EXOHAKOT? APR 9 1919 UC-NRLF bflfl REPORT OF THE MICHIGAN BUDGET COMMISSION OF INQUIRY 1918 EXCHANGE REPORT OF THE Michigan Budget Commission v of Inquiry 1918 FORT WAYNE PRINTING COMPANY CONTRACTORS FOR MICHIGAN STATE PRINTING AND BINDING FORT WAYNE. INDIANA 1918 REPORT OF THE MICHIGAN BUDGET COMMISSION OF INQUIRY Lansing, Michigan, October 1st, 1918. Hon. Albert E. Sleeper, Governor of Michigan. Sir : In accordance with the requirements of act one hundred ninety- three, public acts of nineteen hundred seventeen, the following report of the Michigan Budget Commission of Inquiry is respectfully submitted to you: Organization of the Commission: Following your appointment of the commission and pursuant to your call, the commission, consisting of Joseph W. O'Brien of Grand Haven, Charles D. Thompson of Bad Axe, Dana H. Hinkley of Petoskey, O. C. Tompkins of Lansing, and George Lord of Detroit, met with you and Auditor General Fuller, ex-officio members, at the state capitol on July llth, 1917, and formally organized by electing yourself Chairman ; Com- missioner C. D. Thompson, Vice-Chairman, and Commissioner George Lord, Secretary. Your designation of Commissioner Thompson as special investigator was later confirmed by the commission. Powers and Duties: As expressed in the title of the creative statute, the commission was created "to investigate and report upon the general financial system of this state insofar as it relates to the appropriation, control and expendi- ture of moneys for the support of state departments, boards, commis- sions and offices, and to investigate, report upon, and recommend legis- lation necessary to establish a budget system." The act charges the commission with the duty of making a thorough survey and investigation of the financial system of the state and of the general affairs of the several activities of the state government, for the purpose of ascertaining facts relative to the business and financial admin- istration and the degree of efficiency and economy maintained in the expenditure of moneys appropriated; of investigating and ascertaining the facts relative to the present method of appropriating money; of examining the budget laws of other states, their operation and results obtained, and of gathering and compiling such information as may be necessary to enable the commission to formulate a comprehensive budget system for the state. It is also charged with the duty of drafting appro- priate bills for legislative consideration, embodying such changes in the present laws as may be necessary to bring about the most efficient and economical correlation, control and management of the several activities of the state government, and the expenditure of public funds; also a bill, or bills, providing for the regulation and control of the appropriation of moneys by an adequate budget system. A further duty imposed on the commission is that of causing an examination to be made, by its spe- cial investigator, of each state department, institution, board, commis- sion and office for the purpose of ascertaining their respective financial 677379 4 needs and estimated income for the next biennial period, and of making an estimate and compilation thereof from which a budget must be pre- pared for presentation to the next legislature. There are forty-three active state departments, boards and commis- sions and twenty-five state institutions. To visit and investigate the general affairs of .each of these units of the state government, in addi- tion to the other duties imposed upon the commission, was found to be physically impossible of accomplishment within the time limit prescribed by the statute, namely, January first, nineteen hundred eighteen. The commission suggested, therefore, in order that no part of the work be left undone, that the services of the special investigator and the secretary be continued until such time as the requirements of the statute be car- ried out. In accordance with this suggestion of the commission, and acting under authority vested in you by law, you designated Special Investigator Thompson and Secretary Lord to continue their respective duties until the statutory requirements be fully complied with. The result of all this work is as herein set forth. WHY A BUDGET SYSTEM? That question can best be answered by briefly stating the present sys- tem of appropriating public revenues, the manner of controlling moneys appropriated and the method of their disbursement. Also, by way of comparison, the system that would prevail under adequate budgetary procedure. As a general rule, appropriation bills, under our present system, are prepared by the departments, institutions and offices requesting money and, in the case of institutions, are usually introduced in the legislature by the members representing the localities in which the institutions are located. Because of local pride and the possibility of added political prestige, it is only reasonable to assume that these members of the legis- lature will make every effort to get as much money as possible for their respective institutions, to the extent of the amounts requested in the appropriation bills, and this irrespective of whether they have ascer- tained, with a reasonable degree of certainty, that the amounts requested are actually needed and are essential to the public good. Their knowledge of the financial needs is usually based on what the executive heads of the institutions tell them rather than on personal investigation. This criticism is also applicable to the other state activities seeking appropria- tions, the bill for each of which is usually introduced by some member at the request of the executive head of the department or office requesting the appropriation, and the only information he gets as to the necessity for the appropriation requested is the information furnished him by the department or office affected. He is not furnished with adequate infor- mation resulting from a proper investigation of financial needs, nor with a comparative statement of past expenditures with amounts requested for the same activity, essential to his intelligent understanding of the measure he is advocating and to the economic conduct of governmental activities. Appropriation bills, upon their introduction, are first referred to the standing committees on the institutions, or other state activities, they 5 cover. Preliminary to the consideration of an appropriation for a state institution, the committee usually visits the institution and, in a sort of a perfunctory way, endeavors to find out something as to what the financial needs of the institution are. As a usual thing, the time 'spent by the committee at the institution is wholly inadequate for getting any- thing but meager information, and most of that is furnished by the execu- tive officer of the institution. Furthermore, the members of the com- mittee are not usually men who have made a study of state governmental business and financial affairs. It should not be expected, therefore, that they gain very much knowledge as to actual conditions, other than what they are told, by a few hours' visitation. They undoubtedly do the best they can in the limited time they can spend at the institution and, gen- erally, are honest and conscientious in their endeavors. The fault, then, is with the system. When the appropriation bills are reported out by the standing com- mittees they are immediately referred to the committee on ways and means, or finance, where they rest, with few exceptions, until the closing days of the legislative session. When those committees get through with their pruning to a point where they are quite sure that the total of all the appropriation bills does not exceed the aggregate amount which the administration agrees shall be the maximum cost of the state govern- ment for the next biennium, the bills are reported out and are usually enacted as reported, without change and with but little, if any, discus- sion. The reason for the apparent "smooth sailing" of appropriation bills after being reported out by the finance committees is that the mem- bers of the legislature, other than the members of the committees to whom appropriation bills are referred, are not furnished with any infor- mation as to the actual necessity for the amounts of money called for, neither are they afforded the adequate means for consideration of appro- priation items, essential to effective criticism and to an intelligent vote thereon. Furthermore, under the present system, the general public who is called upon to "foot the bill" gets no information relative to the financial program until the closing days of the session and then about all the information the public gets is that a certain amount of money was appropriated for certain activities. There being practically no pub- licity of the items of appropriation measures and the necessity therefor, at least, before they are enacted into law, the general public is deprived of the opportunity it should have of criticising any part of the financial program or of offering suggestions concerning it. Hence the term, "Invisible government." During each regular session of the legislature, there are from fifty to seventy-five appropriation measures enacted into laws. At the last ses- sion there were over eighty such laws enacted. Few of those measures are given sufficient publicity as to their necessity, previous to their enact- ment, and the discussions concerning them are usually heard behind the closed doors of the committee room, wherein is generally found only those advocates directly interested in getting all the money they can for the particular activities of the state government they represent. We dare say that not one-sixteenth of one per cent of the general public have any knowledge of what those appropriation measures contain pre- vious to their enactment, and only slight knowledge thereafter. The reason is the miserable unbusiness-like system we have of financing the 6 state government. Under its operation, the people are afforded prac- tically no opportunity for gaining the knowledge concerning proposed appropriations essential to an intelligent understanding of actual finan- cial needs. One of the weakest and most unsatisfactory features of our present fiscal system is the manner in which many of our governmental activities are financed from the general fund. This fund is provided for by what is known as the "General Purpose Bill" and is augmented by certain revenues derived from sources other than direct taxation. It is from this fund that the ordinary expenses of the state government, such as departmental salaries and expenses, salaries and expenses of the judi- ciary, legislative expenses, etc., are paid. The general purpose bill, enacted by the last legislature, appropriated money for seventy-eight distinct purposes without naming them in the bill. There was no itemi- zation of contemplated expenditures under these appropriations fur- nished the legislature so that it could act intelligently in regard to them, everything being done by the lump-sum method. The total of the general purpose bill for the biennial period of 1917-1918 amounted to $2,898,- 305.00, for which a direct tax was levied on the general properties of the state, $1,575,480.00 of which amount was levied in 1917 and $1,322,825.00 in 1918. These two amounts were appropriated in lump sums with the appropriating body, other than the members of the finance committees, having only meager knowledge as to the actual necessity therefor or the purposes for which the money is to be expended. Further- more, under this system of appropriating and spending the people's money, the general public gets very little information concerning the fiscal activities covered by the general fund. This condition of our fiscal affairs ought not to be. The people have a right to know, and they should be furnished the means of knowing, in detail, the purposes of proposed expenditures before they are authorized, so that they may be able, through their representatives in the legislature, to effectively control the public purse. The general fund as at present constituted and con- trolled is the official money grab-bag of the state. It has been a common practice for various functionaries to present money bills to the legislature without any tax clause so that the disbursement might be made from the general fund and thus smother opportunity for the public to readily ascertain actual cost of operation. Furthermore, some of the depart- ments receiving appropriations for their support also draw upon the general fund for a part of their expenses, thus making it exceedingly difficult for the general public to ascertain what the total expense of conducting such departments is. The present methods of appropriating to, and disbursing from, the general fund were wrong in their concep- tion, promote waste and extravagance, and breed inefficiency in the conduct of the government. It is no wonder, therefore, that there has developed during recent years a strong public sentiment for a change in our financial methods by way of a comprehensive budget system. Publicity being the keynote of a well constructed budget system of ascertaining the financial needs of government and of appropriating and controlling public moneys, "invisible government" under its operation cannot exist. The general public will know the whys and the wherefores of all demands on the public treasury as soon as the legislature convenes in session, as will also each member of the legislature. There will no longer be good reason for public criticism of state governmental costs, because the people will be afforded ample opportunity for examination and study of budget estimates, enabling them to intelligently express their opinion concerning them and, through their representatives in the legislature, to effect a much more efficient control over the public purse. Under the budget system, money will be appropriated by definite and comprehensible segregation according to governmental functions and objects of expenditures. Appropriations will not be made largely upon guesswork, as at present, but upon the actual needs of each activity of the government determined by expert investigations, followed by care- fully prepared comparative data in relation thereto. The plan is to require each institution, department and office of the state government to furnish on appropriate forms, which will be sent to them, a detailed estimate of financial needs for the ensuing biennial fiscal period, together with anticipated income; also, for comparative purposes, a detailed statement of past expenditures and income, and of its present financial condition. These estimates of financial needs will be subject to revision by a centralized authority, and, before final action is taken, there will be public hearings in regard to them. Following final revision, a statement, or budget, will be prepared showing the estimated amounts required for the conduct of the state government in all its departments, institutions, boards, commissions and offices for each year of the biennial fiscal period next ensuing; an estimate of the revenues of the state, and the sources thereof, for the same period; the expenditures, including bills due and unpaid, and revenues during the first year of the current biennial fiscal period and also for each year of the next preceding biennial fiscal period; an estimate of the amount needed for emergency purposes, the amount needed to pay and discharge such principal and interest of the state debt as may become due, together with such other data relating to fiscal conditions as will serve to furnish the legislature and the general public with a complete understandable statement of the actual financial needs of our state government in all of its activities, and of its present financial condition. The books and accounts, and the general affairs, of each state depart- ment, institution, board, commission and office will be subject to exami- nation at any time for the purpose of ascertaining facts relating to the budget, and for the purpose of making recommendations to the legislature relative to the degree of efficiency and economy in which they are being conducted. The cash receipts of all branches of the state government, from what- ever source derived, will be required to be turned into the state treasury on or before the first day of each month following receipt or collection. Exceptions will have to be made in the case of certain revenues derived by two or three of our educational institutions from sources other than from specific appropriations, over which revenues, because of constitu- tional inhibition and federal grants, the state has limited control. No money will be disbursed from the state treasury unless specifically authorized by law, and then only upon warrant of the Auditor General, for the purpose, or purposes, named in the governing statute. Further- more, no money will be disbursed from the state treasury in excess of the amount appropriated for each activity of the state government, and no money appropriated for a specific purpose will be permitted to he transferred and used for any other purpose without the written approval of the budget commission. State institutions will not be permitted to draw large sums from state treasury, not necessary for their immediate needs, and deposit the money in local banks, some of which draws interest and some does not. Whenever a state institution shall be in need of funds, it will be required to make request therefor to the Auditor General, who, if satisfactory showing is made that the funds requested are actually needed, will draw his warrant for the amount requested, which amount will then be credited to the appropriation account of the institution making the request. The amount so credited will then be subject to withdrawal from the state treasury by appropriate voucher checks signed by the executive officer, or officers, "of the institution. All funds so drawn must be used strictly for the purpose, or purposes, for which appropriated, and in accordance with the requirements of the accounting laws of the state. Each institu- tion will be permitted to establish and maintain a petty cash account to the extent of five hundred dollars, and no more. It is pertinent to remark that on the first day of October, nineteen hundred seventeen, over seven hundred thousand dollars of state funds were in the hands of the treasurers of the various state institutions. It will readily be seen that, under such a system as outlined, not only will the financial needs of the government be ascertained by scientific methods, which spell accuracy, but the revenues of the state will be deposited in the state treasury to be paid out only in pursuance of appropriations made by law, and in such amounts as may be actually needed, from time to time, for the proper conduct of the several activities of the state government. State sub-treasuries will no longer exist. There will be a central (state) treasury in fact as well as in name, and all financial transactions of the state government will pass through the state treasury in accordance with a sound business practice. There is now confusion and lack of uniformity, and of modern business methods, in the manner in which the financial business of the state is transacted, resulting in the door being left open to governmental dissi- pation. State funds are often drawn from the state treasury in large amounts and expended in contravention of a sound business policy. Bills for expenses, in several instances, are paid directly by the offices incurring them without audit by, and approval of, the auditing depart- ment of the state. Some offices pay their expenses from fees collected and forward unexpended balances, if there are any, to the state treasury. Several of the offices collect a large amount of fees which are deposited to their credit and for their use. Their bills, however, go through the proper channels before payment requiring the approval of the Auditor General or the Board of State Auditors. At least one state commission draws its entire appropriation from the state treasury and pays its own bills, the unexpended balance, if any, being returned to the state, together with a report of expenditures, at the end of each year. State institutions pay their bills directly from appropriated funds which they draw period- ically from the state treasury. After payment, an itemized statement of expenditures is sent to the Auditor General. One of the principal causes of the growing popular sentiment for a change from our present loose method of financing our state government to a scientific budget system is, undoubtedly, the large increase in the cost of our state government during the last decade. During that -period, our tax levies have been increasing by leaps and bounds until, today, the people are groaning under the burden. In 1908 our tax levy for state government purposes amounted to f 4,252,923.00, and this year (1918) the levy will be over f 9,000,000.00, an increase of 114 per cent for the ten- year period. This is a much larger percentage of increase than we have experienced in population, or in wealth. It is true that the assessed valuation of the state increased 140 per cent during the ten-year period ending with 1917. This increase in assessed valuation, however, does not mean that there has been a similar increase in taxable wealth. A large portion of it is the result of increases in the percentages of assessments, rather than as a result of actual increase in properties, or property values. It is well known that ten years ago the average ratio of the assessed value of the general properties of the state to their actual value was about 60 per cent, while now the tax commission reports that assess- ments are being made on a full value basis. Estimating our population at the present time to be 3,750,000 and Michigan's most optimistic dreamer will hardly say we have more inhab- itants than that the tax per capita for state purposes increased 59 per cent during the last ten years, the state tax per capita being $1.51 in 1908 and f 2.40 in 1918. The increase in population during the same period was about 30 per cent. It should be said, however, that the principal causes of this increase in the cost of government result largely from First, The increased demands of the people for new things ; Second, The increased costs of all items purchased and used by the state in the conduct of its business ; Third, The natural growth of the state's business in common with the growth of private industries ; and Fourth, The creation of new institutions and new offices and the increasing of the powers and duties of the old offices. This increase in the cost of government, however, calls for a revision of our financial methods and the highest degree of efficiency in conducting the business of government. Governmental costs have increased so rapidly during the last decade and have reached to such an amount as to stagger those who have to bear the burden. The utmost care will have to be exercised and improved financial methods followed in the conduct of our government, if we hope to keep our future expenditures within the limit of reasonable taxation. Waste and extravagance must be prevented and all unnecessary demands upon the public treasury detected and stopped. That this can best be done effectively by the establishment of a budget system to govern our fiscal activities is beyond question. It is almost universally recognized that a budget system is essential to efficient and effective administration of public financial activities. Its effect would be to prevent waste and extravagance, to stop unnecessary expenditures, to give the fullest publicity to all our fiscal activities, without which publicity there can be nothing like an adequate public control over expenditures, and to substitute order for disorder in the manner of financ- ing our state government. In every country, in every state, and in every 10 municipality having a budget in operation, it has proven to be the most effective agency for the promotion of efficiency and economy in the conduct of government and, furthermore, it furnishes the people the means of readily ascertaining what has been accomplished by the govern- ment for money spent and for what purposes money requested for the next biennium is to be used. Under its operation public servants are forced to a strict accountability of their stewardships. As well said by President Taft's commission on efficiency and economy, "n budget is an effective means whereby the government may be kept in constant adjust- ment with. the welfare needs of the people; a means whereby the economy and efficiency of administration may be regularly brought to a test." The trend everywhere is toward scientific budget making to take the place of the "hit-and-miss n method of appropriating public moneys which, up to a few years ago, was followed in nearly all the states. During the last decade the following states have adopted a budget system : New York, New Jersey, Connecticut, Massachusetts, Maine, Vermont, Ohio, Illinois, Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Nebraska, Oklahoma, Utah, Washington, Oregon, California, Arizona, New Mexico, Texas, Florida, Virginia and Maryland. In none of these states is there any desire to return to the old system of financing their respective governments. Of the states named, the commission visited, for the purpose of investi- gation and study, New York, Ohio, Illinois, Wisconsin and Maryland. These particular states were selected either because of the special pro- gress they have made in their