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From this brief analysis it is manifest that the
primary responsibility for both the legal and the
financial rehabilitation of the Boston & Maine rests
upon the federal government and upon the owners
of the property. We have every assurance that the
federal government will perform its duty, — and
so perform it that there will be no inmnmity to
wrongdoers.

But a duty no less important and pressing rests
also upon the owners of the securities of the Boston &
Maine Railroad system, particularly upon the owners
of the stocks of the leased lines. This great railroad
system cannot be reorganized and rehabilitated so
as adequately to serve the community in which it
lies and do justice to all of its owners without
immediate, intelligent, public-spirited as well as
self-interested action upon the part of all of its
owners.

A radical and immediate reorganization of the
whole system is absolutely essential. For, if through
receivership proceedings the system is disintegrated,
the owners of the stocks of the leased lines will almost
inevitably sufifer serious loss; they will find it diffi-
cult, perhaps impossible, to protect and secure even
the real and intrinsic value of their properties. The



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1914.] ^ SENATE — No. 1. 59

situation is very grave. It is a time when men can-
not safely attempt to drive hard bargains or to
stand too obstinately upon merely technical rights,
or to adopt dilatory tactics. Both self-interest and
public welfare caU for co-operation and compromise;
it is a time for construction. Both the holders of
the stocks of the leased lines and the holders of the
Boston & Maine stock must contribute to the solu-
tion of the problem; the necessary sacrifice must not
cdl be made by the Boston & Maine stockholders.
If we are not to have a great financial catastrophe
in our New England railroads we must now — im-
mediately — avert the danger by a reorganization
which will re-establish the credit of the corporation,
slough off the parasitic contracts which have been
sapping the life-blood of the system, and provide
hereafter for a management both faithful and com-
petent.

Clearly at this time this railroad system is in no
position to demand or to expect any substantial in-
crease in rates, either passenger or freight. If the
owners of the system show to the public a willingness
and ability to reorganize in accordance with soimd
principles, to free their corporation from such unjust
and improfitable contracts as that of the American
Express Company, and to eliminate from their man-
agement any incompetent and unfaithful directors
and ofi&cials, then the public can be depended upon



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60 GOVERNOR'S ADDRESS. [Jan.

to do its part in making any reasonable sacrifice
necessary.

There is no spirit of confiscation in Massachusetts.
The owners of the securities of public-utility cor-
porations may rely on being permitted to draw a
full and fair return upon all capital honestly and
prudently invested in the public service. But so
long as our public utilities are privately owned, that
private ownership must assimie and bear the re-
sponsibility of management and also pay the penalty
for mismanagement. The Commonwealth may and
does regulate, both for the benefit of the ratepayer
and to some degree for the benefit of the investor;
but regulation is not management, and the main
responsibility for the soundness of the investment
rests and must continue to rest upon the management
chosen by the stockholders.

Such reorganization as will reduce the propoi;tion
of fixed charges and put the railroad into the control
of a management competent and faithful to the
interest of its own stockholders or to the public
is a condition precedent to legislative help and to
public favor of any sort.

I repeat and emphasize; both nation and State
insist upon an immediate divorce of the Boston &
Maine from the New Haven and a contemporaneous
reorganization of the Boston & Maine; that a larger
part of the responsibility for that reorganization



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1914.] SENATE — No. 1. 61

rests and must rest upon the owners of the stock of
the leased Imes; that if these owners should fail in
the immediate, efficient performance of their duty,
serious disaster to them and to the public at large
is to be expected.

As the representative of the great public interest,
I call upon all these owners to face now the real
truth, to remember that they are, in a broad sense,
trustees, not merely for themselves and for the
stockholders, but for the whole Commonwealth.

While, as I have said, it is for the owners to devise
a just and sound form of reorganization, it may be
foimd expedient if not necessary to charter a new
corporation in which the stock of the leased roads
should be merged with those of the Boston & Maine,
— the bonds of all the consolidating corporations
being assumed by the new company, — so that the
result shall be a railroad corporation organized
substantially in accordance with the traditionally
sound theories of Massachusetts railroad finance.
The Commonwealth can and will aid in a wise plan
of reorganization, with enabling legislation so framed
as effectually to guard both our investors and our
general public from a recurrence of the mismanage-
ment and the evils of the past.

