TO THE LEGISLATURE AND THE PEOPLE OF THE STATE OF CALIFORNIA:
It is the custom for the Chief Executive of California, upon assuming office, to announce at least the broad principles that will govern his acts during his administration of the affairs of state, and to call the attention of the Legislature and the people to matters which he may deem of special importance. To attempt to do more than this would not be wise on the part of one who approaches the task before him without the benefit of extended experience; and, moreover, the need of a detailed discussion has been met by the message which the retiring Governor, enjoying the advantages of four years of intimate acquaintance with State affairs, has already laid before the Senate and Assembly. That the suggestions for the guidance of the Legislature contained in that message will receive thoughtful consideration, and, wherever possible, will be acted upon, is the earnest desire of him who now succeeds to the Executive office.
Standing here to-day, the new Governor of my native State, the impressive words of my oath of office still ringing in my ears, striving to appreciate fully the responsibilities that rest upon me, realizing faintly my own limitations and the difficulties before me—standing here to-day, I pledge to the people of California, and to you, gentlemen of the Legislature, the best that in me lies for a wise, careful, economical, and yet progressive administration. It is my hope that during the next four years this great State shall advance with even more rapid strides than ever before toward the accomplishment of her splendid destiny.
In order that this hope may be realized, it is indispensable that there should be the most cordial co-operation not only of all public officers, but also of all good citizens. And I shall therefore welcome, at all times, the views, adverse or favorable, of every citizen of California whose interest in the welfare of the State impels him to do his duty and freely express his sentiments.
THE STATE IS PROSPEROUS
We take office under conditions which are most flattering. California is blessed to-day with a material prosperity for which her citizens may well thank the bountiful mercies of the God who rules the destinies of nations and of men. Almost every interest is thriving as it has not thrived before in many years; our homes are homes of peace and plenty; work and employment abound, and the rewards of industry and enterprise were never greater. Wealth is increasing; and the proportion of the increase which is represented by the $350,000,000 deposited in our savings banks indicates that prosperity is widely distributed among all our people and is not the exclusive enjoyment of a few. Upon such industrial conditions as these we may well congratulate ourselves; and, if we are wise, we shall carefully refrain from any course which might produce a change for the worse.
One of the essentials to a stable prosperity is a reasonable content with the blessings we enjoy and the avoidance of dissensions which would interfere with the steady movement of industry. We may, therefore, well deprecate the efforts of those who, however honest in their mistaken zeal, would strive to create classes among our people where no classes are or ought to be, and who would endeavor to array those who labor with their hands against those whose livelihood is gained in other ways. Under the American flag, with its guaranty of equal rights, there is no room for classes. Labor, without capital and intelligence, can accomplish little; and capital, without labor and intelligence, is equally helpless. But labor, capital, and intelligence, all three working to a common end, can do all things. It is the duty of the State to see that each of the three, so necessary to our welfare, shall be given protection and encouragement, and that none of them shall be sacrificed to the others. But it should be always borne in mind that labor has but little opportunity to look after its own welfare; and, therefore, its rights and privileges should be the more carefully guarded by the State. But the rights and privileges of all persons should be, and will be, preserved and guarded by the State so long as we are true to the American ideal; and any attempt to divide our citizens into classes according to their occupations, or to found political parties upon so-called social distinctions, will be the first step toward the disintegration and downfall which have been the fate of all nations that have entered upon such a course. Greece, Rome, the French Empire, all fell to pieces as soon as classes were recognized in the state. Their fate should always be before our eyes.
THE WRIT OF INJUNCTION
Complaint is frequently made against our courts for what is alleged to be a too frequent and an ill-advised use of the writ of injunctions. Properly used, this writ may save property, life, and liberty. Improperly used, it may become an instrument of oppression. Without it, the rights and privileges of individuals would be often imperiled, if not destroyed. I would, therefore, advise great caution in legislating in the matter. While it will be well to look thoroughly into it, I am strongly of the opinion that hasty legislation might be very bad legislation; and the passage of ill-advised or hastily-considered laws on this subject might place us under greater disadvantages than those we now have.
A GOVERNMENT OF DIVIDED POWERS
The experience of a century has proved that the division of governmental powers between the legislative, the judicial, and the executive departments, each with its limitations well defined, both in our Nation and in our States, was a wise provision on the part of those who framed our constitutions. Sometimes this division of authority leads to vexatious delays, and sometimes the government appears to lack vigor in righting wrongs or instituting reforms. But, in the long run, this division of powers is conducive to that orderly progress which contains the best assurance of the greatest good to the greatest number. It is proper that each of these three departments of government should be independent, and that no one of them should ever attempt to interfere with the lawful prerogatives of the others. It shall, therefore, be my endeavor while at the head of the Executive Department to act in this spirit and respect the independence of each of the other departments. But, on the other hand, there should always be such cordial relations between the concomitant branches of the State government that no one of them should ever hesitate to advise and counsel with, or even offer criticism to, the others. Therefore, I bespeak from the members of the Legislature, both Senate and Assembly, from the other officers of the State government, and from the judiciary, on all occasions, and at all times, a full, frank, and free offering of advice, counsel, and criticism to and of the Chief Executive. And, in turn, I shall take it upon myself to advise and counsel with the other branches of the State government, as custom and the law direct.