fiscal organization or of their presenting problems similar to those in our own state. Visits were also made to the city of Baltimore, in which a well organized budget plan is in operation. Much valuable information was gained by the commission by these visitations, not only at the time of the visit, but also subse- quently by correspondence. Of the states visited, the state of Illinois has gone much farther in remodeling its administrative system of government than any other state in the union. The change in the state administrative system in the state of Illinois came about primarily as a result of an exhaustive survey of the state government made by a very able commission. The Governor of Illinois, Honorable Frank O. Lowden, using the report of the commission as a basis, submitted to the legislature of that state a bill providing for a new civil administrative code which was enacted into law. Under the provisions of this law, the government of Illinois, with the exception of certain temporary boards and commissions of quasi-judicial or quasi- legislative character, has been consolidated into nine divisions, with a director at the head of each division. These divisions are Finance, Trade and Commerce, Public Welfare, Public Works, Labor, Mines and Min- erals, Agriculture, Public Health, and Legislation and Administration. These nine divisions do the work now which formerly was done by some- thing like one hundred and twenty-five independent agencies of tlie state government. We are advised by the administrative officers of that state that the new system is proving a success. The following excerpts relative to the operation of the budget system in some of the states named may be of interest : "Having operated the state financial system on the budget plan since 1913, I do not know how we could properly manage without it. The expenditures 11 of the state are placed upon a scientific basis, through which untold saving has resulted The legislative finance committees have for their guidance the carefully estimated needs of all departments before any appropriation is made, and each appropriation is made for a specific purpose. Each year indicates refinements to the system now employed. At the last session of the General Assembly, we found the personal presentation of the state's financial needs a most helpful thing." Governor James M. Cox, Ohio. "The budget recommendations of the State Board of Control and the Controller, presented to the legislature, as a study of the needs of the state departments and institutions, have been of benefit in that they present figures founded upon necessity and eliminating the old hit-and-miss system and like- wise the old system of asking for an appropriation many thousands of dollars in excess of the amount hoped to be received." Marshall DeMotts, Chairman, State Board of Control, California. "It would be a long story to tell you why we adopted the Executive Budget System for Maryland. Briefly, we found that a budget prepared by the Governor after hearing from the different departments could be more accu- rately and expertly prepared than one which is hurriedly prepared by a legislative body. It has worked finely in Maryland." Governor Emerson C. Harrington, Maryland. "The budget act here was adopted because of the realization of the inade- quacy of check on public appropriations and expenditures under the old system, which left the appropriation bill until the last hour of the legislative session and its contents unknown to any but a few members of the legislature before final passage." Governor W. E. Lindsey, New Mexico. "The first budget used in this state was presented to the legislature of 1913. Prior to this time our fiscal affairs' were in more or less of a chaotic state. In many instances no limits were placed upon the amount of money that departments might spend. Appropriations were scattered throughout our statutes and session laws. Appropriations were even duplicated, departments having as many as three appropriations for the same purpose. "The budget plan has put the entire financial affairs of the state of Wis- consin upon a sound business basis. It enables the legislature to consider a department's needs in an intelligent way and requires the departments to pre- sent facts to back up their budget figures. "The budget system has also done away with departmental lobbying. In previous years during the legislative session departmental work was more or less at a standstill until the necessary appropriation measures were enacted. Now, the departments pay no attention to the working of the legislature. They are called before the Finance Committee when their budgets are con- sidered. After the Finance Committee has passed upon these, bills take the proper course in the legislature and require no departmental watching. "Even though our total expenditures have increased from year to year, we feel that the budget system has resulted in a saving of money to the people of Wisconsin. We are today receiving more nearly a dollar's worth of services or supplies for every dollar expended than has been the case in times past." Governor E. L. Phillipp, Wisconsin. "Personally, I believe that a state organization ought to be operated under a budget system." Governor Ernest Lister, Washington. "I believe in the budget system to the extent that I would like to see it a part of our state constitution and made mandatory. Business government, where the estimates are made and are made with intelligence so that the estimated amount will be raised within a certain tax levy, renders efficiency and justice to the taxpayers." Governor R. L. Williams, Oklahoma. "Florida has always been practically under the budget system that is to say, appropriations are made for a specified purpose which under the law and constitution cannot be exceeded. In this manner a limitation is placed upon the expenditures, of course, and very little is carried over to be met by deficiency appropriation. In 1915, the legislature, realizing the economical 12 benefits derived from the plan used by the state, required the counties to go upon a budget system. The law has worked very satisfactorily and while some few officials may object to it on account of a little more work in detail, yet, upon the whole, I am sure that no one would think of having it repealed." Ernest Amos,, Comptroller, Florida. "Probably the feature of the budget system which commends itself most to the people of the state is the one by virtue of which it seeks to avoid all confusion and put the statistics of state finance in the open. "I might write much more regarding this, but think the fact that no move has ever been made by either party or no suggestion by a responsible public official that the old system be returned is sufficient evidence of the approval of both parties. "The system commends itself to conservatives and radicals alike, because at a small expense it enables them to know what is happening in regard to their public finances." W. T. Donaldson, Budget Commissioner, Ohio. "This is the second year of the budget policy and the first year under my supervision. The wisdom of the system cannot be disputed." Governor Walter E. Edge, New Jersey, in his budget message. "The budget is intended to help the people exercise, through their chosen representatives, the right to control the public purse, to determine what work shall be done by the state, and how much shall be paid for it." Hon Carl E. Milliken, Governor, Maine. Dr. S. Gale Lowrie, Professor of Political Science, University of Cincinnati, and a well-known authority on budgetary procedure, says : "There is no more important reform than the installation of an adequate budget system in our state governments. Only in this way can the affairs of government be conducted efficiently, economically and in a way to permit of an orderly development." Professor A. R. Hatton, Western Reserve University, says : "No single change would aid so largely to both democracy and ctliciency as the introduction of proper budget methods." We know of no political economist of repute who does not advocate a proper budget system of financing governments. Noted authorities on public finance are practically a unit in condemning the "log-rolling" system of voting away the people's money and in urging as a prime essential to efficient and economical government the adoption of modern budgetary procedure. After a close study of our fiscal activities in Michigan and the fiscal activities in other states, we urgently recommend the enactment of a law providing for a comprehensive budget system for our state govern- ment. We have prepared a bill providing for such a system and for an adequate control of state funds, a copy of which bill is submitted here- with as a part of this report. 13 UNIFORM ACCOUNTING Section eighteen, article ten, of the state constitution reads as follows : "The legislature shall provide by law for the keeping of accounts by all state officials, boards and institutions, and by all county officials ; and shall also provide for the supervision and audit thereof by competent state authority and for uniform reports of all public accounts to such authority. Such systems of account shall provide for accurate records of all financial and other transactions and for checks upon all receipts and disbursements of all such officials, boards, institutions and county officials. All public accounts and the audit thereof shall be public records and open to inspection." Notwithstanding this mandate of the people contained in the consti- tution of 1908, it was not until 1911 that the legislature made any attempt to comply therewith and enact a uniform accounting law. During the legislative session of that year a strong effort was made to enact such a law that would apply to all state and county offices and to all state institutions. The bill was passed as introduced by the lower branch of the legislature but it was amended by the state senate in such a way as to make it of. little use. The result is that our system of accounting is practically the same now as it was before the 1911 law was enacted. That this system is wholly inadequate and unsatisfactory is conceded by everyone familiar with its operation. It was the weakness of the system that undoubtedly prompted the constitutional convention to embody the foregoing quoted mandatory provision in the state constitu- tion, later adopted by popular vote of the people. There is an utter lack of uniformity in the present system and in only a few instances are accounts kept so as to show actual cost of operation. Indeed, under the present system of keeping accounts, it is impossible to ascertain, with any degree of accuracy, the actual cost of any department of the state government. To get at the approximate cost would be almost an endless task, necessitating the assorting and examination of numberless vouchers and the compilation therefrom of cost articles. It will be readily seen, therefore, that a comparison of actual costs for similar activities cannot now be accurately made. Few of the departments and offices have any regular bookkeeping accounts, the evidence of receipts and expenditures consisting largely of book memoranda, vouchers and voucher registers, and through many of these departments large sums of money pass every year. Private business concerns rely upon their accounting systems to point out the weak spots in their operations; indeed, they will spend any amount of money necessary to perfect such an accounting system as will disclose expenditures reduced to unit costs and thereby obtain a correct analysis of operation that will enable them to stop all possible leaks. If such a system of accounting is a good system for private business, surely it would be a good system for public business. There is now more than seventy million dollars raised annually in Michigan by direct taxa- tion and expended for governmental purposes. This vast sum of money comes from the pockets of the people and they have a right to know, with a reasonable degree of certainty, what is done with it. They are entitled to know of what the public income consists, how it is derived and dis- bursed and of the financial condition of every unit of government. They are entitled to the means of readily ascertaining facts capable of intelli- 14 gent comparison relative to governmental costs and the benefits received for money spent in similar activities. A uniform system of accounting will provide such means and it will also afford a means of making a comparative check of the relative efficiency and economy in the adminis- tration of all governmental functions. We dare say that no private busi- ness enterprise would think of adopting such a loose, unscientific system of keeping accounts as at present obtains in the various departments of the state government, and undoubtedly in many of the county govern- ments, and, if any private business enterprise would adopt such a system, it certainly would not spell "success." Ordinary private business enter- prises everywhere have adequate systems of bookkeeping and public business should be no exception to this rule. It is believed that if an adequate system of accounts had been installed in the various public offices of our state that a large saving would have been made to the taxpaying public. This, we think, is evidenced from the fact that in nearly every county wherein expert examination of the rec- ords of county offices and accounts has been made a large sum of money has been recovered and turned back in the county treasuries that had been irregularly expended, these irregularities having been caused principally by the utter lack of a proper bookkeeping system. Furthermore, the repressive, or preventive, influence of a proper accounting system would result in much benefit to the general public. It is only through the keep- ing of a complete set of books, and the periodical examination thereof by an expert central authority, that the receipt and expenditure of public funds can be properly safeguarded. We do not hesitate to say that if such a provision is made by law no public servant will dare misuse public moneys or divert them from their proper channels. In short, an adequate, uniform system of accounting in public offices is one of the keystones to efficient and economical government and, therefore, it would not seem possible that opposition to its installation and operation should come from any source, and opposition will not develop except among those who follow the "public-be-damned" policy of conducting public business. Business men everywhere advocate what they practice in their private ousiness an adequate system of accounting and sound business methods of conducting public business in all its various activities. That public sentiment demands the installation and operation of a uniform system of accounting in the various institutions, departments and offices of the state and county governments is evidenced by the adoption of the provision of the constitution requiring it. Surely, there- fore, the popular will of the people should no longer be ignored and the carrying out of this desirable mandate as contained in the constitution longer delayed. Many of the states have a uniform system of accounting in operation, and in every instance it has proven a success and, from our investigation of the benefits derived in these states by the installation of uniform accounting, we believe the cost thereof is a mere "bagatelle" compared with the results obtained. For instance, in the state of Indiana for the fiscal year ending June 30th, 1917, as a result of the examinations made by the State Board of Accounts, there was a recovery of over f 100,000.00 in cash that had been irregularly and illegally expended by public offices, and, in addition, cases pending settlement aggregated nearly |200,000.00, of which the accountants estimated that at least 70 per cent 15 would be collected; so that in one year nearly one quarter of a million dollars was recovered and turned back into the various government treasuries. Furthermore, a large sum of money was saved by the pre- vention of waste and extravagance. The Board of Accounts of ~ that state estimated that there was a saving to the taxpaying public of over one quarter of a million dollars annually in the decrease of supplies purchased, as a result of the operation of the uniform accounting law of the state. Practically the same results have been obtained in Ohio, West Virginia, Washington, Iowa and other states having uniform accounting laws. Of the beneficial results obtained in the state of Washington, the Chief Inspector of the Bureau of Inspection and Supervision of Public Offices in that state writes us as follows: "The beneficial results in this state from our uniform system of accounting and periodical checks of the records cannot be measured in dollars and cents, because, by a uniform system of accounts of the same class, there is always a comparison between different cities and counties as to the moneys expended for the same size taxing districts, and in addition the officials, knowing that a check will be made, are usually on the alert to see that the records are not only kept properly, but that they are absolutely in balance, because, if they are not, they are held accountable for any shortage. "A few public officials have been sent to the state penitentiary for short- ages which has had a very good effect on those in office. "It is safe to say that the passage of this act (uniform accounting law) was as important as any act passed by the legislature of the state of Washington." In a communication on the operation of the uniform accounting law in the state of Indiana, following are excerpts from the report of the Chief Examiner of the Board of Accounts in Indiana : "If we were asked to sum up in one sentence what is being accomplished by the State Board of Accounts, we would say efficiency and economy in the administration of public affairs." "The system has eliminated leakage and established accuracy." "The recovery of misappropriated funds and the preventing effect of the law is not the only good accomplished ; the elevating of the moral standard of official life, in Indiana, the establishing of public confidence in officials, the inspiration to office-holders to establish and maintain efficiency and economy in public affairs, are blessings beneficial to the public and the officials alike." "A department organized for the purpose of conserving the public funds is at all times desirable, but at this critical period in our national life, when all the energies of government are directed to conserve the wealth of the country, in order that we may successfully cope with the forces arrayed against liberty and civilization, it is the most important factor in this state for spreading the propaganda of honesty, efficiency and economy." Hon. G. H. Hendren, State Examiner of Indiana, in writing to this commission, says : "Our Indiana accounting system has been giving the best of satisfaction and results so much so that, after a thorough test, there are no changes we desire to make." Hon. Victor Blue, who formerly had charge of the administration of the uniform accounting law in the state of West Virginia, in communi- cating on the results obtained from the operation of that law in his state, says : "Where there was absolute chaos before the enactment of the uniform accounting law, there is now order, system and efficiency. The law has accomplished much good." Hon. W. S. Hallanan, who now administers the accounting law in the state of West Virginia, in a recent letter to the commission relative to the operation of that law, says : "This piece of legislation has proven, I think, to be the most wholesome of any legislation passed in this state in the last quarter of a century. Prior to enactment of this law, financial matters all over this state were in con- fusion. The direct result of the enforcement of the public accounting law has been to turn back into various funds thousands and thousands of dollars that had been wrongfully expended. Besides, we are now reaching a condi- tion that anyone may at any time know, by little investigation, the condition of the financial affairs of any fiscal body." The Auditor of the state of Iowa gives his opinion relative to the opera- tion of the uniform accounting law in that state as follows : "It is one of the best laws on the statutes of Iowa, and it has had a very salutary effect. Many thousands of dollars, ranging in amounts from a few dollars to several thousand dollars, have been returned to the county exchequers by the various officials who misappropriated county funds." In advocating a unification of fiscal accounting, Hon. William H. Taft, during his incumbency of the office of President, said : "I want to have figures that will enable me, like the manager of a big corporation, to send for one of the heads of a department and ask him why he is spending more money than another department chief for precisely the same article. I want to call attention to the fact that the expenses of a department are greater this year than last so that I can learn the reason for the increase." We might continue to quote similar experiences relative to the suc- cessful operation of uniform accounting laws and of the large benefits obtained therefrom, but we do not think it is necessary to go any further into the matter. We have confidence in the good business sense of the legislature and that it will carry out the will of the people as expressed in the state constitution. STATE PURCHASING Under the present method of state purchasing, we have practically as many purchasing agents as we have institutions and departments of 1ho state government, with the result that one department or institution buys supplies in ignorance of what another is doing along the same lines. Furthermore, there are no central records maintained showing the rela- tive cost of supplies bought by the various departments and institutions, making it exceedingly difficult to make a comparison of the relative cost of the various things purchased by the different units of government. It will readily be seen how impossible it is under such a decentralization of buying to fix responsibility for waste and extravagance. There really is no order or system in the present method of purchasing supplies by the state government. Supplies of the same kind and quality oftentimes are bought at the same time by various institutions and departments, at varying prices, these supplies being largely bought in the open market which means retail rather than wholesale prices. There being very little standardization of things bought by the state, everybody buys just what 17 he likes and as much as he likes without any check upon waste and extravagance. Where such a condition exists in the purchasing system, of any govern- ment, the door to dissipation of the people's money is left wide open. The cure for this condition is the establishment of a central purchasing department such as is maintained by large industrial enterprises every- where. It is only through purchases made by a central authority that the state can obtain the lowest possible prices, because centralized buying would mean large quantities, and it is a fundamental principle of supply and demand that the larger the quantity purchased the lower the price. It stands to reason that flour, for instance, contracted for at one time for the institutions of the state could be obtained at a much lower price than if it were bought by twenty-five different agencies and at as many differ- ent periods. Everything used by all departments and institutions for the same purpose should be purchased at one time under contract entered into subsequent to competitive bidding. Not only would this result in lower prices, but it would result in a considerable saving of money in the lessening of the number of vouchers and the work entailed in auditing them and, furthermore, it would make it comparatively easy to make an analysis of the relative cost of everything which goes into the various institutions and departments of the state government. Under the present system of purchasing this is almost impossible of accomplishment. Under a centralized system gross quantities would be bought under a single contract, whereas, now the purchases are made upon a number of different contracts and at widely varying prices. A centralized purchasing agency would result in an audit of proposed expenditures for supplies before such expenditures are made, whereas, under the present method of pur- chasing, the money is often spent and goods delivered before an audit can be made. This surely is a most unwise way of conducting the purchasing end of the state's business and, in justice to the taxpaying public of the state, it should be remedied. It is our belief that a properly conducted central agency for the purpose of purchasing state supplies would result in a large saving to the taxpayers of the state and in getting better quality for money expended. This has been the result in every state and in every city wherein a central purchasing agency has been in operation. It is true that since 1.912 there has been some improvement in the purchases made by the state institutions. At that time there was organ- ized what is known as the "State Institutional Buyers' Association," consisting of the executive heads and the stewards of the state institu- tions. Through this association there has been more or less of a stand- ardization of things purchased by the institutions, schedules made up of various requirements and a portion thereof purchased under contract, following competitive