Rensselaer Semi-Weekly Republican, Volume 39, Number 39, Rensselaer, Jasper County, 18 January 1907 — THE INDIANA LEGISLATURE [ARTICLE]

THE INDIANA LEGISLATURE

Governor Hanly’s Message to the Sixty-Fifth General Assembly at Indianapolis.

Gentlemen of the Senate and House of Representatives:The people jlfftre spoken, and you are here bearing,!, their commission to act. Xou are convened in an auspicious hour of our history—the beginning of the last decade of the first contury of statehood—and under circumstances calculated to .inspire efficient and high service. Material prosperity outruns comparison. Wealth surpasses precedent. Labor, agriculture, manufacturing, mining and commerce have touched and passed high tide and the ebb is not yet pegun. Monetary conditions are at their best.. During the last year there was no failure or any financial institution within the State. Taken all in all conditions are indeed unusual. They present to you a problem unlike that which usually confronts legislative assemblies. Where others have been called to consider legislation providing the means and opportunity foe the equipment of wealth, you are compelled bo devise enactments requiring the just and wise administration of wealth. Your problem is not how to create now industrial and commercial opportunity, but how to save' the industrial and commercial opportunity which already is. It is not how to make possible the further organization of mighty aggregations <sF‘capital and powerful corporations equipped to transact great affairs and to conduct gigantic enterprises, but how to direct the purposes and limit the operations of those which the industry and genius of the age have called into being under existing laws, so th'at their benefits shall be diffused among the. people. The challenge is not, “Can you create?’’ but "Gan you administer?” It came to the people before it came to you, They b pnr h and understood, and have made heroic answer. They have risen to "new ideals, and have caught visions of better things. In them moral conviction is triumphant. Civic duty and public obligation have taken on a new and more sacred meaning. They know again what, for a time, they did not seem td remember, —that the.i-r rights—the rights of the masses.—-are superior to the claims or demands of any special interest, natural or corporate. They arc conscious again that this is their government, and tbey intend that it shall be administered in all its departments in their behalf. Stirred by the re-discovery of old hut half-forgot-ten power, they mean that whosoever holds their commission shall answer the challenge of the hour even as they have answered it. They will be impatient of delay, and swift to avenge failure. To serve at such a time and under such conditions is an unusual and an exalted privilege. Of time and circumstance such as these opportunity is born. He who meets it as becomes a man, measuring up to its h’cig’ht and breadth, is To~ be, ex tolls d and ho norerl. He who fails to meet it for lack of capacity is to be pitied and) forgiven. But he who possesses the. ability and'fallsfrom lack of moral worth-is to be condemned and despised. For him there is no defense in any forum. I congratulate you that such time and circumstance both are yours. The constitution imposes upon the executive a share in your deliberations. It devolves upon him the duty of giving you “information touching the conditions 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— XQiir—.responßlbility and becomes a part of the legislative department. It is therefore important that relations of confidence and mutual helpfulness exist between you ami 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 tt ora county treasurers is Included. On the 31st day of October, 1904, the balance in the treasury was $60,601.93. but to obtain this balence advanced payments from county treasurers had been called, and the revenue for 1905 anticipated in the sum of $154,740.00. But for these advanced payments there would have been on treasury balance, but, instead, a deficit of $94,133.07. 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 or anticipating the revenue of the next year a single dollar. For the fiscal year ending October 31, 1906, the revenue of the general fund, exclusive of transfer funds, aggregated t 4 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 to obtain which the revenues of the present year werC' 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 three-cent 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 officials. 