MESSAGE Q.F Gov. HE}IRY D. IiicDAlIIEL, TO Tllli GENERAL ASSEMBLY OF GEORGIA, NOVEMBER, 1884. ATLANTA, GEORGIA: JAs, p~ HARRISON & Co., PRINTERS AND PUBLISHERS, 1885, MESSAGE GoY. HENRY D. McDANIEL, 'l'O THE GENERAL ASSEMBLY OF GEORGI~ NOVEMBER, 1884. ATLANTA, GEORGIA: JAs. P. HARRISON & Co., PBUiTEr.s AND PuBLISllll:BS, 1885. MESSAGE. EXECUTIVE :QEPARTMENT, ATLANTA, GA., November 5, 1884. To tlw &nate and lloitse qf Representatives : The people of the State, sine i the adjournment of the preceding Legislature, have steadily gained in all the ele. ments of rnaterial prosperity. It would be too much to f'ay that there have been no losses, or di~appointmenti:, or disorders. Our crops have not met the expectations of those dependent npon the rewards of agricnltnre; but there has been no disastrous failn re in any section of the State. Improved method:; of husbandry, increased indnAtry and thrift, and the steady tendency to greater diver,-ity of crop!', have kept the farming interest f~irly proElperons.' There has been a gratifying; increase in mannfacture8. lndm,trial eriterpriees are constantly ,::pringing up and furni,-hing more varied .means of honest livelihood, and adding to the number of i,.killed artisani,-an important dal's of citizens which contributes much fo the wealth of a State. We have not e~caped the deprcs~ion whieh has affected rrianufactn,-ing internst throughout the U ion, and the effects of the financial panic of the past spring and summer have been l'everely felt in ottr commerce and tinancef'. Yet the strain has been admirably borne, and ther~ has been no sneh increa~e in the 1:umber and amount of fail1Hes as to deetroy, or seriou,;Jy impair, confidence. Crime has not increaf'ed, while the laws have been vigorously enforced. There has been a pE:rceptible increase in the number of convictions and executions of the death Een. tence, but this is attributable to increased vigilance on the part of officials of the courts1 sustained by an enlightened 4 pnhlic opinion. We may not hope to stippress crime altogether. No people have lived under conditions which rendered such a result attainable. But we may hope to render punishment more certain, and protection to life and property more efficient. I transmit herewith the Reports of the various officials connected with the government directly, or with institutions supported by the State, which give satisfactory details, showing the operations of their departments. STATE FINANCES. The Report of the retiring Treasurer, Hon. D. N. Speer, contains a gratifying exhibit of the financial condition of the State. Cash balance in the Treasury, October 1, 1882, was $690,4-72.15. Receipts for the year ending September 30, 1 83, $1,327,051.64; disbursements for same period $1,478,384.41. Cash balance in the Treasury, October 1, 1883, was $539,130.3S. Receipts for the year ending September 30, 188-i, amounted to $1,533,220.38. Disbursements for same period $1,924.259.00-leaving a balance October 1, 1884, of $148,100.76. ' It will be seen that the bonded debt of the State on October 1, lSS~ was $9,6:H,rn5, and on October 1, 1883, "1as $9,454,63;5, and on October 1, 1884, was $8,704,635, showing a reduction of $169,500 in 1883, and of $750,00l> in 1884. The interest on the public debt for the year 1883 was $645,440.00; for the year 1884: it waa $633,495 40, and to be paid in 1885 is $582, 121.0C showing a reduction in th() interest charge upon the ~tate of $11,944 60 for 1884, and of $51,314 00 for the year 1885. The public debt on January 1, 1878, was $10,644,500 and the amount of interest paid for the year 1878 was $723 538 00, ~bowing a reduction of 3141,4H.00 which represents a redu~tion $1,939,865.00 of the principal. The amount paid on the public debt appears to be $556,370.00 for 1883, and $939,508.76 for 188!. 'l'his arose from a 5 tihange in the practice of the Treasnry, by which all pay- ments made on bonds and coupons during the quarter end- ing September 30, 1884, were entered on the hoc.ks, report- ed to the Executive office and covered by warrants before the end of the quarter. The Treasurer, having but one assistant, finds it difficult to do this, as the con pons are paid in different cities and are not always promptly sent to the Treasury. The balance in the Treasury, October I, 1884, waA act- nal, not apparent, as heretofore, by which is meant that it contains no bonds ur coupons paid off and held as cash, be- eause not recorded on the books of the Treasury, reported to the Executive department and covered by warrant. The former practice accounts for the large balances