bidding. The result of the work of this association has undoubtedly been a considerable saving of money in the purchases mado. This, we think, is acknowledged by those active in the work of the association. If such is the case and the little unification of purchases made by the association is a success, then surely a larger unification, embodying all the activities of the state government, would be a still greater success and result in a much larger saving of money. The principal object of the organization of the association was to centralize purchasing : and we have no complaint to make of the good work of the 18 association in that direction. However, there is room for improvement as is evidenced by the fact that not more than 25 per cent of the purchases made by the institutions of the state were made last year through the Institutional Buyers' Association. It lias been suggested that, if a law were enacted making it compulsory for all the institutions to make their purchases through that association, much better results would be obtained. Be that as it may, there is no good reason why a central pur- chasing agency should not be established to embrace all activities of the state government. The Institutional Buyers' Association is an improve- ment over past methods, is good so far as it goes, but certainly does not go far enough. When it is considered that many millions of dollars of the people's money are spent annually by the state for supplies of various kinds, it will be appreciated how essential it is that the utmost care be exercised in purchasing these supplies and the most up-to-date system of purchasing maintained a system that would make possible the stoppage of all waste and extravagance. We believe that in no other way can the highest degree of efficiency be maintained in purchasing supplies for the state government than by a centralization of control. It is perhaps needless to say that large private business enterprises are founded on the principle of centralization and that their purchases are all made through one agency. Why should not the same principle of purchasing be followed in public business as in private business? The only excuse there can be for not doing so is that, by the establishment of a central purchasing department, those who now exercise the privilege of buying for the state would be deprived of their powers in this direction. However, it is not believed that it is good business, or a correct policy, for the state to follow, to satisfy the yearning for authority, in a matter of this kind when to do so would be at the expense of the people of the state. "Correct business" should be the aim of every public servant and not the continual reaching out for more and more authority irrespective of the public welfare. If central purchasing is a good thing and we believe it is there is no good sense in longer delaying its establishment simply because a few public servants will be deprived of a little authority. A large number of the states have a centralized purchasing system, namely: Alabama, Arizona, California, Delaware, Florida, Georgia, Indiana, Illinois, Iowa, Kansas, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Texas, Vermont, Virginia, W T est Virginia and Wisconsin. Several other states have a partially centralized system, and the executive officers of other states are advocating the enactment of laws providing for such a system. The trend everywhere is toward a centralization in the making of purchases by governments. The state of New York at this writing is conducting an investigation of purchasing systems with the object in view of establishing a central agency in that state. The Chamber of Commerce of the state of New York, at a meeting held the early part of this year, unanimously adopted a resolution calling for the enactment of a law to consolidate the pur- chases of all supplies for the state in the hands of a central authority. Two of the paragraphs of said resolution we quote as follows : "Whereas, The state of New York has over 165 boards, commissions and other departments, each buying its own supplies, involving needless duplica- 19 tion in printing, advertising and distribution of proposals in the preparation and execution of contracts ; and. "Whereas, The consolidation of purchases under the control of a single central buying agency would eliminate needless duplication ; would- enable purchases to be made in wholesale instead of retail quantities as is often now the case; would result in a material saving on the part of the state in its expenditures for supplies ; and would bring about many obvious econo- mies ;" Such a resolution, coming from the leading business men from the various parts of the state of New York, constitutes a recommendation that can hardly be ignored by anyone having good business sense. Busi- ness men everywhere are practically a unit in advocating the centraliza- tion of authority to make purchases into one agency. Having, by experience in the conduct of big private business, seen the benefits obtained from such a centralization, they are now advocating the same system of purchasing for public business. Many of these men are cap- tains of industry, contribute large sums of money toward the support of government and consequently are deeply interested in the conduct of public business and the establishment and operation of the most efficient and economical system of conducting government. In our correspondence with the various states having a central purchas- ing system, we find that large sums of money have been saved by the operation of such a system. There has also been more efficient service and a better quality of goods. Following are a few excerpts from some of this correspondence: George Leavy, State Purchasing Agent of the state of Texas, says: "The chief argument we have is that the total amount of all institutions in Texas aggregates so much that we make all our purchases from either the manufacturer or the jobber, thereby saving profit that is made by the smaller concerns. Last year we purchased fifteen thousand barrels of flour at $5.40 per barrel which was $13.00 per barrel before the contract expired. On thousands of other articles the profit was nearly as much. We saved at least 33% per cent on dry goods, 40 per cent on groceries and in some instances as much as 150 per cent on hardware and steel. "We find merchandise that is suitable for one asylum is proper in every way for the other. Merchandise used for one normal school is practically what is needed in the other state normals, and likewise in hardware and other lines of merchandise." Governor Goodrich of Indiana says : "By an act of the last General Assembly, a purchasing committee was authorized. Under the direction of this committee, they have standardized all supplies and are working upon a plan through the committee to centralize the purchase of all staple products in the hands of a single person or a com- mittee of three. I am quite certain that one thoroughly competent business man, with authority to purchase all the supplies for all the state needs, could buy much cheaper than could a number of separate boards, or even a committee of three." The Purchasing Agent of the state of Minnesota writes: "Experience of the period covering the centralized purchasing for institu- tions has demonstrated beyond the shadow of a doubt the great saving effected by means of such purchases." 20 Governor Lindsey of New Mexico writes : "I am very much in favor of a purchasing board, or rather a single pur- chasing agent, empowered to make all purchases for the state." Hon. John S. Denton, President of the Tennessee Board of Control, savs : "Our purchasing department advertises and solicits bids monthly for the wanted articles for current use and advertises for proposals to iill yearly contracts on such commodities as we find it desirable to buy for that or a shorter period. This system has worked to the great financial advantage of the state and its institutions. "Under the old system the trustees of each institution either appointed a purchasing agent or designated someone connected with the institution to buy supplies. The purchases were made from local dealers and in many cases from favorite dealers, generally at retail prices, and, as a result, the state not only paid higher prices for practically everything it used in the institutions, but the goods were generally of inferior quality. We unhesitat- ingly recommend the centralized purchasing board or system for all state institutions." Governor Edge of New Jersey says: "I most emphatically approve of a central purchasing system for all state supplies. In fact, when a member of the legislature, I introduced and spon- sored a bill which resulted in the installation of the central purchasing system in New Jersey, and that system, aftei an experience of several years, is proving very successful indeed." The Board of Control of State Institutions of North Dakota writes as follows : "Our system of purchase allows us to show the greatest maximum of business and has permitted us to make our contracts with the very best houses, which has resulted in obtaining close prices on goods wanted at our small institutions as well as at large ones. We believe fully that a central body can make a distinct saving in your purchases as combining all your wants in one line, under one cover, will make the business you have to offer attractive to any house." Mr. W. G. McMillin, Purchasing Agent of the state of California, says: "By comparing market quotations and market conditions with the result secured by our purchasing department, we are able to show marked saving in expenditures, and the very fact of the unusual business conditions existing and the scarcity of supplies in many lines has shown a greater need for a central purchasing department for the securing of those supplies." The Oregon State Board of Control says : "Before this board was organized, our institutions were paying retail prices for a great deal of their merchandise. Under the pre.-ent system, we are recognized the same as the large dealers and secure prices accordingly, therefore, have saved the state thousands of dollars." Mr. Charles B. Christy, Secretary to the Commissiori of State Institu- tions of the state of Arizona, writes us as follows: "Our commission, organized and authorized by the last legislature, believe that a central purchasing board or agent system is far preferable: that the most economical method of handling can be observed by putting this into the hands of a central board who will not only avail themselves of best 21 prices possible on account of purchasing in quantities, but will also scan and question extravagance in purchasing." Governor Bilbo of Mississippi says : "I believe that a central purchasing board ought to work well and it honest, conscientious and first-rate business men could be selected, I believe it would result in money saved." We might continue these quotations from states having had experience in central purchasing, all of which speak of its operation with high favor. Last fall the commission visited Washington for the purpose of study- ing the purchasing system inaugurated by the Navy Department. Under this system, the -purchases of everything used by the Navy are made by a central authority. The Paymaster General of the Navy, Admiral McGowan, has direct supervision over the purchasing department. When it is considered that this department of the United States Government purchases every month supplies and equipment amounting to many millions of dollars, its magnitude will be appreciated. Of the success of the new system we can do no better than quote from Admiral McGowan's report for 1917, as follows : "If the principle of centralized purchasing for the naval system needs any justification, the developments of the few months since the war began would amply furnish it." This purchasing division of the United States Navy Department has been brought up to the highest degree of efficiency, resulting not only in quick buying of supplies of better quality and grades, but also at lower prices than obtained prior to the inauguration of the system. The success of the centralization of authority to purchase by the Navy Department has prompted the government to move for a similar system in other departments in Washington. We understand that the* War Department has recently inaugurated a similar system. Under this system of centralization, everything needed by the Navy Department is standardized by experts who also pass upon all requests for supplies, all purchases being made in accordance with these standards expressly specified. The department kpeps a classified index of all manufacturers, wholesalers and jobbers who manufacture or deal in supplies used by the Navy Department. When the Navy is in need of any supplies, notice is sent to each of these concerns requesting bids ; and there is also a public advertisement calling for bids. These bids come in under seal, are deposited in a container, which is kept locked until the specified time for opening bids has been reached, and at the specified time these bids are taken from the container and publicly opened, anyone interested being given the opportunity of witnessing the opening of the bids. A force of clerks are on hand to make proper tabulation of the bids on appro- priate forms as fast as such bids are opened, so that almost immediately upon the close of the opening of the bids it is known who are the lowest bidders for the various classes of supplies called for. Everything is purchased under contract and the successful bidder is required to give a bond for the faithful performance of his contract. There does not seem to be any good reason why the state of Michigan should not make its purchases by a similar system. Our state buying runs into many millions of dollars every year ; and this money is mostly 22 derived from direct taxation, coming from the pocketbooks of the people. The people, therefore, are entitled to the consideration of having all supplies purchased by the state in the most systematic and economical manner. As a result of our investigation and study of the purchasing problem, we unhesitatingly recommend the enactment of a law providing for the establishment of a central purchasing department, charged with the duty of purchasing all supplies required for the proper conduct of the various activities of the state government. This department should be headed by an officer to be designated "State Purchasing Agent/' to be appointed either by the Governor or by the Board of State Auditors, preferably by the former as the executive head of the state government and in whom would be fixed the direct responsibility for the proper con- duct of the department. In case it should be decided that the Board of State. Auditors should make the appointment, then it should be provided that the purchasing should be done under the supervision of said board through its purchasing agent. We do not believe that any law providing such a department should contain too many rules and regulations cover- ing state purchasing, but that the authority to make such rules and regu- lations should be delegated to the purchasing department. The powers of the department should be broad and not restrictive. It will be appre- ciated how essential this is to the success of central purchasing because of the constantly changing market conditions. In order that the state purchasing agent may receive the benefit of the knowledge gained by the purchasing agents of the state institutions in making purchases and their knowledge of the needs of such institu- tions, we recommend that the steward of every institution or, where there is no steward, the executive head of each institution constitute an advisory council to the central purchasing agent, and that this council be required to meet periodically with the purchasing agent for the pur- pose of consultation relative to the work of the purchasing agent's depart- ment. STATE PRINTING The annual cost of state printing has grown to be quite a sum of money. Last year there was expended by the state ftlttiMOl.OO for publi- cations, consisting of books, reports and bulletins. In addition there was a large sum of money expended for job printing, stationery, cards, blanks, etc. With an efficient system for the control of this printing, the cost would not have exceeded two-thirds of the amount expended last year. Many of the reports published by the state contain a mass of material of little or no use to the general public and are scarcely ever read by anyone. Instead of publishing concise statements of activities and com- piling and publishing statistics, in classified aggregates, the utmost detail is resorted to. This necessitates, of course, a very large amount of clerical work which, added to the cost of printing, binding and paper, amounts to a large sum of money that is absolutely wasted. There is hardly a report published by the state that could not be condensed to one-half of its present size and in consequence would be of much more value to the public and would be read and studied by a much larger number of our people. 23 Furthermore, most of these reports are belated reports, some of them containing statistical and other information gathered two or three years before being presented to the public. One report recently came__to_our notice which was issued the early part of 1917 and contains statistics for the year of 1914. The publication of such a report is extremely repre- hensible. A statistical report must be recent to be of any value. Reports that are published two or three years after they become due constitute a waste of public funds. Much blame undoubtedly rests with the state printer for the lateness of many of our state publications. It seems that other than state printing is given precedence in a great many instances with the result that state printing oftentimes has to wait so long that the delay becomes exasperat- ing to the executive heads of the state departments. It is suggested that some way be found for penalizing the state printer for failure to deliver state documents within a reasonable prescribed period. Another thing, there are altogether too many copies of state publica- tions printed and distributed. This is evidenced by the large number of volumes of different kinds of publications that have been sold for waste paper. In 1916, twenty-eight tons of the compiled laws of 1897 were sold for waste paper, for which the state received $31.00 a ton, or a fraction more than 23 cents for each set of the laws. Each set of these laws cost the state approximately $5.00, so that there resulted an absolute waste of over $17,000.00 in the over-publication of these laws. There is the utmost recklessness in the method of publishing and distributing- state publications. Reports and other documents are sent out indiscrimi- nately without any knowledge as to whether they are wanted by the people. For instance, a county clerk recently reported to the Budget Comrrission that he had just sold two tons of state publications for waste paper, there having been but few requests from the people in the county for such publications. Surely, it is time that something be done toward stopping this waste of public funds incident to our state printing. We, therefore, urgently recommend that a law be enacted providing for a director of state publications. This director should be the Board of State Auditors, who in turn should be directed to appoint a state supervisor of printing. Said director of publications should be clothed with general supervisory powers over the printing and distribution of all publications relating to the activities of the state government. The director should be given authority to prescribe the form and extent of all reports and other publi- cations of each department, institution, board, commission and office of this state ; should determine the number of pages to which any such pub- lication may extend and also the kind of paper and binding to be used in such publications. The enactment of such a law, we are quite sure, would result in a large saving of money to the taxpayers of the state, and would also result in the publication of reports, etc., that would be readable and of more value, and in eliminating entirely the publication of those which are of little or no value to the public. It has been suggested to us that the state engage in the business of printing on its own account rather than by private contract. We are not prepared to say that this would be the best thing for the state to do at th's time. We believe, however, that if it can be done without violat- ing the provisions of the constitution, the Industrial School for Boys and 24 the State Prison at Jackson might print most, if not all, the stationery and blank forms used by the state, leaving only book printing and binding to be done under private contract. This, we think, is a matter that might well receive consideration at the hands of the next legislature. STATE INSTITUTIONS All the state institutions have been visited at least once by the com- mission, or certain members thereof, and a close study made oi' adminis- trative matters. We found that the administrative allairs of nearly all the institutions are being conducted by men of high character and ability and, in many cases, the personal services of these men arc being given to the state at considerable sacrifice. With the exception of special criticism of the Industrial School for Boys at Lansing, and the State Prison at Jackson, the only criticism we have to make relates to the purchasing and accounting systems. To these features we have called attention in other parts of this report. Industrial School for Boys: We regret to say that conditions at the Industrial School for Boys are far from satisfactory. We do not mean by that to reflect on the adminis- trative officers. The present Superintendent we believe to be an efficient man, and it is no fault of his, nor of the Board of Control, to any great extent, that the present condition of affairs is unsatisfactory. In our investigation of the school, we found, among other things, that a large number of the boys sleep on the third floor of the cottages, where there are no fire escapes, and where there are far from adequate sanitary arrangements. The exit from these floors is by way of a narrow stairway, in some cottages two narrow stairways, and these stairways are very steep. In case of fire, there does not seem any possibility of escape for these boys. Furthermore, no arrangements haVe been made for furnish- ing these boys with drinking water. We were told by the Superintendent that when these boys wanted a drink of water they .usually dipped it out of the flush box of the toilet. Sometimes during the hot weather of sum- mer they would carry water up in pails. It is also to be noted that these boys are not furnished with night shirts in which to sleep. The bathing facilities are inadequate and unsanitary. The only way the boys can bathe is to stand under an irrigation pipe in the basement of the cottages, which is also the place where they wash their face and hands. That these boys should be thus treated, it seems to us, is anything but credit- able to the state. Surely, the institution should be furnished with suffi- cient funds to remedy these conditions ; and this should be done forthwith. These boys are human beings and it should be the policy of the state in sending them to the school to use every endeavor to build character in these boys and not place around them such conditions as will induce them to return to waywardness after they are discharged from the school. The present conditions at the school are such as to offer every inducement for sex perversion, and from what we have learned, from our investigation, there is considerable of this carried on. Surely the state should take whatever steps may be necessary to better these conditions in order that these boys may be taken care of in such a way as to make 25 them better boys and not worse boys than before they were sent there. Referring to the neglect to furnish fire escapes, it is pertinent to remark that the state employs inspectors who travel around the state all the time to see that public buildings are furnished with adequate fire escapes and where it is not done the owners of these buildings are pun- ished as provided by law ; and, at the same time, we have a state institu- tion, almost under the dome of the capitol building, without any fire escapes, where there are on an average about eight hundred boys kept for corrective and educational purposes. State Prison., Jackson: A great deal has appeared in the press from time to time relative to the supposedly efficient manner in which the affairs of the State Prison have been administered, particular reference being made to the claim that the prison has not for some years cost the taxpayers any money; in other words, that it has been a self-sustaining institution. In our criticism of this claim, we desire that it be strictly understood that we are not interested in the least in present or past political squabbles con- cerning it. We believe, however, that it is our duty to bring the facts before the people as we find them. It is true that the profit and loss statement issued by the prison authorities shows a profit ; but this profit has been based on the current expense account of the prison only and not on the total moneys involved in its operation. All moneys from whatever source derived by the State Prison should have been carried into the profit and loss statement in proper accounting form. If this had been done, the