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 companies which have been due the State since the expiration of the term of James H. Rice as Auditor of State—moro than twenty years. A conservative estimate of the revenues of the general fund for each of the three years named, is $3,726,650.00 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 avuiiablc for the present fiscal year without necessitating the collection of advanced payments from county treasurers and u consequent Impairment of next year’s revenues, a result which, in my judgnieri. should be avoided with scrupulous care. If the Income of the general fund for the fiscal year ending October 81, 1908, meets the estimate made and the regular appropriations for the year are not Incfiused beyond w|iat now seems to be anccessnry aggregate for the transaction of the State's business, there will lie $1,010,000.00 available for specific appropriations for raid year. For the fiscal year ending October 31, 1909, there will be substantially a like balance available for specific appropriations. except as It may be Impaired by the expenses of the Sixty-sixth General Assembly, now estimated at $125,000.00. It seems, therefore, that In round numbers *2,000,000.00 must be the limit of speclil.. appropriations for the coming biennial period, If we are to keep within the revenues of the State anil are to avoid the Impairment of the revenues of the next.biennial period. To do this it will be neceSsaVy to transfer the threecent sinking fund levy from the sinking fund to the genofal 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 $407,000.00 on the principal of the {Rate debt, thereby UAQCcIIng all of the debt that is now payable. This leave* but 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 matures, it would be necessary to restore the three-cent 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 produoe an annual revenue of something more than $500,000.00. I have been anxious that the’ debt should tie paid at the earliest possible date and have hoped that it could he 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 I have been compelled to mend 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 $500,000.00 of the debt within a year after its option to pay matures, and tire remaining $300,000.00 within six months thereafter. The necessities of the State absolutely require the completion of the institutions now under construction within tjie coming bieninal period. The emergency is so great that 1 cknnot urge ;upon you too strongly the Importance of making adequate provision therefor. I know ot no way this can be done with as ljttle inconvenience as it can be along the lines suggested. Posterity will certainly, have no just cause of complaint of us if we cpn-str-uct and, pay for these great public improvements and retire the last dollar of foreign held indebtedness within nineteen months after the privilege to pay obtains, and three and a half years before the obligations evidencing such debt mature. The step, If taken, will rest upon so many substantial reasons 'UiaTHrJVIITbcTiT analysis and- debate with certainty of justification in the end. Contingent Funds.

For the fiscal year ending October 31, 1905, the sum of SIO,OOO was appropriated for the Governor’s Civil and Military Contingent Fund. The sum of $619.25 was expended, of which $139.75 were expended by my predecessor in the investigation of the Southern Indiana Hospital for the Insane and in the matter of the claim of Vincennes University. The remainder, or $479.50, was expended by the present executive. The unexpended balance of the appropriation, amounting to $9,380.75, was covered back into the general fund. For the fiscal year ending October 31, 1906, SIO,OOO were aporopriated for thi3 fund, $5,453.00 of which were expended and $4,547.00 covered hack into the treasury. The expenditures were all on account of expense incurred in the investigation of the office of the Auditor of State. The appropriation for the Governor’s Emergency Contingent Fund for the fiscal year ending October 31, 1905, was $30,000.00, of which $2,206.05 were expended by my predecessor, and the sum of $116.65 by the present executive on account of the expenses of the tuberculosis commission, authorized by the Sixty-fourth General Assembly. The total expenditures were $2,322.70. The unexpended balance, amounting to $27, t--677.30, was covered back into the general fund. The appropriation for this fund for the fiscal year ending October 31, 1906, was $31,000.00, all of which was expended except the sum of $1,123.26, which balance was covered back into the treasury. The total expenditures from this fund were $28,886.74. Of this amount,J_s2A, 22 were expended to defray the expenses of tTie Till)erctritrsi s commission; $2,385.05 were expended In behalf of the maintenance account of the State Prison, because of the failure of the Sixty-fourth General Assembly to make a per capita appropriation for that institution; $4,000.00 were also expended in the completion of the dining room for the State Prison, occasioned by a clerical error in the appropriation act of the Sixty-fourth Geheral Assembly, appropriating $19,500.00 for a store room which cost but $15,0011.00 and appropriating $15,500.00 for a dining room which cost $19,500.00; (The transposition of the amounts was not discovered until