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Governor Walter M. Pierce's Administration

Governor's Message, 1927

Source: MESSAGE Of WALTER M. PIERCE, GOVERNOR To the Thirty-fourth Legislative Assembly 1927

Members of the Legislature:

At the close of my administration as governor of the state of Oregon I wish to express to the people my appreciation for the great honor that has been conferred upon me, and for the wonderful opportunity for public service which I have enjoyed for four years last past. I am retiring in the firm belief that in the main my administration has been most successful, and that the real accomplishments will become more apparent as the years go by.

In fulfillment of my promise made in my first message, I am today returning the commission given me, as clean and as untarnished as I received it four years ago.

The legislature at this time should declare and outline a state policy on the following issues pressing for settlement:

(1) Hydro-electric development

(2) Reforestation

(3) Taxation

(4) Law enforcement

(5) Irrigation

Hydro-electric Development

Water power is one of our very valuable natural resources. It belongs to all the people, and if we should allow this heritage to pass into the hands of special interests future generations would scorn our memory as we do today the men responsible for wasting the school fun of Oregon.

The development of Oregon’s water power will bring a new era of prosperity to the state. Literally millions of horsepower are available from the streams coming down the sides of our mountains, fed by the eternal snows. I ask you to enact such legislation as will make it possible for any district or city in the state to organize, acquire power sites, issue bonds, construct hydro-electric plants and sell the power, so that the original investment may be absorbed within a reasonable number of years. This tremendous resource must be developed by the people, for the people, or the state of Oregon must yield first place to our sister state on the north, which has developed such a vast amount of electric power and is now selling it to her citizens at rates so low that it can be used economically even for heating the homes.

Not only should factory wheels be turned with this power, but the homes in both city and country should be heated and lighted. Propose a constitutional amendment that will give the people the right to act through a municipal corporation. If you enact proper legislation at this session, Oregon’s prosperity will double and treble, and come to know no bounds. If you yield to the propaganda of the special interests, you will do nothing. The people will be able to judge from your action in this matter whether you desire to legislate for the many or for the few.

REFORESTATION

Oregon is today the leading timber state in the Union. It can remain such, and the output of lumber can be quadrupled, if present existing forests are conserved and proper methods adopted for reforestation. This problem must be approached from the standpoint of the whole state and not from the standpoint of the whole state and not from the standpoint of the vested interests. Even on privately owned land the forest growth should be cut under a selective logging plan similar to that now in use by the United States Forestry Service. An unripe tree should not be cut even on privately owned land. I recognize the right of the individual in privately owned land, but that right is subordinate to the rights of the entire people. If the beautiful mountains of Oregon are denuded of their timber, as they will be in another generation unless some action is taken, the same disastrous consequence will follow here that have resulted in other parts of the world.

Fully 80 percent of the timber in this state belongs to non-resident individuals and corporations, and only a small part of the lumber manufactured in the state is consumed at home.

The State Board of Forestry consists of the governor, the acting head of the forestry school of the Oregon Agricultural College, and five electors of the state of Oregon, appointed by the governor from and upon the authoritative recommendation of the Oregon State Grange, the Oregon Forest Fire Association, the West Coast Lumbermen’s Association, the Oregon Wool Grower’s Association, and the United States Forest Service. The board therefore consists of seven members, five of whom are appointed by five different private organizations. I recommend that the law creating this board be so amended that the governor may have the free and exclusive right to appoint the members thereof, without the necessity of a recommendation from any organization.

The two forestry bills tat will be present at this session practically vest in the State Board of Forestry the power of taxation, a greater power than should be exercised by any commission not directly responsible to the governor or to the people.

Assessing property for the purpose of taxation is one of the most important function of government. It is intolerable that such powers should be exercised by a board, the majority of the members of which are appointed neither by the electorate nor by any governmental agency whatever, but solely by private organizations standing in no responsible relation to the state, and controlled, it may be, by persons who are not even citizens of the state. The manner of appointing the members of this board is repugnant to the whole spirit of representative government. The constitutionality of this law should be tested at an early date.

I recommend that reforestation be done by the state for future generations. Nature has given us the soil, the rain and the sun, the necessary elements to grow the tree. When the tree has reached maturity it is not right nor just that it should be the property of descendants of men who are fortunate enough today to own the land and are powerful enough in political circles to secure legislation that will enable them to grow the tree to maturity practically free from taxes.

I do not believe in a severance tax. In former messages I have recommended such a tax on timber, to be divided into four parts, one-fourth to go to the state, one-fourth to the irreducible school fund, one-fourth to the county in which the timber is cut, and one-fourth for reforestation. Vested interests seems to be so strongly entrenched in this state that it appears utterly impossible to secure the enactment of such a law from an Oregon legislature. By way of compromise I now recommend that a severance tax be imposed and the entire proceeds used for reforestation by the state. We should not allow our beautiful forests to be cut, manufactured into lumber, and sold in eastern states and foreign countries, and not realize enough revenue therefrom to start an active reforestation program.