reported in the Treasury at the end of previous years. The policy of the State for many years has been steady reduction of the rate of taxation, in order that no more revenue should be collected than mi~ht be necessary to meet the legitimate expenses of government, and pay the interest on the bonded debt, and the principal of the eight per cent. bonds as these matured. Accordingly the rate was, from time to time, reduced f.om five mills (fifty cents on one hundred dollar~) for 1V,73, to three mill., for 1881 and 1882. This gradual reduction was facilitated by the collection of considerable sums due the State from the gov- ernment of. the U nitcd States, and of railroad taxes ms- r, pended by litigation. The General Assembly, in the Act of December t88J, with a view to further rednction, authorized the levy of two and one half mills for general purposes for year., 1883 and 1884, leaving the tax provided for by Act of February, 1873, to meet maturing 8 per cent. bonds to be levied, if found necessary. The condition of the Treasury seemed to justify the belief that the reduction contemplated could be made. The usual estimates of receipts and expendi: tures submitted by the Treasurer and Comptroller General. .and based upon the information then available, indicated 4 pnblic opinion. We may not hope to s1ippress crime alto gether. No people have lived under conditions which rendered such a result attainable. But we may hope to render punishment more certain, and protection to life and property more efficient. I transmit herewith the Reports of the various officials connected with the .government directly, or with institutions supported by the State, which give satisfactory details, showing the operations of their departments. 6'.fATE FINANOES. The Report of the retiring Treasurer, Hon. D. N. Speer, contains a gratifying exhibit of the financial condition of the State. Cash balance in the Treasury, October 1, 1882, was $690,472.15. Receipts for the year ending September 30, 1 83, $1,327,051.64; disbursements for same period $1,478,384.41. Cash balance in the Treasury, October 1, 1883, was $539,130.3S. Receipts for the year ending September 30, 188~, amounted to $1,533,220.38. Disbursements for same period $1,924.259.00-leaving a balance October 1, 1884, of $148,100.76. It will be seen that the bonded debt of the State on October 1, 1S8~ was $9,6~4,rn5, and on October l, 1883., "'as $9,454,63;5, and on October 1, 1884, was $8,704,635, showing a reduction of $169,500 in 1883, and of $750,00l> in 1884. The interest on the public debt for the year 1883 was $645,440.00; for the year 1884: it waa $633,495 40, and to be paid in 1885 is $582, 121.0C showing a reduction in theinterest charge upon the Rtate of $11,944 60 for 1884, and of $51,314 00 for the year 1885. The public debt on January 1, 1878, was $10,644,500 and the amount of interest paid for the year 1878 was 8723 538 00, ehowing a reduction of 3141,41';'.00 which represents a redn~tion $1,939,865.00 of the pl'incip11l. The amonnt paid on the public debt appears to be $556,370.00 for 1883, and $939,508.76 for 188!. 'l'his arose from a 5 change in the practice of the Treasnry, by which all payments made on bonds and coupons during the quarter ending September 30, 1884, were entered on the hoc.ks, reported to the Executive office and covered by warrants before the end of the quarter. The Treasurer, having but one assistant, finds it difficult to do this, as the con pons are paid in different cities and arc not always promptly sent to the Treasury. The balance in the Treasnry, October I, 1884, waA actnal, not apparent, as heretofore, by which is meant that it contains no bonds or coupons paid off and held as cash, because not recorded on the books of the Treasury, reported to the Executive department and covered by warrant. The former practice accounts for the large balances reported in the Treasury at the end of previous years. The policy of the State for many years has been steady reduction of the rate of taxation, in order that no more revenue should be collected than mi~ht be necessary to meet the legitimate expenses of government, and pay the interest on the bonded debt, and the principal of the eight per cent. bonds as these matured. Accordingly the rate was, from time to time, reduced f.om five mills (fifty cents on one hundred dollar~) for 11~73, to three millo for 1881 and 1882. This gradual reduction was facilitated by the collection of considerable sums due the State from the government of. the United States, and of railroad taxes mspended by litigation. The General