal court, in which the case was tried, for error of law occurring at the trial. Mr. Sherrick is now' at liberty on bond pending a re-trial of the charge against him. It is an unconscionable miscarriage of justice that a public officer charged by the law with the duty of receiving reports showing the amount of taxes due from the insurance companies to the state and of auditing them, and with the further duty of bringing suit to recover from the companies the taxes so reported where they fail to pay them into the treasury, and who issues written notices to the representatives of smjh companies containing a garbled statement of the law made to read so as to require the payment of the, taxes to him. and who, pursuant, to such notice, receives such taxes from the companies over the counter of his office, receipting for them as auditor of state, should go acquit on account of a technical if not fictitious ownership. And that it may never occur again in the state of Indiana, I recommend that you enact a statute, the terms of waich shall clearly make it embezzlement for any public officer to convert to his own use money received under color of his office, while acting under claim of official authority, no matter in whom the technical legal title thereto may be held to vest. In its investigation the committee found inaccuracies, in the way of overdrafts, in the accounts of the adjutant general, John R. Ward, running from May 19, 1903, to Jan. 6. 1905, and aggregating $976.75. Upon receipt of the evidence in the case I demanded the immediate resignation of Mr. Ward and the payment of the sum of the overdrafts. The demand for his resignation was promptly complied with, and the overdrafts were paid within a few days thereafter. General Oran Perry was appointed to the vacancy. Inaccuracies in the reports made to the auditor of state by Secretary of State Daniel E. Storms, discovered by the committee, led subsequently to the disclosure of the fact that the secretary had sequestered fees due to the state and missapplied certain funds appropriated to the office of secretary of state for public purposes, by converting them to his own use. The committee was immediately directed to examine the books and accounts of the office of secretary of state, but upon appearing at the office to take up the work they were refused permission to examine or see any of the books or accounts of the office. The executive then’ addressed to the secretary a demand in writing for full information touching the condition of the affairs of the office of the secretary of state. This the secretary declined to give. Thereupon the attorney-general brought suit in i the superior court of Marion county to remove the secretary from office, charging him with the embezzlement of public funds and malfeasance in 1 office. The statute' under which the proceeding was brought was held invalid

by the court. Having failed in the courts to secure the removal of the secretary, the executive was about to convene the Sixty-fourth general assembly in special session, for the purpose of asking his impeachment, when he resigned. The committee immediately took possession of the books and accounts in the office and made a careful examination of the same for the period of Mr. Storms' incumbency. The misappropriation of funds, conversion of fees and appropriations made by the general assembly, amounted to $4,583.50, interest upon which at the time of the retirement of Mr. Storms amounted to $3,556.35, a total, principal and interest, of SB,139.85. The sum was paid in full to the treasurer of state April 1, 1906, the date of the secretary's retirement. Conditions discovered in the auditor’s office led the executive to instruct the committee to examine the accounts and books of the office back to 1872. A discrepancy in the accounts of General M. D. Manson as auditor of state was discovered, amounting to $347.50, which was evidently due to errors inadvertently made. James H. Rice, while auditor of state, collected and retained insurance taxes in the sum of $11,418.50 and reciprocal fees due the state in the sum of $36,650.24. These sums, together with interest thereon to April 1, 1906, amount to $108,877.74. The ex-auditor is dead. I am advised that his estate is insolvent. The statute of limitations bars a suit upon his bond. So far as he. his estate or his bondsmen are concerned, this entire sum is lost to the state. The law, however, required foreign Insurance companies doing business in the state of Indiana to pay into the treasury of the state the taxes erroneously paid Mr. Rice, amounting, principal and interest, to $26,091.27. Payment to him in defiance of the provisions of the law was not payment to the state. Proceeding upon this theory investigation was made and the names of the companies making the erroneous payments and the amount due from each were ascertained and notice served upon them that payment must be made by November 10, 1906, together with six per cent Interest thereon, or their license to do business in the state would be revoked and suit instituted to collect the amounts due. On Nov. 11, 1906, settlement was made by all but two or three of the companies. The amount paid into the state treasury was. principal. $9,755.78; interest, $12,997.24; total, $22,753.02. This leaves a balance of $3,338.25. Some of the companies owing this balance ceased years ago to do business in the state, and others are insolvent. It appears from the report of the committee that Bruce Carr, while auditor of the state of Indiana, unlawfully retained $34,259 of regular fees and $40,040 of reciprocal fees which lawfully belonged to the state, a total of $74,569. Interest thereon to April 1, 1906, at 6 per cent, aggregates $75,998.24, making the total claim of the state $151,470.92. None of the funds misappropriated by Mr. Carr were insurance taxes. Mr. Carr is dead. His estate, as I am advised, is insolvent, and the statute of limitations bars suit upon his bond. This sum is, therefore, lost to the state. J. O. Henderson, as auditor of the state of Indiana, collected and retained insurance taxes, regular fees and reciprocal insurance fees aggregating $49,616.45. Interest thereon to March 1, 1906, aggregates $42,345.96, which, with the penalty of 10 per cent imposed by the statute, equals slOl,158.65. This, in the judgment of the executive, constitutes a valid claim against Mr. Henderson. Acting upon that assumption, the attorney general has brought suit in the superior court of Marion county to recover the same. The report also shows that A. C. Daily, as auditor of the state of Indiana, collected and retained insurance taxes amounting to $13,511.57. Interest thereon to March 6, 1906, aggregates $8,054.33. Mr. Daily also failed to pay into the treasury of the state other moneys due the state at the time specified by the law. Interest upon such deferred payments to Mar. 6. 