Democratic Sentinel, Volume 10, Number 50, Rensselaer, Jasper County, 14 January 1887 — INDIANA AFFAIRS. [ARTICLE]

INDIANA AFFAIRS.

Biennial Message of Governor Isaac P. Gray. The Financial and Industrial Condition of the State. Gentleman of theGenoral Assembly:In obedience to the provisions of tbe Constitu- ! tion of the State, you have assembled to enact j euch laws as in your wisdom tqe wants of the j State demand, and it affords me much pleasure j to welcome the chosen representatives of the j people in this new Capitol, in which you have ; been permitted to meet, prior to its completion, j through the kindness of the contractors. The rooms designed for the use of the Gen- ! eral Assembly and their respective officers and committees, and also bucU rooms as could bo prepared for the use o< the State officers, were tendered to the State free of charge, upon the condition that the State shall indemnify the contractors against any damages, to any part of the building, which shall be occasioned by such occupancy. Their offer was accepted, and you have the honor to be the first General Assembly convened in this magnificent Capitol, and in thus dedicating it to legislative purposes, I trust you will, in the results of your sesion. leave an enviable and honorable record, to which, at all times, you will have just cause to refer with becoming jiride. Public Debt. The indebtedness of the State may be given in a tabular form as follows : FOREIGN DEBT. Five per cent. State stock certificates, issued under the adjustment acts of 1616 and 1847 ; duo and interest stopped Sept. 1, 1870 £14,169.99 Two and one-half per cent. State stock certificates 2,355.18 Three and one-half per cent, registered funding bonds, temporary loan, dated April 1, 1885, payable April 1, 1805, issued under the provisions of an act approved Feb. 21, 1885, and held as follows : German Savings Bank iu the city 9f New York 400,000.00 Dry Dock Savings Institution of the city of New York 100,000.00 Citizens’ Savings Bank of New York City 85,000.00 Three and one-hulf percent. Registered Bonds, Temporary Ixiun, issued under provisions of mi act approved Fob. 21, 1885, dated March 1, 1885, and payable at the pleasure of the State after March 1, 1890, due March 1, 1695, held as follows : Dime Savings Bank of Brooklyn, New York 500,000.00 German Savings Bank in the City of New York - 100,000.00 Three and one-half i>er cent, registered New State House Bonds, temporary loan, dated May 1, 1885, payable May 1, 1895, issued under the provisions of an act approved March 31,1835, held as follows : Bowery Savings Bank of tho City of New York 8100,000.00 Citizens’ Savings Bank of tho City of New York 100,000.00 Total foreign debt .81,701,825.12 DOMESTIC DEBT. School Fund Bond No. 1, issued January 1, 1867, bearing 6 per cent, interest 8709.024.85 School Fund Bond No. 2, issued January 20, 1807, bearing 6 per cent, inuterest 2,658,057.30 School Fund Bond No. 3, issued May 1, 1868, bearing 6 per cent, interest.. 184,234.00 School Fund Bond No. 4, issued January 20, 1871, bearftig 6 per cent, interest 177,700.00 School Fund Bond No. 5, issued May 3, 1873, bearing 0 per cent, interest.. 175,767.07 Fivo jier cent. Bond held by Hurdue University at Lafayette, Ind., due April 1, 1901 340,000.00 State University (Bloomington) Bond, iu custody Treasury of State, dated October 1, 1885, bearing 5 per cent, interest 60,000.00 Total domestic debt 84,304,783.22 Total State debt ,86,006,608.34 AMOUNT OF INTEREST ON FOREIGN DEBT. All of which is paid semi-annually, as follows : Funding bonds, temporary loan (principal 8585.000, interest 3J£ per cont.), payable April 1 and Oct. 1 820,475.00 Temporary loan bonds (principal 8600,000, intorost 3W per cent.) payable Sept. 1 and March 1 21,000.00 New State House bonds, temporary loan (principal 8500,000, interest 36j percent.) payable May 1 and November 1 17,500.00 AMOUNT OF INTEREST ON DOMESTIC DEBT. Interest payable semi-annually, April 30 and October 31. Six school fund bonds, numberod from one to five, inclusive, aggregating 83,904,783.22, at 6 per cent $234,286.C9 Furdue university bonds, 8340,000, at 5 per cent 17,000.00 Indiana university -bond (Bloomington], 860,000, at 5 per cent 3,000.00 Total amount interest 8313,201.99