after the buildings were nearing, completion. The excess of one specific (appropriation could not be used to make up the deficiency of the other.) $2,892.01 on account of the replacing of a boiler at the School for Feeble Minded Youth; $241.50 on account of expenses incurred In the ease of the State of Indiana vs. David E. Sherrick; $1*200.00 on account of fees of special counsel in the case of the State of Indiana vs. Daniel E. Storms; $7,805.29 on acdunt of expense Incurred in the investigation of the office of the Auditor of State; SIOO.OO In connection with the stopping of pool-selling at the State Fairgrounds in the summer of 1905, and $17175.89 on account of expenses incurred in connection with the closing of the gambling resorts at French Lick and West Baden, of which $119.82 lias subsequently been returned to the treasury of the State; $7,025.39 fOT maintenance at the Girls’ -Industrial School, because of the failure of the Sixty-fourth General Assembly to make a per capita appropriation for that institution and the great increase in the number of inmates during the past year; $230.55 on account of expense incurred in the case of the State of Indiana vs. McCaslin, for the recovery of eighty acres of land belonging to the State: $229.50 on aeount of expense incurred in the investigation of the State Agency Company, and $1,076.04 on account of expense incurred In the investigation of the State Life Insurance Company.-—.,,,. - _ The total cost'Of the proceedings for the closing of the gambling resorts at French Lick and West Baden was $1,374.72; the aggregate cost of the tuberculosis commission up to the close of the last fiscal year was $640.87; the investigation of the office of the Auditor and Secretary of State cost, In the aggregate, $13,258.29.

Defalcation In State Offices. In 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 State due July 1. 1905. Upon Investigation it was learned, through the admission of the auditor himself, that he was short in his accounts to the extent of $145,000.00. Settlement was demanded, and later the auditor's resignation. September 14, 1905, he resigned. Hon. Warren Bigler was Immediately appointed to fill the vacancy, and suit was promptly 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 of necessity of accurate Information touching the condition of the office impelled the executive to appoint a commission to examine and Investigate its affairs. Accordingly, Hon. W. B. Duiborow and lion. James W. Noel, representing the two dominant parties in the State, were appointed, together with Hon. Warren Bigler. Auditor of State, by executive order, and instructed to “pursue the investigation and make examination of said office and its several departments uninfluenced by fear, favor or affection, and without any purpose to shield any person or party or to advance the interest of any person or party, to the end that the whole truth touching the affairs of the office for Bald term may appear In your report, and that tjhe guilty may be exposed and the Innocent vindicated.” The facts touching the financial interests of the State, as disclosed by the investigations oT the committee, were laid from time to time before the Governor for executive consideration and notion. From this report It appears that Mr. Bherrlck’s defalcation, principal and interest, aggregated, on the 14th day of September, 1905, the day of his resignation. $154,896.78. On March 1; 1906, final payment was received, with Interest to that date, thq total amount returned to tire State treasury, principal and Interest, being $156,637.31. Subsequent to his resignation Mr. Sherrick was Indicted, tried and found guilty of embesstiment and sentenced and committed to the State Prison. On the 16th day of November. 1906, the Supreme Court of the State reversed the

Judgment of the Marlon 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 retrial of the charge against him. During his term as auditor Mr. Sherrick collected $854,798.89 of insurance taxes, which, as I have Indicated, he had no right to collect under the law. He misappropriated and embezzled a large portion of these funds. In its decision the Supreme Court held that these taxes were not the property of the State; that they were collected without warrant of law; that In receiving them Mr. Sherrick acted as the agent of the insurance companies and not as the representative of the State, and that as to these funds he was therefore not guilty of embezzling public funds. 4 The fact that he embezzled the funds is without dispute. The moral turpitude of the offense is not lessened by the fact that the court has held that the technical title to them was In the insurance companies and not In the State. 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 such 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, received 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 which 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.