PROTECTION OF INDUSTRIES
Two of the most important industries of the commonwealth are those of mining and agriculture, including under the latter term viticulture and horticulture, dairying, stock-raising, lumbering, and all the industries directly connected with the soil. These are the source of a great share of our wealth, our reputation, and our prosperity. In their development there have been illustrated not only the limitless resources which nature has bestowed upon California, but also the indomitable energy of our people. For, without the latter, the former would have remained as valueless as they were while the land was in the possession of the several races which preceded us. The gold-seekers who were drawn here by Marshall's discovery were pioneers in a double sense: for they not only explored a strange land, but in extracting the precious metal they were compelled to develop a new art. With characteristic American ingenuity, they overcame stubborn difficulties; and so thoroughly did they and their successors master the business that California has since been called upon to supply the world with practical and theoretical mining men.
The triumphs of our agriculturists have been no less remarkable. In this case, as in that of the miner, great natural opportunities were accompanied by formidable obstacles. Our markets are so far away that our crops are transported greater distances than those of any of our competitors. Only a rich soil and a singularly favorable climate, coupled with an enterprise which never permits itself to be conquered, could have made it possible to produce grain for the European markets in competition with the nearer wheat-fields, or to transport our fresh fruits across thousands of miles of desert and mountain to the Eastern centers where they are sold.
It is the duty of the State carefully to foster these great industries, to see that they are not oppressed by unequal taxation or other unfair conditions, and to make liberal provision for the scientific research and training which are necessary to insure our future leadership in these directions. There is an increasing dependence upon science in all the practical arts, and the husbandman and the miner of the future must be better educated than those of the last century.
WASTE OF FOREST RESOURCES
Another fundamental consideration, to which we can not too often return when discussing what will most surely promote the greatness of our State, is the necessity of protecting our natural resources from needless destruction or waste; and of all our resources there are none which stand more in need of safeguarding than our streams and forests. A large part of California is a semi-arid land, in which irrigation is either a necessity or an advantage; and over great areas of fertile soil the only measure of production is the measure of the water which is available.
The relationship between streams and forests is an intimate one, and the former are best guarded by protecting the latter. Our forests are our great natural reservoirs. Where the mountain sides are clothed with abundant forests, which delay the run-off of the winter rains, the need for artificial reservoirs is not great. It is claimed, too, that the amount of our annual rainfall has steadily diminished as our mountains have been denuded of their forests.
If, in a country as moist as Germany, the preservation of the forests is deemed so important that their ownership can not be trusted to private interests, and their management is one of the most important concerns of the government, how much more important is it for this State, by averting the danger of destruction of its forests, to save itself from such a fate as has overtaken Spain and other semi-arid countries of the Old World!
Our National Government, seeing this great peril imminent, has created a series of forest reserves which will protect forever the headwaters of numerous streams flowing into the San Joaquin and other valleys. But there are millions of acres of timber lying outside the forest reserves. Recently the title to these lands has been passing from the government of the United States to private parties with a rapidity which has excited justifiable alarm. One great manufacturing corporation has acquired no less than 40,000 acres. A single enterprising speculator who has been engaged for several years in buying out smaller owners and the makers of original entries is credited with controlling no less than 1,000,000 acres. Several other investors are each currently reported to have acquired from 20,000 to l00,000 acres. The methods by which these great tracts of timber land have been transferred to private owners are discussed in the last annual report of Secretary of the Interior Hitchcock. He charges that a system of making wholesale entries in the names of persons who are hired for the purpose has been inaugurated by speculators, who immediately acquire the title from the entrymen, and that, in this way, at a cost of only about $2.50 per acre, ownership is acquired of timber which in some instances is worth forty times as much. So long as a fraud is so easy and so profitable as this one has proved to be, it will be practiced; and Secretary Hitchcock announces it as his conclusion that unless certain Acts of Congress, notably the Stone and Timber Act of 1878, are soon repealed or amended, the result will be "the complete destruction of the timber on the unappropriated and unreserved public lands."