TAXATION

In my first message I stated that the reduction and redistribution of the tax burden was the paramount question. We have made progress with this vexing problem, but it is still a paramount issue. The enactment of the income tax law in 1023 was a signal triumph for the overburdened taxpayers of the state, and for those who believed that the money necessary for the maintenance of state government, including the millage taxes, should be collected from sources other than a tax on property. The income tax was in effect only ten months, but under its operation the state collected $2,928,320.65, and the money so collected has been largely responsible for the reduction made in the state tax levy, which in 1922 was $9,376,289.11, and in 1926 was $7,200,830.79. There has been a material reduction in the amount annually contributed by each county in the state. I claim and have a right to claim full credit for this reduction, by reason of my championing the income tax, vetoing bills and curtailing the expenditure of state funds. I have never faltered in my demand upon the legislature to enact laws for collecting money for state governmental functions without resorting to a property tax. Ten years ago, for the second time, I returned to the state senate, advocating the principle that visible property should not bear the burden of maintaining state government. Three tax investigating committees have reached the decision that visible property must be relieved of part of the burden. The special tax investigating committee, appointed by the last legislature, went on record unanimously last month as being in favor of this principle. I consider the action of this committee a complete vindication of what I have advocated so long, so earnestly and so faithfully.

There are several states in the Union, California, Pennsylvania, North Carolina and Virginia, the levy no tax on visible property for the maintenance of state government. North Carolina collects almost all state revenue from a tobacco tax and an income tax. Pennsylvania, with a budget of $64,452,654.00, raises the money from the following sources:

Charter Stock Tax $ 18,333,086

Corporate loans Tax 6,851,989

Corporation bonus on charters 1,760,393

Gross receipts tax 4,104,414

Insurance premiums tax 4,026,489

Bank stock tax 1,455,704

Mercantile license tax 3,650,222

Anthracite coal tax 6,741,761

Emergency profits tax 2,125,000

Inheritance tax 11,561,367

License fees tax 2,444,274

Miscellaneous 397,955

TOTAL $63,452,654

Ohio levies only $2,800,000 on visible property, while Oregon, in 1926, levied nearly three times as much. Yet Ohio has a budget of more than $50,000,000 and has fifteen times more wealth the Oregon. The same situation prevails in most of the states of the Union. Only three states exact a larger per capita contribution that Oregon from the owners of visible property for the maintenance of state government.

Columns and pages of misinformation have been published in the press of the state during the past two years about the difficulties surrounding the functioning of state government, by reason of the fact that property taxes can not be increased more than 6 percent a year. I have been accused of being largely responsible for this condition. I was president of the State Taxpayers’ League that was largely responsible for enacting the 6 percent constitutional limitation amendment. I also have been a member for four years of the State Tax Commission when tax levies have been made. I have made it impossible for the state levy to be increased materially on the small homes and farms of this state. Most of the functions of state government are for the benefit of the corporations and business interests of the state, and even the most profligate of legislatures would have more money than it could spend if these same corporations and business interests paid taxes in proportion to the amount paid by the farmers and the small property owners.

The situation demands that you enact legislation that will force an equalization of the burden. Records on file here in the statehouse show that in 1923 there were 2,260 business concerns on our tax rolls that had a book value of $254,000,000; they were assessed for $63,000,000, or 25 percent of the book value. These same 2,260 business concerns had a net income of $29,283,000, or 11 _ percent of book value. Just thing of it! These 2,260 business concerns made a net profit in one year of 47 percent of their assessment. I am not dreaming, guessing or estimating. These figures have been taken from the sworn statements of these business firms. It is also worth nothing that these figures are not from a few firms, but from many, scattered all over the state. In one county, not Multnomah, nine manufacturing concerns had a book value of over $10,000,000, a net income of $2,755,000, assessed for $2,246,690, or 81 percent of their net profits for one year. In another county five corporations had a book value of $17,560,000, a net profit of $2,629,000, and were assessed for $2,754,000.

The federal census for 1925 shows 700,000 acres less cultivated land in Oregon during that year than for the year 1920. The number of abandoned acres will increase with the years unless he who cultivates the land is able to realize a larger portion of the real value of the products he raises, and also be given relief from the excessive amount of taxes he is now obliged to pay. A short time ago my attention was called to a corner lot in one of the prosperous cities of the state. Upon this lot there had been recently erected a beautiful building, costing many thousands of dollars. The lot was appraised by three shrewd business men. The highest appraisal was $125,000; the lowest, $90,000. That lot is assessed for $16,000. This instance could be multiplied thousands of times. I warn the owners of great wealth, those who control the business interests of this state, and also largely control its politics, that the continuation of this policy is exceedingly dangerous, for loyalty can not be expected among the citizens of this Republic and of this state when a man is obliged to give up his farm for taxes and then behold hundreds of instances just like the one I have cited. Such a condition breeds not patriotism, but bolshevism.

