Governor Robert D. Holmes' Administration

Inaugural Message, 1957


Ladies and Gentlemen of the Assembly:

With humility and gratitude for the high honor bestowed on me, I address you today. Eagerly I accept the challenges ahead. For ahead is the opportunity for a bold, imaginative, vigorous course, with unlimited vistas of growth and progress.

This is the direction I propose to take. I propose to take it because I think that the people of Oregon voted for such a change of course. I think that they expect me as the chief executive, and you as legislators, to take a fresh, new, forward look at our state government.

In charting the course successfully to meet the great challenges facing up --- challenges of our children, challenges of opportunity, challenges of money, challenges of brotherhood --- I think they want daring, not dullness; faith, not fear.

We must fly, not founder. There can be no turning back.

And I say to you that we can meet these challenges. The answers are here. We must face them eagerly. “Seek and ye shall find”, says the scripture. Not may find: but shall find. And we can find them in a manner that is exciting and exhilarating and eventful --- not dreary, and despairing and dull.

To accomplish the task we need certain structural changes in government. And, of course, as we sail boldly forth into new adventure, we shall naturally want to select key members of our crew. During the next twenty-four hours I shall begin the personnel changes contemplated.

These are my suggestions for structural changes:


We should provide for a lieutenant governor. The man who succeeds the governor should be elected by all the people, not by just one district. A lieutenant governor can lift many of the social and governmental burdens from the chief executive, freeing him for the conduct of state business. I hope you will make such provision in a constitutional amendment to be submitted to the people.


The Board of Control should be abolished. This hydra-dreaded manager of our state institutions diffuses executive responsibility. It can become a political merry-go-round. Sound management practice dictates direct responsibility vested in the chief executive. In place of the Board of Control the office of Director of Institutions should be created, with salary status commensurate with the responsibilities such a qualified individual would assume.


Legislative business of Oregon has far outgrown the orderly confines of a biennial session. In the twenty months between sessions, wholesale handling of the state’s vital problems through the emergency board, as is done now, is an abrogation of legislative responsibility. Too, our present long sessions bar many qualified citizens from service as legislators. Farmers, who might serve during January and February in an annual session, now cannot participate because of the heavy springtime demands on men of the soil. Younger people who have not attained economic sufficiency may not now serve --- with a shorter annual session they might also participate. I believe government closet to the people with roles for all the people would result from an annual session. I urge you to give attention to this problem at this session.


Operation of a 55 million dollar a year business, the largest retail business in Oregon through a part-time, non-paid commission is in my opinion a violation of sound business practice. To continue to administer Oregon’s liquor monopoly through such unsound practices is folly. I ask that you enact into law provision for a full-time paid administrator appointed by the governor.


Operation of our parole system through a non-paid part-time commission is also a violation of sound business and humanitarian practices. It costs $1,054 a year to keep a man in the penitentiary. It costs $156 a year for a man on parole. From a taxpayer standpoint alone, with no consideration for the humanitarian aspects of rehabilitating human beings, we should have a system that keeps parole hearings up to date.

Waiting beyond his just time --- thirty, sixty, ninety days and even longer --- because of the present commission’s inability to keep on schedule produces a man embittered against society, more susceptible to the lures of his crime-hardened cellmates. In the interest of tax savings, and in the greater interest of savings for lawful society, I hope this legislature will bring into being a full-time, paid parole administrator.


With respect to Oregon’s overall structure of Boards and Commissions, we need a complete re-evaluation. Without question many of such existing agencies can be regrouped on the basis of similar function and placed under the jurisdiction of existing departments. Such structural changes will tighten legislative and executive control and will unquestionably save tax dollars. Within the Management Research Division of the Department of Finance we have the personnel to make such re-evaluation and to bring to the next legislative session a blueprint for such change. As Governor, I am asking that this work be carried our, beginning immediately.


In examining the challenges I have mentioned, the most important it seems to me, is the challenge of our children.

Oregon’s children are her greatest natural resource. Here are our future scientists to successfully cope with this revolutionary atomic age, our planners, our doctors, our lawyers, our farmers, our economists, our teachers, our answers to the manifold problems that save us, our taxpaying citizens. Their proper education then becomes our most important task. The success of any state, country, civilization rests on the enlightenment of its citizens.

In the field of education, Oregon has made substantial gains during the past decade. On the basis of comparison with other states we stand high in many educational aspects. But we dare not let smugness nor complacency bring about an educational recession.