profit and loss statement would have shown a much different result. Furthermore, in its mad rush to make a showing of earnings, the buildings and equipment of the prison have been permitted to deteri- orate to such an extent that it will take a very large sum of money to place them in proper condition. This certainly is anything but credit- able to the administrative officers of the prison. Not only so, but a considerable portion of the so-called earnings of the prison was the result of appreciation in the value of materials and was not derived from actual operation of industries. After all, the making of money by the State Prison, or any other 'prison, should be a secondary consideration ; the first consideration should be to build character in the men confined there and to place them at such work as would enable them, upon their discharge, to go into society and earn an honest living. In this connection, it is pertinent to say that the binder twine industry at the State Prison, while a success as a money- maker, is not a success from a vocational standpoint. We understand that there are practically no private concerns engaged in the manufacture of binder twine; so that when a prisoner leaves the prison, after several years of work in the binder twine plant, he has learned nothing that will be of any use to him and, therefore, he is more than likely to return to his old ways of living. It might well be the policy of the state to pay a little more attention to the welfare of these prisoners who some day will go back into society than to pay so much attention to the art of money-making. The accounting system at the prison, until recently, was unsatisfactory. We are glad to say, however, that an improved system of accounting has recently been installed by a firm of expert accountants. We are also 26 glad to say that the present management is evidently making an earnest effort to better conditions generally. We desire to call special attention to the fact that under he law the Warden and Board of Control can pledge the property of the prison as security for loans and that this is being done right along. Hundreds of thousands of dollars are frequently borrowed in this way, this money usually being secured from a New York bank. We think this a very unsatisfactory fiscal policy for the state to follow. If Jackson Prison should need money for the operation of its industries, it should be sup- plied by the state and not by a New York bank to whom the prison authorities have to pay over 6 per cent interest for money. As a matter of fart, so far as finances are concerned, the State Prison is a little government unto itself. It is anything but good business for any agency of tho state to be permitted to pledge the property of the state as security for loans and the law authorizing it should, in our opinion, be repealed immediately. At^ntion is also called to the wholly inadequate fire protection at the prison. The character of much of the material stored at the prison is such that a fire is very liable to start at any time from spontaneous com- bustion. We refer particularly to the large quantity of sisal stored at the prison, the value of which usually runs into several hundred thousand dollars. There is practically no fire protection except that which might possibly be furnished by the city of Jackson. The prison should forth- with be fully equipped with the necessary apparatus to successfully pro- tect the property of the prison from destruction by fire. It is pertinent to remark that only a few years ago fire at the prison destroyed seventy- five thousand dollars' worth of sisal, much of which could have been saved had the prison been properly equipped to meet such an emergency. College of Mines: The conditions at the College of Mines are somewhat of a problem. This college is being splendidly conducted and the graduates it turns out are in much demand as mining engineers. However, the per capita cost of - maintaining the college is large as is also the amount of money invested by the state in the college. The number of pupils is very small and the number of instructors proportionately large. It has occurred to 11 * that a part of this school might be used for vocational training, in addition to teaching mining engineering. The Superintendent of Public Instruction has assured us that there is much demand in the state for vocational teachers, and if the College of Mines at Houghton would take up this branch of work, in addition to what it is now doing, it undoubtedly would be of benefit to the state. At any rate, it is a matter that might well receive legislative consideration. The College of Mines is a very useful school and must, of course, be maintained ; at the same time there is no good reason why the buildings at the school should not be utilized fully for educational purposes. University of Michigan : The University of Michigan is also being well conducted. Its affairs are in the hands of exceedingly efficient men and, from both an educa- tional and business standpoint, it is a credit to the state. It is needless 27 to say that the University of Michigan is classed among the leading edu- cational institutions of the world. Many of its graduates have attained high places in governmental, industrial and financial activities. The accounting system maintained by the University is all that could be desired. Any citizen of Michigan, desiring to know, can very readily ascertain the source of all income and the purposes of all expenditure, in minutest detail, by reference to these accounts. We find that the Board of Regents gives unusual attention to the administrative affairs of the University and maintains a business system which is a credit to them. Michigan should be, and is, proud of its University. State Normal Schools: We desire to especially commend the efficient manner in which our state normal schools are being conducted. Our state normal schools are, as is well known, under the supervision of the State Board of Education. We do not know wherein there could be any improvement in the conduct of these schools except in the purchasing and accounting part of it. This weakness, however, is no fault of those administering the affairs of the schools but is the result of statutory weakness. With a centralized system of purchasing put into effect and a uniform system of accounting, these institutions would be placed upon a high plane of efficiency, and we hnve no other recommendations to make in regard to them. Farms : There is doubt in the minds of the commission as to the advisability of our state institutions maintaining large farms. We refer particularly to institutions whose inmates cannot be employed because of physical disabilities. We also doubt the advisability of any institution being permitted to buy up large acreage of poor land. We have an instance of this in the case of the State Prison at Jackson. This prison owns over four thousand acres of land, considerable of which is anything but good land. This is evidenced by the fact that last year the prison lost several thousand dollars from the operation of its farms. This is another matter that might well receive consideration at the hands of the legis- lature. STATE DEPARTMENTS In our investigation of the various state offices, we found that on the whole they were being conducted fairly well, considering the inadequate remuneration paid the clerical help. However, there is duplication of effort, a lack of labor-saving equipment and inattention to many things which, if given attention, would increase the efficiency of the offices and, consequently, lessen their costs. In some of the offices we found that they were following the same methods of doing the work as prevailed many years ago, notwithstanding that many labor-saving devices have been developed. For instance, in some of the offices many thousands of envelopes were addressed each month, with pen and ink, from permanent lists of names, this work requiring the constant attention of one or two clerks, whereas one addressing machine would do the work of half a dozen offices. We are glad to say, however, that in a considerable meas- 28 ure this condition has been remedied and thus a saving of money will result. There is considerable duplication of work which, of course, entaili duplication of expense and it should be stopped effectively. In the De- partment of State there is a division known as the "Vital Statistics Divi- sion." This division collects statistics relative to deaths, births, mar- riages and divorces. These statistics are compiled and published in monthly bulletins and also in an annual report. So far as the record of deaths is concerned, the State Board of Health gathers practically the same information as does the Vital Statistics Division and this informa- tion is also published in bulletins and the annual report of the State Board of Health. The commission can see no good reason for this dupli- cation of work in these two departments. In the matter of making inspections provided for by law, it is often the case that the state will send an inspector to a locality to make an inspec- tion as to sanitary conditions, another inspector 1o the same locality to make inspection as to adulterations of food commodities. It is suggested that one inspector could do the work of the two now engaged. Inspec- tions as to fire risks and inspections as to fire escapes are now divided between the Labor Department and the Insurance (Fire .Marshal's) Department. We believe that those inspections might well be made by the same inspector. Oftentimes it hapi>ens that two inspectors will be sent by the state to the same place for the purpose of making these inspections when one inspector could do the work quite as well as two. Comment on the duplication of work in connection with compiling and printing of annual reports will be found in this report under the head of "State Printing." The clerical force in the employ of the state will, we believe, measure up, so far as efficiency is concerned, with a similar force employed any- where receiving the same compensation. It is true that there are some among them who do. not measure up to the standard of clerks that the state should have in its employ; on the other hand, there are many clerks who, from long years of service, have become exceedingly proficient in their work and are worth much more to the state than they are being paid. We believe that if the state paid a fair compensation, it would not only be able to retain in its service the most efficient of its present clerical force, but would also be in position to secure efficient help in the future whenever it needed it. It is very poor economy for the state to pay low salaries to its employes at the expense of efficient service. The state should be willing to pay the market price of labor; and this is just what it has not been doing for some time. The result has been that many of its most efficient employes have left the service of the state to enter the employ of private enterprises at much larger compensation than the state was paying them. This we believe to be a distinct loss of money to the taxpayers of the state. Something surely should be done by way of placing these clerks upon a fair and reasonable salary basis, sufficiently high to meet the present day economic conditions. Under the present graded salary law a clerk- when first entering the employ of the state, can only be paid at the rate of $800.00 a year. No matter how efficient this employe may prove to be, he cannot receive an increase in salary for a period of three months. The maximum amount that he can ever receive, no matter if he has been in the employ of the 29 state for twenty-five years, is only thirteen hundred dollars a year, and the average salaries paid by any department cannot exceed eleven hun- dred dollars a year. With the present high cost of living, it will readily be seen that a man with a family, earning only eleven hundred dollars a year, has a very difficult task to make the two ends meet; and it is doubt- ful that he can possibly do so. We, therefore, recommend that the graded salary law be amended so as to provide a maximum salary of fifteen hun- dred dollars, an average salary of twelve hundred dollars, and the removal of the minimum salary. This, we believe, will be more nearly a living wage for the state to pay its employes. Surely no taxpayers in the state will object to the employes receiving a rate of compensation that will enable them to properly meet their living expenses. Departmental clerks now are entitled, under the law, to twenty-four days' vacation each year with pay. We believe this to be excessive. The usual rule among private business enterprises is to give employes not to exceed two weeks' vacation with pay. There is no good reason why state employes should receive more vacation than those working in private establishments. This law should be changed so as to provide for a two weeks' vacation instead of twenty-four days. This changing of the vaca- tion period will go a good ways toward offsetting the increase in clerical salaries above recommended. Bank examiners, upon entering the service of the state, receive a salary of seventeen hundred dollars a year. This salary may be increased at the rate of two hundred dollars a year until a maximum of twenty-five hundred dollars a year is reached. Thereafter there can be no increase in salary under the present law, no matter how efficient and valuable these men are in the state's service. The result is that these examiners are constantly leaving the employ of the state to enter the service of banking institutions who will pay larger salaries than can now be paid by the state. This condition of affairs is a distinct economic loss to the people of the state, especially when it is considered that these men have been schooled in the banking business at state expense. It is pertinent to remark that one of the examiners, at least, employed by the Securities Commission, receives a salary of thirty-five hundred dollars a year, or one thousand dollars a year more than the maximum salary paid a bank examiner; another instance of gross inequality in the payment of salaries. Special attention is called to the inequality of the salaries paid the various executive officers of the state, their deputies and secretaries. A table showing these salaries will be found in the statistical part of this report. The gross inequality in the distribution of these salaries should immediately be remedied. There is no good sense, for instance, in the state paying the Deputy Secretary of State, the Deputy State Treasurer and the Deputy Auditor General twenty-five hundred dollars a year when the secretaries of some of the commissions receive three thousand dollars a year, and the Director of the Securities Commission four thou- sand dollars a year. The Department of State and the Auditor General's Department are the two largest departments of the state government, and the State Treasurer's Department is of prime importance in that through it all state moneys are received and disbursed. Surely the depu- ties in these three offices should receive as large a salary as those holding any other office immediately below in grade the office of chief executive. It will also be noted that the Deputy Commissioner of Banking, which 30 is one of the most important positions in the state's service, receives only twenty-five hundred dollars a year, while the first Deputy Insurance Commissioner receives three thousand dollars a year. The state constitution fixes the salaries of nearly all the elective state officers. The Governor and the Attorney General each receives a salary of five thousand dollars a year. The Secretary of State, State Treasurer and the Auditor General each receives a salary of twenty-five hundred dollars a year. The salary of the Superintendent of Public Instruction, which is fixed by statute and not by the state constitution, is four thou- sand dollars a year. The salary paid the Secretary of State, State Treas- urer and the Auditor General should, in all fairness, be equal to that now paid to the Superintendent of Public Instruction. Each of these three state departments transacts a large volume of business which requires the almost constantly careful attention of the executive head. Indeed, in the case of the Auditor General's department, at leasl, the present executive head devotes his entire time to the duties of his oflice and is one of the most efficient officials the state ever had in its service. The Secre- tary of State and the State Treasurer, in addition to their duties as such, are members of the Board of State Auditors in which capacity they are required to discharge many additional duties. It does not seem possible that the people of the state would refuse to grant a reasonable salary to these state officers, provided they shall be fully informed of the important duties the heads of these three departments have to perform. At any rate, there should be equality and not inequality in fixing the salaries of state officers. The legislature, therefore, would do well to equalize the salaries paid state officers and employes so that each would receive a fair wage according to character of service he performs. More complete information relative to the various ollices will be found in the stenographic reports of the examination of such offices, contained herein, and in the statistical part of the report in which will be found tabulations relating to the cost of these offices and the per cent of increase and decrease, covering a period of years. STATUTORY CHANGES In addition to the foregoing recommendations for a budget system, uniform accounting, improved control of printing, a central purchasing agency and certain recommendations relative to departmental work, we respectfully call attention to the following matters for legislative con- sideration : Dairy and Food Activities: Under the present laws the extension work in dairy industries is now divided between the Dairy and Food Department and the Michigan Agri- cultural College. It is suggested that this work all be done by the college. The work of inspecting commercial feeding stuff now done by the Michigan Agricultural College should be transferred to the State Dairy and Food Department. 31 Deeds to State Property: Deeds to state property are now in the custody of different depart- ments thus causing a good deal of confusion. There should be enacted a law requiring that all deeds be deposited either with the State Treas- urer or with the Auditor General. Examination of State Lands: Under the present system lands deeded to the state and subsequently deeded to purchasers are appraised by two distinct departments of the state government, namely, the Public Domain Commission and the Auditor General. This. is a duplication of effort and of expense. The law should provide for this appraisal to be made by one department. Game Laws: Something should be done by way of legislation to protect the citizens of Michigan from the grabbing of fish from our waters by foreign corpora- tions which come into the state, hire the fishermen and contract for all the fish they catch. Nearly all fish caught in our waters go to the large producers residing outside of the state of Michigan, most of which is put in cold storage and later is shipped back to the state for sale to our citizens at three or four times the price paid the fishermen. For several years there was a law on our statutes which provided that fish caught in inland rivers and lakes of this state could not be shipped out of the state. This law evidently was enacted for the purpose of giving the citizens of Michigan the benefit of the fish caught in our inland waters. For some reason this law was repealed. We suggest its re-enactment. Under the present law blank hunting licenses are sent to each county clerk to be sold to hunters, and for the sale of which he receives a com- mission of ten per cent. The balance of the fees the county clerk collects are supposed to be turned in to the state each month, together with cer- tification of the number of licenses issued. At the end of the year the stubs and unused licenses are sent to the game warden. This system has proven very unsatisfactory, the state having lost money and having been put to considerable expense in making collections. This is partly due to a lack of a proper accounting system and partly due to neglect on the part of some of the county clerks. This system should be changed so that when a supply of licenses are sent to a county clerk, report thereof should be sent to the Auditor General by the Game Department. The Auditor General should then charge the county with the amount of fees that would be collected from the sale of the licenses. Upon remittance of the funds collected from the licenses issued and the return of the unissued 'licenses and stubs, the county would then be credited and the account against the county balanced. In this way, the county would be held responsible for a proper accounting of these license moneys. The fire protection division of the Game Warden's Department main- tains two offices, one in the lower peninsula and one in the upper penin- sula. The Budget Commission sees no good reason for the maintenance of two such offices. The office maintained in the upper part of the lower peninsula is quite capable of looking after all the work. The upper peninsula office was only recently established, and was established by the 32 Game Warden taking over the work formerly done by the Northern Fire Protection Company, a private concern located in the city of Marqnette. The maintenance of this upper peninsula office costs the state several thousand dollars a year, twice as much as the similar office in the lower peninsula. Michigan Fish Commission: There is no good reason for the state maintaining the Fish Commission as at present constituted. The work now done by the Fish Commission can be done by the Game Warden's Department at a much less expense. We, therefore, suggest that the Fish Commission be abolished and its activities transferred to the Game Warden's Department. The opera- tions of the Fisli Commission have not been very efficient, resultant partly from inattention to duties on the part of some members of the commission, and partly from weaknesses in the governing statute. Last year there were no meetings of the commission between the months of May and October, and from August, 11)15, to October, 11)17, covering a period of twenty-six months, there were only six meetings of the com mission held. Of these meetings one member attended all of them, another member attended five meetings and the other member attended only two meetings. None of the records of the proceedings of these meetings have been signed by any member of the commission. It is quite evident, therefore, that the work of the commission lias been largely handled and conducted by the secretary thereof. A large amount of money conies into the hands of the commission every year, anywhere from forty to fifty thousand dollars, from non-resi- dent licenses. Usually an average of several thousand dollars a month is in the hands of the treasurer of the commission until the end of the year when it is turned into the state treasury, or supposed to be turned in. We are sorry to say that some difficulty has been had by the audit- ing department of the state to secure a prompt turning over to the state treasury of these moneys. In the past there has been a distinct waste of money at several of the state hatcheries in the laying out of extensive flower beds, etc. At some of these hatcheries it requires one man almost constantly to look after the flower beds, shrubberies, lawns, etc., and oftentimes there are two men required. No one seems to know just what the value of these hatcheries and other property owned by the Fish Commission is. The appraisal of the same is usually left to the local superintendent at the hatchery. The purchasing done in behalf of the commission is in charge of the local superintendent at the hatchery and for the purpose of making purchases, advances are made. None of the superintendents, however, are required to furnish bonds. Under the present system the Fish Commission issues the licenses, collects the fees and then its duty is ended. It is left to the Game War- den's Department to enforce the law. This surely is as bungling a sys- tem as could be devised and certainly should be remedied. The Game Warden's Department is now being conducted in a com- mendable manner and it is certain that the work now done by the Fish Commission, if transferred to the Game Warden's Department, will be well done by the present game warden, whose services to the state are of an exceptionally efficient character. 