If those who ought to lead in the task of rehabili-
tating this railroad do not rise to their opportunity
and duty the Commonwealth is not without recourse.



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62 GO^^RNOR'S ADDRESS. [Jan.

The great middle classes which have suffered such
losses in their savings from the mismanagement of
the public-service corporations by private interests,
and have suffered such a loss in their earning power
from the extortion of monopolies created by these
same interests, are no longer blind to the preten-
s ons of private ownership. They have seen so much
vulgar graft where they once thought they saw only
respectability; they have seen so much mediocrity
and downright incompetence in places which pay
princely salaries, that the glamor and pretence of it
aU is gone. The government has recently extended
its functions to the express business through a par-
cels post, and it has been a tremendous success. It
is just completing the most stupendous engineering
task of the age at the Isthmus of Panama, with glory
to the nation, while private enterprise in Massachu-
setts has just built a fifteen-mile railroad which may
cost the Boston & Maine almost four times the aver-
age cost per mile of railroads in this Commonwealth.

If the Commonwealth is obliged to save a necessary
public utility because those who are primarily inter-
ested will not save it, the Commonwealth will do so
imder circumstances most favorable to itself, and
without sentimental compunction for those who
would not help themselves.

Let me repeat there must he no delay. — Massa-
chusetts cannot and wiU not see her industries
crippled, her development checked, her investors



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1914.] SENATE — No. 1. 63

robbed by a continuance of such railroad mismanage-
ment as has marked the past few years. If the
parties in interest avail themselves at once of the
opportmiity of reorganization on just and fair terms,
any enabling legislation reasonably desired I shall
gladly recommend; but if they fail in the prompt and
efficient performance of that duty, it will then be the
plain duty of the Commonwealth to take drastic
and effective action to protect itself, its industries, its
savings institutions and its citizens from fiuiiher loss
due to incompetent or unfaithful railroad manage-
ment.

WESTERN TROLLEYS.

Before the New York, New Haven & Hartford can
acquire the right to purchase those street railways
in the western part of the State mentioned in the
so-called trolley merger act passed last year, it must
satisfy the Public Service Commission that it is finan-
cially able to carry out the provisions of that act.
If the Public Service Conamission decides that the
financial condition of the railroad will not warrant
undertaking the cost of carrying out the provisions
of the act, the right which is given to the railroad
under the act is lost to it. Other action may then
be considered to provide transportation facilities for
the western towns.

I shall await the action of the Public Service Com-
mission before making any reco nmendation in this
matter.



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64 GOVERNOR'S ADDRESS. [Jan.

CONCLUSION.

A deep sense of public obligation leads me to
urge the serious consideration and the enactment
into law of the several measures herein recommended.
I trust you will find these measures in line with the
best thought of the country, — that thought which
is devoting itself with increasing earnestness to the
betterment of conditions in order that government
by the people shall bear its full fruitage of benefits
and thereby insure its perpetuity.

I am sure the people of the State generally, without
regard to party or other division earnestly desire
the passage of many of these measures, and they will
not be content to wait for them indefinitely, and will
determine the extent to which you fittingly repre-
sent their judgment by the enthusiasm and earnest-
ness with which you seek to enact their views into
law.

I omit some things to avoid the risk of reconoimend-
ing too much. Of those not mentioned your own
diligence in the public service will supply knowledge,
and I shall also from time to time, as occasion re-
quires, submit further information and recom-
mendations.

We meet to-day, conscious as never before in our
lives, of the great opportunity for service to the
people of our great Conamonwealth; the solemn



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1914.] SENATE — No. 1. 65

words of the oath administered to you yesterday and
to me a few minutes ago in your presence are still
ringing in our ears. But we are not going to be
judged by our promises nor by our good resolutions
or even by our firm purpose to serve as best we
can. At the end of our deliberations the people
will judge us upon what we have accomplished;
the verdict that awaits us will depend upon the
courage, the wisdom and the fairness with which
we act.