We must continue to seek improvement in the field of training better teachers, of elevating the teaching profession to a status equal to that of any other in our society, so that we can attract the best of our youth into this field.

Teacher’s salaries in our public school system must be raised.

With rising school sects demanding at least half of local tax dollars, we must provide for more state aid from basic school support. I recommend that basic school support be raised from the present 80 dollars per census child to 120 dollars per census child. And our method of distributing basic school support funds must be revised. Originally designed to equalize educational opportunity by providing the poorer districts with extra dollars, this formula is not now operating in such fashion. You will have before you a proposed now formula to bring the original intent of the law into operation. I urge its adoption.

So that children in small, inefficient school districts will not be penalized in the field of teaching, administration and curriculum, reorganization is needed promptly. I urge that you enact legislation now to bring about sound well-planned reorganization of school districts.

Many school districts are now bonded to capacity and still do now have needed facilities to properly house their school children. I urge the establishment of a fund of five million dollars at the state level, to be used for building relief for these distressed districts.


In order to successfully meet our educational challenge of the future we need a program of federal aid to education. Here is the logical way for children all over America to share educationally in our national wealth, extending the principle of taking the money where it is to educate the children where they are. I urge you to memorialize Congress to enact a program of federal aid to education now!

The foremost problem facing higher education, in my opinion, is retaining the recruiting high quality faculty members. Because of unwise action by the higher education subcommittee of ways and man in the last legislative session, salary schedules for the faculty members of our colleges and universities were thrown completely and unrealistically out of competitive balance with other such institutions and with industry. We have lost faculty at an alarming rate. Unless such a t rend is reversed we are in grave danger of relegating our whole higher educational system into second class status. I urge that the salary requests as presented by the Board of Higher Education in the budget be fully granted, and that any cuts recommended by the outgoing governor be resorted.

Another pressing need in higher education is the maintenance and expansion of the physical plant. At present there are 18,500 students in the state system of higher education, a 25 percent increase in the biennium with the prospect that within the next ten years the enrollment will surpass 30,000. The Board of Education’s long range plans are well conceived. Their requests for a capital outlay program of 14 million dollars for projects should be granted. These needs can and must be met.


The challenge of opportunity is an area where education to the facts can, I think, lead us out of the economic wilderness.

Oregon’s elected officials in past years have too often refused to look realistically at our economic picture. They have been content to drift, wistfully optimistic about the future, hopefully silent about any storm signals ahead, and hopelessly ineffective in leadership toward economic progress.

Any successful enterprise, including the economy of an entire state, needs realistic appraisal of the facts, realistic planning in the light of those facts, and realistic action taken on those facts.

As governor, I shall do my best to inform the people of Oregon, candidly and truthfully, about the economic facts confronting us. Because these facts constitute part of the urgent business of this legislature, I propose to start now.

The state of Oregon, Indeed the whole Pacific Northwest, stands oat a critical point in its economic development. Instead of continuing the economic momentum gained in the phenomenal growth and prosperity of the 40’s, we are losing ground by comparison to the rest of the nation.

IN the decade 1940 to 1950 we in Oregon became accustomed to leadership --- leadership in population growth, leadership in jobs, leadership in the six of our weekly pay checks.

Our public officials looked upon what our resources has wrought, and thought that it was good. And it was good. But it wasn’t good enough to last without encouragement. Complacency is the spoiled child of abundance and prosperity. While or officials stood complacently by, Oregon lost time and industry, lost abundance and prosperity.

Federal wartime production programs in the northwest tapered off or, as in Oregon, came to an abrupt halt. This can be replaced with solid consumer industries.


Time, however, is irretrievable lost, particularly in our vital low cost power development program. Policies of private utilities, with the aid and comfort of the state and national Republican administrations, have delayed the needed construction of power facilities. Their policies have cost us now four precious years. We must not lose more.

Research has pointed our, and we should recognize, that most of our new employment opportunities in the northwest were due directly or indirectly to low-cost power --- sold at Bonneville industrial rates. Nothing is changed. It is still true. But we have no reserve supplies of kilowatts to recharge our economy.

We must give every encouragement to our Congressional delegation to urge immediate construction of John Day Dam, and a full control program calls for construction of big upstream storage projects such as Hells Canyon. Oregon needs all the benefits from comprehensive use --- flood control, year –round navigation, improved fish propagation, and additional low-cost power.

Because the Northwest Governors’ power policy committee has not been sympathetic toward these objectives, I see no purpose in continuing Oregon’s representation in it.