1906. aggregates $2,101.84. These sums, together with the penalty of 10 per cent imposed by law, amount to $26,034.51. Believing this sum claimed against Mr. Daily to be a valid claim in favor of the state, the execu--1 tive instructed the attorney general I to proceed to collect it. He accordingly brought suit in the Boone circuit court and recovered therein a judg- ' ment in the sum of $25,435.50. Mr. I Daily appealed from this judgment, ! and the case Is now pending in the i appellate court. The aggregate collections already made from delinquent officers and insurance companies is shown in the ! following statement: David E. Sherrick, audit0r..5156.367.31 D. E. Storms, secretary.... 8,139.85 John R. Ward, adj.-gen 1,510.44 Insurance companies 689.79 Insurance companies 22,753.02 Total $189,460.41 Valid claims still pending: A. C. Daily, auditor of state (judgment) $ 25,435.50 1 J. O. Henderson, auditor of state 101,158.65 Total $126,594.15 The entire cost of the investigation, Including the insurance department, was s'-.'— — The facts I bring to your attention have convinced me of the necessity of a law’ authorizing the governor to appoint an executive accountant, whose duty it shall be to make frequent examinations of the accounts and books of the several administra-

tive offices of the state and of the 1 several state institutions, under executive direction. The salary ought to be such as to command the services of a competent accountant. Such a law would have saved to the state many thousands of dollars in the past and will save to it many thousands of dollars In the future. The recommendations of the committee relating to the auditing department of the c ■ flee of auditor of state and the genera! fiscal affairs of the state, contain many thoughtful and timely suggestions which I commend to your consideration with the hope that legislation may be enacted to meet the needs suggested. Separate Department for Insurance. —The need of a separate department for the supervision of insurance is so apparent and of such urgent character as to preclude debate or delay. The department, as now’ organized, is no more than a neglected adjunct of the auditor’s office. This office is overwhelmed by the multitude of duties and demands, infinite in nature and variety, devolved upon it. The legislature and not the auditor, however, is to be criticized With the means now provided the auditor cannot make it other than it is—a neglected adjunct. With a beggarly allowance of $5,920 for the entire department, he is expected to administer a department having supervision of eighteen legal reserve life insurance companies, sixteen assessment life insurance companies, nine fraternal life insurance companies, seven fire insurance companies and three casualty companies, a total of fiftythree, organized under the laws of and domiciled in Indiana and carrying hundreds of millions of dollars of insurance. To the supervision of these is to be added the supervision of fortynine legal reserve life insurance companies, 125 fire insurance companies, forty-one casualty companies, thirtyseven fraternal insurance companies and nineteen assessment companies, a total of 271, organized under the laws of other states and doing business in the state of Indiana—a grand total of 324. These 324 companies last year collected in premiums from the people of Indiana the sum of 073,815.41. The securities entrusted to the care of the department, under the law, have a face value of $8,963,000. They are subject to frequent change and substitution. Their acceptance and care require skill and legal knowledge and unqualified integrity as well. The fees collected by this department for the year 1905 aggregated $66,553.21, and for this year $72,660. The insurance taxes collected for the year 1905 aggregated $303,786.16. It is simply impossible to secure effective administration of such a department with the allowance made. The department is entitled to stand, and, if properly organized will stand, as a barrier between the people and the horde of graveyard insurance companies, funeral benefit societies and various wild, visionary concerns and criminal speculative organizations thgt are continuously organizing and storming the department for the privilege of duping the citizens of the state and preying upon credulity, sorrows and misfortune. Consideration of these facts lead inevitably to the conclusion that a law should be enacted separating the Insurance department from the auditor’s office and creating an independent department to take over the supervision of the business of insurance. The new department is absolutely essential to the public welfare, and I sincerely trust this recommendation will receive your early approval. The form of other insurance legislation will necessarily depend to some extent upon the creation of this detriment, and for that reason whatever legislation you enact providing tor its establishment should be among your first enactments. Railroad Commission —The act of of the Sixty-fourth General Asesmbly creating a state railroad commission has more than justified its enactment. Some of its provisions are imperfect and others almost wholly Inefficient, but the commission has been able to render signal service to the people in manv cases, notwithstanding the weakness of the law under which they have worked. The law should be strengthened in many particulars, giving the commission additional powers. State Board of Tax Commissioners. —The work coming before the state board of tax commissioners has grown so