If the sacred traditions and glorious history of our
Conamonwealth, if this very building in which we
are assembled with its record of accomplishment in
behalf of the people, if the names of the great states-
men of Massachusetts which are inscribed on the
walls of this room, do not serve daily and hourly
to inspire you to greater effort in the service to which
you have been called, then I appeal to you to go
out and move among the people of the State,
the rich and poor, the prosperous and the toiling
millions, and observe how they love Massachusetts,
to what unestimated degree they would sacrifice
everything, even life itself, to preserve and perpetu-
ate this their government, — observing and reading
all this in the faces and hearts of our fellow citizens,
I call upon you to make the legislation of 1914
memorable for the wise and eflScient use of the
authority confided to you by the people of Massa-



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66 GOVERNOR'S ADDRESS. [Jan. 1914.

chusettS) that these liberty-loving and God-fearing
people will be all the more anxious and willing to
make whatever sacrifice time may demand because
our efforts have made their government more
precious than ever to them.

Let us begin and end our service with "malice
towards none, with charity for all, with firmness in
the right as God gives us to see the right.''



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ADDRESS

OF

His Excellency

DAVID 1. WALSH

TO

The Two Branches

OF THB

LEGISLATURE OF MASSACHUSETTS.
January 7, 1915.



BOSTON:

WBIGHT & POTTER PRINTING CO., STATE PRINTERS,

32 DERNE STREET.

1915.



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i:"Xi:/v;ge
massachusetts state

LIBRARY



ADDRESS.



Gentlemen of the General Court.

We meet this year under somewhat unusual con-
ditions and are confronted by problems that call
for our utmost diligence and most careful thought.
A tremendous conflict is raging beyond and upon
the seas, with consequences already seriously felt
within our own borders and likely to be increasingly
felt. Unemployment with its inevitable concom-
itants of suffering and crime has risen above the
normal level; the confidence of investors in hitherto
stable investments, rudely shaken many months
ago, has not yet been restored; the purchasing power
of many workers is seriously reduced; and we have
furthermore in the near future to expect and provide
for an unprecedented influx of inmaigrants from the
devastated fields and ruined industries of the old
world.

To avert an aggravated congestion of our cities,
to utilize the newcomers and our own under-employed
in developing our neglected natural resources and
opening new avenues of employment, and to con-
tinue to improve the conditions of labor without



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4 GOVERNOR'S ADDRESS. [Jan.

crippling the industries upon which remunerative
employment must depend, — these are some of the
special tasks which confront us, while as usual there
are before us serious problems relating to the promo-
tion of the public health, the extension of educational
advantages, and the development of our commerce
demanding our ceaseless study. The work that lies
before us is arduous and exacting, but it offers to
faithful and devoted effort great opportunities of
service to the Commonwealth.

RELIEF FOR THE UNEMPLOYED.

First of all, I earnestly ask your immediate action
to solve as far as a solution is within our power the
pressing problem of the unemployed.

By a coincidence which seems to me clearly provi-
dential, the legislation of preceding years has made
surprisingly simple and easy the task of supplying
a very large measure of relief, and that not only
without any ultimate burden upon the taxpayers,
but with direct and indirect results of great financial,
physical and moral advantage to the entire Com-
monwealth.

