History of Dakota Territory, volume III, Part 19

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1146

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He stated further that the state printing was costing too much and should be investigated. He favored the registration of voters in order to protect the ballot from fraud and from colonization, which had been practiced to some extent ever since territorial times. He deprecated betting at elections and declared that all such gambling devices and intrigues should be throttled by the Legislature.

He favored the early organizations of all unorganized counties which desired such action in order to place the citizens thereof in a position to prevent and punish crime.

He urged that help should be given to counties which contained school land that was arid or otherwise likely to be unproductive, and suggested that wells should be sunk at public expense for the purpose of securing water to irrigate school lands and spoke particularly of a few such tracts in Meade County. He asked that the laws of the state which were now scattered, conflicting and confus- ing, should be collected and codified in accordance with the unanimous desire of the judges and the courts. The laws of Dakota Territory had been compiled in 1887, but now the volumes were so scarce that they were worth from $18 to $20 a volume .. Hence he urged that under the state government a new code should be prepared, because many laws had been repealed, new ones passed, and others become obsolete.

He referred to the Taylor defalcation and said that the Legislature should now ascertain the exact status of the matter. He suggested that the Legislature should help in giving the state a suitable exhibit at the Trans-Missouri Exposition to be held in Omaha. He questioned whether the oil inspector's office should be abolished, and thought it was better perhaps to amplify the power of the oil inspector rather than to do away with the office and thus flood the state with oil so poor that it had been rejected by other states.

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He spoke at considerable length on the question of revenue and taxation and said he had estimated that all receipts had fallen short of actual necessities, and hence the state at all times was hard up and compelled to issue temporary war- rants and to pay interest thereon. As another result the State Board of Equaliza- tion had steadily levied a deficiency tax, and the constitutional limit of two mills had been continually exceeded. This had caused much criticism, discussion and ill feeling, particularly during the political campaign. The hard times had caused a heavy delinquency, but no one was to blame. The practice of issuing revenue warrants to be sold for money with which to keep the state's paper at par, was humiliating and expensive, he declared. "The temptation under this system is strong to issue these revenue warrants months in advance for necessary money, thereby furnishing capital at the expense of the people for favorite banking institutions-a very profitable privilege to the banks, but a practice which no prudent man would employ in his own business. He believed that a constitutional amendment, as had been suggested, to increase the regular tax from two to three mills would not be favorably received by the state at this time. He thought the Legislature must seek new fields to get money. "Our laws relating to taxation do not give satisfaction. Indeed the question of taxation is difficult of solution. No system can be made to suit everybody." He believed that the Legislature should remedy the weakness. He stated that corporate property was not propor- tionately taxed in South Dakota. Particularly, the railways were taxed only about one-tenth of their actual valuation. He called attention to the current statement that in the range country west of the Missouri River there was a vast amount of property that continually escaped or evaded taxation. It was rumored that 200,000 head of cattle in that district were not taxed. This fact was inex- cusable and ridiculous. The cattle at this time were owned largely by foreign corporations. In any event the Legislature should consider the question of their suitable assessment and taxation.

In a special message to the Legislature on January 9, 1897, Governor Lee urgently asked the Legislature to pass an immediate resolution demanding that State Treasurer Phillips be required to produce and have counted the state funds in his possession before his official bonds should be approved. The governor states that he had no authority to count the money and therefore asked the Legis- lature to carry this investigation into effect. He said he had learned that the treasury contained only $282, while there should be over two hundred and fifty thousand dollars. The republican press throughout the state promptly scored Governor Lee for his course in compelling Treasurer Phillips to produce the cash in the state treasury. Mr. Phillips signified his willingness to have the money counted and promptly issued a statement showing that the funds in his possession were distributed in the banks of Chicago, Pierre, Deadwood, Yankton, Spearfish, Lead and Rapid City. In all he had deposited in these banks, he stated, $282,639.22. In the Pierre banks alone was a total of $71,897.32. The charge made by Governor Lee against State Treasurer Phillips was that he loaned the state money to banks and pocketed the interest received thereby. The governor took the position that this interest was part of the state funds proper and that the state treasurer should return it to the treasury. He claimed that this was a real shortage which amounted to about fifty-two thousand six hundred and fifty-three dollars. The political opponents of Governor Lee declared with much

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emphasis that in asking the Legislature for super-official authority to count the money in the state treasury, he was actuated wholly by political motives. They declared that the step was taken by the populists with the anxious expectation of finding some irregularities, if not worse, in the treasurer's office. A thorough search by the investigating committee and a count of all the money in the posses- sion of the treasurer, showed no irregularities whatever and cleared that official from all suspicion and charges.