rapidly and has been added to so greatly that the amendment of the law relating thereto has become an imperative necessity. Last year this board considered and assessed property of the aggregate value of $224,377,446. Under the present law it has but fifteen days in which to perform its work. I earnestly recommend an amendment of the statute, requiring the board to begin its first session on the first Monday of April of each year and providing that it continue in session for a period of forty days, if the business before it shall so warrant. While I am personally willing to continue to serve the state as a member of this board, my judgment is that the governor ought to be relieved from membership on the board. It is quite impossible for the governor, in the midst of the ever-increasing executive duties imposed upon him. to perform the character of service as a member of the board to which the state is entitled. State Institutions.- The state instiI tutions. taken as a whole, never were I in better condition than they have been during the past biennial period. ' Political considerations never affected them as little. Their management has . been characterized by economy and efficiency. In a number of instances the cost of maintenance per capita

has been reduced notwithstanding the Increase in the cost of supplies. There is, however, still room for improvement in the administration of these institutions. I suggest for your consideration the propriety of revising the laws relating to all such institutions other than the institutions for higher education, that uniformity may be had in their administration. Tuberculosis Commission. —By joint resolution approved March 6, 1905, the Sixty-fourth General Assembly authorizes the appointment of a commission of five persons to investigate the need of a hospital for the treatment of tuberculosis in this state and the work of such institutions in other states. These gentlemen have made wide and intelligent investigation of the subject and have filed a report of their proceedings and their conclusions, copies of which will be furnished you and which I commend to your consideration. The subject is one that appeals greatly to all thoughtful persons, and if the finances of the state will permit, steps leading to the establishment of such an institution should be taken by you. Anti-Lobby Law.—Special interests, individual and corporate, are wont to undue influence upon all legislation relating to any matter of concern to them. They fill legislative chambers and the approaches thereto with paid agents who recognize no public interest which conflicts with that of their employer. An act should be passed, under suspension of the rules, carrying an emergency clause, which shall provide that every person thus retained or employed shall forthwith file in the office of the secretary of state a written statement setting out the names of the person or persons, firm or firms, corporation or corporations, association or associations, by whom or on whose behalf he is retained or employed, together with a brief description of the legislation in which such service is to be rendered, and that every person, firm, corporation or association, within sixty days after the adjournment of the Genera' Assembly, shall file in the office of the secretary of state an itemized statement showing in detail all expenses in connection with the legislation pending at the last previous session, together with the names of the payees and the amount paid each, Including all disbursements of every kind or character paid, incurred or promised to counsel or agents and specifying the nature of said legislation and the interests of the person, firm, corporation or association therein. The act should also make the viola tion of any of its provisions a crime and provide severe penalties as punishment therefor. Railroad Passes.—Two years ago I urged upon the General Assembly the necessity of anti-pass and anti-frank legislation. None was enacted. The whole practice is corrupting and demoralizing. I therefore repeat the recommendation I made in this behalf to the Sixty-fourth General Assembly. Two-Cent Fare.—With free transportation eliminated there is no just ' reason why the maximum passenger rate of steam railways in Indiana for ■ intra-state travel should not be fixed by law at two cents per mile. Such ’ legislation will be of substantial ben- ' eflt to the traveling public. I take it you will enact a law in this behalf, 1 Since most of you come with instructions from your constituents to do so. ' Private Banks.—The Sixty-fourth General Assembly enacted a private ‘ banking law which has been construed by the supreme court and held valid. ' The law, though defective in many particulars, is a step in the right di- ' rection. Its greatest defect is the ' lack of state supervision and examination. I recommend that the law be amended by providing for state sul pervision and examination of all such banks. f Inheritance Tax.—l am thoroughly ' convinced of the necessity and the just--1 ness of a law which shall provide for • the taxation of the devolution or suct cession of property by device or in- . heritance. Such a tax is levied but > once, and that at a time when it can i be paid without hardship. It is an - eminently just form of taxation. Ini J deed, its validity and fairness are I quite gene.tally admitted. In case of • inheritances by direct heirs $20,000 is, - in my judgment, a reasonable exemption, and in case of inheritances by • collateral heirs, the exemption should ! not be more than SI,OOO. i United States Senators.—l believe > a great majority' of the people of the s state are in favor of an amendment to i the federal constitution which shall > provide for the election of United • States senators by the direct vote of ■ the people. I commend the subject to > your consideration. 1 Primary Elections.—l commend to 1 vour consideration the enactment of ; a primary election law which shall be> 1 simple in the method it provides and ’ which shall require the nomination of • all candidates for city and county of- ‘ flees, of every political party, and the • selection of all delegates to any con- • vention held by any political party for ' the purpose of nominating candidates ’ for any public office, to be made by 1 direct primaries. > Trusts. —There is need of legislation ! conferring upon the attorney general ' authority to proceed against unlawful i combinations of capital and against ’ corporations chartered by the state in 1 all case where they abuse the power conferred upon them by the state. ■ The attorney general has prepared a ■ comprehensive act upon this subject ■ which I believe is essential to the enforcement either of the common law : or of any legislation relating to trusts which you may enact. I commend it .' to your consideration. , Public Depositories. —The events or . the last two years have emphasized