33 Securities Commission: Attention is called to Section 11945, Compiled Laws of 1915, relating to fees collected by and the expenses of the Michigan Securities Commis- sion. This law gives the commission privileges not enjoyed by any other board or commission that collects fees and, under the system adopted by the commission, it is difficult for the Auditor General to gain the knowl- edge he should have relative to the total amount of fees collected or the expenses of the commission, these fees being deposited to the credit of the deposit account of the commission and certain expenses paid from that fund. In some cases the expenses are paid from the fees collected and the balance deposited to the deposit account of the commission. This condition of affairs, of course, will be cured providing the legislature enacts the budget bill we have prepared. Under the present law governing the commission, it has the power to appoint a secretary at a salary of $2,500.00 a year and can employ such other and further assistants as may be necessary to carry out the pro- visions of the law, the salaries of such assistants to be fixed by the com- mission, subject to the approval of the Board of State Auditors. In order that there may be uniformity, it is suggested that the salaries of the clerical force of this commission be made subject to the graded salary law, as are those of the clerks in other state departments; and that the salaries of the executive officers and examiners be fixed by law. Highivay Department Activities: Under the Covert law, large sums of money are received from the sale of bonds. This money is turned over to the county treasurers and by them deposited in banks designated by the State Highway Commissioner or by the Board of Supervisors. No bonds are required by law from the County Treasurers as security for the safe handling of this money, nor are any bonds required by law from the depositories. The law should be amended requiring that this be done. The Highway Commissioner's bond is in the sum of only $5,000.00 This is wholly inadequate for the large sum of money passing through the hands of the Commissioner <1 iiring the year. The estimated expenditures of the department this year are from two to two and one-half million dollars, one-half million of which, it is estimated, will be expended under the Covert law. Under the present law bonds issued for highway purposes are certified to by the Highway Commissioner only. We recommend that the law be changed so that such bonds be also certified by the Governor and by the Attorney General as to their validity. Banking Department Activities: The present banking law places a limitation upon the number of clerks that may be employed by the banking department, the limitation being five clerks. The efficiency of the department has suffered considerably because of this statutory limitation. The work of the department is constantly increasing and there is no good reason for placing any such limitation upon the number of its employes. Attention has already been called to the inadequate salaries paid the bank examiners employed by the department. 34 State Tax Commission: Under the present law in case the State Tax Commission, acting upon petition, conducts a review of the equalized value of assessment districts in a county, the cost of such review is borne by the state. This is decid- edly wrong. The expense of making such a review should be paid by the assessment districts making complaints. It is more than unjust to ask the taxpayers of Ingham County, for instance, to help pay the cost of a review of the equalized value of the various assessment districts in the county of Jackson, which review is made on complaint of a township or city in the county of Jackson. We recommend that the law be amended so as to remedy this condition of affairs. Advisory Board in the Matter of Pardons: Attention is called to the statutory limitation of two hundred days for which the State Pardon Board can receive compensation. It is impos- sible, with the large number of cases which now come annually before the board, for it to give such cases proper consideration within this time limit. The result is that either the board must work without compensa- tion or the convicts applying for parole are not given the full considera- tion that they should receive. The function of the Pardon Board is important and the effect of its work, if efficiently performed, is far reaching in that opportunity is given a deserving convict to redeem him- self and become a useful member of society. We think it is poor policy for the state to hamper this board in the discharge of its duties by such a statutory limitation. The board should be permitted to give ample time for the consideration of every. application for parole coming before it; and the state certainly should not require the members of the board to discharge any part of their duties without compensation. It is inter- esting to note that the number of cases considered by the board has prac- tically doubled during the last five years. State Auditing: The manner in which claims against the state are now being audited is a decidedly mixed affair in that it is done by two distinct depart- ments of the state government. Part of the claims are audited and allowed by the Board of State Auditors and a part of them by the Auditor General. Bills for expenses incurred by state departments, boards and commissions, which are payable from appropriations, are audited and allowed by the Auditor General, and those which are payable from the general fund are audited and allowed by the Board of State Auditors. The result is that the expense bills of a single department are divided for audit and allowance between two auditing departments of the state 'and consequently there is more or less duplication of work and expense in connection therewith. It is a clumsy procedure to say the least and is the result of legislation enacted without sufficient considera- tion of its probable workability and its relation to modern business methods. There should be but one department for the audit of the ordi- nary claims against the state and, in our opinion, the department that should be charged with this work is that of the Auditor General, who, being under the law the warrant officer of the state, must of necessity, before he draws his warrant for the payment of any bill, examine closely 35 and audit such bill to make sure that moneys are not being diverted from their proper channels. As it is now, bills audited by the Board of Btate Auditors are required to be sent to that board in duplicate, one copy of which is retained by the board and the duplicate copy turned over to the Auditor General. Furthermore, the Board of State Auditors meets infre- quently with the result that the state's business in regard to the audit and payment of claims is not given the prompt attention it demands; whereas, if all bills were sent to the Auditor General direct for audit they would receive immediate attention. Extraordinary claims against the state, all claims relating to any contract, should, of course, still be handled by the Board of State Auditors, but the ordinary expenses of the state, incurred by the various departments, boards and offices, might better be handled by the Auditor General. We believe, also, that all claims of every character against the state should be subject to audit by the state's auditing department before they are paid. At the present time there are a few offices of the state which pay their own expenses without such audit. Consolidation of Offices: Because of numerous boards, commissions, etc., there is considerable ^overlapping of duties and the utmost confusion in the minds of the public as to what the duties of these various boards and commissions are. We believe that by consolidating some of these offices, at least, there will result not only greater efficiency, but also a considerable saving of money to the taxpayers of the state. It will also result in consolidating similar activities under one head and surely this in itself would be a decided improvement. We, therefore, recommend: That the present Railroad Commission and Securities Commission and the Corporation Division of the Secretary of State's Department be abolished and the powers exercised and duties discharged by these two commissions, and by the said Corporation Division, be transferred to a Corporation Commission to consist of three members to be appointed by the Governor. By doing this all matters relating to public service cor- porations and private corporations will be placed in one department of the state government instead of in three departments as at present obtains. The way corporation work is now handled by the state results in considerable duplication of effort. The Railroad Commission has supervision over the issue of bonds and other securities of public service corporations; the Securities Commission has supervision over the issue of bonds and other securities of private corporations, and the Corpora- tion Division of the Department of State receives for filing and record articles of association of all corporations, also amendments to articles of association, and receives for filing the annual reports of such corpora- tions. It is pertinent to say that, under the present system, a corporation is required to file a report with the Secretary of State and is also required to file a similar report with the Securities Commission. This duplicate report is checked over by two distinct departments, entailing a consider- able amount of work by each department and, consequently, double expense to the state. When a corporation files its articles of association with the Secretary of State and these articles show intangible values as a part of its paid-in capital stock, the Secretary of State has no means of ascertaining how much water is contained in such intangible values. We 36 believe that it is important, as a protection to the investing public of our state, that when such a condition is presented to the state, it should be incumbent upon the state to make an investigation, such as is now done by the Securities Commission when an issue of bonds or other securities is contemplated by any private corporation. All property which consti- tutes a part of the paid-in capital of a corporation should be subject to appraisal whether or not an issue of bonds or stock to the general public is contemplated by the original incorporators. Unless this is done, there is danger that subsequent distribution of worthless stock will be made to the public. We believe that this new department should have charge of all this work so that if the general public wanted to know anything about any class of corporations, it could get the information from one depart- ment of the state government. It is our opinion that this consolidation would effect a saving in money and most surely would, from the stand- point of convenience, be of great benefit to the people of the state. It is pertinent to call attention to certain matters relating to the activities of the State Railroad Commission. Public utilities applying to the commission for authority to issue stocks, bonds, or notes, are required to submit to an appraisal of their properties. These appraisals are usually made by Professor Cooley of the University of Michigan and a staff of engineers which he employs. From May, 1914, to November. 191."). covering a period of eighteen mouths, tl\e cost of these appraisals was nearly $246,000.00. The cost of appraising the property of the Pere Marquette Railroad was $79,502.00 and the cost of appraising the prop- erty of the Detroit United Railway was si (15, (4 1.00 and the cost of mis- cellaneous appraisals, $734.00. Tliis cost, of course, is borne by the com- panies whose property is appraised, the money being paid direct to those employed in making the appraisals. This is a decidedly wrong way for the State of Michigan to transact business. The companies should be billed by the state for the cost of much appraisals and the money paid direct to the state; in turn, the state should fix the compensation of all persons employed in making the appraisals and they should be paid accordingly direct from the state treasury. Any balance remaining over and above the expense of making the appraisals should be credited to an appropriate fund in the state treasury. It is suggested that if the state had in its employ an engineer capable of handling this character of work, a considerable portion of the amount paid for these appraisals would be saved to the state and, furthermore, it would be correct business whereas the present method is anything but correct business. Under the present law the public service corporations applying to the commission for approval of bond issues are not required to pay any fee to the state for such approval. When an investigation is found necessary by the commission before such approval is given, we believe that a small fee should be exacted for this service. For the first six months in 1917 the commission approved the issue of bonds and other securities amount- ing to over $200,000,000.00. It will readily be seen that a small fee, as low as one-quarter of one per cent of this amount, paid to the state as a fee would be quite a sum of money and no corporation making payment thereof would be hurt. We have a large number of boards engaged in public health matters, such as the Board of Examination of Barbers, Board of Pharmacy, Board of Registration of Nurses, Board of Dental Examiners, etc. We believe 37 all matters relating to the public health should be centralized in one department. The legislature would do well to give this matter its .careful consideration. Under the present law the Agricultural Division of the Department of State collects statistical information relative to the deaf, dumb, blind, idiotic and epileptic. This work is strictly a public health matter and, therefore, should be done by the State Board of Health. It seems ridicu- lous to place the collection of information relating to public health in the hands of an Agricultural Division of the state government. The State Board of Health as at present constituted consists of seven members. This board might well be dispensed with and a State Commis- sioner of Public Health substituted therefor, to be appointed by the Governor. This would concentrate supervision of all public health mat- ters into the hands of one executive officer of the state for whose efficiency the Governor would be held responsible. The law creating the office of State Oil Inspector, we think, might well be amended so that the powers now exercised and duties performed by that officer be transferred to the State Dairy and Food Department. In this connection we desire to call special attention to the stenographic report of the examination of the State Oil Inspector contained herein. Under the present laws, there is considerable laboratory work done by various departments of the state government at considerable expense. We believe it not only would be more convenient but would result in greater efficiency and a saving of money if this laboratory work was placed in charge of one chemist to be appointed by the Governor. Special attention is called to the amount of fees paid by the various state institutions for the services of architects, a record of which will be found in the statistical part of this report. It should be noted that last year there was paid for such services the sum of $37,271.45 and for the five-year period ending with 1917, there was paid $160,743.22. It is sug- gested that the legislature give its careful consideration to the desira- bility of providing by law for the employment of a State Architect. CHARLES D. THOMPSON, JOSEPH W. O'BRIEN, GEORGE LORD, O. C. TOMPKINS, DANA H. HINKLEY, Members of Michigan Budget Commission of Inquiry. 38 PROPOSED LAW PROVIDING FOR A BUDGET SYSTEM. A BILL To establish a budget system for the several activities of the state gov- ernment; to create a state budget commission, prescribing its powers and duties ; to provide that said commission shall be furnished with informa- tion by the several state departments, institutions, boards, commissions and offices relating to their financial condition and needs, receipts and expenditures, and general affairs; to prescribe the manner of financing all activities of the several departments, institutions, boards, commis- sions and offices of the state government; to provide punishment for refusal or neglect to comply with the requirements of this act; to provide for meeting the expense authorized by this act; and to repeal sections three and seven of chapter sixty-three, and sections six and seven of chapter sixty-four, compiled laws of nineteen hundred fifteen, insofar as said sections relate to the powers and duties of the State Board of Cor- rections and Charities and the making of reports thereto by state insti- tutions; and all other acts or parts of acts contravening the provisions of this act, including the provisions of all acts making specified peri- odical (continuing) appropriations, excepting act three hundred three, public acts of nineteen hundred seven, and act one hundred fourteen, public acts of nineteen hundred fifteen (Act 303, P. A. 1907 and Act 114, P. A. 1915.)- The People of the State of Michigan enact: Section 1. The term "budget system," established by this act, shall be construed to be a systematic plan of ascertaining and meeting the finan- cial needs of the several departments, institutions, boards, commissions and offices of the state government, and of the controlling state funds. Section 2. There is hereby created in this state a budget commission who shall exercise such powers and discharge such duties as are herein prescribed. Section 3. Within thirty days after this act takes effect, it shall be the duty of the Governor to appoint a qualified elector of this state, who shall be well versed in state governmental affairs, a member of said budget commission, who shall be officially known as Budget Director. Said budget director shall hold his office for a period of four years from and after the date of his appointment, shall devote his entire time to the duties of his office and shall be the active working member of the com- mission. He shall receive an annual salary of four thousand dollars together with his necessary traveling expenses which, when approved by the Governor, shall be paid by the State Treasurer upon warrant of the Auditor General. Said budget director, together with the Governor and the Auditor General as ex-officio members, shall constitute the said budget commission, of which the Governor shall be the chairman. The ex-officio members of said budget commission shall each receive his actual expenses incurred while engaged in the discharge of his duties which, when approved by the budget director, shall be paid by the State Treas- urer upon warrant of the Auditor General. Said commission may engage the services of such expert assistants and such clerical help as shall be necessary to carry out the provisions of this act and shall fix their com- pensation, which compensation, when approved by the budget director, 39 shall be paid by the State Treasurer, upon warrant of the Auditor General. Section 4. Said budget commission shall have the power, and it is hereby directed, to obtain from the several state departments, institu- tions, boards, commissions and offices, on appropriate forms prescribed by the commission, on or before the fifteenth day of September in ench even year, such information relating to their past expenditures and income, present financial conditions, and to their financial needs for the ensuing biennial fiscal period, together with anticipated income, as said commission shall determine is necessary and essential to the preparation of a complete budget for presentation to the legislature. It shall be the duty of the several state institutions, departments, boards, commissions and offices to promptly comply with any and all requests for information which said budget commission may make, and to render all possible assistance to the commission in carrying out the requirements of this act. Section 5. It shall be the duty of said budget commission to assemble, on or before the first day of December, nineteen hundred twenty, and every two years thereafter, the information gathered, including an esti- mate of the financial needs of the several state departments, institutions, boards, commissions and offices for the biennial fiscal period beginning on the first day of July thereafter. Said commission shall then proceed to examine and revise the estimated financial needs submitted and before final revision shall hold public hearings in relation thereto, at which hearings any executive officer of the state government, including members of boards and commissions, shall have the right to be heard on the esti- mates of the department, institution, board, commission or office he rep- resents. It shall be the duty of all such officers of the state government, or their subordinates, to attend such hearings upon request of the budget commission. The governor-elect shall be invited, and he is hereby author- ized, to sit with said commission at such hearings, and he may examine the estimates and other information in possession of said commission and may make such suggestions and recommendations in relation thereto as he may deem advisable. Upon revision of said estimates the commis- sion shall prepare a statement showing the estimated amounts required for the conduct of the state government in all its departments, institu- tions, boards, commissions and offices for each year of the biennial fiscal period next ensuing, together with the per cent of increases and decreases from expenditures for the next preceding biennium and for the first year of the current biennium, and the reasons therefor; an estimate of the revenues of the state, and the sources thereof, for each year of the ensuing biennial fiscal period ; the expenditures, including bills due ana unpaid, and revenues during the first year of the current biennial fiscal period and also for each year of the next preceding biennial fiscal period ; an estimate of the amoiint needed for emergency purposes, the amount needed to pay and discharge such principal and interest of the state debt as may become due, together with such other data relating to fiscal con- ditions as said commission shall deem wise and of material value to the legislature in its consideration of the financial needs of the state govern- ment. When so prepared, said statement shall constitute and be known as the state budget. Section 6. Within ten days after the legislature convenes in regular 40 session, it shall be the duty of the Governor, as chairman of the budget commission, to transmit to each branch of the legislature the budget herein provided accompanied by such explanations and recommendations relative thereto as he may deem necessary and advisable. A sufficient number of copies of the budget shall be printed to supply the press, a copy to each member of the legislature, a copy to the executive officer of each state department, a copy to each state institution, board and com- mission, also two hundred copies for distribution by the budget com- mission. Section 7. Said budget commission shall have the authority to examine the books and accounts, and investigate the general affairs of the several state institutions, departments, boards, commissions and offices at any time it may deem necessary for ascertaining facts essential to a proper administration of this act, and for the purpose of making recommendations to the legislature relating to the degree of efficiency and economy in which they are being conducted. Upon demand of the budget commission, it shall be the duty of any and all officers of this state to produce, for examination, the books and papers of their respec- tive offices, departments, and institutions, answer all questions relating thereto and to render every possible assistance to the commission in meeting the requirements of this section. In connection with such exami- nations, the budget commission, or any member thereof, may compel attendance and testimony of witnesses, administer oaths, and examine such persons as deemed necessary and compel the production of books and papers. The orders and subpoeras issued by said commission, or member thereof, in pursuance of the authority in them vested by pro- visions of this section, may be enforced upon the application of said commission to any circuit court by proceedings in contempt therein, as provided by law. Section 8. All departments, institutions, boards, commissions and offices of the state government which heretofore have been supported and maintained in whole, or in part, from income derived from fees, licenses, penalties, or in any manner other than by specific appropriations by the legislature, shall hereafter be subject to the provisions of this act and, except as hereinafter provided, shall each be wholly supported and main- tained by specific appropriations by the legislature, following the sub- mission to the legislature of the budget, herein provided, containing the recommendations of the budget commission relative thereto. All income of such departments, institutions, boards, commissions or offices shall by i them be turned into the state treasury in the manner provided by law, and such moneys shall not be paid out of the state treasury except in pur- suance of specific appropriations made by law: Provided, That the income derived by the State Game, Fish and Forest Fire Commissioner's department from licenses and fees shall be estimated and such estimates included in the budget, and shall be specifically appropriated to said department for its use in the manner and for purposes provided by law. Said department, in all its activities, shall be wholly financed and main- tained by such income and from no other source. Unexpended balances standing to the credit of said department at the close of any fiscal period shall be subject to transfer to the general fund, or to the emergency fund, and shall be so transferred by the State Treasurer upon written order of the budget commission : Provided further, That the state revenue derived 41 from the registration of automobiles and chauffeurs shall be estimated and included in the budget, and shall be specifically appropriated to the State Highway Department for its use in the manner and for purposes provided by law. Section 9. All