DANGERS OF FOREST DESTRUCTION
The rapid passage from public to private ownership of the forests of California which are not included in the forest reserves will be looked upon with misgiving by every thoughtful person, because it is hardly probable that private interest will tend to such use of the forests as will long insure their preservation. And though, from the legal standpoint, this is a Federal question, the State has a deep interest in its solution. During several sessions, the Secretary of the Interior has appealed to Congress, though, so far, without success, to change the laws which make it so fatally easy for corporations and speculators to acquire the ownership of the forests. Recognizing the vast prospective interest which the State of California has in this matter, it may be wise for the Legislature to address Congress by resolution, setting forth what, in its judgment, ought to be done.
But worse than the rapid cutting of our timber is the utter want of care for the protection of the second growth. Dead and fallen timber, stripped bark and limbs, rejected butts and tops are allowed to lie where they fall. In a short while the ground, exposed to the sun, is covered with a new growth of tiny trees, which, if allowed to grow, would, in half a score of years, cover again with grateful shade the land upon which the rains of winter fall. And thus our streams would still retain the slowly-fed sources of their summer fullness. But, ere this second growth can gain a development that makes it a protection to the thirsty soil, ere it can become sturdy enough to fight its own way, the fallen débris left by the timber-cutter is swept by mountain fires, and the little trees are killed before they have the opportunity to do the work that Nature designed them for. And, in the place of the cool, damp depths of forest-shaded mountain sides, holding, like sponges, the rains of winter, to give them slowly up in spring and summer to the mountain streams and rivers of the plains—in place of this, we have bare, baked mountain sides, gashed and gullied by the winter torrents, which thus run riot and are lost to those who need them most in the heat and dryness of succeeding summer.
Not only so, but in half a century this second growth, having done its work during these years, would, if permitted to exist, itself again become a source of wealth. And thus our friends, the trees, serve a double purpose to our growing wants.
I call the attention of the Legislature to the instant need of some action to protect our present forests and promote the growth of new ones in the place of those no longer ours. Let some protection be given; at least let the danger of fires, as set forth above, be guarded against by all possible precautions.
IRRIGATION AND WATER LAWS
Legislation which promises to be of inestimable benefit to the arid West has recently been enacted by Congress, whereby the proceeds of sales of the public lands in certain States and Territories may be used for the creation of irrigation works. No State has a deeper interest than has ours in this momentous innovation in national policy; and, in order that we may secure the largest possible benefit with the smallest loss of time, it would be well to provide for co-operation with the Federal authorities, at least in the measurement of the flow of streams, the surveys of reservoir sites and other preliminaries to the practical operation of the Act. This subject, as well as the matter of our forests, I also commend to the thoughtful attention of the Legislature.
Of equal importance is the revision of the irrigation laws, a course of action to which all parties in the late election pledged their candidates. This is a most necessary proceeding, because the evils of the existing system are numerous and very serious; but it is also a difficult undertaking, because it involves numerous legal and economic problems. These, however, should not discourage attempts at reform, but should only incite to greater efforts to accomplish results which would be so greatly beneficial and to which members of the Legislature, as well as the executive officers, stand pledged.
THE PUBLIC SCHOOLS
Education is the greatest interest with the care of which the State stands charged. Fully one half of the revenues raised by the State government is expended for education in one form or another; and in this California is merely yielding to the strongly marked tendency in all governments, which, where they once grudgingly gave a small pittance for the education of the people, are now content to see it become one of the largest of the State and local and even National expenditures. New York State, counting State and local outlays, spends $30,000,000 annually upon her public schools; and California, with a record of more than $7,000,000 a year, is, in proportion to population, equally liberal. The cost of our public schools is not far from $5 for every man, woman, and child in California; but the object is recognized as a noble one, and no taxes are paid more cheerfully.
In these matters California is where she belongs, in the front rank of progress. Proportionately, she expends as much for her common schools as any of the States in the Union; or, if there be exceptions, they are but two or three in number. In results obtained, also, we have reason for satisfaction, even if not cause for exultation. But excellence in these matters is marked by an advancing standard, and California can not afford to rest upon the record of what she has accomplished. Already several of the Western States surpass us in the percentage of children who attend school, and it will not do to be further outstripped in this competition.
The welfare and the perpetuity of the State demand that each and every one of its citizens should be educated and intelligent. The public schools are kept up for that purpose. And the State should insist upon its right to have every child within its borders obtain at least some education. And California should be ashamed that so large a proportion of her children do not go to school at all. There may be two reasons for this. One is the overcrowding of the schools in some of our larger cities, and the other is the fact that child-labor is becoming more frequent as our manufactories increase. Of both conditions California may well be ashamed. Let us provide school-room enough for all our children; and then see to it that every California child shall go to school at least six years. The State has a selfish interest in demanding this, while humanity and charity will applaud the act. Above all, California should, once for all, refuse to allow the growth of child-labor within her borders. I commend these matters to the careful consideration of the Legislature.