A portion of the funds embezzled by Mr. Sherrick consisted of fees which he had a legal right to collect. It is upon this charge that he is now awaiting re-frial. In its investigation the committee found inaccuracies, in the way of overdrafts, in the accounts of the AdjutantGeneral, John R. Ward, running from May 19, 1903, to January 6, 1905, and aggregating $976.75. The overdrafts ■were due to incorrect footings in the column containing a summary of the totals of the pay-rolls of the several National Guard companies appearing on the last page of the voucher prepared for the approval of the Governor and for .presentation -to the Auditor. The company totals in each instance Were made, up from the bills filed with the voucher, and were cbrrect. They were also properly entered on the last sheet in the summary column. The footings or totals in this last column were found to be excessive in sixteen Instances. 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 occasioned by the resignation of General Ward. Acting under executive direction he made a careful examination of the accounts and books of the Adjutant-General’s office, with the result that an additional shortage was discovered, aggregating $533.69. This also has been repaid and returned to the proper funds in the hands of the! Adjutant-General. The sum of money returned to the State by General Ward is $1,510.44. 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 the State and misapplied certain funds appropriated to the hffice-ufJ3e.cr.et.ary 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 uf> 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 assisted by eminent counsel, employed by the Governor for that purpose, brought suit in the Superior Court of Marion County to remove the Secretary from office, charging him, under the oath of the executive, with the embezzlement of public funds and malfeasance in 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 report of the committee shows In detail the condition found. 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 $8,139.85. The sum was paid in full to the Treasurer of State April 1, 1906, the date of the Secretary’s retirement. Errors In computing the tax statements of certain foreign insurance companies. occurring during the administration of Mr. Sherrick, were discovered, amounting to $689.79. Upon demand this sum was paid into the treasury by the companies owing the same. 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. The results of the Investigation are set forth in the committee’s report and are such as to abundantly justify the executive direction under which they acted. 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. This sum represents the claim of the State against Mr, Rice, exclusive of statutory penalties. The exauditor 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 they erroneously paid Mr. Rice, amounting, principal and Interest, to $26,091.2i. 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 eroneous payments and the amount due from each were ascertained and notice served upon them that payment must be made by the 10th day of November, 1906, together with 6 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 November 11, 1906, settlement was made by all but two or three of the companies. The amount paid Into the State treasury was. principal, 19,755,78, 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 $34,259.00 of regular fees and $40,040.00 of reciprocal fees which lawfully belonged to the State, a total of 974.569.00. Interest thereon to April 1, 1906. at 6 per cent., aggregates $75.998 24. making the total claim of the Btate $161,470.92. None of the funds misappropriated by Mr. Carr were Insurance taxes. Mr. Carr la dead. SjU§ estate, I am advised. Is Insolvent, and tho statute of limitations bars suit up-

on h!s bond. This sum Is, therefore, lost to the State. i J - 9- Henderson, as Auditor of the State of Indiana, collected and retained insurance taxes, regular fees and recip* rocal_ insurance fees aggregating $49,4 Interest thereon to March 1, 1906, aggregates $42,345.98, which, with the penalty of 10 per cent, imposed by the statute, equals $101,158.65. 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 Marlon County to recover the same. The report also shows that A. C. Dally, as Auditor of the State of Indiana, collected and retained insurance taxes amounting to $13,511.57. Interest thereon on March 6, 1906, aggregates $8,054.31f._ Mr. Daily also failed to pay into file treasury of the State other moneys due ithe State at the time specified by the law. Interest upon such deferred paymterits to March 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, th'e executive instructed the .Attorney General to proceed to collect Tt.’ lie accordingly brought suit in the Boone Circuit Court and recovered therein a judgment In-the sum of $25,435.50. Mr. Daily appealed from this judgment, and the case Is now pending in tile Appellate Court. The aggregate collections already made from delinquent officers and insurance companies is shown in thf following statement: David E.. Sherrick, Auditor of State $156,367.31 Daniel E. Storms, Secretary of State 8,139.85 John R. Ward, Adjutant General 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 J. O. Henderson, Auditor of State 101,158.65 Total .