By chapter 759 of the Acts of 1913, amended by
chapter 596 of the last session, a Board composed of
the Boards of Health and Agriculture, acting jointly,
has been given authority and a small appropriation
to begin the task of reclaiming the large fresh-water



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1915.] SENATE — No. 1. 5

swamps and marshes in eastern Massachusetts,
which, although in natural fertility and ease of cul-
tivation they far surpass most of the land now under
cultivation within the State, are now practically value-
less, and cannot, from the nature of the engineering
problems involved and the dispersion of ownership,
be reclaimed by private enteiprise. Surveys and
studies of various tracts have been made, and all
is now ready for immediate action. Much of these
wet lands consists of open meadows, requiring for
reclamation suitable machinery but a relatively
small amount of unskilled hand labor. There are,
however, great wooded swamps where the conditions
arQ reversed; where a large amount of unskilled labor
can be employed to advantage in the winter. If
you at once — within a week if possible — pass an
emergency appropriation of not less than $50,000,
thereby providing the Board with the means of taking
over not less than a thousand acres of such land,
establishing workmen's camps, cutting the wood and
timber, and preparing it for market, and also au-
thorize the employment, as an emergency measure,
of laborers at a moderate monthly wage, with board
and lodging, — giving preference, if you will, to men
with dependent families, — several thousand men if
need be can be given work for the next few months,
with mutual advantage to themselves and the Com-
monwealth, preserving at the same time their self-



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6 GOVERNOR'S ADDRESS. [Jan.

respect^ avoiding the pauperizing tendencies of gra-
tuitous relief, and lessening the strain upon the
finances of our charitable organizations. If, further-
more, later in the session, you follow up this tempo-
rary action by sending to the people the homestead-
taking amendment passed last year, and by making
certain minor changes in the wet lands reclamation
act and the rural credits act, which I intend to recom-
mend at an early opportunity, I believe that a much-
needed impulse will be given to the '^forward to the
land" movement, with ultimate benefits to our manu-
facturing population not easily overestimated.

STATE FINANCES. .

This year again I urge you to exercise the utmost
care, not only in authorizing appropriations for new
and special undertakings, but also in making those
appropriations required by existing legislation.
While a not inconsiderable portion of our existing
financial burden has been brought upon us by the
desire of various localities, as expressed by their
representatives, to secure local improvements at
the expense of the Commonwealth, by far the major
part of the enormous increase in the State tax and
debt in the past ten years has been brought about
by the needs of a rapidly growing industrial State
and the rapid advance of humanitarianism in gov-
ernment. The people demand more of the govem-



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1915.] SENATE — No. 1. 7

ment than ever before. I would not for a moment
advocate having Massachusetts take one backward
step in the work of caring for her unfortunates, in
aiding education, in the regulation of her public
utilities, in guarding the savings of her people, in
the protection of their health, in the upbuilding of
our highway system and in the improvement of
our harbors and waterways. The enlightened public'
opinion of to-day expects and demands this work of
the government, but it also demands that its rep-
resentatives in the government proceed with pru-
dence and economy in providing and expending the
money necessary for such work.

During the financial year just closed we expended
for the protection of public health $600,000, — for
educational purposes, $1,877,000; for the construc-
tion and maintenance of highways, $2,300,000; for
the care of the sick, the poor, the insane and the
defective, $5,635,000; and for the restraint of de-
linquents, $2,314,000.

There may be some significance in the fact that
for several years our charitable and correctional
expenses have approximated the amount of the State
tax, which at once brings up the question of the
wisdom of intrusting the expenditure of this im-
mense sum to unpaid commissions, — a policy that
would never be tolerated by private enterprise. I
submit for your careful consideration the advisa-



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8 GOVERNOR'S ADDRESS. [Jan.

bility of a complete reorganization of the State
Board of Charity along the lines of the new State
Department of Health.

The estimated expenses, under existing laws, for
the fiscal year ending Nov. 30, 1915, are $19,469,095.
The estimated revenue is $9,289,000. The cash on
hand Dec. 1, 1914, the beginning of the present
fiscal year, was $2,862,884. The warrants remain-
ing unpaid at that time, added to the warrant for
December expenses, and a balance of $2,000,000
unexpended 1914 appropriations, which are available
for 1915, reduce this amount to $386,015. This leaves
in sight to meet the expenses of the government
for the current year $9,675,015, which, subtracted
from the estimated expenses, leaves a difference,
unprovided for, which must be met by taxation of
$9,794,079. The balance improvided for is over
$2,000,000 more than the figures of one year ago.
The estimates from which it is derived cover only
such appropriations as existing legislation requires.
In determining the amount of the State tax there
must be added to these all special appropriations
of the present session. The amounts asked for
this year by the various departments, boards, com-
missions and trustees for special purposes, such as
new buildings and improvements, total $2,629,893.