Notwithstanding the repeal of the income tax law in 1925, and the failure of the people to enact the Grange Income Tax Bill in 1926, I still contend that it is the fairest and most equitable method of distributing part of the burdens of state government. I believe it is your duty, at an early hour in this session, to enact into law the principles embodied in the Grange Graduated Income Tax Bill.

A tobacco tax is in force in twenty-two states in the Union. Many more states will enact such a law this year. From this source a million dollars could be raised annually. Two years ago, in the office of the president of the senate, an agreement was entered into between myself, as governor, and representatives of the tobacco bill, which omitted cigars, there would be no referendum called on the bill. I kept my part of the agreement. Because this bill was referred, there is today a deficit instead of a surplus in the state treasury.

Much printer’s ink has been wasted on the so-called deficit in the state treasury, and how handicapped this legislature would be in providing for the proper functioning of state institutions. Here are the facts from the books of the state auditor: There has been a deficit at the close of nearly every year for ten years last past. On December 31, 1922, at the time I was inaugurated governor, there was a deficit in the state treasury of $582,872.85. The same books now show a bookkeeping deficit of $969,823.71, which will be reduced by the return of the unused balances from the various appropriations. These unused balances will aggregate $300,000. In other words, the total actual deficit now is not to exceed $100,000 greater than when I was inaugurated governor four years ago, and this amount was appropriated by the people in November for the Eastern Oregon Tuberculosis Hospital, and is included in the estimates. What a mess of falsehoods have been spread, circulated and hammered into the people of this state as propaganda. We heard nothing about the deficit four years ago, six years ago or eight years ago, but now we hear much about the present deficit because powerful influences in the state desire to put over this misinformation.

Many, many times the statement has been made that all Pacific Coast states should have the same kind of tax laws. Friends of the income tax have been severely criticized for pioneering in this method of raising revenue. The critics can now show their sincerity by assisting in the passage of a law in Oregon similar to the California law taxing corporate excess. Under that law California is collecting over $6,000,000 annually. Such a law would yield over $1,000,000 annually in this state. It would hurt no one, reaching only those enjoying excess profits. It would reach firms in Oregon that have a small amount of tangible property and large net profits, often exceeding the assessments.

When I was inaugurated governor the insurance department of the state was collecting for the state treasury $316,793 in revenue. The amount collected in 1926 was $695,597. The fees collected from insurance companies very justly can be increased. California collects a larger percentage than we do in Oregon.

At least I percent should be levied on premiums of all domestic insurance companies in the state. The law provides that they must be examined at frequent intervals, and this entails considerable expense. There is no reason why the domestic companies should be entirely free from bearing their part of the burdens of government, which have been increased by reason of the operation of these same domestic insurance companies.

The life insurance companies have derived great benefit financially from the work of the state boards of health in the various states by reason of the prolongation of life. It is my belief that a special tax should be levied on these companies sufficient to pay the expense of maintaining the state board of health.

Corporation fees can and should be increased. Especially should a much heavier tax be levied on nonresident corporations.

As a result of my vetoing the appropriation for the Public Service Commission two years ago, the legislature provided for a special tax on public utilities, to raise funds to maintain the Public Service Commission. The fund provided has not been found sufficient. The commission should not be a burden on the general taxpayer. The percentage collected should be increased.

LAW ENFORCEMENT

The fourth great issue demanding solution is law enforcement. The first great cause of crime is lack of responsibility. A large number of our people do not realize and appreciate the wonderful privilege of being American citizens. They simply don’t care. The rich and the powerful must be made to see that it is not only their duty, but is necessary for their safety, to help the less fortunate to secure positions where they can earn a competence. Equal opportunity to earn and acquire is necessary above all things. Free institutions will be approaching the end when men and women accumulate in numbers and are not able to secure employment at remunerative wages, and these great fortunes of the rich and the powerful may melt in a night, before the angry, unreasoning mob, demanding bread, just as such fortunes have melted away many times in the centuries past.

Prohibition and the enforcement of the Eighteenth Amendment is here to stay. The bootlegger and the manufacturer of moonshine whisky must be driven from the boundaries of our state. The product sold as whisky is killing and blinding hundreds and disabling and impairing thousands. No man can with safety today drink the moonshine whisky that is being illicitly sold.

There is decidedly a far better degree of law enforcement today in Oregon than there was when I was elected governor. There are counties in the state where there are practically no violations of the law. I have repeatedly said that the success of law enforcement is measured by the degree of cooperation between citizen and official. It is noticeable that the sentiment for law enforcement grows steadily better as the years come and go. I am aware of the fact that there is a studied, carefully planned campaign of propaganda sweeping this country from end to end, poisoning the minds of the people, and endeavoring to create the impression that there is more drinking of alcoholic liquor now than before the passage of the Eighteenth Amendment. This is absolutely untrue and not founded on fact. There is not 5 percent of the liquor consumed in Oregon today that was consumed ten years ago, and the amount is growing less year by year.