$126,594.15 The entire cost of the investigation, including the insurance department, was $13,258.29." ~ - - From .a money standpoint alone! no better expenditure . of public funds, viewed from the amount actually recovered and returned to the treasury, has been made in Indiana for many years. But the commission’s work did not stop with the recovery of these funds. The moral effect of the investigation it made and of the facts which have become public, will continue to be of value for years to come. The facts I bring to your attention Have convinced me of the necessity -ofa 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 administrative officers of the State and of the several State institutions, under executive direction. The salary ought to he such as to command the services of a competent accountant. Such a law would have saved the State many thousands of dollars in the past and will save to it many thousands of dollars in the future. It is not enough to expose the system and lay bare its evils. We must put an end to it absolutely. The general statute covering the several administrative offices of the State requires some of them to make annual and some semi-annual settlements with the Auditor and to pay into the treasury the moneys in their hands belonging "to the State. For a number of years each appropriation act passed by successive General Assemblies has provided for quarterly with the Auditor and the payment of the money in the handS of the several officers, due the State, into the treasury, and that the salary Of no officer who failed to comply with such provision should be paid until settlement with the Auditor and payment to the treasury- of the moneys in his hands. This requirement of the law had been ignored by all the officers until the present executive required compliance therewith. Since October, 1905, all such settlements and payments have been made quarterly. The recommendations of the committee relating to the auditing department of the office of Auditor of State and the general fiscal affairs of the State, contain many thoughtful and timely suggestions which I commend to your consideration with the hope that legisla- ’ tlon" t 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 criticised. 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 fifty-three, 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 forty-nine legal reserve life insurance companies, 125 fire insurance companies, forty-one casualty companies, thirty-seven fraternal insurance companies and nineteen assessment companies, a total of 771, organized under the laws of other States and doing business in the State Of Indiana —-a grand tot&Lof 324, : - These 324 Companies last year collected In premiums from the people of Indiana the sum of $23,073,815.41. The securities entrusted to the care of the department, under the law, have a face value of $8,963,000.00. 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 $72,660.00. The insurance taxes collected for the year 1905 aggregated $303,786.16.

Preneh Lick and West Baden. For a number of years an Incorporated company, known as the French Lick Hotel Comphny, and a similar company known as the West Baden Hotel Company, have, respectively, owned and operated large Hotels at French Lick and West Baden. In connection with the hotels, buildings have been erected and devoted to use as casinos. These casinos have been equipped with many elaborate and, expensive gambling devices. Gambling lias been .carried on therein to such an extent as to constitute them veritable Monte Carlos. This has been done directly by the companies, or, under lease from them, with their knowledge and connivance. Condi-'" tlons became such as to shame the State. The Attorney General, In connection with the prosecuting attorney of the local judicial circuit, were directed to raid the casinos and seize the gambling paraphernalia, and to'institute suit against the hotel companies to enjoin jha further operation of the casinos. "The casinos were raided and thousands of dollars of gambling paraphernalia seized and a suit Instituted for injunctive relief. The Circuit Court of Orange County held that the State had no authority, to Intervene In the premises and sustained a demurrer to Its complaint. Appeal has been taken from the decision of the court, and the case Is .now pending in the Supreme Court of the State. If, in the decision of this case, the Supreme Court sustains the action of tho lower court, the welfare of the State will require such legislation at your hands as will clothe the State with effective powers In such cases. Under the present statute the gambling seized by the State cannot be destroyed until there is a conviction of the persons, in whose poaz session It was round. Crlihlnal proceeding* have been instituted and are still pending In the local courts of Orange County, but, so far, the State has been unable to bring these cases to trial. The statute ought to be amended so as to authorise the destruction by Are of all such paraphernalia wherever found, summarily and without trial.