THE HIGH SCHOOL AMMENDMENT
By the adoption, at the recent election, of a constitutional amendment, the levying of a special State tax for the support of high schools is authorized; and thus there is taken another long forward step. It is the decision of the people, expressed by the ballot, that the State government may undertake the partial support of the secondary schools, and also that these should become, in the fullest sense, a portion of the general system. In dealing with a matter with which they are so well acquainted as they are with the common schools, the instincts of the people can be trusted. But, in the practical application, some difficulties may arise, owing to the unsatisfactory condition of the State revenue system. And for the present, and for some time to come, the advocates of State support of high schools ought to be content with a very moderate special tax.
There are at present one hundred and thirty-nine high schools in the State, and they have an enrollment of more than fourteen thousand pupils. The constitutional amendment and the legislation to follow will cause the establishment of a considerable additional number of schools. On a conservative calculation it is easy to show that if the State should undertake to pay one half the cost of high schools it would add to the existing burden of taxation an amount almost equal to the support accorded to the State University. The proportion of the cost of support of high schools which the State can undertake should, it seems to me, be much less than this.
An additional reason for reaching this conclusion is that our State government already contributes to the support of the schools in larger proportion than other States. The policy has been adopted by all the States of dividing the cost of maintaining public schools between State and local governments. But while the average of all the States shows that sixteen per cent of the total is borne by the State governments, the proportion so borne in California is forty-five per cent, or nearly three times as great. While the State is interested in having good, even the best, schools, still, it would be well, I think, to have a fair portion of their cost assessed upon the localities where they are situated.
INVESTMENT OF SCHOOL FUND
There is now lying in the State Treasury $1,000,000 of school money. It is the policy of the State to invest this money in such a manner as to produce as great an income as possible. But the law provides that the investment shall be made only in National, State, or County bonds. The returns from National bonds are so slight that it is hardly profitable thus to invest these funds. State bonds are not available, for the reason that nearly all of California State bonds are now held by the School Fund. And, on account of our great prosperity, California's counties are getting rapidly out of debt, and, therefore, their bonds are not available.
In order, therefore, that the School Fund may receive the largest possible income-commensurate with safety, I would suggest that the law be so amended that investments may be made in municipal and school bonds of California. Of course such investments would require the most careful investigation of the legality of the securities offered. But, with proper care, the investments would be safe, and the benefits to the schools would be great.
MAINTENANCE OF STATE UNIVERSITY
The State University, our greatest single educational institution, is in a position where it is compelled to appeal for a more liberal provision for its needs. The people have been generous to the University. But they have imposed upon it demands which are, at present, beyond its ability to meet. It has been costing, until very recently, approximately $300,000 to support the University; and measured by results, no equal amount of money expended for any other purpose produces greater benefits. The higher education has ceased to be regarded as an elegant accomplishment, or the possession of merely the fortunate few. Thousands of bright and ambitious boys and girls, drawn from all walks of life, look upon it as a necessary part of their equipment for future work; and it is no less remarkable how, in all lines of industry, the services of university-trained young men and women are demanded. Science and practical business are coming every day more into touch; and the university graduate is no longer looked upon as an impracticable, useless member of any community.
The University of California stands to-day among the foremost institutions of learning in the United States, if not in the world. Its graduates are holding positions of greatest trust and highest emoluments, and are looked upon, the world over, as among the greatest authorities in mining matters. To our agricultural, horticultural, and viticultural interests the University has rendered services of the greatest value. It has placed itself at the disposal of the farmer, the orchardist, and the vineyardist, and has given them the benefit of a scientific examination of soils and waters; it has helped them fight the pests which threaten to destroy the products of their toil; it has sent its representatives to the Farmers' Institutes, and placed at their disposal all the knowledge that scientific investigation has produced. The University has saved many millions to the State and has added many other millions to our wealth.
The 2,400 students now at Berkeley have taxed to the utmost the income so generously provided. The room which was ample for half the number of students is, long since, overcrowded. It is to be hoped that the Legislature may see its way clear to do something toward providing accommodations and instruction adequate to the army of young people who are now crowding and overcrowding the classrooms at Berkeley and making it necessary to resort to all manner of temporary expedients to provide for the overflow.
I commend, therefore, the University of California to the Legislature and bespeak a careful consideration of its needs.
HOSPITALS AND PRISONS
California, probably on account of her geographical position and her fame as a land of wealth and easy conditions of life, which serve as an attraction to the restless and idle, has an overplus of inmates in her penitentiaries and reformatories. These unfortunate persons constitute a small army of from 2,500 to 3,000, who are supported at an aggregate expense to the people of about $400,000 a year. There is another army of still more unfortunate ones, numbering over 5,000, who are inmates of our asylum-hospitals; and the burden of their maintenance is annually three quarters of a million dollars. In our two large Prisons, our five State Hospitals, and our Home for the Feeble-Minded, we are presented with problems enough to call for the efforts of the best penologists and alienists. May it not be proper to call to the aid of the State, to an extent greater than has yet been attempted, those who have made a scientific study of these matters, and to get the benefit of their counsel and advice?