departments, institutions, boards, commissions and offices of the state government shall hereafter be wholly financed and maintained by specific appropriations by the legislature, except that the University of Michigan and the Michigan Agricultural College shall con- tinue to receive such income as each may derive from its respective mill tax and interest fund, and except that the State Normal College shall continue to receive such income as it may derive from its interest fund. Except as herein otherwise provided, no money shall be paid out of the state treasury to any such state department, institution, board, commis- sion, office, or officer, except it be in pursuance of specific appropriations made by law, and for the purpose for which the appropriations were made : Provided, That no money shall be drawn from the state treasury in excess of the amount appropriated for each activity of the state govern- ment : Provided further, That no money appropriated for a specific pur- pose shall be transferred and used for any other purpose by any state department, institution, board, commission or office, without the written approval of the budget commission. Section 10. Except as hereinafter provided, all revenue of the state government, from whatever source derived, shall be turned into the state treasury by the state department, institution, board, commission or officer, which makes collection or receives such revenue, on or before the first day of each month following its collection or receipt. No funds shall be disbursed from the state treasury unless specifically authorized by law, and then only upon warrant of the Auditor General and for the pur- pose, or purposes, named in the appropriation or governing statute. The Auditor General may refuse to draw his warrant upon the state treasury for any funds requested by any state department, institution, board, commission or office unles^ satisfactory showing shall be made that the funds requested are actually needed at the time and in the amount named in such request: Provided, That such funds as shall be needed, from time to time, by each state institution shall be credited to its appro- priation account in the state treasury upon warrant of the Audior Gen- eral, and the amount so credited shall only be paid out of the state treasury upon check-vouchers signed by the executive officer of the insti- tution, the form of which check-voucher shall be prescribed by the Auditor General. All such funds shall be used by said institutions strictly for the purpose, or purposes, named in the appropriation act, or acts, and in accordance with the requirements of the general accounting laws of the state: Provided further, That each state institution shall be permitted to establish and maintain a petty cash account in an amount which the Auditor General shall deem is necessary and expedient, but in no case shall such account exceed, at any time, the sum of five hundred dollars (1500.00) : Provided, That the provisions of this section shall not apply to or affect such revenue as may be derived by the University of Michigan, the Michigan Agricultural College, and the State Normal College, from sources other than specific appropriations : Provided further, That the State Treasurer shall keep separate accounts of the funds used by the 42 state institutions engaged in manufacturing on state account, and such funds shall be paid out of the state treasury in accordance with the requirements of this section. Section 11. All emergency claims against the state shall be presented to the Board of State Auditors for investigation and consideration, and all such claims allowed by said board, together with reasons for their allowance, shall be certified in writing by said board to the Auditor General before he draws his warrant therefor. Section 12. The Governor shall have the power, and he is hereby directed upon a finding of guilt, to remove from office the executive officer of any state department, the members of any state board or commission, or the incumbent of any other office of the state government, who refuses or wilfully neglects to comply with any of the requirements of this act. It shall be the duty of the budget director to report to the Governor each such refusal or neglect and thereupon the Governor, before taking final action thereon, shall summons the person, or persons, complained against to make answer why he, or they, should not be removed from office. Section 1.3. The Board of State Auditors are hereby directed to fur- nish suitable offices for the use of said State Budget Commission, which offices, if possible, shall be located at the state capitol building. Section 14. For the purpose of meeting the expense of carrying out the provisions of this act, there is hereby appropriated frr the use of said State Budget Commission the sum of eighteen thousand dollars, eight hundred dollars of which amount the Auditor General shall incorporate in the state tax for the fiscal year ending June 30th, 1920, and ten thou- sand dollars of which shall be incorporated in the state tax for the fiscal year ending June 30th, 1921. Section 1.5. Sections three and seven of chapter sixty-three, and sec- tions six and seven of chapter sixty-four, compiled laws of nineteen hun- dred fifteen, insofar as said sections relate to the powers and duties of the State Board of Corrections and Charities and the making of reports thereto by state institutions ; and all other acts, or parts of acts, contra- vening the provisions of this act, including the provisions of all acts making specified periodical (continuing) appropriations, except act three hundred three, public acts of nineteen hundred seven, and act one hun- dred fourteen, public acts of nineteen hundred fifteen (Act 303, P. A. 1907, and Act 114, P. A. 1915) relating to the mill tax for the support of the University of Michigan and the Michigan Agricultural College, are hereby repealed. 43 PROPOSED LAW PROVIDING FOR A UNIFORM ACCOUNTING SYSTEM A BILL To provide for the formulation and establishment of a uniform system of accounting and reporting in the several departments, offices andJjisti- tutions of the state government, and in all county offices ; to provide for the examination of the books and accounts of each state department, office and institution, and of each county office; to provide for annual financial reports from all such departments, institutions and offices, and for the tabulation and publication of comparative financial statistics relating thereto; to provide that the Auditor General shall administer the provisions of this act, prescribing his powers and duties in relation thereto ; to provide penalties for violation, or failure to comply with the requirements of this act ; to provide for meeting the expense authorized by this act, and to repeal act number one hundred eighty-three, public acts of nineteen hundred .eleven and all other acts, or parts of acts, con- travening the provisions of this act. The People of the State of Michigan enact: Section 1. It shall be the duty of the Auditor General to formulate, prescribe and install a system of accounting and reporting in conformity with the provisions of this act that shall be uniform for every state department, office and institution, and for every county office and public account of the same class. The Auditor General is hereby required and directed to proceed to carry out the requirements of this section imme- diately following the date this act takes effect. Section 2. Said system shall embrace accounts showing all sources of income, the amounts due, collected and received from each source, the amount expended for each purpose, bills and accounts payable; the receipt, use and. disposition of other public property and the income, if any, derived therefrom. Said system shall also embrace accounts which shall show for each industry conducted by any institution or department of the state government the unit cost of operation and shall be in such form as shall exhibit actual detailed financial results of each industrial activity. Said system shall embrace such other forms of accounts as the Auditor General may deem wise and essential to efficient financial admin- istration of public affairs pertaining to the state and county governments. Section 3. A separate account shall be kept of each appropriation, or fund, made to or received by each department, institution and office of the state government, and by each county office, which shall show the date and manner of each payment therefrom, the name and address of the person or association of persons to whom paid, and for what purpose paid. Section 4. It shall be the duty of each department, institution and office of the state government, and each county office, to make an annual financial report in accordance with forms prescribed by the Auditor General which shall be uniform for all accounts of the same class. Said reports shall be made in duplicate, one copy of which shall, within thirty days after the close of each fiscal year, be filed in the office of the Auditor General and one copy with the Governor, and shall contain an accurate 44 statement in summarized form showing, for each fiscal year ending June 30, the amount of all collections and receipts from all sources, and their disposition, all accounts due the public treasury but not collected, the amount of expenditures for every purpose and by what authority author- ized, the amount of indebtedness, the cost of operation of all industrial activities and financial results obtained therefrom, balance of funds on hand at the close of each fiscal period, together with such other informa- tion as may be required by the Auditor General. The substance of these reports shall be arranged by the Auditor General and published at the expense of the state in an annual volume of comparative statistics, and shall be in such form as shall show the comparative receipts from the various sources of revenue and the comparative costs of the several branches of the state and county governments. A sufficient number of copies of said volume shall be published to furnish a copy to each member of the legislature, a copy to each state department, institution and office, a copy to each county office, and two hundred copies for general C3C3CO 00rH rHrH CO t^ 1C CO CO rHl>rHCOCO rHI JCOrHCO T)rHC3C3lO CO OO COrHO3O3rH -^OO Or-I 03 O 00 O3 N O5 CO 00 CO * IO rO O 00 O CO !oo gco co ) O5 CO rH IO CO COOO rH (N COOOO -i OJ COOiO l^OCD 00 OCOO5 OOi 3O iO 05 (N COO rH.< ^ (M IOO5O5 Jocoo i-lO rHOS IO O5 CN^N T}< ^fiH^< O OO 1 ^ tHrJl t^ t>- i-lCO5 O 'tCOOS CO COCO CON rHCO COIO COCD COTjt O O O5tHOO rH 00 rH COl^lO CO 00 00 COO iO ^ O5 00 rH CDfNCO C005 iO COOiO 03 rfrHOO WOO O^ft t* Tf Ot^OO >O lOCOCO 0000 O. OOCOCO 00 -"tOiN Nt^ COU2 rH 00 CNOO 1 * IO O3 IO C5 OOTH CD^ t^- *> OONCO 00 COON rHNO rH rH CO N 00 N I rH CO < -tt^O5 iO03 3 "s: &:l B SI lalSi :| If llPib :igs| -wS 51S Will? "S S > ^ W S C8 P 03 -H >2 0) CD -kS PH r-1 M PHOQGGCC 49 :& oc t^ -tfoot^o tH r-iiOOCO COOOOO OS 10 o GO o O5 r)H CO Tt< (M COCOOO--I 00 C^ O5I> O5 O5 CO O * rn" Pubh'c d .... iiijl i^ill a cs so o 8 Hfi.oJ H.SdS- *l a ll? s .a PI I* ftOJ W S silss IS^oll SBQ+sSS glss^s Ilfilll -* oJ^,0 ! b 0> 50 I hJ PH Q} "O rt 35 OQO 88 88 :8 8 : ii iiii ii lOO fly g 5ol * 51 COMPARATIVE STATEMENT. Showing salaries paid deputies and secretaries of the various state departments for the years 1908 and 1918. 1908. 1918. Deputy Secretary of State .... $2 500 00 $2 500 00 Deputy Auditor General 2 500 00 2 500 00 Deputy State Treasurer 2 000 00 2 500 00 Deputy Attorney General 2 000 00 4 000 00 Deputy Superintendent of Public Instruction 2 000 00 2 500 00 Deputy Highway Commissioner 2 000 00 Clerk, Board of State Auditors 2 000 00 2 800 00 Secretary Michigan Securities Commission a 4 000 00 Secretary, Public Domain Commission 2 000 OOb 3 500 00 Deputy Insurance Commissioner 2 000 00 3 000 00 Deputy Labor Commissioner 1 500 00 2 000 00 Deputy Banking Commissioner 2 000 00 2 500 00 Deputy Food and Drug Commissioner 1 , 500 OOc 2 500 00 Chief Deputy, Game Fish and Forest Fire Commissioner Secretary to the Governor 1,500 OOd , 1 , 800 00 2,000 00 2 500 00 Secretary Board of Health 2 500 00 2 500 00 Secretary, Board of State Tax Commissioners 2 000 00 3 000 00 Secretary Michigan Railroad Commission 1 500 00 2 000 00 Secretary, Industrial Accident Board e 2 500 00 Secretary, State Board of Corrections and Charities . . . 2.000 00 3.000 00 aEstablished 1913. b Deputy Land Commissioner in 1908. cDeputy Dairy and Food Commissioner in 1908. dDeputy Game Warden in 1908. eEstablished, Extra Session of r912. COMPARATIVE STATEMENT. Showing costs for 1908 and 1917 of the principal departments of the state government, together with the per cent of increase or decrease. 1908. 1917. Increase Per Cent. Decrease Per Cent. Attorney General $19,117 00 $28 831 00 51 Auditor General 172 081 00 151 186 00 12 Banking Commissioner 35,368 00 83,459 00 136 Dairy and Food Com'sioner. . 41,917 00 55,709 00 33 Department of Labor 37 920 00 58 969 00 56 Executive Office 14,483 00 15,743 00 9 Game, Fish and Forest Fire Commissioner 45 813 00 219 075 00 378 Geological Survey 13,278 00 36,659 00 176 Industrial Accident Board . . . a 50,317 00 Insurance Commissioner 15,265 '00 56,753 00 272 Michigan Railroad Commis- sion 23 881 00 33 387 00 40 Public Domain Commission . . b 50,642 00 89,924 00 78 Secretary of State 85 806 00 184 294 00 115 State Tax Commission 42 122 00 200 867 00 376 State Board of Fish Commis- sioners 45 088 00 74 236 00 65 State Board of Health 25,067 00 100 844 00 303 State Highway Department.. 78,177 00 1,627,658 00 1982 State Library 34,717 00 45,306 00 31 State Military Purposes 126,501 00 188 924 00 49 State Naval Brigade. . . 16 867 00 38 502 00 128 State Treasurer 11,323 00 22 361 00 97 Supt. of Public Instruction. . . 21,667 00 43 122 00 99 Supreme and Circuit Courts . . 199,898 00 310,256 00 55 a Organized in 1913. b Includes $42,057, expense of state land office which office was consolidated with the office of the Public Domain Commission in 1915. 52 H 5 ^ cu H 3 S 5 H "C M H S > a s I A* W ! W P4 (D II OCO--i(N M M iji OH 3 DC 81 Increase Per Cent. OOkO(Ni-l S2| 8 A (MI>iMl> lOOO H a 62 2lgS s O I -s oo 00 : ooo t^ 1C coo & 3 . H If a gS Is e yearly ditures. -1917. SS8 OOO5IMO GO i-l 00 >O 111 Expend new bu. Ill C5OCO.7S:J.7L> Second 291,507.44 Third IXVtfG.S? Those are the first three out of the five. We have not the money, o course, but there have been six projects put up to the government One contract has been let and the road is under construction, an< the others are in process of getting along to that point. We liav had project statements enough allowed to practically exhaust. <>u first two allotments, and of the third allotment no money could 1> used until after the first of next July. The type of road is anythin that the Federal Government will approve. Usually, anything thi state has suggested has met with approval. Now, for instance, th first project put forth was for a road in the Upper Peninsula, acros Baraga county, through to the copper country. In the first placi the Federal Government asked us to submit to them a general schem of trunk line road system of the state, and they have requested repeat edly that these roads, as far as possible, be kept on main lines, an also on roads of interstate importance as much as possible. They are also quite insistent that the roads be post roads. The Baraga road is not a post road and we had to go to Washington and through the congressmen's aid it was approved. I did make one promise to the Secretary, that I would not ask him to bend his rule for any other project in Michigan. We are using this money just as soon as possible to fill in the gaps on the trunk line roads. This act was fol- lowed up by the State Federal Aid Act, which gives the state author- ity to make contracts, with the government, for carrying on the work. The general Federal Act provides that this shall be done by the various state highway departments, and the state followed it up with an enabling act, for the two succeeding years, to pay the state's por- tion of the Federal Act. The State Federal Aid Act provides that this federal aid money shall be distributed to the counties not neces- sarily to all counties but, if it goes to any county or township, we may aid the poorer counties more than the larger ones, working it out on this basis, according to the valuation per trunk line mile. I might say here that the values for this unit vary widely, from Oscoda at the bottom to Wayne at the top. Oscoda has a valuation of about 25,000.00 and Wayne county about f 16,000,000.00 per trunk line mile. Counties having valuations of $100,000.00 and less may receive 25 per cent from the state and pay 25 per cent themselves, and get the remaining 50 per cent from the Federal Aid ; those having valuations of f 100,000.00 to $200,000.00 per trunk line mile pay 20 per cent themselves and get 20 per cent from the state, and so on up until we reach the counties having $500,000.00 per trunk line mile where they are required to pay the full 50 per cent and the state's only expense is to pay for taking care of the supervision. This is true except one condition, the Federal Aid money is limited to $10,000 a mile for the government's portion; hence, if we build -a road 101 :,,,/;<,;, H'OR^n* costing over $20,000.00 a mile, the state would have to step in and pay the additional cost. Mr. Thompson : To what classes of road would it be alloted ? Mr. Rogers : Any township or county is at liberty to make application to this department for Federal Aid, and projects taken up by this department, on what we call "project statements," and they are passed on at Washington and allowed or disallowed. We have sub- mitted to the department at Washington a plan showing our trunk line system, showing the gaps and practically telling them, as far as possible, how we shall act, and how these Federal Aid funds shall be used for closing in these gaps. (5) Bridge Department. This is a branch of the trunk line work. In addition to the regular work of designing and building bridges under the Trunk Line Act; we are also authorized to prepare plans for townships and to advise counties regarding plans. Quite a share of the activities of the department has been to prepare plans and assist townships and counties with their own building. We prac- tically furnish the engineering services. Mr. Belknap: Under the Covert Act the money is borrowed upon the proceedings. If we have been correct in our proceedings all the way through, in the holding of the hearings of objections, regarding our contract, and review of special assessment roll, we can then adver- tise to sell bonds, and upon these proceedings we borrow this money. We do not borrow the first year, as a usual thing, because the law provides there is no interest on first year's special assessment rolls. The money must be placed in banks, in the different counties, which are approved by the department, if the department is handling the proceedings, otherwise banks are approved by the Board of Super- visors, and it is necessary for us to go into the matter of designating the proper bank. Many of the state banks have only a capital of 120,000.00 and there does not seem to be any method in the act which provides a proper protection. We have gone into that by requiring each of the banks to furnish the County Treasurer with a suitable bond, a surety bond in most instances. The County Treasurer passes on the security primarily ; we have no authority to "do so, but we have required the County Treasurer to furnish us with a copy of the bond. Mr. Rogers: When money has been sent to the County Treasurer, we have designated in advance the bank in which it shall be deposited. Mr. Thompson: Do you require additional bonds from County Treas- urers ? Mr. Rogers : There is nothing in the law' that would give us authority to ask for additional bonds. Mr. Thompson : The Attorney General has so advised you ? Mr. Rogers: No. Mr. Thompson : What bond do you put up yourself ? Mr. Rogers: Only a bond for faithful performance of duties of the department, f 5,000.00. Mr. Thompson : What are your suggestions as to the matter of handling this money through this department? Mr. Rogers: Well, we have met the condition as it is rather than as it might be, and I would imagine that eventually there ought to be about the same protection as with any other officer handling a large 102 amount of money. We have no discretion in picking our County Treasurers, but we have selected the banks with as much care as we can and have required a proper bond to the County Treasurer. You will see from our voucher check that we simply draw an order under form one on the County Treasurer. We go further than that, we specify on a voucher exactly what services have been rendered for which it has been drawn, and still go further and fill out the check which the County Treasurer is to sign on the depository bank, and banks are instructed to pa} 7 no checks except these voucher checks, showing just what the services are. The check is tilled out ready for County Treasurer's signature. Mr. Belknap: I think, perhaps, there is one point that has not been covered, that the faith and credit of the assessment district or county is pledged, and the faith and credit of the entire state, when you sign bonds. Mr. Thompson: These funds from the Covert Act are deposited in the County Treasurer's office, when the bonds are sold, then deposited in depository banks, and checked out by the check of this department when the engineering department approves the road, Mr. Rogers: The sale of the bonds has been by advertising, receiving bids in the ordinary way, and sold in that way. Mr. Thompson: Do you have many bidders? Mr. Rogers: So far we have had bids from Ellis of Grand Rapids, Cook of Kalamazoo, Detroit Trust Company, F. C. Hayler Company of Toledo, Justus Meyer Company of Cincinnati. Mr. Thompson: Before offering the bonds do you determine the rate of interest? Mr. Rogers: The law specified that the rate shall not exceed six per cent. The bid specifies the interest. Mr. Thompson: What publicity is given as to bond offers? Mr. Rogers: We have been advertising in the Michigan Investor and usually in a local paper, that is in the vicinity of the job, and in out of state papers; then we circularize all bond houses we have had information of. Mr. Thompson: How many bond houses? Mr. Rogers : We have about thirty on our list, I believe. Mr. Thompson: How do you arrange to pay those bonds? Mr. Rogers: The bonds are serial bonds and they are paid from the assessment rolls. The bonds have been made payable at the bonding offices usually; that is, the bonds held by Hayler Company are pay- able at the Security Bank Trust Company at Toledo, those held by the Detroit Trust Company are payable at their place of business at Detroit, Ellis's payable at his own bank. Mr. Thompson : Tell us about the financial procedure to pay these bonds. Mr. Belknap : It is necessary for this department to make out a special assessment roll which is usually either one-fifth or one-tenth of the total amount. We send that properly certified, to the County Clerk before the annual meeting of the Board of Supervisors. The Board of Supervisors orders these rolls spread and collected and the sums of money are deposited with the depository banks by the County Treasurer when collected. 103 Mr. Rogers : Of course, these rolls draw six per cent interest under the law, except the first year. Mr. Thompson : Tell us about the financing of your other activities. Mr. Rogers : By direct appropriation of the legislature ; we have f 35,0t)0 for the next two years. Mr. Thompson: Does this department have any receipts other than from the Covert Act and direct appropriation by the legislature? Mr. Rogers: Nothing, except now and then selling a blue print or county map for about enough to cover the cost of the material that is in it, and the most of those are handed out officially and no charge is made. Mr. Thompson: What about the automobile tax matter? Mr. Rogers: The Secretary of State and Auditor General advise us of our credits as they come due. Those are all paid out through the Auditor General's office in regular way on approved vouchers. Of course, in payment of state rewards, we are instructed to certify to the Auditor General that such a road is completed and entitled to state reward, and he in turn makes an order on the State Treasurer who issues a check, and those checks are mailed out from this depart- ment with receipt cards. In the early days of the department the money was transmitted from the Treasurer's office, but they kept writing us about it. We now notify the Highway Commissioner and the Township Clerk, in addition to sending a card to Township Treasurer, that the money has gone forward, so the Treasurer don't have a chance to hold it very long without someone asking about it. Mr. Thompson: What were the total expenditures by the department for your fiscal year ending June 30th, 1917? Mr. Rogers : About one and three-quarters million ; a little better than one and one-half million. Mr. Thompson: Coming from what sources? Mr. Smith : Trunk line appropriation $ 600,000.00 Automobile tax 1,100,000.00 Current expense appropriation 30,000.00 $1,730,000.00 Mr. Rogers : This year, we have a Federal Aid appropriation that will have to bear a part of the expense of Federal Aid Roads and expense from Covert Act. Mr. Thompson : From what you can see now, how much will your expen- ditures be for the fiscal year ending June 30th, 1918 ? Mr. Rogers: Probably will run over two and one-half millions. One- half million will be Covert Act money. Mr. Thompson : How much Covert Act money do you expect to handle during the calendar year of 1918? Mr. Rogers: That depends a whole lot on whether we are going to be able to build roads on account of labor conditions and car condi- tions. If we do anything like we ought to it would be $2,000,000 but we are going to do well if we build $1,000,000 worth. Mr. Thompson: What would be your estimate of community roads that will be improved? Mr. Rogers: Something over 70,000 miles of public wagon roads in Michigan. 