IRRIGATION

The fifth leading issue upon which you should declare a state policy is irrigation. The increased population will soon demand every available acre in the state. The trouble with agriculture today is not over-production, but under-consumption. There are many, many thousands of our citizens who are financially unable to buy. The increase of the arable area in Oregon depends upon irrigation. The federal government has at least entered upon the active development of the irrigation projects of Malheur and Owyhee. Undoubtedly, in the near future, provision will be made for the Baker, the North Unit, and many other projects that will require federal aid for proper development.

The state, however, has a problem of its own, brought upon us by the ill-advised constitutional amendment which gave the securities commission authority to guaranteed interest on bonds issued by irrigation districts for a period not exceeding five years. Under the operation of this law the state guaranteed the interest on bonds issued by 15 districts. Like the usual guarantor the state was called upon to pay, and did pay, interest for several of these districts, by issuing general obligation bonds of the state to the amount of $2,168,260, upon which interest has accrued to the amount of thousands of dollars. The state has certified to the value of twenty-nine irrigation districts, and these districts have issued bonds to the amount of $11,871,000. Since the expiration of the state guarantee several of these districts have defaulted in the payment of interest and principal, and chaos now prevails.

Upon this question you should declare a state policy. I recommend (1) that it be declared that the state in no way assumes responsibility for the bonds issued by the irrigation districts; (2) that you propose the repeal of the constitutional amendment guaranteeing interest on these bonds; (3) that the right of the bondholder to all of the property in the districts be freely acknowledged; (4) that you do not provide for a commission or committee to investigate. It simply means delay. There is nothing to investigate. Like the man who loans more money on a piece of property than the property is worth, the bondholder individually and in the aggregate, must accept his part of the loss, which is the difference between he actual value of the land and the amount due under the bond.

By reason of having paid the interest for some of the districts, the state occupies a peculiar position in this matter. There is a reasonable probability that is the case is presented properly, the Supreme Court will find that the state, by reason of its advances, holds a prior lien over the bondholder. At least the state is in position to effect a compromise between the holder of the bond, the settler and the people. The first thing necessary is to put the land to work. That can be done only by securing permanent settlers. Permanent settlers can be secured only by giving them a limited liability; that is, by selling them a specified number of acres for a stated sum of money, free from the general blanket mortgage that now covers every irrigation district. Any attempt on the part of the state to pay delinquent taxes will cost the state all the money so invested, will be of no aid to the settlers and may result in the state’s being obliged to assume the entire bond issue.

I have persistently opposed the guaranteeing of interest on irrigation bonds. I lost my seat in the senate six years ago because I dared to fight the corporations who were in favor of it. I faced threat of recall three years ago because as governor I refused to allow further interest to be guaranteed upon other districts. I felt the full power of the opposition in the recent election. I warn you that they have strength political and financial, and if the people fall asleep, as they are apt to do, state bonds will be substituted for the entire amount of the outstanding irrigation bonds, and instead of a loss of nearly $3,000,000, as at present, the amount may reach $15,000,000, if the plans prevail that will be presented at this session by the powerful banking group, which holds and owns many of these irrigation bonds. This law has been the cause of many farmers losing their earnings of a lifetime when they were invested in farms within the boundaries of there organized irrigation districts. The state is not obligated to pay or assume, directly or indirectly, these outstanding irrigation district bonds.

HIGHWAYS

The work of the state highway department during the last four years can not be too highly commended. Oregon owes a debt of thanks to the members of the highway commission and the others who have labored so faithfully in that department in carrying out our highway program. So far as I know there were but two men in the state four years ago who believed that the oiling of the macadam roads would be a success. I appointed one of these men highway commissioner. The other, in charge of the eastern Oregon division of the highway work, was given a free hand, and commenced experiments in real earnest to hold the macadam roads in place with oil. These experiments have been crowned with success far beyond the most sanguine expectations, and the oiled macadams of Oregon are today the best roads in the world.

During the past four years the state highway bonded indebtedness has been reduced from $38,700,000 to $36,066,750. During the same period the following highway work has been completed:

Pavement…………………………………………….…..59 miles

Rock surfacing………………………………………...1161 miles

Graded………………………………………………...1069 miles

Oiled macadam…………………………………………575 miles

Bridges over 20-foot span………………………………100 miles

During the coming four years, if the same plan is carried out, the state highway bonded indebtedness can be reduced to $28,966,750, and the Roosevelt Highway completed, as well as many roads in the interior.

During the next few years a huge sum of money will be required to retire the highway bonds at they mature, pay interest, maintain the present highway system and building new roads. For these reasons I do not favor reducing the amount of revenue now being derived from automobile license fees and the gasoline tax. I do favor a readjustment of the automobile license fees which will allow a reduction to old and used cares, and, if necessary, raising the license fee on the new and high-priced cars. I also recommend legislation making it possible for the automobile and truck owners to procure a quarter-year license. This would greatly benefit many citizens, especially farmers, who do much of their hauling during the early part and latter part of the year.

STATE MARKET AGENT

The office of state market agent should be retained. The law creating this department should be amended and the powers of the agent increased. This department should also include horticultural products. The state market agent should be a real factor in cooperative marketing.