It is generally admitted that the management of the State Hospitals for the Insane has been judicious and humane. The cost of support per patient in them is lower than in a majority of asylums in other States, and the percentage of recoveries is creditably high. But there are other things connected with the institutions which are not so satisfactory. The increase of patients is great enough to call for frequent large expenditures to add to the capacity of the hospitals, while, at the same time, there is generally a considerable number of inmates, who, although they are helpless and poor, and, therefore, proper objects of charity, are not in their right place in institutions intended for the treatment and care of the insane. It is much easier to secure the admission of patients to the hospitals than it is to effect their discharge after they have been found to have been improperly placed there. There is ample opportunity for improvement in the method of commitment and the manner of disposing of cases which belong in county hospitals rather than in institutions for the insane. The Legislature will do well to investigate these matters and provide a remedy therefor[e].
Although the continued growth of our insane population can be counted on with certainty, it would be unwise, I think, to make any addition to the number of asylums, because it is cheaper to add to the capacity of the existing institutions, the cost of maintenance being proportionately less in a large establishment, up to a certain point, than in a small one. In course of time, the main buildings at each of our hospitals will be surrounded by groups of smaller ones, the cottage plan of housing the patients having been tried and found very satisfactory. Thus, the accommodations may be increased indefinitely, without proportionate increase in the cost of administration.
It is probable, however, that it will soon be necessary to make some provision for the separate care of two classes, the criminal insane and those insane and criminals who are afflicted with tuberculosis and other infectious and contagious chronic diseases, and who, therefore, ought not to be allowed to endanger the health of those who are free from such diseases.
To direct the operations of its hospitals, with their large and growing population, the State should enjoy the services not only of the best medical specialists, but of a well-trained corps of nurses and attendants. And this can be best insured by making security of tenure, certainty of promotion, and increase of pay the faithful rewards of faithful work and effort for improvement. Appointments and removals for political reasons should not under any circumstances be made in the State hospitals.
The State Commission in Lunacy, which was established a few years ago, and which shares the powers formerly exercised alone by independent local boards of trustees, has accomplished considerable in the direction of unifying the system, stimulating improvement, and equalizing conditions. Further benefits from the new arrangement may be expected in time.
The present method of governing the State prisons, through a Board of Directors, who are appointed for long terms, has brought forth some good results, and the Directors must be applauded for the improvements in discipline and the efforts toward the reformation of criminals which they have made. At the same time, it is admitted by the members of the Board, in their biennial reports, that there is room for changes for the better in a number of ways, most of which will require action by the Legislature. The congregate plan, by which persons of all degrees of criminality, old and young, first offenders and hardened veterans, are mingled, is still pursued. There can be no doubt that this exercises a disastrous influence against the success of reformative measures. Both humane and economic reasons appeal to us to do what we can to bring our penal methods into line with the best thought of the day. And I therefore bespeak a careful consideration of any proposals intended to accomplish this which may be brought before the Legislature. One such proposal will be for the establishment, in a few of the larger cities, of special courts for the trial of juvenile delinquents, and the separate confinement of youthful and first offenders, so that they may not be hardened in crime by enforced association with those who are incapable of reform.
THE NATIONAL GUARD
There can be no doubt that standing armies, such as are maintained by European countries, may be a menace to liberty, and certainly are expensive and a drag upon material prosperity. In our country they are not needed. On the other hand, the Spanish-American war has demonstrated the necessity of having a trained body of men ready to spring to arms whenever necessity shall demand. And the instant ease with which the National Government was able to put into the field armies of at least partially trained soldiers proved, beyond the question of a doubt, the necessity for an organization of State troops, through which passes a percentage of our young and patriotic citizens. It is idle to say that our National Guard is of no use. The gallant service rendered by the First California Volunteers, taken as a body from our National Guard, to say nothing of those other thousands who volunteered in other commands for service in the Spanish-American war, refutes the accusation of uselessness. I therefore recommend that our citizen soldiery be given due consideration and support by the Legislature.
The great commerce that is beginning to flow through our State to and from the Far East, where this nation has recently acquired important possessions, mostly finds its entry and exit through the port of San Francisco. Within a comparatively few years the commerce, which even now taxes to its utmost the facilities there so wisely provided by the State, will wax far beyond the capacity of the present docks. The newly laid transpacific cable, the greatest work of our late lamented fellow-citizen, John W. Mackay, brings us closer to Hawaii, and will, in a few short months, unite us to the Orient. From this will flow still greater benefits; and we must be ready to take advantage of them.