The cash in the Black Hills banks and elsewhere was brought to Pierre under the guard of a detachment of Company K, of the Dakota National Guard, from Huron. The amount thus brought from the Hills was found to be $188,060. It was duly counted by the so-called "third house" which assembled in the Hotel Locke. Another train loaded with state gold was stuck for a while in a deep snowdrift in Minnesota while soldiers guarded the treasure. "The sensation of the day, the 22nd, was the appearance of a company of militia, which boarded the train at Huron as escort for the state cash in transit from Chicago. Under this guard and with the attendance of six armed messengers who had accompanied the money from Chicago, a procession formed at the express office and marched to the capitol building, where the funds were counted by the legislative committee appointed for this purpose. The military escort was requested by the state treas- urer as a precaution against robbery. When the cash is shipped out Company K will escort the funds to the state line. The funds on deposit in the three Pierre banks, amounting to $71,000, were also taken to the state house under militia escort. The count was completed and the committee reported they found in the treasurer's office, the full amount of the state funds and the governor will approve Treasurer Phillip's bond."-Press Cor. January 23, 1897. The counting of the state cash was attended with many interesting and ludicrous features. The joint committee appointed for that purpose was amusingly denominated the "third house." They had regular sessions in the Locke Hotel and a large concourse of cowboys, inquisitives and legislators gathered to witness the proceedings. The leader of the committee was designated Squatter Governor Ballard. In charge of the work of counting were Gen. G. A. Silsby yclept state treasurer and the commission was manfully guarded by "the bell boys militia company of the Locke." The "third house" attracted far greater interest and attention for a time than did the regular houses. All assumed that the movement was one calculated to kindle amusement, and jokes of every color, garb and description were cracked at the expense of the movement and the officials.

At the legislative session of 1899 the message of Governor Lee proved one of the first most important topics for consideration. It was so extremely long, forceful and critical that many members of both houses favored not reading it, but it was finally read to both houses jointly. Much of the message was saga- ciously devoted to answering the many pungent criticisms of his administration. Another large section was devoted to Kirk G. Phillips who had conducted more or less of a crusade against the governor since his first inauguration. He reviewed the merits and demerits of the various cases he had instituted in the courts against Auditors Mayhew, Hipple and Anderson; and said the acquittal of Mayhew by Judge Gaffay was uncalled for, officious and unjust. He declared the judge had decided in positive and contemptuous defiance of a rule of law laid down by the Supreme Court. It was owing to these adverse rulings, he declared,

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that he had directed the dismissal of similar suits which he had commenced against other officials. He thus took the position that the rulings of the court were unfair and unjust, and that by reason of that fact, he was unable to proceed and conse- quently had ordered the cases dismissed.

The governor took up in detail the report of the railroad commission which he said was doing good and satisfactory work for the state, and he asked that they should be given a larger appropriation to enable them to continue their duty. He sustained his veto of the insane hospital appropriation of two years before, but observed that the state could better meet such expenses and expansions at the present time. He recommended that the statute be so changed as to allow the land commissioner to invest state funds in state securities. He devoted much space to the question of permitting state officials to accept interest on public funds. This was the open charge he had made against Kirk G. Phillips during the campaign of 1898 and was the nature of the suits which he had contemplated bringing against other state officials. The governor asked for reform in the law concerning brand fees. He commended the idea of a referendum, but con- sidered the Moody question of free text books more or less of a hobby. The entire message was burdened with a review of the vexatious obstacles which the governor had valiantly encountered during the two years of his administration. He took up in detail and reviewed with apt discrimination the progress that had been made by the state institutions, and said that the work done by all was com- prehensive, effective and along the line of improvement. He expressed a belief that the state had enough state institutions, but that the number already in exist- ence should be furnished with adequate means for potent operation. He warmly congratulated the state on the adoption of the progressive principle of direct legislation, and expressed the sincere opinion that it was the duty of the Legis- lature to make this path easy and clear for subsequent administrations in this state.

He observed that the state was nearly out of debt, which fact was due in the main to better crops and thus better times. He noted that the liquor license receipts amounted to $60,000, and said that the total state revenue in two years amounted to $3,905,024.46 and that the disbursements amounted to $3,405,506.02. The state debt from January 1, 1897, to January 1, 1899, he said, had been reduced $554,501.60, and the net debt on the latter date was $738,300. He asked what should be done with the interest on the state funds which had been deposited in various banks by the treasurer, Kirk G. Phillips. He stated that an investigation of the treasurer's books had shown that they had been doctored, and he declared that it was the duty of the Legislature to look into the matter. He boasted of the passage of the amendment on initiative and referendum, and insisted that it was the bounden duty of the Legislature to put these reform measures into active operation. The amendment for state control of the liquor traffic had carried at the election of 1898, therefore it was now incumbent on the Legislature to provide for a state dispensary law in accordance with the pronouncement of that elec- tion. He stated that some action concerning the fellow servant problem should be taken and recommended eight-tenths of a mill as a permanent appropriation fund for the state educational institutions to be apportioned among them accord- ing to their proportionate needs. He reviewed in detail the questions of assess- ment and taxation and insisted that radical reform was necessary. He showed that 60 per cent of the burden of taxation was now placed upon the land, and