Because the interstate Compact does not serve the purposes outlined, I see nothing for Oregon to gain in further attempts to develop it.

Because of our common interests in this field, I intend to meet in the very near future with the governor of our sister state, Washington, to discuss action to meet the pressing problems of river development. Both of us, I am sure, will work with the other states of the northwest and with Canada to promote maximum development. Nor would I want to neglect the smaller dams of Green Peter, Cougar and Hills Creek in our own Willamette Basin. These should go forward at once.

Our greatest opportunity today lies in converging the multiple waste of floods and unused power to multiple use for jobs and income.

Industrial development can be encouraged for Oregon by low-cost power, a healthy labor and consumer market, and by a healthy tax structure.


And it can be encouraged more directly. A good deal of money has been spent, and many of the leading citizens of the state have volunteered their time and energy to the task. So far we have very little to show for our effort.

IN the past five years many states have found that a development department within the state government, directly responsible to the governor, utilizing the authority and power of the office, and administered by a technically competent staff, is the most effective tool for this purpose.

My studies have convinced me that this is the direction in which we should go. I am convinced that such a program can be initiated and staffed for a sum not substantially greater than that appropriated for the present Oregon Development Commission. In terminating the assignments of the commission I want to express to them the gratitude of the people of Oregon for their efforts to solve our common problem.

There are other goals for development. Nothing has been done about the moral and economic unfairness of overland freight rate structures. Nothing is more disadvantageous to Oregon’s economy than this discrimination which prices Oregon products out of eastern markets, strangling Oregon manufacturers.

Another of our great natural resources is not, in my opinion being fully utilized. As I have indicated in my remarks about education, the most important single resource we have is people. We do not wish to attack industry as an end in itself, but as a source of additional opportunities for the people who live in Oregon.

At present, many of our best-educated and technically trained younger people are leaving Oregon to seek opportunities elsewhere. This means that we are subsidizing the more industrialized states by exporting our most brilliant and expensively trained youth. We must correct this situation in fairness to our young people and to ourselves.


Continued efforts must be made at our state level to improve the economic lot of our farmers. During the past four years, the net incomes of Oregon farmers have been drastically reduced. During the Substantially the property tax burden of this industry. I propose to ask the Tax commission to conduct a series of hearing throughout every sector of the state covering every agricultural commodity and interest so that we may have body of sound factual information upon which to base necessary law revision.


I urge you to give the utmost consideration to every aspect of Oregon’s forestry program. Every state program designed to advance research and development of the forest products industry should not only be maintained but expanded. Special consideration should be directed towards the development of processes and the location of plants for the newer products of wood and fiver technology. I shall do everything in my power to secure more federal funds for these purposes as well as for more access roads. We must have state and federal timber sales policies which will allow the smaller operators to purchase a rightful share of our timber thought competitive bidding.

And I shall add my efforts to those of our congressional delegation to persuade the Federal government to real the disastrous tight-money policy on housing credit which have done so much damage to our Oregon forest industries.


Development of our resources means protection of our resources. The beauty of Oregon, the intrinsic value of its recreation areas to our citizens and the dollar value through our visitors are irreplaceable. This value of primitive areas, of forests, of waterfalls, of fishing holes, of campgrounds, of wildlife, of God’s country must be preserved for all time.


A successful program for developing our resources and increasing the state’s industrial capacity depends, of course on a well-trained, well-paid, well-adjusted and stable labor force.

It is my hope that Oregon may enjoy many years of understanding and peace between industry and labor. To this end I prefer that our state rather than the Federal Government take those legislative steps necessary to improve and modernize workmen’s compensation laws, unemployment compensation and minimum wage standards. I also favor establishment of a realistic mediation and conciliation service and I strongly urge repeal of the 1953 anti-picketing bill as a prerequisite for working out a proper conciliation procedure.

With respect to the field of employment, I ask this assembly not to forget that the salaries of state employees need further adjustment. I urge that a start be made toward institution along-range salary increase program for those on whom we depend for the day-to-day operation of state business and services.


Broadened activity on the part of all the people in the public affairs of the community, the state, the nation and the world must be encouraged, not frustrated. I urge immediate steps to make election laws more efficient and democratic, at the same time maintaining sufficient safeguards to prevent fraud. Simplification of voting processes recommended by the interim election committee merits support.

I urge also a re-examination of regulations which restrict some people, because of their jobs, from full participation in public affairs. There is no justification for nay such restrictions. There is no place for second-class citizenship within our state.