It behooves the State, therefore, carefully to consider the fast approaching absolute inadequacy of the existing facilities and to increase them by some well-devised plan of expansion. Transportation seeks the cheapest routes, and ocean commerce concentrates in the ports where cargoes can be most economically loaded and discharged. California's seaports have strong competitors in the North; and, in order to hold the profitable business we already enjoy and to command as much as possible of the new commerce of the Pacific Ocean, it is necessary to make the most of the opportunities offered by the harbor of San Francisco, and also of other harbors on which the State controls water frontages.
I recommend, therefore, that the wharves and docks of San Francisco, where so much has already been done and so much more is urgently demanded, be given instant attention, and that some plan be devised whereby the present facilities be greatly increased as soon as possible. And, in this connection, it may not be out of place to call attention to the fact that the building of wharves and docks of wood in these teredo-infested waters is, while cheapest in the first instance, far more expensive in the long run. It would be well, therefore, it seems to me, to devise a plan for making all these needed improvements, so that they will last indefinitely and not require to be replaced every few years.
If, in order to execute the improvements, it should be necessary to borrow money upon bonds, to be paid, principal and interest, from the future income of the port, as was done when the ferry building was constructed, it is well worth considering whether this would not be a justifiable and business-like proceeding.
The harbors of San Diego, San Pedro, Oakland, and Eureka should also receive attention at the hands of the State, and some plan be inaugurated for their improvement.
THE BALLOT LAW
The ballot law, which was adopted in this State in the belief that it would correct the evils which prevailed when the old party ballot was used, has developed a weakness which could not have been foreseen, and legislative remedy is necessary. In its desire to exclude all opportunities for fraud and to obtain absolute secrecy, the Legislature required strict uniformity in the marking of ballots; and the courts have interpreted these requirements with equal strictness. The consequences are that many voters, through carelessness or lack of understanding, make mistakes which are fatal; and the ballots have to be rejected. These are not the results which the framers of the law intended; and some change to prevent the thwarting of the will of so many voters is necessary. But the framing of the needed amendment calls for the exercise of good judgment, lest the attempted cure of one evil create other and worse evils, as so often happens in dealing with matters like this. It seems probable that, in the ballot-machine, which has now been clearly legalized by a change in the Constitution, we shall ultimately find relief from the perplexities of ballot laws which are frequently too loose or too strict to work well. I need hardly say, however, that the whole question should be approached with great care and handled with extreme conservatism. There is nothing in which, to my mind, haste would make greater waste than this.
ST. LOUIS AND PORTLAND EXPOSITIONS
During the next two years there will held two important expositions of art and industry in which it may be desirable that California should be represented by such exhibits of her products as will most likely prove a benefit by attracting capital and the best class of settlers. The first of these is the Louisiana Purchase Exposition, which will open in the city of St. Louis next year, and the other is the Lewis and Clark Exposition, to be held in Portland in 1905. The former will be international in character, and will equal or exceed in scope any other exposition held in this country; while the second is of great interest to California, because it will be held in the leading commercial city of the neighboring State of Oregon.
I recommend that a modest appropriation be made, under a law so framed that it will be possible to secure the most judicious expenditure of the money and the most efficient direction of the exhibit. We should try to profit by the experience already gained by participation in several expositions, to secure, by good management, the largest measure of benefits with the smallest expenditure of funds.
APPROPRIATIONS AND TAXES
At present, the Governor of California is inducted into office under circumstances which greatly militate against his efficiency. Elected in November, he goes into office early in January, only two months afterward. Unable, in this short space of time, to gain the mastery of the intricacies of so great and complicated a business as is presented to him by the manifold affairs of the State; unable even to visit, much less to study, the many State institutions; precluded from informing himself in any satisfactory manner as to the needs of or abuses in any of the many departments of the State government, the Governor, as his first official duty, finds himself face to face with a Legislature, most of the members of which are as inexperienced as he in the business they have in hand. Would it not be better to have the State election held two months earlier, say about September first? If this were done the newly-elected officials would have four, instead of two, months in which to study the situation and inform themselves on their new duties. To do this, would, of course, require a constitutional amendment.