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that in a considerable portion of the state, land was assessed at its full value and that in no case was it assessed at less than one-third of its value; and that bank stock, moneys, and credits, and all forms of profit-bearing securities, practically escaped taxation. Live stock, he said, was assessed all it could legally stand. Railways escaped taxation and so did other large corporations throughout the state.

In speaking of the railways he said, "These institutions have grown so bold and audacious that they appear to believe the state was created for them to plunder. During two sessions of the state board of assessment I have made a conscientious effort to increase railroad valuations, but being unaided by any member of the board except the auditor, I found the task practically hopeless. It is an outrage upon the state that this class of property dictates how much taxes it will pay and this outrage has been rendered unbearable by the frequent insolent declarations of the railway representatives before the board, that their companies would pay no more taxes unless they were allowed virtually to fix their own valuations." He said that the railways did not make an honest and comprehensive return of their annual earnings to the state. He cited instances where both the Chicago, Milwaukee & St. Paul and Chicago and Northwestern railways had brazenly shown that their earnings had steadily decreased instead of increased during the previous seven years. He called attention to the fact that the big mining companies of the Black Hills escaped taxation except upon a ridiculously small portion of their property. The annual product of the hills, he said, was $8,000,000, while their tax was a mere bagatelle.

At the legislative session of 1899 Governor Lee vetoed many bills, more perhaps than any other governor thus far during statehood; but not as many as Governor Church had vetoed during his term as territorial executive. While the republican newspapers severely criticised Governor Lee for many of his acts, no one questioned that he was conscientious, honest and fair minded; and all were pleased that he could not be bluffed, bullied or bull-dozed by politicians or other self-seekers. All admitted his courage and sound judgment, even though they might oppose his politics.

The following important measures were vetoed by Governor Lee: Perman- ent educational levy ; depository act ; sugar bounty bill ; pure caucus bill; increase in judges' salaries ; license to steam engineers ; to abolish days of grace; to allow non-English reading voters to have help in marking ballots; to prevent a man's name from appearing twice on a ballot ; to establish a Normal School at Water- town; to establish a Normal School at Aberdeen; appropriation for Springfield Normal School. He gave his reasons for every veto, and his friends accepted his views as reasonable and wise. On the other hand he was rigorously criticised by the republican press of the state.

In his retiring message to the Legislature in 1901 Governor Lee opened by saying that nothing of grave importance had disturbed the growth and tran- quillity of the state during the past two years. The tide of immigration had set in toward South Dakota with great strength, and the increase of population from 1890 to 1900 was 22 per cent. He noted that the public health generally throughout the state was good; that peace had been constant and unbroken; that the education of youth had advanced at rapid and felicitous strides; that the total of state school funds had already reached the vast amout of $3,372,926.16,

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and that it was now yielding annually for the support of public schools about two hundred and fifty thousand dollars.

Governor Lee said that so long as the present crude system of assessment and taxation prevailed the question of revenue would be all important and one of extreme difficulty. As the state was bound to increase rapidly in wealth and population, it was necessary that the Legislature should provide for its propor- tionate and harmonious development; that all stages of growth should be weighed and considered in order that justice might be done and ail property owners be required to pay their just proportion of the public expenses. The revenue law was wholly inadequate, was cumbersome, confusing and out of date and should be amended or killed. The state had steadily been borrowing next year's revenues and paying interest thereon to meet this year's expense until the limit in this unwise respect was almost reached. Now the heads of the state institutions asked for appropriations amounting to a total of $930,000, and he noted that this sum was greater than had been the total expense of maintain- ing the institutions during any previous biennial period prior to 1899. He called attention to the fact that the state auditor had just announced that by July 1, 1901, the state deficit would amount to between $150,000 and $200,000. He stated that there were three ways open through which to meet this deficiency : (1) To register warrants at a high rate of interest and take them up as rapidly as the increasing revenue permitted; (2) to issue bonds which though at a lower rate of interest would cost more than registered warrants in the end: (3) that the business like way was to tax all the property of the state in an equitable manner, instead of allowing railroad, telegraph, telephone, express and mining corporations to escape their just burden of taxation. He said that the state board of equalization had pretended in 1899 and 1900 to raise the railway assessments, but that the increased valuations were really and injustly placed upon other over-taxed forms of property held by the people. The increase on other property was so great, said the governor, that the railroad companies actually paid less money proportionately into the state treasury than they had previously paid under smaller valuations. He recommended that in order to avoid the undue influence of the railway companies over the state board of equalization an assessment law should be enacted giving assessors power to fix the valuation of railway property within such counties. He recommended that the telephone and telegraph companies should be placed under the authority of the railroad commissioners who should be given power to regulate railway rate charges. He said that telephone charges were outrageously high-that the rates charged the previous year were more than the cost of construction and operation and that a reduction of 50 per cent should be made thereto in all justice. He believed the state should buy up the existing telephone lines or build and operate its own system.

