Governor West's address to 26th Oregon Legislative Assembly

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Message Of OSWALD WEST Governor of Oregon, To the Twenty-Sixth Legislative Assembly Regular Session 1911

Gentlemen of the Legislature:

Under the Constitution it becomes my duty as Governor, and I deem it a high honor and privilege, to inform you, insofar as I may, of conditions in the State and its institutions and to make such recommendations or suggestions concerning legislation as I may deem fitting or necessary.

OUR SYSTEM OF TAXATION

The power to tax being essentially legislative in its nature it follows that in the absence of constitutional limitations the power of the legislature as to matters of taxation is plenary and absolute. The framers of our State Constitution realized the extent to which this power might be carried and, as a protection, hedged the legislature about with certain constitutional limitations which required that all taxation should be uniform and equal. By uniformity they meant that all property similarly situated should be taxed at the same rate and in the same manner, and by equality they meant that the burden of taxation should be so distributed that each taxpayer might contributed in proportion to his property and feel neither more or less inconvenience from his share of payment than every other person experienced. They were doomed to disappointment, however, for instead of bringing about an equal distribution of the burdens of taxation these constitutional provisions became breastworks behind which the public service and other corporations of the State could dodge and escape being hit for the payment of a just share of the cost of conducting our State government.

Taxation was undoubtedly fairly equal in early days in this State, for at that time most of our wealth consisted of lands and live stock, which were easily listed and valued, but with the rapid growth and development of the country, the coming of “big business” with its public service corporations and their “franchises” and “intangible values”, conditions have changed and call for new methods of distributing the burdens of taxation.

"New occasions teach new duties, Time makes ancient good uncouth."

The taxpayers of this State have known for years that our general property tax was “uncouth” but for some unknown reason have never, until within the last few year, taken steps to remodel it. The first good move was that made by the legislature of 1905 when it provided for the appointment of a board of commissioners for the purpose of examining and reporting on all matters of assessment and taxation. This board made a most exhaustive report to the Governor and prepared and recommended for passage a number of bills and constitutional amendments, which in their opinion would give the people a more efficient and equitable system of taxation.

A number of the bills proposed by the board were passed by the legislature of 1907, but its constitutional amendments and bill for creating a State Tax Commission failed to pass. The legislature of 1909, however, took up these measures and after making a few changes passed them. The constitutional amendments, of course, had to be and were submitted to the people at the recent election. They failed to pass, however, and their failure to pass was due largely to the fact that the people were led to believe that their passage would result in many departures from our present system of taxation and open up the way for all sorts of “isms”. The measures in fact were most conservative and had the endorsement of nearly every tax expert in the country, and while opening the way for a most equitable system of taxation, one which would compel each to contribute a just share toward the support of the government, they threw ample constitutional protection around each and every class of property.

While the people were voting down these alleged “radical” amendments they voted for and passed the so-called “poll tax” amendment which wiped out all existing constitutional limitations and restrictions but reserved to the people the right to vote on all measures pertaining to taxation. In the absence of express constitutional limitations the legislative power in matters of taxation is unlimited and extends to everything; it acknowledges no limits and “may be carried even to the extent of exhaustion and destruction, thus becoming in its exercise a power to destroy.”

All limitations and restrictions in our State Constitution having been removed, so far as the people are concerned, the only thing which stands in the way of an abuse of the power to tax is the integrity and sense of justice of the people and the restrictions found in the Constitution of the Untied States. Our Federal Constitution provides that no State shall make or enforce a law which shall abridge the privileges or immunities of the citizens of the United States and that no state shall deny any person the equal protection of the laws or permit the taking of property without due process of law.

This new amendment will no doubt prove beneficial, however, because it will open the way for any and all reforms which were aimed at through the two defeated amendments, but it is objectionable in that it provides that no tax measure passed by the legislature can become effective, not even a meritorious emergency measure, until it has hung on the hook for two years and has been approved by the people. This provision was no doubt inserted for fear that in the absence of constitutional restrictions unjust measures might be passed by the legislature. This was undoubtedly a wise precaution, but it was unnecessary to go to extremes. The people would have been given ample protection if it had simply provided that no tax measure passed by the legislature should carry an emergency clause. This would have given the people a chance to examine all tax measures passed by the legislature, invoke the referendum on the objectionable ones, and permit the taking effect without delay of all those which were meritorious.