State Finances. The reports of the Auditor of State for the fiscal years ending Oct. 31, 1885, and Oct. 31, 1886, will give you in detail the financial transactions of the State Government for thoso two years. For the past ten years the tax lovy for State purposes has been fixed by law at 12 cents on the SIOO, and at the time such levy was fixed it was only deemed to be sufficient to meet the usual and ordinary expenses of the . State and its institutions. In that period the State has largely developed in her material, financial and commercial resources, and the cost of the maintenance of her institutions has also increased on account of the increased number of inmates. New offices have been created, and new duties have been added to the old offices, which have likewise largely aided in increasing the current and ordinary expenses of the State. In addition to such expenses, there have been, from time to time, as each General Assembly convened, appropriated from the general fund, from which all the expenses of the State Government and her institutions are paid, large sums for unusual or extraordinary expenses. The State has in part been enabled to pay the large amount of extraordinary appropriations by anticipating the revenue of each ensuing year in the way of advances by several County Treasurers, as provided by law. The amount of advances has increased from year to year, os the pressure upon the Treasury lor funds has grown, until such advances for the fiscal year ending October 31,1836, amounted to the sum of 3440,804.65. The State Government has, during said years, been carefully and economically administered, without the loss of a single dollar to its revenues by defalcation or official neglect of duty. In the construction of the new State House 3200,000 has been appropriated and paid from the general fund. The construction of the Female Department of the Indiana Hospital for Insane, at Indianapolis, begun in May, 1875, and completed June 2, 1884, was wholly paid for by appropriations out of the General Fund at a cost of 8722,000, of which sum $522,009 has been paid since April 1, 1877. Also the construction of the three additional Hospitals for Insane has been entirely provided for out of the General F und, The amount now authorized by appiopriutions to be drawn from the General Fund on account of these institutions is 81,161,800,, of which amount there had been paid at the close of the last fiscal year the ■urn of $747,255.73, The appropriations from the general fund for extraordinary expenses from the Ist day of November, 1883, until the Ist day of November, 1886, as taken from the report of the Auditor of State, amount to $1,208,852.02, and show the continual sapping of the revenues, which were only intended to pay the current expenses of administering the State government. The amount expended for like purposes from January 1, W 77, to November 1, 1883, was perhaps as large. In the foregoing amount there has been no attempt to include many small specific appropriations or the increase in current expenses of our groat and growing State, occasioned by the le-

gftimate expansion of our public institutions, the creation of new offices, and the enlargement of the duties of older offices. In 1885. the General Assembly, by an act approved Februaiy 21, 1885, authorized the Governor, Auditor and 'Treasurer to make a temporary loan of 8609?WO.OO, redeemable at the pleasure of tbe State after five years and payable in ten years, at a rate of intenst net exceeding four per cent, per annum. It was also provided in the aame act, that whenever it was ascertained that the temporary loan indebtedness of the State, or any part, could be funded at a lower rate of interest, and that such officers could negotiate and secure the funding of such temporary loan at such lower rate, they were authorized to fund such indebtedness at such lower rate for a period not less than five years, nor more than ten years. There was outstanding at the iiine a temporary loan of indebtedness of 8 85,000, issued April 1. 1879, payable April, 1, 1883. and redeemable at tbe pleasure of the State after April 1, 181!, bearing Interest at the rate of 5 per cent, per annum. It was ascertained that such indebtedness could be funded at' a lower rate of interest. Bids were invited through public advertisement upon each of said loans, and tbe loans were awarded to Mr. Walter Stanton, of New York City, as the lowest and best bidder. The bonds of the State, dated April 1, 1885, were issued, denominated “registered bend, temporary loan” for 8600,000. bearing 3% per cent, interest, payable semi-annually, upon which loan the State received a premium of \% per cent., amounting to 88,2.50, and the sum of 8608,250 was paid into the State treasury to the credit of the general fund. Similar bonds denominated “registered funding bond, temporary loan,” for $585,000, were issued payable in ten years from April 1, 1885, bearing interest at 3b, per cent, per annum, and with the proceeds of said bonds tho State redeemed and canceled said outstanding temporary loan bonds of 8585,000 issued April. bearing 5 per cent, interest. A premium on the new bonds of 1% per cent., amounting to 810,965.75, was received and paid into the State treasury to the credit of the general fund. The premium received upon the 8600,000 was much smaller than received upon the 8585.000 funding loan, because the law required the former to be redeemable at the pleasure of the Stats after five years while the latter was payable in ten years, capitalists regarding it a very desirable investment. Tho General Assembly, by an act approved March 31, 1885, authorized the Governor, Auditor, and Treasurer to mako a temporary loan of #500,003 by issuing and selling tho bonds of the State, redeemable iu not less than five nor more than ten years, bearing interest at a rate not exceeding four per cent, per annum, payable semi-annually, to meet tho appropriations for the new State HouseAccording to public notice of the sale of said bonds, said loan was awarded to the lowest and best bidder, and in pursuance of such bids the bonds of the State were issued, denominated “Kegistered New State House Bond, Temporary Loan,” dated May 1, 1885, payable in ten years, bearing threo and one-half per cent, interest per annum, payable semi-annually, upon which loan the State received a premium of one and one-half per cont, amounting to 87,500, and the sum of 8507,500 was deposited in the State Treasury to the credit of the New State House Fund, as the law directed. The credit of the State has so improved th at said loans were negotiated at a rate of interest, with the premiums received, that will make said loans average about 3 1 4 per cent., and the refunding of said temporary loan of April 1, 1879, will make an annual saving of 88,775 in interest. Undor provisions of “An act to provide a fund for the permanent endowment of the Indiana University and for the investment of the same,” unproved "March 3, 1883, a sum exceeding 860,000 of said permanent endowment fund had been paid into tho State Treasury, and, the State needing a loan to meet a casual deficit in tho revenue and to nay the interest on the public debt, the sum of 860,000 was, in pursuance of section 6 of ssid act, transferred from said fund to the credit of the genoral fund. As provided in said act, a non-negotiablo bond of the State for said amount was made and issued by the Governor and treasurer, attested by the Secretary of State with the State seal, to the trustees of said university, dated October 1, 1885, payable in fifty years at the option of the State, bearing five per cent, interest, to be jiaid semi-annually, on the first days of May and November, in each year, until said bond is paid. Tho total amount borrowed for the benefit of the general fund was 8660,0U0, and, deducting such amount from the amount of the said extraordinary expenses, 81,208,852.02, will show that during said years 1883, 1884, 1885, and 1886, the sum of 8548,852.02 has been paid from the revenues of the State, over and above the ordinary expenses. It will be apparent to you that the State can not engago in the construction of expensive and elaborate improvements without increasing the tax levy for Stato purposes, or borrowing the necessary moneys to meet tbe additional cost of such improvements. Considering the excellent credit of the State, I have no hesitation in recommending the borrowing of the necessary funds in preference to increasing the rate of taxation.