Assembly, in the Act of December~' 188J, with a view to further rednction, authorized the levy of two and one half mills for general purposes for year., 188:3 and 1884, leaving the tax provided for by Act of February, 1873, to meet maturing 8 per cent. bonds to be levied, if found necessary. The condition of the Treasury seemed to justify the belief that the reduction contemplated could be made. The usual estimates of receipts and expendi~ tures submitted by the Treasurer and Comptroller General. -and based upon the information then available, indicated 6 that two and a half mills on the .increased returns for the Tear 1883 would raise the necessary amount, with other sources of rnvenue, to meet the expenses of the State, and pay the eight per cent. bonds maturing in 1884. The levy of two and a half mills was accordingly made August, 1883, 1u pon the returns for that year. At tliat time the sums of $82/H8.,54 and $Z2,206.~ 3 depo1;itcd hy the State in the Oitizens' Bank of Atlanta, and Bank of Rome, respectively, and due from the banks, appeared as ca,h in the Treasury. These amounts were c:harged off and left as debts due the State on September ~9, 1883, under the resolution of the General Assembly, -approved September 19, 1883. The General Asrnmbly made epecial appropriations of large amountt>, subsequent to the levy, notably for completion of the enlargement of the Lunatic Asylum; for supplying disabled Confederate eoldiei-s with artificial limbs, ,and for the erection of the new t,tate Capitol~for which no provision was made and which could not be anticipated. For reasons which appear el.,ewhere, the amounts due from the Citizens' Bank and Bank of Rome have not been .available. 'fhe cost of the session of the General Assembly of 1883 was $42,650.63 in excess of the cost of the eession of 1882. The money required to meet appropriation., to support the Government, and the institutions. under the care of the State,.and the interest on the public debt, and eight per cent. bonds maturing in 188.J, not being fully provided for, I rernrted, reluctantly but nece@iiarily, to a temporary loan to pay a portion uf the interest. In anticipation of the 111ecessity,and in order to pay promptly the interest due on 1st July last, the Treasurer, by my direction, went to New .1' ork, on the .first indications of the financial embarrassment, to arrange the LeceEsar_y loan. He waa assn red by the President of the Fourth National Bank, through which the State has, for many years, paid the intereat on bonds 7 payable in New York, that the amount needed would be advanced, unless the financial condition grew much worse than he anticipated. In June following the Treasurer was notified that the bank could not furnish the money. The Presidents of the Western and Atlanti~ Railroad Company, the Central Railroad and Banking Company, Georgia Railroad and Banking Company, and Southern Bank of Savannah, and prominent citiz,ms, on learning that the State needed a temporary loan to meet a portion of the July interest, promptly tendered amounts largely in excess of our needs at seven per cent., the legal rate of interest: I accepted from the Wcstern and Atlantic Railroad Company $50,000, reduced by discount to a net amount of $48,874.94; and $50,000 from the Georgia Railroad and Banking Compan_y, and $30,000 from Central Railroad Company, and $30,'JOO from the Southern Bank of, Sa,vannah. The patriotic spirit manifested in this transa.ction by these gentlemen and corporations deserves, and dvubtless will receive, grateful appreciation and remembrance by the people. The high credit and abundant resources of the State, and the public spirit of her citizen,, were exemplified, and every lawful demand upon the Treasury was promptly paid. This experience, while creditable to the watchfulness and financial ability of the Treasurer, admoni~hes the General Assembly that it is wiser not to ;limit taxation below a reasonable reserve fund to meet exigencies. It became necessary to levy 2 mills for general purposes (including payment of tom porary loan); and one-half mill to meet the eight per cent. bonds in 1885, upon the property returns of 1884. The last installment due the State by the East Tennessee, Virginia and Georgia Railroad Company for the purchase of the Macon and Brunswick Railroad, being $625,000, with five per cent. interest ftom February 28, 1880, and amounting to $750,000, princip~l and interest, matured 8 February 28, 1884. The purchasing company propornd tO" pay the amount in registered 3 per cent. bonds of the United States, and inquired of the