104 Mr. Thompson: How many miles of intertown roads are improved? Mr. Rogers : A little over 5,000 miles at the close of the last fiscal year. . Thompson : How many miles of any class of roads are in process of improvement ? Mr. Rogers: We couldn't answer that very specifically. We get the applications in and they are on file here. There are more than double the amount of roads on file than we can hope to complete during any succeeding year. I thought we would build over a thousand miles of road during the fiscal year but things are slowing down quite a little, so that I expect when the fiscal year rolls around we will not have anywhere near that completed. Mr. Thompson : How many years will it take you to complete the roads as planned now? Mr. Rogers : We have 5,000 of the 15,000 miles completed and are build- ing roads at the rate of 1,000 miles a year. All of the 5,000 should not be included because a certain per cent will be intertown and community roads. Mr. Thompson : Probably it will continue for the next five or ten years. Mr. Rogers : History of states shows that they have grown more active year by year. Mr. Thompson: Does this department purchase anything? Mr. Rogers: Nothing except in the bridge line". We are buying bridges. We are receiving bids and. letting contracts for trunk-line bridges and for the maintenance of trunk line bridges right along. We find it necessary in some instances to place small orders where we can get the material and get it quickly, such as creosote lumber; and the small amounts of supplies that go into the drafting room, such as materials, books, etc., as we use in the office, those are all purchased through the State Board of Auditors all of that small stuff. Mr. Thompson: How do you let contracts for your various classes of work? Mr. Rogers: The roads and bridges are practically in the same class. We advertise them in papers in and out of the state, if they are very large contracts. For small work we found that that hardly was profitable. We have a list of bridge contractors sixty or more, and we circularize them direct everytime there is an advertisement pub- lished so we know they see it. Mr. Thompson : Where are those contracts let ? Mr. Rogers : They are let here at the office to the lowest bidder. Mr. Thompson : Do you think that is more economical for the people of the state than to let them in the community ? Mr. Rogers : I think so. We are getting a large number of bids and find that comparatively few men who bid will take the pains to come. We assisted Ottawa County in letting a contract for that big bridge ; it was advertised as usual, also twenty-five or thirty bidders came in, but a firm from Joliet, Illinois, the Joliet Bridge and Iron Com- pany, who mailed their bid, got it, as they were below any represen- tative on the ground. Mr. Thompson : Going back to the scope of this department. It is your thought that there will be 10,000 or 12,000 miles of road completed in Michigan in the next ten years. Mr. Rogers. Yes, sir. 105 Mr. Thompson: What will be the probable expenditure by way of rewards on those 10,000 or 12,000 miles ? Mr. Kogers: More than f 1,000,000 a year during that period, and I think we are fast approaching the point where the automobile money will practically take care of those rewards. Mr. Thompson: What will be the capacity of this department as to turning out road work for the next few years ? Mr. Kogers: I think we can by expanding meet any emergency. We think we are organized here with men who are experienced in their lines so that sufficient help can be gathered in to handle emergencies. Mr. Thompson : What changes in the handling of money by the depart- ment would you suggest? Mr. Kogers : Well, I think that a little discretion ought to be affirma- tively shown in the law as to depositing large sums of money with the County Treasurer. Mr. Thompson : Would it be wise to have all the money go through the State Treasurer's office? Mr. Rogers : We have been thinking of that some and it has some very desirable factors, and we have not been able to discover very many objections to it. The bonds could then be payable at the office of the State Treasurer, although certain bonding companies have ventured the statement that these bonds would all market better if they were payable in New York City? Mr. Smith: Don't you believe that if these bonds were payable at the State Treasury and the money was all handled through that office, that it would put them in a greater financial light and possibly reduce the rate of interest? Mr. Kogers : I think it would look better to the people of the State of Michigan and be handy for this department; it would relieve us of attention to that matter. It would very much simplify and safe- guard the whole thing. Mr. Thompson: Do you have some employe connected with your office who pays particular attention to the financial matters of the depart- ment? Mr. Kogers : Our bookkeeper and assistant. Mr. Thompson : Are these bonds certified to in any case, that is except your signature? Mr. Rogers: Some of the bonds sold to F. C. Hayler Company; they wanted some county official's name to appear on them, and we finally induced them to take Mr. Belknap's name as Special Deputy, in addi- tion to my own. Mr. Thompson: Do you have proceedings certified to by the Attorney General? Mr. Rogers : No ; the Attorney General has spent a great deal of time on this act, but we have not asked him to go through the proceedings of any road except to get us started. Mr. Thompson : Would it not be a service to the people of the state to have the Attorney General certify as to their validity in every case? Mr. Rogers : It might have a tendency to. Mr. Thompson: What is going to be the effect of the war on your department ? Mr. Rogers: In the first place we are losing men. We have sixteen 106 stars in our service flag now and one more to put up, and undoubt- edly more to follow. We are having to fill their places with men of less experience and this year it was impossible, after school closed, to get a man from the University. For the first time in the history of the department, we have taken men from out of the state, from other institutions, and we had to fill up with under-graduates, a class we would have passed by to some extent a year ago. Previous to this we have been able to take University men during the summer, and give them vacation work. Mr. Thompson : What will be your policy during the war ? Mr. Rogers; Our policy during the war will be to continue work as far as possible, especially on important trunk line roads. We are going to do all we can to encourage that sort of road building. Mr. Thompson: Do you rent some buildings around the state? Mr. Rogers: We rent one building at Cadillac at $8.00 per month. Our district engineers, other than that, are using one room in their homes for an office. They are in and out and have found that a better way and more convenient. We are not trying to create branch departments. Mr. Thompson : How do you buy your supplies ? Mr. Rogers : Through the Board of Auditors on their contract. Mr. Hinkley: What is the situation on the Seney Road? Mr. Rogers : The situation on the Seney Road is this : we have a letter from the Attorney General directing that, since that road was ordered built, it is our duty to complete it, and we have been grading, and in fact, have graded to the county line, and are expecting to build a road between the end of the stone road and the county line. Mr. Hinkley: How much do you anticipate it will take to finish this road? Mr. Rogers : As we are planning it now, one and two-thirds miles more, and the cost probably will be $4,000 or $5,000 a mile. Mr. Hinkley: As I understand the situation, the legislature refused to appropriate money to finish this road, and on instructions from the Attorney General, you have, or are, finishing it, anyway. Mr. Rogers : That is about the situation. We are building it as cheap as we can to get to the county line. BOARD OF STATE AUDITORS Mr. Lord: You are a member of the Board of State Auditors, Mr. Odell? Mr. Odell: Yes, sir. Mr. Lord : And being a member, you are quite familiar with the activi- ties of the Board of State Auditors? Mr. Odell : I have only been a member of the board since the first of the year and, on account of the work in my own office and the number of boards I am on, I have not been able to devote much time to this work. It is safe for me to say that we can depend on the Secretary to give you the information you desire. Mr/ Lord: Would you want to state in a general way what the powers of the Board of Auditors are, and what their various activities are. or would you prefer to have the Secretary make that statement? 107 Mr. Odell : I would prefer to have the Secretary make the statement. Mr. Lord: Very well, Mr. Mathews, will you outline to the commis- sion, as briefly as possible, the various activities of the Board of State Auditors? Mr. Mathews: In a general way, the board has charge of the letting of contracts for printing, binding and stationery and the purchase of stationery for the several departments ; also the ordering of the printing and binding for the several departments, which is all done on requisition from the departments. After the printing is done the printer sends his bill to the Board of State Auditors, together with samples of the printing and binding. All printing and binding is let by contract under certain items, one item covering one kind and one item another kind, and it is all classified and billed to us under the certain item. It is our duty to take those samples, which accom- pany the bill from the printer, and see that they conform with con- tract samples on file downstairs. In case they are not correct, it is our duty to correct them. We also give the proper item number and get the bill ready for the Board of Auditors to pass upon at their next board meeting. The books come in what we call "dummy" forms. We go through the dummies and check up, page by page, to see if the composition is charged correctly, some being single prices, some double price, etc. Then, in the "job" work, for instance, here is a job of printing charged to "22." On looking this over we changed it and charged it to "20." The binding works out similar to that. It is done under contract as well as the printing. Mr. Lord: Do you advertise for bids on those contracts? Mr. Mathews : Yes, sir. That is required by Act 12, Public Acts of 1903. We have to advertise for six weeks in three daily papers. Mr. Lord: Are the contracts usually let to printers who are residents of the state or to outside parties? Mr. Mathews : Usually to residents of the state. Mr. Lord : Do you always let to the lowest bidder or do you reserve the right to reject any bid? Mr. Mathews : We reserve the right to reject any bid or any part of anj bid. Mr. Lord : For what reasons usually do vou reject bids, irresponsi bility? Mr. Mathews : No, I don't know as we have ever rejected on that ground. We usually let it to the lowest bidder unless there is something in connection with the work that would make it impracticable. Mr. Lord: Now you can go ahead and tell us about the rest of your activities. Mr. Mathews: While we are on this printing proposition I might say that departments send in to us for their needs different blanks, etc. ; and we have a system whereby we keep a duplicate of what we send just as soon as the job is bilied to us, and when paid it is a check against duplicate payment. Mr. Lord: In letting your contracts for state printing, do you provide for any forfeitures or penalty of any kind where delivery is not made at the proper time? Mr. Mathews: Yes, sir; that is in the contract. Mr. Lord : Do vou ever enforce that contract condition ? 108 Mr. Mathews: We never have, although in our contract for letting printing it says, "All work done under this contract is to be com- menced immediately upon delivery of copies and is to be carried forward to completion promptly and without delay, and all work done hereunder is to have preference over any work from other sources to be performed by contract. The right is reserved by the state, in case of any default of this contract, to have any of the work covered by this contract performed by parties other than certain contractors, the cost of doing same, if over and above the contract price, to be borne by said contractor." Mr. Lord : Have you ever taken advantage of that when there has been a delay in getting the stuff here? Mr. Mathews: I don't recall that we ever have. Mr. Lord: Don't you think there should be legislation of some kind directing you to enforce the terms of such contracts? Mr. Mathews: The state reserves the right to annul the contract, if there should be a failure at any time to perform any of the specifica- tions in the contract. Mr. Lord : Don't you know as a fact, Mr. Mathews, that' the state printer oftentimes does do private work and allows the state printing to wait until he gets the private work done? Those charges have been made and never have been denied by the state printer. Mr. Mathews : We attempt to take care of that by requiring our work to have preference over any other. Mr. Lord : Yes, but that don't do it. The fact is that the reports, laws, etc., printed by the state are usually delayed to such an extent that they are not of much value to the people of the state. That is not the fault of the state departments, but of the state printer, and there should be some way to jack him up. Mr. Odell : What reason does the state printer give for these delays? Mr. Mathews: All kinds of excuses. Sometimes they claim they have been held up for six weeks on proof, etc. Mr. Lord : Now, Mr. Mathews, you may proceed. Mr. Mathews : Bills come to us from the printer in duplicate. The orig- inal goes to the Auditor General and we keep the duplicate. Then after the board meeting and after these have been allowed, we post them to proper item number. We keep a card system and on those cards we keep the quantities that are printed for the two-year period. Then, when we are letting the new contract, we use these cards as a basis to work on. We give a record of these quantities to the bidder for a guide. Mr. Lord: Is the original copy given to the Auditor General for the purpose of being a guide for him to draw his warrant for payment? Mr. Mathews: Yes. Of course, we approve them first and audit them. The record of stationery is kept practically in the same way. We keep a record as to what kind of stationery and the quantity that is bought. This time it will be for a one-year period, as we let the con- tract for stationery only for one year, on account of the unsettled condition of the market. Mr. Lord : In the selection of stationery, the kind of paper you use, etc., do you have the last say as to what the quality of paper shall be, or do you refer that to the department heads? 109 Mr. Mathews: We really have the last .say. Sometimes a request is silent as to the kind of paper. Sometimes they request some special kind of paper and, if we consider that kind impracticable, we usually take the matter up with the department head and ask if some other kind wouldn't be satisfactory. Mr. Lord: Who buys the paper? VIr. Mathews : The Board of Auditors orders it. Mr. Lord : Is it bought under contract ? Mr. Mathews: Yes sir. After the contract is let, either for printing, binding or for stationery, we get out these little pamphlets, which show the contract price for each item. Some kinds of paper we buy by the ream ; anywhere from fifty to one hundred reams, or maybe more. Book paper we buy in carload lots. Mr. Lord: Do you buy direct from the manufacturer? Mr. Mathews : No, we buy on contract. For instance, the Birmingham, Seaman & Patrick Company have the contract for M. F. paper. Mr. Lord: What record do you keep of your stationery, after it is received ? VIr. Mathews : We use the card system, similar to the system of printing and binding. It shows the quantity of stationery, number of pencils, ink, pens, inkwells, etc., so that we can tell how much has been bought during the one-year period. Those are supplied to prospective bidders, so that they will know what we are using. Mr. Lord: Do they all have to submit samples when they submit bids? Mr. Mathews : Yes, sir. We get out specifications similar to the others just shown, and they bid on different kinds of paper. For instance, we might call for ledger paper and one might bid on United States ledger, another on Weston's ledger, etc., but they submit samples and quote prices. Mr. Lord : Does the state get any discount on purchases of different paper, or is it net in the contract? Mr. Mathews : It is net. The bidding on stationery has been quite brisk and the prices have been considerably lower than commercial prices have been. Mr. Lord: On your stationery items, such as pencils, pens, ink, etc., do you purchase by contract or do you buy from local people? Mr. Mathews : We buy very little through local people. Mr. Lord: Can you tell us approximately the aggregate for the vear? Is it f 1,000.00? Mr. Mathews: No, it would hardly amount to |500.00. Mr. Lord: So that practically everything is under contract? Mr. Mathews: Yes, everything is under contract. Occasionally new things come up that have not been used before and are not in the contract. In those cases, we sometimes have to buy locally. Mr. Lord : Does the Board of State Auditors permit the executive head of any department, or anybody else in the state's service, to purchase any articles for use in that department? Mr. Mathews : We never permit them to buy, but sometimes they do it. Mr. Lord : Then what do you do ? Do you give them a scolding ? Mr. Mathews: Yes. Mr. Lord : Do they ever repeat ? 110 Mr. Mathews: No, they do not very often repeat. They are better about sending in requisitions than they used to be. Mr. Lord: Don't you think that it would be a good plan to make the executive head of a department pay, out of his own pocket, for materials not bought on requisition? Mr. Mathews : It might be. We have made threats to that effect. Mr. Lord: Isn't it a fact that there is a door left open for them to make purchases of this kind? Mr. Mathews : It is very rare now ; not as much as it used to be. Mr. Lord: Has it been lessened by action of the Board of Auditors? Mr. Mathews: Yes; when we don't find a requisition for the articles billed, we call them up and tell them as a protection against dupli- cate bills, etc., and it is getting so that bills don't come that way as much as they used to. Mr. Lord: A system of correct business that isn't lived up to is worse than no system at all. Mr. Odell, as a member of the Board of Auditors, and I think I speak for the Commission, we would suggest that the board refuse to audit any claims for purchases made by any official of the state government, where a requisition has not been submitted, and that requisitions be approved by the Board of Auditors. That would be correct business. Mr. Mathews: A year and a half ago we notified every department that they must send in requisitions or we would not audit their claims. Mr. Lord: Have they lived up to this requirement since that time? Mr. Mathews : They have been a good deal better since that. One duty of the Board of Auditors is to audit claims against the state. There are certain classes of claims that go to the Auditor General and some to the Board of Auditors to be audited. Mr. Lord: Can you tell us in the aggregate how many classes of claims are audited by the Board of Auditors and how many are audited by the Auditor General? Mr. Mathews : I couldn't say as to those audited by the Auditor Gen- eral. There are probably thirty different classes audited by this board. That is, we probably have thirty departments whose claims come here. Perhaps, the same class of claims would go to the Auditor General as come here. For instance, there are certain board members' traveling expenses which go to the Auditor General, and some other board members' traveling expenses come here. Mr. Lord : Isn't it a fact that, in several departments, the auditing of the costs of that department is done both by the Board of Auditors and by the Auditor General? Put it in this way. The department of the Board of Auditors audits the accounts for salaries of a certain department or commission, and the Auditor General audits the accounts for traveling expenses of the same department. Do you think it is the proper way to audit state accounts ? Mr. Mathews: I think it ought to go to one department; but I think the worst fault is that similar department claims come here to those which go to the Auditor General. For illustration, the State Board of Corrections and Charities used to send their bills almost entirely to the Auditor General. Some of the later legislation provides for child-caring institutions, etc., and it provides that those expenses shall be paid from the general fund. The expenses authorized by Ill early legislation go to the Auditor General and anything authorized by later legislation comes here. We have to audit claims that come under the general fund. The claims under appropriations go tcr the Auditor General. T. Lord : Mr. Mathews, those things are not only wrong but they neces- sitate additional bookkeeping, don't they? Mr. Mathews: Well, I don't know how much additional bookkeeping. Mr. Lord: Well, they have to keep an account of it in the Auditor General's office, don't they? Mr. Mathews: Yes. They have to keep two funds and we keep two funds. We keep two postage accounts for the Board of Corrections and Charities. The postage for the Board of Corrections and Chari- ties would not have to come to this board, but they wanted it to come here. Mr. Lord: This naturally necessitates a greater amount of labor and greater cost to the state? Mr. Mathews : Yes, sir ; I think it does. 