EXECUTIVE MESSAGES

MESSAGE OF GOVERNOR SAMUEL M. RALSTON.*

Gentlemen of the Seventieth General Assembly:

I am discharging a constitutional duty imposed upon me as the chief executive of the State in communicating with you at this time. And at the outset of what I have to say to you I desire to felicitate you upon the favorable conditions under which you take up your work as the chosen lawmakers of our Commonwealth. Heretofore, covering a period of more. than eighty years, every Legislature has been confronted with a serious financial question demanding solution, that the affairs of State might be properly conducted and her obligations discharged.

With you the situation is quite different. You will not be called upon to devise new methods and assume responsibilities for raising money for debt-paying purposes; but it will be your duty to determine to what extent and in what respect you can reduce taxation, in keeping with sound business principles. It is a much more pleasing task to remove than it is to impose burdens, and I congratulate you that the former one is your good fortune.

This condition has not come about by accident, but it is the result of a sound, wise and courageous policy adopted by the Sixty-eighth General Assembly and pursued by those administering the affairs of State. It required the readjustment of tax levies and the borrowing of money and the continued calling for advanced payments from the counties from time to time until the new system became adjusted.

ADVANCED LEGISLATION.

This administration has given to the people divers new agencies of government in obedience to their demand, among them being a vocational education law, a public utility law and a workmen's compensation Jaw; and through them, and the general policy to which it has adhered, it has placed Indiana among the most progressive States of the nation.

Because of the broad lines along which it has carried forward its work, this administration has not only had to liquidate appropriations of previous administrations and meet the usual running expenses, but it has incurred these new expenses and has also paid off both the foreign and domestic indebtedness of the State.

EXTRAORDINARY DISBURSEMENTS.

I will be pardoned from naming some of the unusual items that have been paid during the present administration, to wit:

* This is the last executive message of Governor Ralston and was delivered to the two houses of the General Assembly on January 4, 1917.

Appropriations of 1911 Made For

Constructive work at Indiana University.

Constructive work at Purdue University..

$27,200 00

100,000 00

Constructive work at benevolent and correctional institutions.

293,074 73

Cost, maintenance, construction and equipment of the Indiana

State Farm

329,077 38

Additional land and buildings for Epileptic Institution.. Maintenance of Robert W. Long Hospital, annual approximate expense

196,495 47

60,000 00

In addition to the above, there should be added:

On appropriation for Gettysburg Commission that the old soldiers might live over again in mind their experiences on this historic battlefield

On appropriations for the Panama-Pacific Exposition.

$17,681 48 122,974 28

On appropriation to pay for animals killed on account of foot and mouth disease

93,588 44

150,000 00

120,000 00

150,000 00

130,000 00

144,000 00

120,000 00

85,067 92

$2,152,385 10

Without naming other items, this makes a grand total of...$2,386,629 30

HEALTHY CONDITION OF STATE TREASURY.

Notwithstanding the inadequate tax levy in force at the beginning of this administration and the many additional and unusual demands made upon the State during the past four years, on account of the increase in the number of institutions and wards of the State, and the constant increase in the cost of living, I am gratified to call your attention to the fact that at the end of each fiscal year the state treasury has shown a healthy increase in its annual balances.

In the sinking fund there is at this time over $322,000; and the levy now in force will practically double that amount by January 1, 1918. This fund was created, as you will recall, for the purpose of raising money to apply on the outstanding indebtedness of the State, but since the State now has no unpaid debts, the sinking fund tax of 14 cents on each one hundred dollars should be repealed and the money now on band in such fund should be transferred to the general fund, unless its use is otherwise provided for,

I also recommend a reduction of one cent in the tax levy for the general fund. Perhaps a larger reduction than this should be made in this fund, but it is probably safer to stop with the reduction suggested.

The Legislature that enacted the vocational education law fixed the tax rate for this work at one cent on the hundred dollars. This rate yielded in 1914, $100,978; in 1915, $194,097; and in 1916, $201,027.75; and there is at this time in the vocational education fund a balance of $324,546.74. It is apparent, therefore, that this levy should be reduced at least one-half cent, leaving the rate at one-half cent on each one hundred dollars. These three reductions would make a total saving of three cents on each one hundred dollars or an annual saving to the taxpayers of at least $600,000. I urge you to give this relief.

PURDUE ENDOWMENT FUND.

During the recent campaign more or less controversy was indulged in on the hustings regarding the fund known as the Purdue University endowment fund, but we have now reached a time when we are called upon to consider it free from partisan bias.

This fund was derived from the sale of swamp lands, granted to the State by the federal government. The Congress of the United States by its act of July 2, 1862, granted to Indiana certain swamp lands and land script. You are specially interested in this provision of this act, to wit:

"All moneys derived from the sale of lands aforesaid by the States to which the lands are apportioned, and from the sales of land script, hereinbefore provided for, shall be invested in stocks of the United States or of the States, or some other safe stocks; or the same may be invested by the States having no state stocks, in any other manner after the Legislatures of such States shall have assented thereto, and engaged that such funds shall yield not less than five (5) per centum upon the amount so invested and that the principal thereof shall remain forever unimpaired: Provided, That the moneys so invested or loaned shall constitute a perpetual fund, the capital of which shall remain forever undiminished (except so far as may be provided in section five (5) of this act), and the interest of which shall be inviolably appropriated, by each State which may take and claim the benefit of this act, to the endowment, support, and maintenance of at least one college where the leading object shall be without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture and the mechanics arts, in such manner as the Legislature of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life."