PENITENTIARY

Four ears ago I asked the legislature to appropriate for the penitentiary the same sum of money that my predecessor had for the preceding biennium, $420,000, with the provisions that $100,000 of this fund should constitute a revolving fund, and with this revolving fund I would attempt to put the prisoners to work. We did save this $100,000 during the first two years and I used the money to start industries. I am now pleased to report that the state prison, which four years ago had 409 inmates, practically all idle, is today a busy workshop. I am turning over to my successor, from the revolving fund entrusted to me, property worth to the state of Oregon more than half a million dollars. This consists of the most complete whipping, retting and scotching flax plant in the United States for making long line fiber and spinners tow, upholstering tow and flaxseed meal. At the present time we have 135 tons of spinners tow that can be sold to the new linen mill now nearing completion in Salem. From this revolving fund there has been constructed a modern up-to-date hydro-electric plant that furnishes power at the penitentiary. This plant represents a saving to the taxpayers of at least $1,000 per month that he state would be paying if the electric current was purchased from the local power company.

In July the emergency board appropriated $100,000 of which we have used $73,770. I recommend that you do not appropriate for the amount provided by the emergency board, for these emergency warrants can all finally be paid by the sale of products that the linen mill in Salem must have. I do recommend that you increase the amount that the governor can borrow for the revolving fund from $50,000 to $125,000. This will enable him immediately to take up the outstanding emergency warrants issued to purchase flaw straw last summer. The following statement shows the condition of cashable assets and liabilities of the penitentiary revolving fund, and does not include the physical plant or equipment:

ASSETS

Cash and bills receivable $ 15,485.41

38 tons long line fiber 19,000.00

25 tons upholstering tow 2,000.00

135 tons spinners tow 27,000.00

51 tons paper stock 2,000.00

161 tons flaxseed 16,000.00

4 tons flaxseed meal 1,000.00

TOTAL $ 82,485.41

Raw products on hand will yield:

225 tons long line fiber $ 112,500.00

200 tons spinners tow 52,000.00

209 tons flaxseed 20,900.00

150 tons upholstering tow 12,000.00 197,400.00

$279,885.41

LIABILITIES

Borrowed by governor (authority

given by act of legislature)……………. $50,000.00

Amount used of Emergency Board

appropriation…………………………… 73,770.00

Interest, estimated……………………………3,000.000 126,770.00

Actual cash balance when all product are sold

and all debts paid……………………………………………$153,115.41

During the spring and summer months the material on and can be turned into cash and the proceeds returned to the state treasury to pay back the money borrowed. With the authority to borrow $125,000 next summer the governor can purchase all of the flax straw raised by the farmers appropriation for the revolving fund. Within four years this fund should grow over one million dollars. The state should continue to pay the inmates a small wage, a minimum of 50 cents per day, a maximum of $1.25, for work in the flax plant. The waste now consumed in the furnace should be converted into paper pulp.

The shoe and clothing factory should be enlarged, and a new building should be constructed within the prison walls to house these industries. This required no appropriation, as the work can be done with prison labor.

The present penitentiary is a fire-trap. Should a fire break out in the central building, called the chapel, as happened in the Walla Walla penitentiary, there would be no way in which to release the men in the cells. Many lives would be lost. I warn you that this demands immediate attention. Oregon does not need a new penitentiary. An appropriation of $50,000, for the purchase of cement, steel, and other necessary material, is all that is required. Under the supervision of the superintendent of industries all this construction work can be performed by prison labor, and all of the wood removed from the penitentiary, thereby making it absolutely fireproof. I earnestly recommend this appropriation.

About a year ago I moved the state lime plant from Gold Hill to the penitentiary. The limerock is being shipped to the penitentiary form Marble Mountain, in Josephine county, and agricultural lime is now being sold to the farmers of the Willamette valley at $5.50 per ton. The freight rate of $2.05 per ton on this limerock is outrageously high. I have filed a suit with the Public Service Commission asking for a reduction in rates. Two hearings have been held. IT is my hope and belief that the Public Service Commission will reduce these rates at least one-half. This saving should be given to the farmer. Agricultural lime then can be sold at the penitentiary for $4.00 per ton in bulk or $4.50 per ton sacked.

Two years ago the legislature appropriated $33.00 per capita per month to care for the prisoners. I have used $27.00, and have recommended $25.00 per capita per month for my successor. It will be found more than ample. Two years from now that appropriation can be still further reduced, and under the proper management four years from today the governor will be able to announce that the penitentiary thenceforth will be self-sustaining and will require no contribution form the taxpayers of the state. However, my experience teaches me that this department us as delicate as a Swiss watch and me be wrecked overnight.

INDUSTRIAL ACCIDENT COMMISSION

I earnestly recommend that you oppose any changes in the industrial accident law. Eighty per cent of the industries of the state are operating under it. A fund of more than $5,000,000 has been created for the payment of losses and compensation allowed to injured ones and their dependents. It is my belief that the law should be compulsory in all gainful occupations. However, the enemies of the law are too active at this time for any attempt to be made to strengthen it.