, * Removal of Public Officer*. The French Lick and West Baden j cases, and the experience of the State In its effort to remove the late Secretary of State, disclose the need of a ■rirellconsidefeed and effective 1 statute for the rerriovaa of public officials who wilfully fail in the performance of the duties of their office or who are guilty of misfeasance or malfeasance therein. The present statute Is believed to be Invalid, j Railroad Commission. The act of the Sixty-fourth General Assembly 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 many cases, notwithstanding the weakness of the law under which they have worked,. In some instances of flagrant wrong, it has had no power to enforce its findings, but it 'has been able, even In such cases, to do something. It has exposed the abuse to the public eye, fixed the responsibility and laid bare the need of a more effective statute. If the present act'lS upheld by the courts, changes in the law should be made by amendment and not by new and independent legislation. The Jaw should be _ strengthened In many particulars, giving toe- COminlHJ slon additional powers in cases of railroad and interurban crossings, lifterlocking switches, physicaj defects of ways and means, the requirement of safety appliances in intra-state traffic the removal of blockades upon proper notice by orders concerning rates, routes of shipment and the movement of traffic. The provisions of the law authorizing an appeal from the finding of the commission to the Appellate Court, should be amended by substituting a provision for the bringing of suit In some nisi prius court by any person aggrieved by the action of the (commission, with the right of appeal from the decision of .such court. Provision should also be made for the institution by the commission of suits in Its own name for the enforcement of the law whenever the public welfare shall require. Slate 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 r.elating thereto has become an imperative necessity. —— Assessment of Banks. Under the present law the valuation of banks, State and national, and -Of trust companies is made by local authorities. From wide observation and information I am prepared to say to you that there is no other class of property in the State so unequally valued. In some counties these institutions are assessed as low as sixty per cent, of the amount of their capital, surplus or -undivided profits. Having in view the equality of valuation as a fundamental principle of just taxation, I recommend that all hanks, State, national and private,, and all trust companies be required to file their reports for taxation with the Auditor of State and that the State Board of Tax Commissioners be authorized to make the valuation of all such institutions. Assessment by this board would give uniformity of assessment of this class of property wherever situated. The law relating to mortgage exemptions in the assessment of mortgaged real estate has also become the subject of no inconsiderable abuse. The law should be amended so as to require the reference of all such affidavits filed with the auditor to the county assessor, who should be required to examine the same and to refer them, with such recommendation as he may think their merits warrant, to the county board of review, which board should be given full authority to pass upon them and to allow or disallow the claims made by them according as their merits or the good faith of the Instruments in question shall require. This can be done by the amendment of section 2 of the act providing for mortgage exemptions. The schedule of personal property provided in the present tax law should be so amended as to require every per_3P!L owning or holding taxable notes, mortgages, bonds, or other securities to write into his return an itemized statement, giving each note, mortgage, bond or other security, with the amount of the claim it evidences and the name of the obligor. Each citizen should also be required to particularly specify in his return all stock he holds in any foreign corporation, giving the amount of each certificate.

Public Printing. The law relating to the public printing of the State should.be revised. The importance of the subject is made apparent by the statement of the annual cost of the public printing account. For the fiscal year 1905 the Institutional printing cost $27,110.64, that for the several departments and the State generally $7-9,735.62, an aggregate of $106,846.26. For the fiscal year 1906 the institutional printing cost $27,002.29, that for the several departments and the State generally $59,994.80, an aggregate of $86,997.09. State Institutions. The State Institutions, taken as a whole, never were In better condition than they have been jdurjng the past biennial period. Political considerations never affected them as little. Their management has beep 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. Anti-Lobby Law.