Nineteen hundred fifty-seven should mark the date our state accepted as amoral principle the concept that we are our brothers keeper. First, we should abandon the idea that we are bestowing charity through our old age assistance and general welfare programs. Second, we should forsake the idea that we are merely custodians for the physically handicapped, the ill and the mentally sick; and finally we should put away the noting that we are guards at the point of no return over those we just of necessity hold in corrective and penal institutions. We must accept the challenge of the idea of brotherhood

There are immediate and long-range correction to be made with respect to each of these areas. For example, the relative responsibility law has not served the purpose for which it was enacted. On the contrary, it has created awkward and cruel paradoxes in the administration of old age assistance. I recommend the immediate repeal of this law.

I reserve judgment on the budget and program of the state public welfare commission until they have been more carefully analyzed.

However, there is immediate need for us to expedite the placing of adoptable children in permanent and stable homes. I recommend at this time that legislation be passed to enable the public welfare commission to add an adoptive service to its other duties.


As you study the problems of our state hospitals, I urge that you keep always in mind that the chief function of hospitals --- state as well as private --- is the care, comfort and cure of physically and mentally ill. Let us never again regard hospitals as mainly places of custody. We must of necessity think in terms of beds and building programs, but also of necessity, we must think constructively of the sick human beings for whom we are providing the beds and buildings. I am convinced that we must cease to be satisfied with short-range plans for institutional programs.

Building costs are so high and staff needs are so great, we dare no longer ignore the need for long-range, expert planning. Therefore, I ask that this Assembly appropriate sufficient boney for the governor to have made a thorough, unbiased survey of the status and condition of our institutions and their services.

I hope also you will give attention to the need for comprehensive, over-all study into the problems we must face with respect to mentally retarded children.


It is my feeling that state government has an obligation to be civilized, even in the exercise of its obligation to protect society from desperate and murderous criminals. And I find nothing enlightened religion or the ethics of modern civilization that justifies and “eye for an eye” philosophy. Thus, inasmuch as capital punishment neither prevents murder, nor edifies and refines the society that exacts the death penalty, I recommend strongly the immediate repeal of the capital punishment law.


It should be our constant aim to improve all services designed to train physically inconvenienced people and to encourage them to lead useful and productive lives. This, I ask this Assembly to act with sense and sympathy on all proposals that will further assist the blind and help the physically handicapped.]

The whole social and economic climate of Oregon will likewise be improved when we can say of this state that it is a place where discrimination because of race, creed, or place of national origin is unknown.

To the end that we may achieve this distinction, I ask that you look with favor on all legislation presented to extend our civil rights program and to improve it.


The challenge of money, which faces every legislative body, presents one of the more difficult problems. It is not an insurmountable one. The proposed budget for the coming biennium is before you. It was not prepared under my direction, as you know. I explain this because you labors in this field will not be limited to balancing the proposed budget. Other proposals which will necessitate raising additional revenue will undoubtedly be made by individual members of the legislature. I have suggested others which I believe to be fully justified economically and in the best interests of the people of Oregon. In formulating a tax program, I urge, first of all the repeal of the surtax imposed by the 48th Legislative Assembly. I ask that you restore the $600 personal exemption and dependency deduction which it dropped to $500.

Next I urge that, as you consider tax matters, you keep in mind that a shift from the income tax to a sales tax or other excises would not alter the fact that taxes must be paid out of income. Such a shift would merely mean that individuals would be supporting their state on the basis of goods they must purchase rather than on the incomes they have earned. Such a method would be flagrant violation of the first canon of justice in taxation.

The second principle to be remembered is that direct taxes are to be preferred to indirect taxes. Direct taxation permits progressive state scales which are altogether impossible in forms of indirect taxation. Considerations of equity alone justify direct taxation, and certainly one of the major problems in taxation is that of acquiring funds in a way that is fair and just to everyone. Direct taxes allow both the taxing authority and the taxpayer to realize the extent to which each individual contributes to the support of his government. Hidden taxes are apt to be concealed in price rises. Thus if we are to know how tax burdens are distributed, we must rely primarily on direct levies.

The third principle to which I invite you attention is the economically sound “ability to pay” principle. In the days to come you will hear many times that the “benefits received” and “ability to pay” principles are both basic in tax structures. However, the benefit principle has only limited application. Fore example, the selective excise tax on motor fuels can be defended on grounds of benefit only as long as the revenues from that source are used exclusively for the building and maintenance of highways. The ad valorem taxes for support of units of local government are in accord wit the benefit principle to a certain degree. In general, however, a tax system must be geared to the concept of the ability to pay. In final analysis, net income is the best measure of ability, and that fact alone provides sufficient justification for the use of net income taxation as the fore of our state tax structure.