I have asked the former Attorney-General of Indiana, Hon. Evan B. Stotsenburg, for his opinion as to whether or not this fund constitutes a debt against the State in the sense that it can be liquidated by the State; and if it does not, then for his opinion as to how this fund can be handled in the future so as best to conserve the interest of the State and at the same time protect the rights of the university. In response to my request he has, in a measure, reviewed the legislation regarding the fund, and I quote the part of his opinion with which you are most vitally concerned :

"Under the act of Congress of July 2, 1862, the proceeds of the lands donated thereby, was given to the State for the specific purpose mentioned in said act, the same to constitute a perpetual fund, 'the capital of which shall remain forever undiminished.' The principal of this fund amounts to $340,000. It is my opinion that this fund is in the nature of a trust fund, and that it is beyond the power of the State to defeat the purposes of said grant by giving said fund to any institution or otherwise. The effect of the act of the General Assembly of this State of March 6th, 1865, was to create the trustees of the Indiana Agricultural College as agents for the State, to receive on behalf of the State the land donated, to sell the same and to invest the proceeds. The trustees of that college, now Purdue University, have been acting in that capacity since the authority was first given them. It is my opinion that any attempted action of the Legislature to confer the title of this fund on the trustees of said university was ineffective and void. It being beyond the power of the Legislature to grant the principal of this fund to Purdue University, no debt or obligation against the State was created thereby and therefore there is no obligation of the State which is due ond owing from the State. It is my further opinion that the General Assembly at any time may provide for the investment of said fund in mortgage security, the annual interest to be paid to Purdue University."

There is available in the treasury of the State at this time funds in excess of and including said sum of $340,000. This money is on deposit in the public depositories and is only drawing the rate of interest provided by law, while the State is paying to Purdue University 5 per cent. annual interest thereon. The trust fund derived from the sale of such swamp lands should be invested so as to produce at least 6 per cent. interest annually and such interest should be paid to Purdue University as the institution entitled to receive the benefit of the increment of the fund created by said grant. I would recommend that your body take such action in reference to this fund that would provide for the investment and preservation of said $340,000, the amount of said fund. It is my opinion that such fund should be invested and protected the same as the common school fund is, that is by distribution among the counties and making the counties responsible for the principal and interest thereof. In any act passed, the good faith of the State should be pledged to Purdue University that it will be continued as the beneficiary of the interest derived from said fund. If some action is not taken, it will be necessary for the State to continue to pay the difference between the 5 per cent. interest that is required to pay Purdue University and the amount it is receiving as interest on said fund from the public depositories.

SALE OF STATE LANDS.

There should be a change made in the law relating to the sale by the Auditor of State of lands belonging to the State known as swamp and indemnity lands, lands which have escheated to the State, and all other lands belonging to the State and not set apart for state purposes.

Several laws have, from time to time, been enacted concerning the sale of these lands. These laws are not uniform in character, and fre

quently lead to confusion. They differ as to the names and places of sale and as to the appraisement of the value of the lands.

In one of the laws it is provided that before the Auditor of State shall sell any of such lands, the auditor of the county in which the lands are situate, shall cause the value of same to be appraised by appointing disinterested persons as appraisers. In another law it is provided that the county commissioners of the county in which some of said lands are situate shall appoint the appraisers before the sale is made. And in still another law it is provided that certain state lands lying along the Kankakee River may be sold by the Auditor of State without any appraisement having been made.

It has been the custom of the county auditors and county commissioners in the sale of state lands under the two acts first above referred to, to appoint appraisers residing in the county where the land is situate. It has been my observation that these lands, in many instances, are appraised at a very low figure and often at less than their true value.

The different laws now in force, relating to the sale of such lands, should, in the best interests of the State, be repealed by the enactment of a uniform law providing for the sale of all of such lands by the Auditor of State, providing for the manner and place of sale and directing the Auditor of State to appoint appraisers who are residents of the State of Indiana, but not necessarily residents of the county where the real estate is situate, to appraise the value of the lands before sale is made. Such lands should be sold at public sale, after, due and proper notice, and for not less than the full appraised value thereof. The Auditor of State should have authority to reject any and all bids.

DRAINAGE THROUGH STATE LANDS.

The Kankakee River flows in a southwesterly direction across the west line of the State, forming a boundary of the counties of St. Joseph, Laporte, Starke, Porter, Jasper, Lake and Newton.

The river drains approximately 2,000,000 acres of land, of which more than 400.000 acres is marsh land, which was at one time subject to overflow. About one-third of this marsh land has been reclaimed and is under cultivation, one-third is in a partial state of cultivation, but subject to occasional overflow, while the remainder is waste land.

Much of this land has from time to time been drained and is now in a high state of cultivation.

There are approximately 20,000 acres of meander lands lying along this river which belong to the State. Lands immediately separated from the river by the lands belonging to the State cannot be drained without the construction of drains through said state lands. As there is no law authorizing the construction of drains across state lands, those owning property so adjoining are unable to drain their lands.

I would, therefore, suggest that an act be passed giving courts jurisdiction to establish drains on and across state lands when the facts so warrant, all of which to be done at no expense to the State.