While this amendment may be open to some criticism it nevertheless opens the way for tax reform and as it will permit the adoption of any equitable system of taxation the people may choose to adopt there remains no reason on earth why we should not without further delay adopt the most progressive system to be found in any State of the Union. Past legislatures have laid the ground work for a good system and it now rests with you to complete it. The first and most important step is to provide for the separation of the sources of State and local revenue. When this is done the State will raise its revenue principally from public service corporations, license fees, inheritances or such other subjects as the legislature or the people may think could best be handled by the State Tax Commission. This system would give each county complete home rule in the matter of taxation; and unless the sources of State revenue failed to produce enough to cover the needs of the State the counties would not be called upon to contribute anything towards the support of the State and would be concerned only in raising sufficient revenue to cover county expenses. Each county could fix its valuations to suit itself, or as its local needs might require, and without fear of subjecting its citizens to the payment of an unjust portion of a State tax.

The advantages of the proposed system are set out by the tax commission of the State of Missouri and are as follows:

“First. Complete separation would abolish at once the expense, friction and vain attempt to equalize among different counties.

Second. When separation is effected it will be possible to place each tax in that branch of the government, local or State, which is best adapted to administer it.

Third. The local taxing districts, the counties and cities of the State, will then have practical home rule in matters relating to taxation.

Fourth. Equality in taxation, both State and local, can then be secured by making all taxation effective.”

OUR STATE BANKING LAW

Our State banking law is a failure in that it protects the crooked banker from the public, but does not protect the public from the crooked banker. Adequate protection for the depositor demands the following amendments:

Amend our constitution so as to make stockholders liable for double the par value of their stock.

Require more frequent and thorough examination of banks

Further limit the amount of funds to be loaned to any one person, firm, or corporation

Require banks doing both a commercial and savings business to conduct the same as two distinct departments.

Require banks to confine themselves to a banking business

Provide that in even of failure of a bank its affairs be wound up by the State Bank Examiner under the direction of the courts and not by a receiver appointed by the courts.

INSURANCE LAWS

Knowing the insurance laws of this State were obsolete and afforded little or no protection to the public, but realizing that any attempt at complete revision without careful study and investigation would lead only to confusion, the last legislature contented itself with passing a law which removed a few of the most apparent abuses and provided for the establishment of a Department of Insurance which was to have general supervision over all companies doing business in this State. The wisdom of this move is borne out by results obtained during the past two years. The prohibiting of combinations and rate agreements between fire companies and the opening up of the field to competition has resulted in a reduction of about 20 per cent in rates and means an annual saving of about $500,000 to the policy-holders of this State.

The Insurance Commissioner fully sets out in his report the needs of the State in the way of insurance legislation and inasmuch as he has no doubt given this intricate and perplexing question careful study and investigation his recommendation should be given careful consideration. He has prepared several bills with a view of correcting a number of existing abuses and throwing additional safeguards around the policyholders of this State, but recommends that before a complete revision of our laws is attempted the legislature authorize the appointment of a commission for the purpose of investigating the whole question of insurance and preparing for submission to the next legislature an up-to-date and effective code of insurance laws. I am heartily in favor of the appointment of such a commission for it will bring order out of chaos in matters of insurance and at little expense to the State. There are public-spirited men, I am sure, who would willingly serve without pay other than their mileage and per diem when attending meetings of the board.

The 83 stock fire insurance companies doing business in this State alone wrote in 1909 risks aggregating over $177,000,000, for which they collected over $3,000,000 in premiums. Out of the premiums collected about $645,000 were returned on account of risks cancelled and about $943,000 paid for losses, leaving the companies a balance of about $1,400,000. The 12 local mutual companies the same year added over $25,000,000 to the amount of their risks, collected over $327,000 in accounts and paid about $142,000 in losses. It is important, therefore, that the whole question of insurance be given at an early date that careful consideration which it surely merits, in order that there may be placed upon our statute books an effective and comprehensive insurance law which will cover insurance of every kind and give our policyholders every possible protection.