The law provides that one-half of the operating expense be contributed by the state to the industrial accident fund. Upon my recommendation this contribution has been suspended for the past four years. I recommend that it be suspended for two years more.

STATE HOSPITAL

An appropriation should be made for the state hospital at Salem to provide for an industrial building. By doing so the cost of that institution can be reduced. An appropriation should also be made for the installation of an electric generator so that the hospital may take the power out of the steam used for heating the building, generating the electric energy for power and light. It would effect a material saving. I also recommend that a nurses’ cottage be provided for the state hospital at Salem. This would increase the capacity of the Salem hospital sufficiently to care for the increase in the number of inmates during the coming biennium,

I recommend that no further additions be made to the Eastern Oregon hospital at this time.

SCHOOL FOR THE BLIND

The School for the Blind, in Salem, is one of the best in the United States. Another fireproof building should be provided for housing the girls.

The Employment Institution for the Blind, at Portland, fills an urgent need. I recommend that the activities of that institution be increased so that the blind may learn more trades and thus become self-supporting.

TRAINING SCHOOL

The old training school for boys, near Salem, should be converted into a reformatory, where should be confined the younger and unhardened criminals sent to the penitentiary, and also the older boys who are now being sent to the training school.

To that end I recommend the construction of at least two new building at Woodburn. The cottage plan is undoubtedly the best plan for caring for these boys in the state training school.

TUBERCULOSIS HOSPITAL

Oregon now has one of the finest tuberculosis hospitals in the United States, and, it is most efficiently managed. A new hospital was provided by the people and has been located at The Dalles. Liberal appropriations should be made for these institutions.

INDUSTRIAL SCHOOL FOR GIRLS

The Industrial School for Girls has been under most able management. I earnestly recommend the full amount approved by the budget commission be appropriated for this institution.

INSTITUTION FOR FEEBLE-MINDED

The Institution for Feeble-Minded has been under its present official management for several years. The sterilization law passed at a previous session has been in full operation. When once committed to this institution the patients are not discharged or allowed furloughs until they have been sterilized. In a few years this will result in a marked decrease in the number of those unfortunate sub-normals.

SELF-SUSTAINING COMMISSIONS

From time to time commissions have been created by legislative act and authority given to these commissions to collect fees and licenses and to spend the money so collected. I repeat my former recommendations that all fees collected by these so-called self-sustaining commissions be turned into the general fund of the state treasury, and that the commission be obliged to present their budgets to the ways and means committee and receive from that committee their appropriations for the coming biennium. It is not good business or good government, to allow a commission to collect fees, often aggregating many thousands of dollars, and then vest in that commission authority to spend the fees as it sees fit, without audit of supervision by elected state officials.

NEW STATE OFFICE BUILDING

I recommend that a new state office building be erected in Salem. The necessary money can be borrowed form the funds belonging to the State Industrial Accident Commission. Interest should be paid on the money so borrowed.

The building should be of modern, class A construction, and at least six stories high. One floor each should be given to the state library, the highway commission, the bonus commission, the accident commission and the motor vehicle department. State records are now scattered through many different offices in buildings that are not fireproof. It would be a serious disaster to have the records of any one of these departments destroyed. A fireproof state building is absolutely necessary to injure the safety of state records.

FAIRS AND EXPOSITIONS

I ask you to continue the appropriations for the Pacific International Livestock Exposition, the state fair and the various county and district fairs. The annual visit to these various fairs in the fall is the only bright spot in the isolated, lonely lived of many men and women who are engaged in the production of food and clothing for the world. It is also a source of inspiration to hundreds of boys and girls in the state to have held before them constantly throughout the year the possibility of earning a free trip to these fairs. I ask you to make these appropriations as they mean so much t o so many people in the humble walks of life.

OLD AGE PENSIONS

An old age pension should be adopted by the state. There are today many men and women in the state who have reached their declining years and are unable to support themselves. Their unfortunate plight is due partly to economic conditions and partly to their inability to do the things worth while at which they can earn a livelihood. Many of them, in early life, held prominent places in the business and social world. It would be far more dignified and better for society to provide for pensioning these dependent ones than to have them spend their last days in a poorhouse. This is one of the prices we must pay for living in a complex civilization.

IRREDUCIBLE SCHOOL FUND

I again call attention to the fact, as I did two years ago, that there is a serious impairment in the irreducible school fund. The loss in this fund may reach a total of $500,000. This resulted from loaning more money than should have been leaned in certain counties in the state, and the organization of irrigation districts, which included lands mortgaged to the school fund.

I recommend that the legislature, by joint memorial to Congress, ask that body to pass legislation now pending so that title to school lands will be confirmed to the state; and that the federal government relinquish its reserve claim for the minerals that may be found in said school lands. It is not right or just for the federal government to five to the school fund of Oregon, as it did, sections 16 and 36 of each township, and then reserve to itself all mineral rights, coming back years afterward and claiming said mineral rights and disturbing titles long standing in private individuals.