Treasurer a few week& btfore the maturity of the debt, whether or not such bonds would be received. The State Treasurer asked for direction in the matter. Th~s involved a construction of the law and contract of sale. The Constitution requires the application of the proceeds of sales of public property to the State debt. Accordingly, the Act o:1" September 3, 1879, which authorized the sale of Macon and Brunswick Railroad, provided that the purchase money, $1,125,000, with interest at five per cent. on deferred payments, should be paid in the recognized bonds of the State. A provision for payment in money was rejected in the Legislature, for the reason that receiving bonds of the State would he a literal complianc~ with the requirements of the Constitution, without cost or danger to the State, or the necessity of legislation to provide for the dispoaition of the proceeds of sale. Subseqt10ntly iL was deemed advisable to enlarge the .medium of payment, by providing in the Act, October 14, 1879. that registered bonds of the United States might be substituted for the Georgia bonds, at the option of the purchasers. These bonds would be available as a sinking fund to meet maturing State bonds; and the intention to prohibit payment in money fa manifest from these enactments. . The amount of the price and the rate of interest on deferred payments were numerically expressed to designate the amount of the bonds prescribed in which payment was to be made, without reference to the market value of the bonds, whether above or below par, Moreover, the intention is manifest to limit payment to bonds of the State or regiitered bonds O'f the United States outstanding at the time, or issued in pursuance of existing laws. There is nothing in the contract of sale to indic,ate that the Governor of the State, or the purchasing company at the time placed a different construction on these statutee. 9 The three per cent. registered bonds of the United States were issued in pursuance of a law enacted after the sale of the railroad ; and being subject to call hy the Secretary of the 'l'reasury, were practically at par, and the acceptance of them would have resulted in their conversion into money. The Attorney General of the State, to whom the question was submitted, demonstrat,ed, in an opinion of great learning and ability, the correctness of the foregoing construction. All the State officials charged with tfie construction and enforcement of these statutes and of the con. tract of sale being in accord, I caused the East Tennessee, Virginia and Georgia Railroad Company- to be notified, in the early part of February, 1884-, that payment of the balance would be demaHded in recognized bonds of the State, or in United States registered bonds, outstanding at the time of purchase. The counsel of the East Tennessee, Virginia & Georgia Railroad Company, still insisting on its right to pay the balance in three per cent. registered bonds of the United States, or in lawful money, requested me to submit the question to the Supreme Court of the State for decision. I declined this request, because there is no law authorizing the submission of such questions to the Supreme Court, or making it the duty of the court to decide them, and because it is against the policy of the State. Relying with confidence upon the opinion of the Attorney General, who is charged by the Constitution with the duty of advising the Executive in legal questions, I did not hesitate to assume the responsibility of the decision. The time being short every facility within my discretion was afforded the Company to enable it to purchase short date bonds of the State, which commanded a lower premium in the market than the much longer date 4 per cent. registered bonds of the United States. The Treasurer repaired to New York several days prior to February 28, and arranged for delivery of bonds at the 10 Treasury, in Atlanta, and to himself in New York, the last to be sent to the Treasury without"expense to the State. I authorized him to extend the time of actual settlement several days necessary to complete the delivery of bonds cornmencerl before the day of maturity of. the debt. Availing itself of this arrangement {OJ' its benefit, the Company purchased $750,000.00, recognized Georgia bonds, and early in March the settlement was completed. The bonds thus received compri ed $557,500, 7 per cent. bonds; $12,400, 6 per cent. bonds, and $!0,100.00, 4- per cent. bonds, due in 1886; $126,000, 6 per cent. bond!i, due in 1889; and $14,000, 8 per cent. bonds due in 1884-'85 and '86. The interest accrued on these