STATE LAND OFFICE

During recent years the affairs of the State Land Department have been administered in the interest of the taxpayers and school children, and it has ceased to be a breeding ground for scandal and a place of “easy picking” for the members of the old school land ring. An effective land law made it possible for the State Land Board to adopt many long-needed reforms and secure a fair price for the remnants of that magnificent grant of over 4,000,000 acres which was given to Oregon by the Federal Government to aid in the support of its common schools. The records show that on January 1, 1903, three-fourths of all the lands—school, college, university, and swamp—granted to the State had been sold and that the average price received by the State was $1.25 per acre. The State has since that date sold another one-eighth of the grant, for which it has received $2,500,000 or an average price of $5.00 per acre. This leaves about one-eighth of the original grant remaining unsold, and when sold, if the present policy of the board continues, it is safe to say that the State will have realized as much from the last one-fourth of its grant, notwithstanding much of it is inferior land, as it did form the sale of the first three-fourths.

The department having adopted up-to-date methods, the records are now so kept that the public can at any and all times secure full information concerning the transactions of the office or the lands of the State. In addition to these reforms it is essential, however, that every deed issued by the State since its admission tot eh Union be carefully examined and checked to ascertain whether or not the lands described therein have been patented to the State. If it develops that deeds have been issued for lands to which the State has no title, steps should be taken to secure patent or, unless a waiver has been taken, repay the purchase price.

The records on September 30, 1910, show the school funds to contain $6,340,898. Of this, $5,370,829.62 is loaned on farm mortgages; $229,225 invested in school district bonds; $684,858.21 due as deferred payments on sales of school lands, and $55,960.87 is cash on hand.

In making its mortgage loans the State Land Board has in the past been guided by the information furnished by its local attorneys in each county, and if any of them have been careless or guided by selfish motives in recommending these loans it is possible that the State is carrying some bad paper. In any event it is the business of the State Land Board to look into the matter carefully and I will recommend to the board that as soon as the weather and roads will permit the State Land Agent be required to make a personal investigation of, and report upon, every outstanding mortgage loan, in order that the board may be fully advised as to the nature of the security and take steps to protect the loan where the security is found inadequate.

The State has made, and there are pending in the General Land Office at Washington, indemnity school selections covering about 65,000 acres of land. These lands have been sold subject to patent and one-fifth of the purchase price, or about $130,000, has been deposited with the State pending approval of the selections. The State cannot loan this money nor does the $520,000 due on deferred payments draw interest until the selections are approved by the General Land Office. It is therefore of the greatest importance that these selections be approved at an early date, in order that the school fund may receive the benefit of the interest earnings, which will amount to about $40,000 a year. I propose, therefore, to take up this matter without delay with our delegation in congress, with a view to having the General Land Office hurry along the approval of these selections.

STATE PRINTING

Good business demands that hereafter each department of State be required to file all requisitions for printed matter with the State Printing Expert and it be made his duty, before placing the order with the State Printer, to inquire carefully into the requirements of the department filing the requisition, in order that no more than the amount necessary to serve its needs be ordered and the State be saved unnecessary expense. It is common knowledge that under the “help yourself” system now in vogue needless quantities of printer matter are ordered and used only for fuel.

A great saving could also be made if the different departments would boil down their annual reports and eliminate a lot of useless statistical matter. I am sure this can be done without depriving the public of any useful information. A dollar saved is a dollar earned, and there is absolutely no reason why the State should throw its money away for useless printing. As you are no doubt aware, the printing plant now being operated in the State capitol building is the private property of the State Printer, who, having never been placed upon a flat salary, is working under the old fee system.

In 1905 the State of Kansas placed her State Printer upon a flat salary and the records show that a saving of over 40 per cent has been made by the State through the change. I hope to see a bill introduced and passed at this session which will authorize the purchase of a

State printing plant and provide for placing the State Printer on a flat salary. This reform is long overdue and should be adopted without further delay.

PURCHASING SUPPLIES

The supplies for all of our State institutions should be purchased by, or under direction of, one board and this can be done without the creation of additional boards or commissions and with but little added expense to the State. This purchasing board should consist of the Governor, Secretary of State, and State Treasurer, and it should be given authority to employ a chief clerk who should be a man well fitted for the important position he would be called upon to fill. It should be made his duty to visit each State institution at regular intervals and after learning its needs assist its officials in preparing an estimate for a certain ensuing period. From these several estimates he should prepare for the use of the board a statement showing the total needs of all institutions. Bids should then be advertised for and the supplies purchased from the lowest bidders.

This arrangement would not only prove an economical one but would reduce the purchasing of supplies to some system. I can see but few obstacles which, under our present law, stand in the way of this reform, but would ask that the legislature give the matter careful consideration in order that all may be removed.