THE NEXT TAX LEVY
I have reserved till the last a matter which holds as large responsibilities for the Legislature and the Governor as any other, and which calls for renewed serious consideration at each biennial session. The maintenance of so many State institutions, boards, and commissions renders the financial problem a troublesome one at all times. During the next two years it is certain to be unusually difficult. Briefly stated, the situation is this: The tax bill passed by the last Legislature provided a levy for the General Fund much smaller than is usual. Although this rendered a low tax rate possible for the current year, which was very agreeable to taxpayers, it will make a serious drain upon the surplus which had been accumulating in the treasury for some years. Exactly what the conditions are will be made clearer by the following figures, which show the amounts directed by law to be raised for the General Fund for each of the last six fiscal years:
Forty-ninth fiscal year...........$2,553,602.00
Fiftieth fiscal year...................2,553,602.00
Fifty-first fiscal year...............4,000,722.00
Fifty-second fiscal year..........2,946,222.00
Fifty-third fiscal year..............2,750,000.00
Fifty-fourth fiscal year............1,750,000.00
The cost of conducting the State government does not vary so much from year to year that the General Fund levy can be reduced a million dollars in any one year without causing the expenditures to exceed the revenues. The demands upon the General Fund in recent years have exceeded three million dollars annually. And, even when receipts from other sources than taxation are added, the revenues of the year are still bound to be exceeded by the expenditures, if the levy is no larger than it has been for the last two years, and especially for the fifty-fourth fiscal year.
The present Legislature and the Executive must face the serious fact that the General Fund will be almost depleted by the end of the fiscal year, June 30, 1903, and the new fiscal year will commence with so small a balance that, between July and December, before the taxes for the coming year are paid in, the fund will be exhausted and it will be necessary to resort to borrowing from other funds in order to pay the State's creditors when their claims mature. Later on, the amounts so borrowed must be returned to the funds from which they were borrowed.
Owing to the conditions just described, it is inevitable that the levies for the General Fund for the fifty-fifth and fifty-sixth fiscal years should be much larger than the levy for the fifty-fourth. And State taxes, therefore, will be higher. It is only fair that it should be distinctly understood in advance that this, however regrettable, can not be avoided, and that it will be due, not to any extravagance of the present Legislature, but to the policy of its predecessor in reducing the revenues more than it reduced the expenditures.
In justice to the taxpayers, taxes can not be raised above a certain figure. To keep taxes within bounds, and, at the same time, to rehabilitate the General Fund, it will be necessary for the Legislature to make a sincere endeavor to achieve economy by retrenching every needless expense. The necessity for economy is too plain to be questioned, and while there are many improvements in connection with the State institutions which could be made with good effect—while, indeed, many of them are so much needed as to be really urgent—only so many of them can be undertaken as can be provided for by a reasonable tax rate.
THE GENERAL PROPERTY TAX
The present situation is such as to suggest a short review of the recent history of our tax system. There is a general feeling that the State revenue system is not working so well as might be expected—certainly, not so well as could be desired. This, perhaps, is not surprising, and at any rate, it is not peculiar to California. Two years ago a special committee of the California Senate made a report on taxation, in which it was said: "From Maine to Texas, and from Florida to California, there is but one opinion as to the working of the present system. That is, that it is inequitable, unfair, and positively unjust."
The particular subject under discussion by the committee was the general property tax, and it was considered from the taxpayers' point of view. From that standpoint, as well as others, it is unsatisfactory. In the case of California, it has failed to raise the revenue which, at a fair rate, ought to have been produced. And the only conclusion is that much property escapes taxation. For a long time the State has been growing in wealth even more rapidly than in population, as proved by the immense increase in bank deposits, by the growth of commercial exchanges, by numerous heavy investments of capital, and by the general air of prosperity.
And yet assessors have been able to find very little of this newly-created wealth. The total assessment of property has remained almost stationary. And, although we are now enjoying an era of unexampled prosperity, the total assessed valuation is a little less than eighteen per cent greater than it was fifteen years ago. This, every one will admit, is absurd.
The burden of taxation on property which the assessor finds is generally heavy enough—often too heavy—but there is much which he fails to find. This becomes very clear when the proportion of personal property assessment compared with the entire assessment is considered. There was a time, many years ago, when personal property comprised very nearly fifty per cent of the total assessed valuation. That was in the 60's. By 1880 the personal property assessment had gone down, relatively, so much that it constituted only twenty-five per cent of the total. By 1886 it was down to twenty per cent, and in recent years it has been generally about fifteen per cent, though sometimes falling considerably below even that small proportion.
As a community grows in wealth and civilization, the proportion of its wealth invested in forms of property other than real estate and improvements tends to increase relatively as well as absolutely. And yet, the amount of personal property assessed in California is actually less by several millions than it was thirty years ago. As long ago as 1872, the assessors found nearly two hundred and twenty million dollars’ worth of personal property. A few years later the assessment had shrunk to a little more than half of that sum, and, although there has since been a slow increase, it amounts, for the current year, to only two hundred millions.
Contrary to the belief, which is entertained by many, the financial troubles of our State government are not due to a large increase in aggregate expenditures, because in recent years there has been no such increase. Eight years ago both receipts and expenditures were slightly larger than they are at present. It is inevitable, in spite of all the economy we can practice, that there should be a progressive growth of expenditures for public purposes, keeping pace with the population, or even outrunning it, and it is clear that, soon or later, our revenue laws must be changed, so as to produce more satisfactory results.