An act should be passed, under suspension of the rules, carrying an emergency clause, which snail provide mat every person retained or employed for compensation as counsel or agent by any person, firm, corporation Or association to promote or oppose, directly or Indirectly, the passage of bills or resolutions by either nx to promote or oppose executive approval of {such bills or resolutions, shall forthwith file In the office of the Secretary of State a written statement subscribed iby himself, under oath, setting out the names of the person or persons, firm or firms, corporation or corporations, association of 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. It should also provide that the Secretary of State shall keep an appearance docket, wherein the names of all such persons, counsel or agents shall be recorded, together with the Information contained in the verified statement filed by them, which record shall be open to public inspection. Upon the termination of such employment the fact of such termination, with the date thereof, should be entered, by direction of such counsel, agent or employe. It should also provide that no person, firm, corporation or association sliall retain or employ any person to promote or oppose legislation for compensation contingent In whole or In part upon the passage or defeat of any measure or measures, and that no person shall for compensation engage In promoting or opposing legislation except upon such appearance duly entered, and that no person shall accept any such employment or render any such seryice for compensation contingent upon {he passage or defeat of any legislative measure or measures, and that every person, firm, corporation or association, within sixty days after the adjournment of the General Assembly, shall file In the office of the Secretary of State an Itemized statement, verified by the oath of such person, or in case or a firm a member thereof, or in case of a domestic corporation or association an officer thereof, or in case of a foreign association an officer or agen{ thereof, showing In detail all expenses paidj incurred or promised, directly or indirectly, in connection with the legislation pending at the last previous session, together with the names of the payees and the artiount paid each, including all disbursements of every kind nr character paid. Incurred or promised to counsel or agents and specifying the nature of said legislation and the interests of the person, ffl'th, corporation or association therein. The act should also make the violation of any of It#' provisions a crime -and provide severe penalties as punishment therefpr. Duly accredited counsel or agents for counties, cities, towns, villages, public boards and public Institutions should bn excenred: also persons rendering professional services Indraft-

fhflr bills t*r n: advising clients, and tn rendering advice as to tile constructingor effect of such pending legislation, where such professional service is in no other wise connected with legislation. Railroad Passes. Two years ago I urged upon the Gej*» eral Assembly the necessity of antipass and anti-frank legislation. Nona was enacted. I therefore repeat tho rpcrvmr-'endafion 1 made In this behalf to the Sixty-fourth General Assembly. Two Cent Fare, * With free transportation eliminated there is no jpst reason why the maximum passenger rate of steam railways in Indiana for intra-state travel should not be fixed iby law at two cents per mile. There should be a provision that the minimum price of a ticket 'should not be less than five eentß. It will also be but just to the railway companies that provision be made permitting them to charge a cash fare on trains, of not to exceed two and one-half cents per mile where the passenger has been given opportunity by the company to purchase a ticket at a regular ticket office' before entering the cars. Such legislation will be of substantial beneflrto the traveling public. The wealth and the populatlon of the State amply justify it. Its mitt nor insure the railroad companies. Their passengef receipts will tiiiL uc ui’rmnisneu. fine reduction of fare will be offset by the increased trave resulting therefrom. This has been the effect of similar legislation in other States and there is no reason why the effect should be different here. I take it you will enact a law in this behalf since most of you come with Instructions from your constituents to do so. United States Senators. - ■ ■■. ■ X i % I believe a great majority ot the people of the State are in of an amendment to the federal constitution which shall provide for the election of United States Senators by th'te direct vote of_,the people. I commend the subject to your consideration in the hops that you will take favorable action thereon before the present session shall IiIDH, j—— —*— Trusts. There Is need of legislation conferring upon the Attorney General tho authority to proceed against unlawful combinations ot- capital and against corporate)os- chartered by the State in all cases 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 rr\ay enact. 1 commend it to your consideration. In addition to the act referred to, there should be legislation relating directly to the subject of trusts or combinations of capital having for their purpose the elimination of competition or the control of prices. This legislation should be along the lines of tho federal statutes upon this subject, in so far as they are applicable to conditions in this state. These laws have been construed by the Federal Courts, and have been found to be effective wherever those charged with the duty of enforcing them have in good faith sought their enforcement. Public Depositories. The events of the last two years have emphasized the necessity of reform in the methods of handling and caring for th.e; public funds. Sums of money, varying in the aggregate from $13,000,000 to $35,000,000, are constantly in the hands of public officials of Indiana— State, county, eity, town and township. Daily settlements and payments of all moneys received by any offieer into the proper treasury is the first essential subject. The selection of depositories for the funds is the second. Requirement that all public moneys In the hands of treasury officials shall be daily deposited in the depositories selected is the third. Provision that ail interest accruing shall belong to the public and be paid into the public treasuries is the fourth. I believe these provisions to be fundamental requirements. Thb-detalls must be thought out with intelligent care, keeping in mind the essential purposes of the legislation and the fact that the plan adopted shall be as simple as the nature of the subject will permit.