Concerning the finances of the state, Governor Lee said that they were as a whole in as good condition as could be expected. Expenses were high and getting higher and the revenue was low and getting worse. On June 30, 1899, the cash balance was $537,110; on June 30, 1900, it was $555,701. Registered warrants had been issued on which the interest charge at 7 per cent amounted to $4,891. These warrants were worth par. He said: "It seems absurd that a state should tie its hands by the creation of separate funds and be forced to

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pay interest on its own money or suffer depreciation of its paper. For two years the banks in which the treasury deposits its funds, have held nearly half a million dollars belonging to the different state funds and still the state has paid the banks interest to keep its general fund warrants at par. We have paid the bank cashiers 7 per cent to transfer our money from one state fund to another. Some method should be devised to allow a safe transfer of funds and avert the further registration of general fund warrants. The books of the treasury disclosed no interest paid to the state by depository banks although there is the best of reason for believing that the practice of receiving interest on state deposits indulged in by former treasurers is still in vogue. It was proved by the bank books that ex-Treasurer Phillips had received interest on daily balances on state funds deposited in the Dakota National Bank at Sioux Falls, and that someone had endeavored by the use of chemicals to destroy the evidence of the offense. The amount of this shortage on interest received from various banks was estimated to be over fifty thousand dollars. I placed the findings of the public examiner before the last Legislature and the attorney general. Both made the treasurer's offense their own by neglecting to protect the public interest." Governor Lee thereupon recommended the following reforms in the office of the state treasurer: (1) The treasurer should be paid a salary commensurate with his duties and responsibilities; (2) his bond should be in- creased to the full amount of his liability, it being now only one-half the amount of money collected and disbursed each year; (3) a depository law to force banks to pay interest on state deposits or else the funds should be locked in the state iron vaults. The governor further said: "There can be no good reason offered why a state treasurer should be permitted to enjoy a sinecure by which he makes from twelve thousand to fifteen thousand dollars per year at the expense of the people." He noted that the state debt had been reduced by $248,000 in two years and that the total indebtedness June 30, 1900, was $613,300. He recommended that the Legislature appropriate $28,662 for the purpose of refunding to the counties the amounts advanced by them to bring back to South Dakota the First Regiment from the Philippine Islands.

In 1901 Governor Lee recommended the following: A law governing and controlling corporations ; improvement of railway freight and passenger rates ; prohibition of the sale of oleomargarine; repeal of the wolf bounty law which he said had cost the state $40,000 in two years and was probably both fraudulent and unjust ; correction of weaknesses and errors in the liquor laws; a law to compel officers of state institutions to furnish bonds for the safe conveyance into the state treasury of all revenue collected by them.

In his message to the Legislature in January, 1901, Governor Herreid recom- mended that the board of regents of the state educational institutions be increased from five to seven members; that the office of commissioner of immigration be re-established in order to better enlighten the world as to South Dakota's agri- cultural, live stock, dairying and mineral resources; that the governor be given adequate power to remove undeserving officials who had been appointed by him- self ; that the office of state veterinarian be made a salaried one and the duty of the office be made to include a study and investigation of the causes of infectious diseases ; that the office of dairy and food commissioner be created and that official be empowered to enforce the pure food law.

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At this session, out of sixteen recommendations by Governor Herreid, all except three were adopted. He had recommended no assisting committee; how to mark ballots, a name to appear but once on the ballot; a secretary for the board of regents; appropriation for a geological survey ; power of governor to remove officers; a salaried veterinary surgeon; a new state fair board; appropria- tion for the state fair ; the pure food and dairy commissioner to be elected by the vote of the people; legislation for the Soldiers' Home; organization of the State Historical Society ; appropriations. These were the measures approved by Governor Herreid, and were passed by the Legislature.

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History of Dakota Territory, volume III, Part 19

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920 Publication date: 1915 Publisher: Chicago, Ill. : S.J. Clarke Publishing Company Number of Pages: 1146

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1146