the necessity of reform in the methods of handling and caring for the' public funds. Sums of money varying in the aggregate from $13,000,000 tu $35,000,000, are constantly in the hands of public officials of Indiana — state, county, city, town and township. At the present time these funds are not and for years past have not been in the vaults of the several public treasuries, but are and have been either on deposit in the banking and financial institutions of the state or loaned to individuals o corporations by the officers having their care and custody, for their personal profit. Th* system has led to many abuses, some of which have been criminal in character. The whole system, from beginning to end, is so demoralizing and ruinous that the public conscience has become thoroughly aroused and the people, without regard to party’ affiliation, expect you to enact legislation that will destroy it. Insurance Legislation.—The establishment of a strong, well-equipped insurance department is essential, but no fair-minded man can read the report of the committee investigating insurance conditions in this state and believe that the establishment of such a department will be of itself sufficient to correct the abuses which have characterized and still are characterizing the management of certain Indiana companies. Something more than that is necessary. There must be remedial legislation of a character to reach the root of the abuses and put an end thereto. Taken all in all, the matter of remedial insurance legislation is perhaps the most Important subject that will come before you during your deliberations. It deserves painstaking study, thoughtful consideration and dispassionate discussion. You have in the time and circumstances of the present legislative session a rare and unusual opportunity to save Indiana life insurance companies from the weaknesses and follies of those who manage them. You can, if you will, provide opportunity for them to become strong and safe and great. The people expect this legislation at your hands. In the degree you fail to enact it, you will fall in the performance of your duty. Temperance Legislation.—The Sixtyfourth General Assembly amended the law relating to the licensing and sale of intoxicating liquors by authorizing the filing of a remonstrance, signed by the majority of the legal voters of a township or ward, against the retail traffic in such township or ward, and making a successful remonstrance effective for two years. This amendment has been sustained by the supreme court, and is proving a most effective means of restricting the traffic. Since its enactment 189 townships and eighteen city wards have effectively used its provisions. The legalized traffic is now excluded from the territory within such townships and wards. Within this territory live 421,750 people. By affirmative action these people have driven the business from their midst. It is Important that illicit sales by unlicensed venders shall cease throughout all territory covered by successful remonstrance. Death Penalty.—The law in Indiana still permits the infliction of the death penalty as punishment for murder. I am opposed to capital punishment in any form. Society can be protected from the man who commits murder, by life imprisonment quite as effectually as by taking his life. Life imprisonment is adequate punishment. It is a greater deterrent than the death penalty. It should be the limit of human law. In the Indiana state prison the death penalty has been executed eleven times in the last five years. As I read this message four men await execution in the death ceils of the state prison. You have power to prevent these executions by repealing the law that compels them, and authorizing the executive to commute the death sentence to life imprisonment. If the sentence is carried out, you must assume the responsibility. As the executive I appeal to you to save the executive officers of the prison and of the state from the further infliction of such a penalty. If you fail to do so and the executive can find substantial fact or circumstance in either of the four cases upon which to predicate executive action. I shall commute the sentence; and if you fail and I can find no such fact or circumstance, I shall find. God helping me, somewhere and somehow, the resolution to stay my hand and permit the unholy sentence of the law to be done, but to my dying day I shall be unable to acquit the law which imposes the uncalled for burden upon , * me. a Other Recommendations. —The governor recommends an effective stat- , ute for the removal of public officials who willfully fail in the performance of the duties of their office: a broad--1 enlng of the employers’ liability law; a revision of the public printing law with a view to closer economy in that department; the creation of a public library' commission; a change in the fiscal year, to begin Oct. 1 and end Sept. 30: a renewal of the $5,000 appropriation in the Baker bribery case; an act looking to a more equal valuation in the assessment of banks. He also asks that the state be empowered to take over from the Nancy Hanks Memorial association the plot of ground containing the grave of the mother of Abraham Lincoln and to assume responsibility for the care of , the same, and for an appropriation ot SIO,OOO for a monument to be erected/ at the Andersonville prison site ini memory of the 750 Indiana soldier J who died in that prison, and for ■ SSOO appropriation to defray the eJ penses of the unveiling of the Law to/ ; monument.