bond~ February 28, 188!, amou.nted to $8,400.16- This was paid to the Company on maturity of the coupons surrenrlered with the bonds. The Treasurer has canceled these bonds in pursuance of an Executive order, and they are now in the vanl: of the Treasury under seal of the Executive Department, to be exhibited to the Finance Committees of the Legislature, and destroyed as provided by law. The President of the East Tennessee, Virginia & Georgia Railroad Company, at the time of the settlement, presented the protest of the Comp~ny to the requirement that the amount should be paid in Georgia bonds or registered bonds of the United States outstanding at the day of sale of the railroad; and gave notice that the Company would ask the General Assembly to refund the amount alleged to have been paid by it in preruit1m upon the $750,000 Georgia bonds purchased and delivered to the State. It should be borne in miud that the amount thus paid in premium did not reach the treasnr:, and the State was in no wise interested in it. I submit that the State has done no injnstice to the purchasers of the Macon & Brunswick Railroad, in requiring compliance with the spirit as well as the letter of the contract of purchase, and that they have no valid clahn, in law or equity, for reimbursement. 11 3,IATUlUNG B01'DI!. An important duty which will claim your attention is the provision for payment or funding of the bonds maturing in the years 1885 1tnd 18S6, other than the eight per cent. bonds which are provided for by existing law. There are th1 ee clasrns of these bonds; of the 4 per cent. bonds issued under Act December 14, 187S., and due January, 1885, $58,135. The 6 per cent. bonds, issued under Act of February 27, 1856, and due February, 1886,- $126,000, and $150,000 due August, 1886; 7 per cent. bonds with mortgage on Western & Atlantic Railroad, issued under Act of March 12, 1866, and due July 1, 1886, $3,525.500. The payment of balance due on purchase of M. & B. R. R. extinguished $610,000 of the foregoing, as follows: $557,500 7 per cent., $12,400 of 6 per cent. and $-10,100 of the 4 per cent. bonde, leaving $3,249,635 outstanding. The conditions under wbich we are called upon to pro~ isvide for these bonds are cxccpticnally favorable. Our debt being steadily and rapidly reduced, while the resources of the State are steadily increai,ing. The admirable provisions of the Constitution forbidding the increase of the bonded del->t and requiring the r,ayment of $100. 000 of principal annually (or the setting apart of that amount as a sinking fund) and the application of the proceeds of the sales of public property to the bonded debt, invite confidence in our finances. Evasions of these provisions in any manner or for any pretense whatever might give temporary ease to the treasury, but the public interest, as well as public honor, requires strict compliance with the sp:rit of them. Holders of our bonds and investors seeking reliable securities, will appreciate the high value of bonds of a State whose officials obey the law strictly and reduce the debt whenever practicable, rather than put a Furplns in the treasury to be spent in unnecessary appropriations. Moreover, they will appreciate the resources of a State that can red nee her debt without burdensome taxation-a State having 12 valuable public property, the proceeds of which, when sold, are honestly applied to the principal of her debt. In addition, as rates of interest are lower now than when these bonds were issued, and the credit of the State mnch higher, they will appreciate the fact that the interest charge on th~ people will be greatly lowered. The annual saving iu interest on $750,000 bonds paid off is about $50,000. The reduction of intere,it on bonds to fund or pay off the bonds which fall due in 1886, will be a much larger amount, dependent on the date of maturity of the new bonds. A long date bond can be more readily sold than a short date bond, and consequently, the rate of interest necessary to be paid on it would ue lower. Inasmuch as other issues of our bonds fall due within a few years, it is not necessary, at this time, to provide short date bonds in order to keep con~iderable portions of the State debt always within reach of speedy payment. For these reasons I recommend suitable legi1-lation for the issne of bonds maturing within not less than thirty (30) years, and bearing interest at a rate not higher than five per cent. COMPTROLLER GENERAL'S REPORT. The Corr:ptroller General presents interesting and valuable details of our system of taxation, and of the condition of insurance