AUDITING ACCOUNTS

Oregon needs, and the interest of economy demands, some adequate and effective system of auditing the accounts of the State.

The legislature of 1909 placed its stamp of disapproval on the useless practice of appointing so-called expert committees to audit the books and accounts of the several State officials by refusing to appoint such committees. It is common knowledge that most of these committees in the past have been loaded with incompetents who have drawn fat sums from the State and have given nothing in return. The legislature with a view to forever putting an end to this evil appointed a committee to prepare a bill which would provide for some permanent system of auditing the books and accounts of the several State officials. I am no advised as to what action was taken by this committee but know that no such measure has ever become a law. The result is that the books and accounts of nearly all State officials go from one year’s end to another without being experted.

The Secretary of State is required to audit all bills and accounts paid by the State, and, since he is the State’s purchasing agent and acts as a member of nearly every State board he is called upon to perform the double role of not only expending vast sums of State money but of approving and auditing his own bills and accounts. This system is unfair to the Secretary of State, and it is unfair to the taxpayers of the State. Good business demands that steps be taken to provide some regular and effective system of auditing the books and accounts of each and every State official who has the handling of State funds.

It is, also, an undeniable fact that the system of keeping the public records throughout the State is chaotic. Each county has its own peculiar plan, and in most instances each plan is different from every other. This lack of system causes confusion in the transaction of public business and spells loss and waste for the taxpayers of the State. I would earnestly recommend, therefore, that the legislature give its serious consideration to the evolution and adoption of some uniform system of keeping the public books and records, both State and county, for so to do would result in the saving of large sums of the people’s money now being lost through the use of diverse methods of transacting the public record business of the State.

OREGON STATE PENITENTIARY

The Oregon Penitentiary is one of the best managed and most humanely conducted penal institutions to be found in the United States. This fact is admitted by every student of prison reform who has visited the State. The Superintendent, believing that the reformation of a convict can be better accomplished by treating him as a human being and with such kindness as his conduct will merit, has tried, as far as good prison discipline will permit, to furnish the convicts on certain days with wholesome entertainment for the mind and exercise for the body in order that the monotony of prison life might be broken and the existence of the men made more cheerful. The Superintendent has been assisted in this work by a number of volunteer prison workers who deserve great praise for their untiring efforts to make the lives of the convicts more pleasant and ultimately bring about their more certain reformation.

There are approximately 430 prisoners now confined in the State Penitentiary. Many of these prisoners are employed as helpers around the institution, others in the State’s brickyard, while a large number of them are employed in the stove foundry in accordance with a ten-year contract made by the State November 20, 1907, with the Lowenber & Going Co. The State receives 45 cents per ten-hour day for their labor and the contract calls for the employment of not less than 150 men and as many more as the company requires providing they can be spared without depriving the State of necessary help around the institution.

Objection has been made to the employment of convicts in competition with free labor, and there is merit in the objection. But common decency and the consideration which we should have for the unfortunate make it imperative that the convicts be given employment of some kind. Until some objectionable system of employment is devised it would be most inhuman to condemn these men to idleness and to thus deprive them of the God-given blessing of useful occupation. It should be the aim of the State, therefore, to provide them as soon as practicable with employment which will remove them as far as possible from competition with free labor. The best solution it seems to me is their employment in the construction of roads. I am advised that the good roads measures which are to be introduced at this session of the legislature will call for the use of convict labor, and, if so, I hope the people will give the experiment a fair trial, for it if proves a success it will not only insure good roads for, but a great saving to, the State, and will provide healthful outdoor work for the prisoners and go a long way toward putting an end to competition between free and prison labor.

Since the passage of the indeterminate sentence law of 1905 the paroling of prisoners at the expiration of their minimum sentence has, as the law intended, become usual, especially when some one stands ready to furnish the prisoner with employment and answer for his conduct. The parole system has been adopted by the United States Government and 17 States of the Union and has the endorsement of practically every student of prison reform. Our courts, however, do not appear to give this law as much consideration as it merits, for the records show that out of 1,041 convicts committed to the penitentiary since the passage of the law only 118, or 12 per cent were given indeterminate sentences Some of these who were given the indeterminate sentence were repeaters, while many of those who were denied the benefits of this most humane law, and sentenced for a definite time, were young men and boys who had never before committed a crime. As many of those serving definite terms have good prison records and by their conduct have shown every indication of a desire to lead better lives and become law-abiding citizens it is hoped that the legislature will see fit to enlarge the scope of the parole law and make its provisions apply not only to those who may be convicted in the future, but to those who are now serving time.