Insurance Legislation. The establishment of a strong, well 1 equipped insurance department is essential, but no fair-minded man can ,'oad toe 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 ar« characterizing the management of certain Indiana companies. Something more than that is necessary. There must De remedial legislation of a character to reach the root of the abuses and put an end thereto. Tho suggestion that such legislation be enacted has met with some criticism, but it lias come In the main from or been instigated bjr those who are mismanaging the companies in question. They have industriously sought to persuade the public that such suggestions are attacks upon the companies, made for tile purpose of injuring them. It is important to understand in the beginning that the remedial legislation recommended means no such thing. It is not an attack upon the companies but upon the abuses in their management and upon the individual officials who are guilty of mismanagement. It does not mean the injury of the companies. It means their preservation. Tne work of the investigating committee was not undertaken in nor conducted with malice toward any domestic company nor for the purpose of working harm to any such company. It was undertaken and construed to ascertain actual conditions touching life insurance and in the hope that abuses If foubd, could be ended and the companies saved to the people of tho State. Vou will search in vain for a sentence or a word In all the report of the committee indicating either a malicious purpose or revengeful spirit. Facts nave been ascertained and given to the people of the State, The truth has been learned and plainly but kindly told. The good and the bad in the management of the companies have been set forth with equal care and accuracy. The good has been approved and the bad condemned and thoughtful, well-considered; recommendations made looking to its elimination. The mistake the gentlemen who are opposing these recommendations have made and are still making is in thinking themselves the companies. They are not. They are simply trustees. The policy holders constitute the companies, . The desire of the committee and of the executive is that the $23,Q00,000 annually paid for lasurance by the peopls of Indiana may so far as possible bs paid to domestic companies and kept at home to meet the Industrial and commercial demands of our own people. Taken all In all. the matter of remedial Insurance legislation is perhaps the most important subject that will come before you during your deliberatlons. It deserves painstaking study, thoughtful consideration and dispassionate discussion. You have in the tims and circumstances of the present legislative session a rare and unusual opportunltv to save Indiana life insurance companies from the weakness and follies ol 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 vour hands. In the degree you fall to enaet it, you will fall In the performance of your duty. Death Penalty. The law In Indiana still permits th« infliction of the death penalty as punishment for murder. The law requiring such punishment does violence to my every moral sense and I cannot stand acquit at the bar of my own conscience until I have done what I can to put an end to the practice In Indiana It Is out of keeping with the spirit of the age in which we live. It is always and forever in conflict with the teachings of the religion in which Christian men believe. it has no place among the solemn enactment* of an enlightened and Christian people. It has but one defense even In the minds of Its adherents, that of public necessity. I have given this matter patient study and much research and have been unable to find any reliable statistics that Justify the belief that logical executions make the crlm* of inuraer less frequent. There Is not a .State In the Union where the death penalty is Inhibited which does not hav* fewer homicides than most of _th* States whose laws impose It "