companies doing business in the State, and makes recommendations which, in view of his experience and faithful performance of duty, deserve careful consideration. Taxes are promptly paid when levied, and economically collected, the entire loss from failure and cost of collection being 6.54 per cent. of the levy. There has been a steady increase in the annual return of property for ad valorem taxation. The aggregate in 1879 was $234,45!:J,548- for 1884 was $317,074,271, an increase of $82,615,723. This indicates growth in wealth, but it does not indicate a full valuation of the property. Our constitution requires equality and uniformity of taxation. This is unattainable unless uniformity of rates is based upon uniformity of val- 13 nation in the returns. In theory, this is substantially semired undl:ir the present system, by requiring all property to be taxed upon its true market value. How is it in fact? Illustrations taken from the thr~e wealthiest and most populdus counties in the State, of many that _might be presented, will suffice to show great want of equality and uniformity in fact: The citizens of Atlanta were assessed for city purposes, in 1884, on real estate, to the amount of $21,116208, and returned in personalty $8,933,982-an aggregate of $30,0.50,250. Fulton ~ounty, comprising all the people and property of Atlanta, and many thousands of prosperous population, and millions of property in addition, returned under our loose system Sl7,801,345 realty, and $12,934,820 in personalty-an aggregate ot $30,736,165. The citizens of Savannah were assessed, for city purposes, on realty in 1884, upon $12,516,202, and returned personalty to the amount of $7,145,112- an aggregate of $19,661,314; while the county of Chatham returned for State and county purposes, in 1884, $10,513,054 in realty, and $9,924,929 in personalty-an aggregate of $20,437 983. 1 The citizens of Augusta were assessed, for city purposes, the present year, on real estate alone, to the amount of $11,305,860. The same citizens returned for State and county taxation, for the same year, real estate to the amount of $8,126,250. The only comment needed to enforce the lesson of these figures is to add that they represent fairly the basis of re turns tliroughout the State. The amount to be :::-aised being regulated by the necessities of the State, the rate is governed by the amount of property upon which the levy is made. When a citizen fails to return all his taxable property, or undervalues what he returns, he inflicts a wrong upon his neighbor, whd makes a full and just return. To any remedy proposed, objection will be made only l:!y those who profit by the loose system, at the expense of others who suffer by it. Efforts to remedy the defects in the system have not been wanting. Much has been done, but much remains to be done. The duty has been imposed upon Grand Juries of 14 the several counties to revise tax returns and assess values in case of undervaluation. This revision has been productive of good results, but has proven ineffectual. The fact that members of the grand jury are required to revise sworn valuations of property by tax-payers who are their neighbors and personal friends, is not conducive to a rigid performance of the duty. There is a natural reluctance to imply, by official action, that a tax-payer has, even unintentionally, sworn to an undervaluation of his property. Experience proves that proper corrections and valuations are unattainable under this system. The tax payer should be required to return his property as now provided by law, but not to value the realty. Valuation might be made by local boards of assessment, appointed by the grand jury, or Judge of the Superior Court. This would afford a simple and inexpensive method of securing uniformity in the county, without injustice to any citizen. 'l'he Comptroller General, assisted by the Attorney General and State Treasurer, might be empowered to review any digest and require the correction of any comparative inequality in the basis of valuation adopted by different counties. . Ours is not a costly government. We collect annually from the people of the State less than one dollar and twentyfive cents per capita, for State and county purpose:-. Such taxation is not burdensome, and wil_l be cheerfully borne by the people, if adequate means are devised to justly distribute 1t. I invite your attention to the task. The estimates submitted of receipts and expenditures for the next fi.,cal year should receive consideration. It is unwise to accumulate a surplus in the treasury, bnt it is your