WORLD WAR VETERANS’ STATE AID COMMISSION

It is probable that many loans made by the World War Veterans’ State Aid Commission will be found to be over-loans. A number have already abandoned their farms and homes and have turned their property over to the state. The total loaned to date is about $21,000,000, and when all applications are acted on this amount will probably reach $30,000,000. The impairment in this fund may amount to 10 percent, of $30,000,000. The loaning percentage of 75 percent of the appraised value is decidedly too high, and it is certain that this will result in serious losses to the state.

On account of the cash bonus paid, there is a deficit in this fund of $1,499,088. The state is collecting one-half mill on all assessed property in Oregon for this fund. It will require three years collection to take up the present deficit. It is my judgment that $500,000 must be contributed yearly from the general find to the World War Veterans’ Aid Commission for eight years in order to take up the deficit now existing and the further losses that will surely accrue in the future.

PUBLIC SERVICE COMMISSION

By reason of various court decision I know full well that the Public Service Commission is severely limited in its power to grant relief to the people from excessive charges and terms exacted by public utilities. However seriously handicapped the commission may be, it is nevertheless my belief that it should either show a disposition to help curb and correct the arbitrary practices of the Pacific Telephone & Telegraph Company and other utilities or he commission should be abolished.

Arbitrarily and unreasonably, with all the power of an autocrat, the telephone company compels its patrons to pay for the use of the telephone before it is installed; rates are collected in advance; the patron’s money is use without interest. Our Public Service Commission has not made any effort to redress these wrongs, but sits idly by, condones, and at least tacitly, approves such practices. There is no justice, equity or right in allowing the local telephone company to pay four and one-half percent of its gross earnings to the American Telephone & Telegraph Company, under the guise of “supervision,” and then compel the local companies to buy all of their costly equipment and supplies at an unknown profit from the Western Electric Company. The Public Service Commission of this state has failed to regulate except in the interests of the utilities and against the people.

I know the excuse is made that the courts would set aside the decisions of the commission, but it would be a relief to have the Public Service Commission evidence a desire to try to help. I called the attention of the legislature to this matter two years ago.

I now recommend that you appropriate sufficient money to enable the governor to conduct a hearing before the Public Service Commission and in the courts, giving authority to summon witnesses, employ experts and engineers, and compel the production of books and records, that a full and complete hearing may be had on the doings of the telephone companies in the state of Oregon.

To the end that responsibility may be fixed, I recommend that the elective Public Service Commission be abolished, and that the members of the commission be appointed by the governor.

Particularly interested in this telephone matter must be the large delegation from Multnomah county in this legislature, for in the city of Portland the franchise of the Pacific Telephone & Telegraph Company expires in a short time, and the city council of Portland should have the assistance of this legislative body, so that the new franchise granted by Portland to the telephone company will properly and adequately protect the people from excessive rates and arbitrary practices. The city council of Portland can refuse to grant the franchise unless the “supervision” charge of the American Telephone & Telegraph Company is omitted. This is a matter affecting the pocketbooks of many people, and should you fail to act the people will have the right to believe that you have forgotten your duty and the interests of the common man in your desire to serve the special interests.

Some years ago many of the public utilities and corporations which depended largely for their existence upon the good will of the people ,began selling their shares of stock, using “high-power” salesmen and effecting their sales chiefly among the most influential citizens of the community. One hundred dollars in stock, paying 7 percent interest, often influences several votes on election day when the utilities desire to nominate or elect a friend on an important commission or to a high office. In this distribution of stock it is noticeable that the control never passes from the hands of a select few, and the wider the distribution of stock the easier the control. If the American people can be duped by this scattering of stock throughout the country, then the administration of government by the utilities and for the utilities will be perfected.

CONSOLIDATION OF STATE ACTIVITIES

It seems to be utterly impossible to bring about consolidation of state commission in Oregon. I now recommend that you make a state by consolidating all agricultural activities under one head. This will demonstrate the effectiveness and the economy of such a system.

STREAM POLLUTION

Whole hearted support and assistance should be given to our state board of health and to other agencies and organizations that are devouring their efforts toward the prevention of stream pollution. This is vital to the health of every community.

OREGON NATIONAL GUARD

All Oregon should be proud of our National Guard. The Oregon National Guard is the finest in the United States. The federal government expends more than a million dollars a year in Oregon to help train and equip these men. We are not a war-loving nation; we do not believe in militarism, but simple precaution dictates that we at all times be prepared to defend our country and our institutions of government, whether it be from foes within or from the enemy without.

EDUCATIONAL INSTITUTIONS

We should never forget that the most important business in the state of Oregon is the training and education of our children. Soon we older men and women must pass from the stage of action. Those who take our places should have all the training that school, church and home can provide. The perpetuity of American institutions and of civilization itself depends largely upon our schools. Free institutions of government rest entirely upon the intelligence of the masses. The centuries that have rolled by bear testimony to the immutable law that education is the one great bulwark of democracy; that mankind has progressed in proportion to the degree that education has been disseminated among the people; that civilization has stagnated and gone backward when the least among the citizenry have been denied the right to knowledge.