The net receipts to tho general fund from all sources, exclusive of 5257,‘.136.75 advanced by counties and $679,215.75 received on loans, for the fiscal year ending October 31, 1885, were $1,424,249.10, while tho expenditures from tho same fund, exclusive of advances returned to counties during such year, pursuant to appropriations, were $2,083,085.61. The net receipts to the same fund, exclusive of advances by counties, for the fiscal year ending Oct 31, 1886, were $1,421,3 0.81, while the expenditures from the same fund, exclusive of advances returned by counties, during such year, pursuant to appropriations, were $1,619,537,78, The expenditures of the last year are not equal to those of the former year, because the revenues of the State have not been sufficient to meet the appropriations. The State is paying annually about one-fifth of its entire revenue as interest on its domestic debt, which consists of non-negotiubie school bonds of $3,904,783.22. issued in 1867 and 1868, bearing 6 per cent, interest; a non-negotiablo Purdue University bond of 8340,000, issued in 1881, bearing 5 per cent, interest, and a non-ne-gotiable State University bond of $60,000, bearing 5 per cent, interest; and I earnestly recommend a reduction in the interest on the $3,904,783.22 school bonds to 3 or 3V> per cent., as I believe the revenues to the School Fund would still continue to be sufficient. If, however, it should be deemed preferable, inasmuch as the State can borrow money at a much lower rate of interest, a loan could be authorized to pay oil tho entire non-negotiable school bonds, and after the payment thereof provido that the money shall be distributed to the counties in the manner heretofore provided by law, and that all school funds be loaned in the manner now directed at the rate of interest not exceeding 6 per cent, per annum. Either method, I believe, would meet with popular approval. If a funding loan for such purpose were negotiated at a rate of interest not exceeding 3 per cent., which I believe to be possible, it would result in an annual saving of interest of $117,143.50, besides providing a large amount to be loaned to the people of the State at a fair rate of interest. It is evident that the revenues are barely sufficient to meet the current expenses of the State Government, and with a decreased appraisement of nearly $54,000,000 of the property in the State subject to taxation, shows conclusively that the money necessary to complete and equip the new public buildings must be raised either by increased taxation or the negotiation of a temporary loan. In order to provido for the wants of the State and the completion and equipment of the public bqildings now in process of construction, a sufficient loan should be authorized, running twenty years, redeemable at the pleasure of the State after fifteen years, at a rate of interest not exceeding throe;and a half per cent, per annum. As a means of creating a sinking fund for the final extinguishment of the State debt, I would recommend that, the present tax of two cents, levied for State House purposes, be continued permanently, and the proceeds used in pay in y off or purchasing the State's bonds for cancel’ lation and destruction, thus liquidating the State’s indebtedness caused by the construcltion of the new public buildings, without increasing tho present rate of taxation. With the signs of increased prosperity I trust, that wo may reasonably anticipate some in-’ crease in.tho value of the personal property of the State, and that the current receipts will be ample to discharge all current expenses, after providing for the present contingencies. \- > .