As has been remarked, the complaint is widespread against the workings of the general property tax. And some of the most advanced communities are casting about to see what they can do to supplement this source of revenue or to supplant it entirely as a means of providing for the needs of State governments. In the report of the United States, Industrial Commission, the whole subject of State and local taxation is reviewed, and the effects upon industry of the present system are considered. One of the conclusions reached by these investigators, as it has been reached by others, is that the present system does not bear equally upon all classes of property owners, but is very inequitable in the distribution of its burdens. It is contended that the agriculturist, all of whose property, both real and personal, is usually visible to the assessor, is taxed considerably in excess of his fair proportion to other property owners. The escape from taxation of personal property is everywhere a crying evil.
To some of these facts the State Controller of California has called attention in former years. He has suggested certain changes in the tax laws, which might have been made with advantage. But most of these suggestions still await action by the Legislature. They should be taken up, and, where possible, adopted.
ATTEMPTED REFORMS IN OTHER STATES
Realizing the defects in their tax laws, a number of Eastern States have attempted to reform their tax systems. And more progress has been made in eliminating the general property tax than is known to most persons. In Vermont, taxes on real and personal property for general State purposes are levied only when specially ordered by the Legislature; although school and highway taxes are levied annually. In Connecticut, real and personal property has not been taxed for many years. In New Jersey, the only general property tax is collected for schools. In Wisconsin, practically the same state of affairs prevails; the only general property tax ordinarily levied being for the schools and the State University. Pennsylvania has gone even further than her sister States, and real estate is never taxed, except for county and local purposes. The State of New York, also, is aiming to eliminate the personal property tax; and it has made so much progress that, in the year 1900 the tax levied was only twelve cents on the hundred dollars, the lowest in forty years. In 1901 New York derived a revenue of $5,000,000 from the corporation tax, and $4,000,000 from the inheritance tax.
In the report of the United States Industrial Commission, before referred to, the conclusion is reached, and strongly supported, that it should be the aim of the State governments to abolish the general property tax for State purposes, leaving the counties, cities, and other political subdivisions the exclusive right to tax real and personal property, while the necessary revenues for the States are raised in other ways. In the course of the argument, the majority of the Commission makes the following assertion:
"The general property tax is better adapted to a new country, or to an agricultural population, where property is homogeneous, and mainly tangible, than to the modern industrial state."
These matters are referred to, not because it is believed to be possible for California to enter at once on a radical reform of its revenue system, but because it is well to take note of impending changes before they are actually forced upon us, and to promote such discussion as will prepare the way for the transition. Even if it were possible, it would be inadvisable, because unjust, to make a sudden revolutionary change, altering the whole scheme of taxation. Such changes should be gradual, so as to give least shock to established industries and to vested interests.
Meantime, much could be done in the line of practical reform by putting forth greater efforts to live up to the tax laws we already have and to force a fair assessment of the different forms of property. There is no reason why the assessment roll should remain stationary when a State is growing rapidly in wealth, and more particularly, no reason why all but a small fraction of the vast amount of personal property should escape the notice of the assessors. A determined effort on the part of the State and county officers to do their duty would soon work a change, the effects of which would be gratifying.
THE DUTY TO THE PEOPLE
I welcome the members of the Senate and the Assembly to the high duties which, in the name of the people, whose chosen representatives they are, it is their privilege to perform. The opportunity is presented, to render service which will be of vast benefit to the State of California; but to take advantage of and improve the opportunity there is needed such a consecration of purpose as will exclude any temptation to labor for the more selfish objects of party or of self. The time in which the work of the Legislature is performed is short; sixty days afford only a brief space in which to deal with the numerous subjects, some of them of great importance, which are certain to be presented in bills and constitutional amendments. The session is too short for effective work if any portion of it is frittered away through inattention to business or is dissipated in needless contentions. There should be no political strifes. We have each and all been elected by the people; we are all their servants, and faithful attention to their affairs—not senseless rivalries—is what they expect at our hands. They will not commend us if we engage in personal bickerings or neglect the public business while trying to thwart one another and gain a supposed political advantage for any party or any person. The familiar saying, that he serves his party best who serves his country best, is applicable at this time; and it is in that spirit, I trust, we shall act during the thirty-fifth session of the California Legislature. If we do so, the fruits of our labors will be certain to be such as, when presented to the people, to gain their earnest approval.
To the retiring Governor I extend my congratulations on having carried on the affairs of state so well. Peace, plenty, and prosperity are ours. During his administration there have been but few internal disturbances of the public welfare. And I now take up the burdens just laid down by Governor Gage with the hope that, like him, I may retire from office leaving California peaceful and prosperous and her people happy and contented.