As you consider our net income tax, I shall also ask you to bear in mind that one of the other very important requisites of a good tax system is convenience. Convenience is often cited as an argument in support of sales tax. But convenience is largely a matter of tax administration. Realistic withholding of income taxes will enable the mass of taxpayers to meet their obligation as they earn income during the year. A well planned withholding program makes it possible for the income tax to be paid and computed conveniently.

Any discussion of the respective merits of the income tax as opposed to the sales tax can be carried to an exhaustive length, whether in this message or in the deliberations of this assembly. But such discussion, in my opinion, is purely academic. Surely no member of the legislature can any longer entertain the slightest doubt as to the desires of the public in the field of tax legislation.

On five more occasions the people have, by increasingly large margins, voted down the sales tax. Only a few weeks ago the citizens of Oregon, by an overwhelming majority, refused to allow the legislature to affix the emergency clause to tax laws. This refusal was clearly and in my opinion correctly, based on the belief that use of the emergency clause would result in a sales tax. Therefore, the vote of the people can only be interpreted as a sixth defeat of the sales tax.

If this legislative body is to be regarded as truly representative of the people, it must accept that decision and proceed in accordance with it.

I urge that you find the major part of the necessary money to balance the budget within the framework of Oregon’s traditionally fair income tax structure.


While you are considering adjustment to our personal income tax laws, I recommend that you also revise the corporation excise tax law. I recommend the repeal of the personal property tax offset and repeal of the differential rate between utilities and other business corporations. Since the state has not collected any ad valorem taxes for many years, any reasonable basis for the personal property tax offset has long since disappeared.

At the same time you consider those revisions, I recommend that you also make whatever revision in corporate excise tax rates you deem to be proper in order that those rates may be brought into line with the increased demands upon personal incomes enacted into law by the 1955 assembly.


I also commend to you a restudy of the whole state property tax law. I am opposed to a state levy on real property. The property tax law has put a terrific burden on many aspects of our economy, but has penalized particularly the agricultural portion of it. We must not lose sight of the reasons farmers till land and we must consider whether our tax laws are in fact penalizing farmers who have made the highest economic use of their land.

And let me add one final word in this area. The citizens of Oregon want many services from their state government. These same citizens are aware that services cost an increasing amount of money. I urge that no attempt be made to deceive the people, that they be given facts and figures. But I want them to have actual facts and real figures. Let us not deceive people with either over-optimistic financial statements, or equally over-gloomy scare stories.


As a crucial part of the state’s development program, our highway system must continue to be built and improved. We must also plan to coordinate our projects with the great federal highway program. However, I want full and realistic attention to be paid to our system of secondary and access roads, for these constitute the local network of our farm and forest economy.


I also urge that serious attention be given to that greatest killer of our people --- the highway accident. I intend to see that the work of the Governor’s Safety Commission goes forward to implement and assist the many private agencies working toward the solution of a tragic and costly problem.


As executive and legislators we shall want to insure that a suitable celebration will be held to commemorate Oregon’s centennial year, 1959. I hope that we shall have the full assistance of the Oregon Historical Society and other organizations in this field in coordinating all phases of the celebration to produce a program worthy of Oregon’s rich historical heritage.


Because of the importance of specific details in several challenges introduced in this message, I plan to augment them by special messages to you during the next few weeks. In these messages covering resource development, taxation, and perhaps others, I propose to spell out my program in more detail.


It is a matter of great pleasure to me and of great promise for our state, that we now have an alert, hard-working and effective congressional delegation in Washington, D. C. They are pledged to act in full cooperation with my office in the many endeavors which lie ahead. I shall do everything possible to insure that Oregon will receive the full benefits of harmonious teamwork as we face the tasks which must be accomplished.

Together we will do the job.

My heart is filled with gratitude to the people of Oregon, who by their vote have elected me to serve them in this high office. I urge every member of the assembly to join me in approaching the task ahead with courage, confidence and cheer. Boldly we shall set forth on our new course, buoyed by the scriptural enjoinder from the second chapter of Chronicles, fifteenth verse: “. . . Be not afraid nor dismayed by reason of this great multitude, for the battle is not yours, but God’s”

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