Next to the homes of the nation, public schools exert the greatest influences on the character of our citizenship. They are the foundation upon which our intellectual development is built; they aid in rounding out the physical well-being of the youth of the land; they call out he best that is in the minds of the young and direct it into the proper channels. In brief, they determine in large measure the mental and moral character of our citizenship. From the public schools of our country have come our leaders, our great men, those who have left footprints on the sands of time. Our public schools have been our salvation in the past. They are the star of hope for the future.

OREGON AGRICULTURAL COLLEGE

The Oregon Agricultural College stands at the head of land grant colleges in the United States. For twenty years no educational institution has had more able management. The entire state has been benefited and vastly improved through its activities.

UNIVERSITY OF OREGON

Our state university at Eugene is one of the great educational institutions of America, made so largely by the leadership of its late president. Under new management its power and influence should continue.

NORMAL SCHOOLS

Our normal school at Monmouth has 1,000 students. This is a very fine institution for the training of grade teachers. In order to provide needed buildings and equipment, more money must be given for this institution than is collected by the millage tax. I recommend the full appropriation that was approved by the budget commission.

The new normal school at Ashland has exceeded the anticipation of its friends, and new buildings and equipment are necessary.

The new normal school located at La Grande should have an appropriation of at least $175,000 for the construction of the necessary buildings. These normal schools are necessary to train properly the teachers who work so faithfully in the grades with the thousands of future citizens of our country.

STATE LIBRARY

The importance and value of the state library is equaled only by the common grade schools. It is reaching, helping, assisting and inspiring thousands of people in home and communities isolated and distant from the educational centers of the state. I recommend the full appropriation approved by the budget commission for this deserving and valuable state activity.

WOMEN IN PUBLIC LIFE

Since women have been given the privilege of voting, and have taken their places in various vocations in the business world, I have watched with deep interest the ability displayed by those who have been placed in charge of important functions of government. I wish to testify that my observations are that they have made good, and I know of no position in the affairs of state government that a woman cannot fill credibly, provided she has the proper training and peculiar qualifications for the work. There are several outstanding examples that may be seen calmly and impartially appraising the work performed by women of Oregon, i. e., secretary of the state fair board, district judge, superintendent of the girls’ training school, regents of the university and agricultural college, and state librarian. No quixotic spirit of gallantry is needed to commend them for their loyal service to the state. Simple justice dictates that we accord to them our sincere appreciation and thanks for their loyal, unfaltering devotion to duty; for their ever present sense of responsibility, and for the able, efficient manner in which they have acquitted themselves in managing the various departments of state.

For four years my official act has been controlled by my earnest desire to do that which was best for all the people. Fear of opponent, friendship, or hope of reward have in no way swayed me of affected my decisions. Bitter and unjust criticism has been the cause of much worry and many headaches, but has in no way affected my official course. I faced threat of recall because I would not bow to a powerful group that demanded certain action from me. I know at the time that their full power and strength would be used to prevent my reelection. I felt their effectiveness in the campaign just closed. In my inner consciousness I know I was right, and I held for the verdict of the future.

I believe that in the years to come my administration will be given credit—

-For arousing interest in hydro-electric development;

-For an earnest effort to bring about a state reforestation program;

-For beginning the movement to collect the money necessary for state activities from sources other than a tax on visible property;

-For arousing the people to the necessity for more equitable assessment laws;

-For creating public sentiment for law enforcement, including prohibition;

-For changing the policy in regard to guaranteeing interest on irrigation bonds and the use of state credit;

-For initiating a program that will eventually make the penitentiary self-supporting;

-For changing the highway program from a bonding policy to a “pay-as-you-go” plan;

-For changing road construction from “black-top” to oiled macadams, and

-For and active, earnest interest in all matters pertaining to education.

I am laying down my work as governor of this state with ill will towards none, with friendship for all. I again reaffirm my faith in American institutions. I am grateful for the opportunity to live in this wondrous age of human activity, in a country of which we are all a part and parcel, reaching form ocean to shining ocean, using one language, of practically one religion, with free public schools and libraries everywhere, without tariff walls at state boundaries, and with modern means for the transportation of freight and intelligence that are the marvel of all the centuries.

I extend to my successor the kindliest of greetings. It is my sincere hope that his administration may be as successful as I believe the future historian will proclaim mine to have been. Let me close my message to you, and the final moment of my term as governor of Oregon, with these thoughts:

I hold that no man alone succeeds,

Whose life is crowned by noble deeds,

Who cares not for the world’s applause,

But scorns custom’s outgrown laws;

Who feels not dwarfed by nature’s show,

But deep within himself doth know

That conscious man is greater far

Than ocean, land or distant star;

Who does not count his wealth by gold,

His worth by office he may hold,

But feels himself, as man alone,

As good as king upon a throne;

Who battling ‘gainst each seeming wrong,

Can meet disaster with a song,

Feel sure of victory in defeat,

And rise refreshed the foe to meet,

Who only lives the world to bless,

Can never fail—he is Success!

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722

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