Although the General Court of 1914 authorized
the borrowing by loans, to be met directly by the



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1915.] SENATE — No. 1. 9

State, of only $1^95,000, the direct debt of the State
increased almost $4,000,000 during the year, due
to the issuance of bonds authorized in former years.
The net direct debt, indebtedness for which the
whole State is directly liable, increased in the five
years from Nov. 30, 1909, to Nov. 30, 1914, from
$18,980,755 to $28,259,906, — an increase mainly due
to such undertakings as the development of the Port
of Boston, State highway construction, the extension
of the State House, and the erection and equipment
of armories. The interest charges alone upon the
State debt now amount to $1,664,303.58.

Misleading figures issued by the Federal govern-
ment have created in the minds of the uninformed
a wrongful impression of the financial condition
of our Conunonwealth. These figures have com-
bined and confused the direct debt of the State with
the contingent debt, for which latter the cities and
towns in the metropolitan park, water and sewerage
districts are responsible, and for which the State
only lends its credit. This latter debt, the net con-
tingent debt of the State, is $56,441,695.98.

There is much to criticize in our methods of
finance. The State has been meeting from the tax
levy expenses that should be met by the issuance
of bonds. Certainly there is no consistency in
authorizing fifteen-year loans for the construction
of highways while paying for institutional buildings



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10 GOVERNOR'S ADDRESS. [Jan.

out of the taxes of the year in which they are author-
ized. Neither is such a policy consistent with that
imposed by the Legislature upon cities and towns
which allows twenty-year loans for the construc-
tion of and additions to school and other public
buildings, and loans of only ten years' duration for
original highway construction, and but five-year
loans for macadamizing highways. In other words,
the Legislature has prescribed one theory of financ-
ing for cities and towns, while following an entirely
different one for the Commonwealth.

Budget System.

I believe that the proper and only businesslike
way of handling the State finances is by the so-called
budget system. The estimates of the various com-
missions, boards and departments, both for regular
expenses and for special purposes, should be submitted
to the Governor as the responsible head of the ad-
ministration, who, after investigation by the Com-
mission on Economy and Efficiency, should transmit
to the Legislature a definite, detailed budget showing
precisely which items were approved and which were
disallowed or reduced by the Governor. The budget
system would not only locate responsibility but would
add much to the economy and efiiciency with which
plans are made for future work.

Chapter 520 of the Acts of 1907 provides for the



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1915.] SENATE — No. 1. 11

submission of working plans, together with a re-
liable estimate of the cost, with recommendations
for the construction of new buildings and for repairs
exceeding $2,000 in cost on existing structures. Last
year $32,000 was paid f6r plans of buildings which
were disallowed by the Legislature. Included
with legislation for the budget system should be a
provision that no plans for such work should be
contracted for unless the Governor had approved
the reconunendation.

TAXATION.

It is believed by thoughtful men that the great
political controversies of the future in this country
will be waged over questions of taxation.

As much injustice to the average citizen can be
perpetrated through a bad system of taxation as
through any other evil of government. This subject
is now beginning to arrest the attention of our
citizens, and last year some progress was made which
must be considered notable in contrast with the
inertia of former years. But what we did last year
merely indicated that the subject was stirring in our
minds. Much more remains to be accomplished
before our plan of adjusting the public burdens will
be fair to the taxpayer, and before we have brought
our tax laws up to the standard of the more advanced
States.



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12 GOVERNOR'S ADDRESS. [Jan.

We still impose double taxation upon certain forms
of "intangible" property, affording a plausible excuse
for wholesale tax dodging, which the present plan
of assessment has proved wholly inadequate to
check. Trustees and scrupulous investors are still



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