The inequality and lack of even justice which exists in our system has been removed to some extent through the initiation by Governor Chamberlain of the practice of granting conditional commutations or pardons, but the State should, through the expansion of the parole law, adopt a uniform policy which would make such action by the executive unnecessary and would also remove every possible excuse for the abuse of the pardoning power. The extension of the parole system would be found extremely advantageous should the State decide to use convict labor in the construction of roads.

Capital punishment should be abolished, in my opinion, in this State. The system of paying for a life with a life is, in my belief, merely a relic of that ancient and barbarous doctrine of “an eye for an eye and a tooth for a tooth”.

It is a fact, undisputed by the judicial history of this or any other State, that the average jury shies at a verdict involving the sacrifice of human life. Murder, from the very nature of the crime, must be proven, to a great or less degree, by circumstantial evidence, and the average man, sitting as a juror, hesitates before casting his vote to deprive a fellow being, no matter how degraded his condition, of his life. The result of this is the hung jury, the failure to convict, and oftentimes, the cheating of justice, all of which means lessened safety to society in general and an increased drain upon the purses of the taxpayers of the State.

The report of the Superintendent of the Penitentiary records 18 cases of capital punishment in the last seven and one-half years, the greatest number ever executed in this State during a similar period. This, in my opinion, bears out the argument that the desperate criminal, relying on the reluctance of the average juror and the caution of the court, in the imposition of the capital sentence, is more willing to take a gambler’s chance with death for the furtherance of his criminal object, than he would be to face the greater certainty of a life spent behind the bars.

Believing as I do, I therefore recommend to you, gentlemen, that you take steps to do away with capital punishment in this State. But in this connection I desire to urge that special and particular attention be paid to the restriction of the pardoning power for such cases. I hold that a sentence to life imprisonment for murder should mean what it says, unless post-trial evidence should bring to light some glaring in justice or very potent reason for change, and I contend that the substitution of life imprisonment for capital punishment should carry with it such safeguards as would insure in all cases that full justice be satisfied.

Men sentenced to the penitentiary are, under the present system, delivered at the prison gates by the sheriff of the county in which conviction was had. This is a wasteful, extravagant, and unscientific method and should be discontinued in the interest of economy and for the benefit of the taxpayers of the State. I suggest, therefore, that provision be made for the transportation of convicts from their place of conviction to the penitentiary by prison guards. This system has been found to be most satisfactory in the transportation of the insane, and after several years of trial by the asylum management has been found to be more economical and more desirable in many ways than the old method.

OREGON STATE HOSPITAL FOR THE INSANE

The Oregon State Hospital for the Insane is the largest institution that the State has under its control. Its many and peculiar needs make its administration the most difficult and the most perplexing of any of the State institutions. Because of this, I call your attention especially to the report of the Superintendent of the institution, which report is now upon your desks, and bespeak for it your careful consideration. And in this connection I desire to call your attention to one or two points that have come to my mind.

There are now confined in the Oregon asylum a large number of non-resident insane. This is true, of course, in every State but the fact remains that other states have enacted laws providing for the deportation of this class of patients. While it would be perhaps be best for each State to care for all insane persons found within its borders, yet, it seems to me, under the circumstances, that Oregon must either make provision for returning the non-resident insane to their home State or become the dumping-ground of other States for this unfortunate but nevertheless undesirable class.

Superintendent Steiner, speaking of the institution and its needs, says:

“We cannot lose sight of the central fact that the institution exists for the insane; that whatever adds to their comfort, promotes their welfare, or in any way alleviates their very distressing malady, is right; and that everything that deprives them of safe and sympathetic care, modern and scientific treatment, is wrong. This plain rule of right and wrong has been our guide in administering the affairs of this, the greatest of the State’s charities. We have found much to do in the past; more remains for future accomplishment. The buildings are old; rapid and steady increase in population has rendered the different departments inadequate. In correcting these conditions the future must be taken into consideration, so that the new buildings may be properly grouped and, if need be, added to as necessity arises. It is unfortunate that the need must be urgent before provision is made. In spite of a generally liberal policy on the part of the legislators, every insane hospital in the country is overcrowded. Oregon’s one institution will soon reach, if it has not already passed, the limit in size best calculated to meet the requirements of economy and the needs of the individual patient.”