'r. Lord: Is there any conflict of laws in regard to the auditing of claims as done by this department with that done by the Auditor General's Department? Any similarity of statutory provision which directs the Auditor General to audit all claims and accounts, and any statutory provision which directs the Board of Auditors to audit the same claims and accounts? Mr. Mathews : No, I don't know that there is. (Section 114-124. Chapter 12, "Compiled Laws of 1915," Audi- tor General. Also Sections 148-159, Board of State Auditors. These sections were referred to and discussed by the Commis- sion and Messrs. Odell and Mathews.) Mr. Mathews : There is one other duty which the Board of Auditors has that I am not sure will continue. In the past we have checked up the claims for the Oil Inspector and I am not sure but what the act passed in 1917 will require him to turn in all his fees to the State Treasury and put through vouchers for his expenses. I called the attention of the board to this at our last meeting and was directed to get an opinion from the Attorney General in regard to the matter. But up to the present time we have checked up all Oil Inspection accounts. Mr. Lord : You mean their claims for expenses ? Mr. Mathews: Yes. Under the present system the Oil Inspectors col- lect for oil inspection and then their expenses are deducted from the fees received, and any balance remaining is turned over to the state. Mr. Lord : From the fees that the Oil Inspectors collect, they pay their own expenses and then turn anything that is left into the state treasury. Is that it? Mr. Mathews : That is the way it has been done. Mr. Lord: You checked simply the amounts according to the report sent to you? You don't know whether they have made a correct report ? Mr. Mathews : Well, they are sworn reports, and, furthermore, there is a system of receipts whereby each receipt is numbered and has to be accounted for to the Oil Inspector. We check up the reports to see that the railroad fares are correct and to see that no claims that 112 should not be included are shown. For instance, one man had in his report a charge for telephone in his house. Of course, we cut that out. Mr. Lord: Do they turn in the balance in their hands every month, when they make their report ? Mr. Mathews: They turn it over to the Oil Inspector and he turns it over to the State Treasury every three months. It used to be at the end of every year, but we took it up with him a little while age and requested that he make reports quarterly. Mr. Lord : Mr. Odell, can you tell us approximately how much the Oi Inspector collects, or did collect last year? Mr. Odell : I can't tell you off-hand, but I will get that for you. Mr. Mathews: I think that, in the course of a year, they turn in approx imately $30,000 over and above their expenses. Mr. Lord : Are there any other departments which conduct business ir that way? Mr. Mathews: None that come in this office. Mr. Lord: Mr. Odell, are all the fees collected by departments, com missions and boards, now turned into the State Treasury? Mr. Odell: It is my impression that under the 1917 act, they are. don't know of any that are not. Mr. Mathews: The Oil Inspector's year is a calendar year. Fees col lected for the first quarter of this year were $11,603.41. For the second quarter, $8,491.03, for the third, the last quarter which has been reported, $10,093.31, making for the three quarters, so far this year, $30,287.75. In auditing claims, the board has two meetings ; month. The law requires them to meet on the last Wednesday o every month for auditing claims, but we find there is too much to d( at that time. We meet the day before that day. and also meet two weeks before those days for two days. Those are the regular days foi the meeting of the board. Mr. Lord: Are bills usually checked up before the board meets? Mr. Mathews : Yes. Our office force goes through them and checks them up to see if the railroad fares are correct and that no excessive hote charges are included. Mr. Lord: What are your rules in regard to expenses? Have you any limitations ? Mr. Mathews: The board allows, not to exceed, $5.00 a day outside of the state, and in Detroit and Grand Rapids. Then they allow, not to exceed, $4.00 a day in Battle Creek, Kalamazoo, Flint, Bay City, Sagi- naw, Jackson, Lansing, Port Huron and Muskegon, and not to exceed $3.50 a day in other parts of the state. Mr. Lord: The Board of Auditors is also custodian of considerable state property, is it not? Mr. Mathews : Yes. In the absence of the legislature we are custodian of the property used by them and of the state capitol grounds. There are also two blocks here in the city that we have jurisdiction over; these blocks being owned by the state. Mr. Lord: What authority have you over the employes of the Capitol, such as janitors, etc.? Mr. Mathews: We place these janitors usually on recommendation of the heads of the departments. The board did not feel that they 113 wanted to force an objectionable janitor on any department so they consult with the department head before the formal appointment is made. Mr. Lord: Under whose direct supervision are those employes? Mr. Mathews : F. C. Bennett, Superintendent of the Capitol. Mr. Lord : Has he anything to do with engaging the services of these men? Mr. Mathews: No, sir. Mr. Lord: Does Mr. Bennett ever make reports to this board? Mr. Mathews: He makes a report every month of the sale of old material, such as cast-off furniture, waste paper, etc. Things of that nature, the Board of Auditors authorize him to sell where sale would not exceed $ 100.00. If the price is more than that, it is called to the attention of the board first. Mr. Bennett has a system of receipts made in triplicate by which he handles these mat- ters. He gives one receipt to the party who makes the purchase, sends one receipt to the Board of Auditors with his report, and keeps one in his own book. Every one of those receipts is numbered, consecutively, so that it has to be accounted for. It is a very good system and I believe is accurate. Every month he makes a report on all sales. He makes a report at the first meeting of the Board of Auditors for the sales made the preceding month. Mr. Lord : What disposition is made of proceeds from such sales? Mr. Mathews : They are turned over to the State Treasurer. Mr. Lord : Does he turn over the money himself to the State Treasurer, or do you ? Mr. Mathews: He turns it over himself and files his receipt with us. Mr. Lord : Now, Mr. Mathews, will you tell us about the system of pur- chasing furniture, equipment, etc., for the various offices, how it is done and who does it? Mr. Mathews: Our system is that if a department is in need of any furniture, it sends in a requisition to the Board of Auditors and I refer it to Mr. Bennett. Mr. Bennett takes it up with the depart- ment and, if it is a carpet that it is in immediate need of, he would arrange to go and make the selection, O. K. the requisition, and put on the dealer's name. We would then write an order for it. Mr. Lord : Has there been any resolution, or order, passed by the Board of Auditors giving Mr. Bennett this authority? Mr. Mathews : I don't know of any law that would require Mr. Bennett to take a part in the purchase of these articles. It has practically grown up. We have found that by having one man to look after this work, it is more satisfactory. He becomes accustomed to the prices. Mr. Bennett's services have saved the state a great deal of money in these matters. Mr. Lord : So that as a matter of fact, the furniture is usually bought before it is brought to the attention of the Board of Auditors? Mr. Mathews : Without it is for a large amount. Mr. Lord: Would it cause the department ordering the furniture any great inconvenience if they had to wait two weeks, so that the board could pass on its requisition? Mr. Mathews : Well, in a great many cases they are put up to the board, but sometimes, as I say, after a requisition comes in for material, 114 which the department is in immediate need of, it is referred to Mr. Bennett. For instance, if a requisition comes in just after the board meeting, it is often found necessary to get the material immediately. However, where I think that the department can wait I hold up the requisition for the Board of Auditors to consider. Mr. Lord: How much furniture and office equipment has the State Board of Auditors bought during the last year, or on an average for the last two, three, or four years ? Mr. Mathews : I couldn't tell. Mr. Lord: Has the board bought f 10,000 worth in the last three or four years? Mr. Mathews : Yes, I think that would be a fair estimate. I think Mr. Bennett keeps a record of every order and the cost of the things ordered. Mr. Lord: So that the department head really makes the selection of what is to be bought and the order for it is turned over to Mr. Ben- nett to make the purchase. Mr. Mathews: I could hardly say that; Mr. Bennett is supposed to go with them and have a say in the selection. Mr. Lord : If he thinks it is too costly, can he turn it down ? Mr. Mathews : Yes, and he does that very frequently. Mr. Lord: So that, really, Mr. Bennett is not only the Superintendent of the Capitol Grounds and Capitol, but is also the purchasing agent for the Board of State Auditors. Mr. Mathews: Yes, the board has really delegated that duty to him. You might call him that. Mr. Lord : Does Mr. Bennett buy the coal and things of that kind that are used in the Capitol ? I notice by the paper that you have a con- siderable quantity of coal on hand. Mr. Mathews : That was bought by the Board of State Auditors. It was like this. At board meeting time the board thought best to have one hundred tons of coal put in the bunkers and they told Mr. Vaughan to have Mr. Hicks of St. Johns see if he could get some coal for us. I saw the telegram that Mr. Vaughan sent and the next thing I knew the coal was here. Mr. Tompkins: What did you pay for that coal? Mr. Mathews: I don't know. I know what the freight was, but not what the cost at the mine was. Mr. Lord : What else does Mr. Bennett -do under authority of the Board of State Auditors; except looking after janitors, elevator men, etc., selling of old furniture and the purchasing of new. Does he have any other duties? Mr. Mathews: Of course, there are some of the janitors that are hall janitors, not assigned to any particular department. Those are appointed by the Board of Auditors and are under his immediate supervision. He looks after the elevator, lights, etc., and the upkeep of the building, also the grounds, flower beds, walks, etc. Mr. Lord: If a department wants a new set of steel filing cases, for instance, who purchases them, Mr. Bennett? Mr. Mathews: It is usually authorized by the board and referred to Mr. Bennett to purchase. Mr. Lord : He makes purchases of all such equipment so that he really 115 purchases a large part of equipment for the offices and departments, doesn't he? Mr. Mathews: Yes, sir. Mr. Lord: Do you know of any duplication of effort on the part of the Board of State Auditors and the Auditor General. I mean actual, not what might be authorized and is not done? Mr. Mathews: I don't recall anything. Mr. Lord : Is there any compilation of claims, bills and accounts, or anything at all, done here and published, and which is also published and compiled by the Auditor General ? Do you know of any duplica- tion in that respect? Mr. Mathews : I don't know just what his report covers. I never read it only as I have referred to it. Sometimes we put a claim through under one department head and it goes over there and he puts it under some other head. Mr. Lord: That would be a duplication, would it not? Mr. Mathews : Yes, that is a duplication, it is true. Take, for instance, the Attorney General's claims. We put them through under the department head of "Attorney General." The Auditor General puts, at least, part of them through under the head of "Costs of Suit." Mr. Lord: That is a duplication of clerical work and cost of printing which would include the paper, etc., and it certainly constitutes a waste. Mr. Mathews : I should think it would. Mr. Lord : Duplication of work, Mr Mathews, is a very important thing and if you know of any other duplication, other than that just referred to, I wish you would tell us about it. Mr. Mathews : I can't recall any off-hand. Mr. Lord : If the auditing of all claims of every kind and description was placed in the hands of the State Board of Auditors, there would be no danger of duplication and it would result in a considerable saving of money, would it not ? Mr. Mathews: I think so. Mr. Lord : To get back to the printing again, has the Board of Auditors at any time, or does it contemplate doing it in the future, regulate the size of the reports issued by the various departments, commissions, etc.? Have they ever undertaken to cut down unnecessary detail in the reports? Mr. Mathews: I don't know that they have. There are certain ones that the law limits. Mr. Lord : Yes, I know, but very few of them. Mr, Mathews: I took it up with Mr. Ellsworth of the Insurance Com- mission and he is going to cut his down. He came and talked with me about it and wanted to know if I didn't consider it would be just as valuable a report if it were cut down, and I told him I considered it would be better. Mr. Lord: Could not the Board of State Auditors stop publication of any report that exceeded in size, say five hundred pages. That is, couldn't the board limit the reports to that number of pages ? Don't you think it would be complied with ? Mr. Mathews: They might conform, but I don't know that the law gives that authority to the board. If that was to be done they would 116 have to begin the first of the fiscal year to keep their records accordingly. Mr. Lord: Have you ever examined these reports, or has the Board of Auditors examined them? Mr. Mathews: I don't know as they have. Mr. Lord: You know as a fact, Mr. Ma thews, that these reports contain a lot of useless detail? Mr. Mathews: Yes, I think that is true. Mr. Lord : What would you advise being done to remedy that condition? Mr. Mathews: That is a pretty hard proposition. Mr. Lord : Would you advise an enactment of a law limiting the number of pages and size of every report or reports of each department, or would you advise an enactment of a law delegating the authority to the Board of State Auditors to say how large these reports should be? Mr. Mathews: I believe the better way would be to delegate it to the board and have them take it up with the department. If you limit it to a certain number of pages, there might be something come up that would make it impracticable, but if it was flexible we could use our judgment in cutting out what was not necessary. It seems to me there should be a little leeway there. Mr. Lord : What action has the Board of Auditors taken in the matter of cutting down the number of these reports? Mr. Mathews: I take it up with the heads of the departments and ask them if they can't get along with any less than they have ordered. Mr. Lord: The reason I asked that is this. We have had correspondence with various County Clerks and we find that, in at least one-half of the counties of the state, where a lot of the reports, documents, etc., sent out by the state have been sent, they have been sold for waste paper. One County Clerk reported that last March he sold two tons that had been lying around his office. It seems to me that it should be the duty of the Board of State Auditors to cut the number of these reports. Mr. Mathews: I don't know what kind of publication they refer to. In fact, I don't know how the different departments distribute their publications. We never have more than five hundred of our reports printed. We turn over one hundred and twenty-five to the State Library, fifty to the Secretary of State ; then we send them to mem- bers of the legislature, ex-members of the board, and so on. We don't send any to County Clerks. Mr. Lord: How many of the state documents and reports do you read yourself ? Mr. Mathews: I don't have time to read them. I keep them here for reference as samples of binding, etc., but I don't read them. Mr. Mathews: I think that if they were condensed, it would be better. Mr. Lord: There would be more of them read, and there would be a saving in cost to the taxpayers of the state. Mr. Mathews : Yes, I think that is true. Mr. Lord: Has the board established any standard in the matter of office equipment and supplies in the departments? Mr. Mathews : They have not adopted any standard. 117 Mr. Lord : It is really then a hit and miss, proposition as far as pur- chase of equipment is concerned. Mr. Mathews : They have been starting a new system of filing ; that is, when cases are ordered, they have bought the steel cases to get away from fire, etc. Of course, some of the departments have wood filing cases. Mr. Lord : Do you keep a supply room where you keep a stock of such things on hand, such as stationery, .etc.? Mr. Mathews: Yes, sir. Mr. Lord : Where is it located ? Mr. Mathews : We have one in the basement, one on Ottawa street, and one under the Capitol National Bank Building. Mr. Lord : What record do you keep of those stock rooms ? Mr. Mathews: Those are stock rooms for paper and supplies, adding machine rolls, etc. Mr. Lord : You know what is in there, don't you ? Mr. Mathews : Yes, sir. Mr. Lord : What do you do when a roll of paper is taken out ? Mr. Mathews : It all goes out on requisition and is posted on our stock cards. Mr. Lord : Do you take an inventory ? Mr. Mathews : Yes, every two months. Mr. Lord : A complete inventory of everything you have in each stock room? Mr. Mathews : Yes, sir. Mr. Lord: Who takes that inventory? Mr. Mathews : - Mr. Benjamin and Mr. Riley. Nothing goes out except on requisition. When we are writing an order for printing, we figure up the paper that will be used and check that off on the cards. Mr. Lord: What inventory, if any, do you take of the equipment, sup- plies, etc., in the different departments; of these different supplies and material gotten from the Board of Auditors on requisition? Mr. Mathews : We take an inventory of that. Mr. Lord: How often do you take the inventory? Mr. Mathews: As often as furniture is purchased. For instance, if a desk is purchased for the Auditor General, after it is ordered, the duplicate voucher is turned over to Mr. Benjamin. He goes into that department and puts an inventory number on that desk. The voucher is then turned over to one of our clerks, and she enters it on a card showing where the desk is located. Mr. Lord : Do you have anything to do with the inventory of stationery, etc., in the different departments ? Mr. Mathews : There is none taken that I know of. Mr. Lord: What do you do where anything is transferred from one department to another? Mr. Mathews: When we catch it, we can show it on the cards. That is one thing that is rather lame. They might transfer something to another department or turn it over to Mr. Bennett and we would not know it. Mr. Lord: Why shouldn't he report those matters? Do you think that Mr. Bennett should have the authority, or assume the authority, to 118 approve the transfer of any furniture, without the Board of Auditors knowing anything about it? Mr. Mathews: Lots of times he might not know of it. Mr. Lord : Has the executive head of an office any authority to dispose of furniture in his office? Mr. Mathews : Not that I know of. Mr. Lord: Then, if he does it, it is irregular or illegal. Is this done very often? Mr. Mathews : Once in a while. We occasionally find a mix-up on type writers. Mr. Lord : Couldn't you adopt a system here whereby a complete check could be made on such transfers from one department to another? If you don't do that, how do you know you have all the equipment you have bought? Mr. Mathews : Don't know as we would know. Mr. Lord: Would it not be wise for the Board of State Auditors to adopt a system, so that no transferring of equipment could be mad< unless on your approval, and then request the Superintendent of the Capitol to report all such transfers? Mr. Mathews : I don't know. It would be rather cumbersome A great many times a chair might play out and it would be turned over to th( Superintendent of the Capitol and later a requisition put in for same. Mr. Lord: But he should be required to keep a record of that chair, and the last of every month report to the Board of Auditors on these matters. Unless this is done, I do not see how you can get a correct inventory. Mr. Mathews : I don't think the inventory is very accurate, but we keep it the best we can. Mr. Lord : So that really the Board of State Auditors, being custodian of state property, does not know what it has? Mr. Mathews: I don't know as we would be the custodian in the dif- ferent departments. Mr. Lord : Who would be, the executive heads of the departments ? Mr. Mathews: I think so. Mr. Lord: Why do you take an inventory in the departments and number the articles if the head of the department is custodian? If the Board of Auditors was not custodian of furniture in the office, it would not have any right to go in there and take an inventory. Mr. Mathews : We would not take inventory unless it was bought from an appropriation. Mr. Lord: Most of the furniture purchased is charged to the general fund, isn't it? Mr. Mathews : Not all of it. All the furniture for the Industrial Acci- dent Board is charged to their appropriation. If it was a depart- ment like the Game, Fish and Forestry Department, whose claims go direct to the Auditor General, we would have no way of knowing about the purchases. It could be systematized better if claims all went to one department. Speaking about having somebody to turn the work over to, calls to my mind what I have often advocated the state should have. We should have someone when a question arises we could refer it to, and have him investigate. Take, for instance, the claims of County 119 Agents. Sometimes these look a little doubtful, and it is necessary to write back and ask if the work took two days and why, etc. Lots of times we find duplications of dates and, if in auditing Hio~se claims, we have a suspicion that the man is crooked, we really have no way of investigating. If he is crooked, we ought to find it out. If we had a sort of a secret service man, whom we could refer these matters to, I believe it would be more satisfactory. Mr. Lord: Mr. Mathews, do you know of anything that you could put in here, by way of equipment, that would increase the efficiency of the office at all? Mr. Mathews : I don't know of anything in our department. Mr. Thompson: Do you know of anything that could be placed in any of the departments that would increase the efficiency of the working force ? Mr. Mathews : I don't know much about the other departments. Mr. Lord: So that, so far as you know, you have everything you need by way of equipment, and you think that the employes are all efficient? Mr. Mathews: I think so. Mr. Lord: Are these people in your office appointed because of their qualifications or because of their political affiliation? Mr. Mathews : A little of both, I believe. Mr. Thompson : I notice that you let your printing for so many thou- sand ems. Would it help the state if you had a further classi- fication? Mr. Mathews : I don't think so. Mr. Thompson : As it is, all printing goes to one firm ? Mr. Mathews : On our former contract ; we split it up some. Mr. Thompson : What was your experience in splitting the printing up in smaller units? Mr. Mathews : It was not satisfactory. Mr. Thompson: For what reason? Mr. Mathews : It was too complicated. When a job comes to you, it is hard to know just what item that comes under. For instance, the manuscript is liable to be written with typewriter and it is hard to know what item it will come under when printed. Binding is a little different. You can split that up better than printing. Mr. Thompson : Would it be possible to split it up so that the institu- tion at Kalamazoo or Adrian could bid on the equivalent of one report or several reports ? Mr. Mathews: There are certain items that could be bid on. For instance, the Bed Book or Manual is an item by itself. Public Acts is an item by itself. Thev would have to pick out some item like that. Mr. Thompson : You don't find it advisable, however, to divide it up? Mr. Mathews : In the last bid there was nothing to divide. The present contractor was the lowest bidder on all items in printing. Mr. Thompson: How many other bidders were there? Mr. Mathews: One or two. Mr. Thompson : Do you ever have any bids for less than all the work ? Mr. Mathews: Yes, sir. Mr. Thompson : Did you at your last letting ? 120 Mr. Mathews: I don't know as we did. Mr. Thompson: Can you remember the last time when you did have any bids for less than all the work? Mr. Mathews: On the contract prior to the present one, we did. For instance, we let some parts of it to Lawrence & Van Buren. They were given 57 and 57 A, also 138, and one other concern got all the rest. MICHIGAN SECURITIES COMMISSION Mr. Lord:- Mr. Chairman, will you tell us something about the activities of the Securities Commission, what its duties are, what you accom- plish for the people of the stale by way of benefits, etc.? Mr. Merrick: I imagine perhaps you better hear from Mr. Oates on this, Mr. Lord. Mr. Oates: In view of your long experience, Mr. Merrick, you perhaps might be able to give the Budget Commission more informal ion regarding aft'airs prior to the time I became identified with it. I should be very glad to explain matters I have been cognizant of since I have been here. Mr. Merrick: Well, I presume the duties of the commission are well known to you gentlemen of the Budget Commission, in a general way. The approval of stock issues, except those exempted under the law, before they may be sold to the public in Michigan, covers it partly. The commission has also felt that it should undertake to protect the public in making investigations regarding reports received that, on the face of them, might look fraudulent. We try to keep in touch with stock brokers as much as possible, receiving advice from them as to stocks that are sold ; any complaints made regarding stock sales are investigated by the commission. Originally, there were many exemptions that were taken advantage of in the law; for instance, corporations listed in certain manuals were exempt. I believe of late the commission has taken the position that they should not be exempt and we are requiring that all stock issues be submitted for approval before sold. Mr. Lord : What do you mean by stock issues ; do you mean stock issued to original incorporators as well as to the general public? Mr. Merrick: No, I think that is one of the exemptions under the law. Stock issued to original subscribers is exempt. Mr. Oates: In other words, the purpose of that exemption was to per- mit people to comply with the incorporation laws of the state by sub- scribing for the required amount of capital in order that they might file the articles with the Secretary of State; but, we have taken the position, on stock issued to original subscribers, that if it is subse- quently sold to the public that the stock must be approved, provided they are offered in continuous transactions. Mr. Lord: If it is offered privately, would you have jurisdiction? Mr. Oates : Yes, if there is more than one transaction, and we think the ruling is necessary in order to protect the public. Mr. Lord: When you grant a certificate to a corporation to issue ith stock or bonds, on what do you base your decision ? Mr. Oates : Well, in the first place the applicant must file with us all 121 blanks which we have prepared and which give full information in reference to the financial status of the company. If assets of an intangible nature are designated in the application, it has been-the custom of the commission to require its experts to appraise or determine the value of such assets, and if the principal asset of the company is intangible, an examination might be taken in order to ascertain the commercial possibilities. If it is a mining corporation or timber company, we have been utilizing state experts to advise with us on these values. All examinations are made at the appli- cant's expense. Mr. Lord: Who makes those examinations? Mr. Gates: State Geologist R. C. Allen makes examinations of mining corporations, Professor Vedder of M. A. C. examines numerous patents, etc. ; Mr. Odell of Detroit, Consulting Engineer, makes some examinations. Mr. Lord: Do you know anything about the method Professor Vedder employes in his examinations? Mr. Gates : I shall be very glad to submit his reports ; would be glad to furnish copies of every one of our engineer's reports. Mr. Lord: Getting the value of intangibles is a very important thing in this work and there would have to be a reasonable degree of accuracy or you would get off in your work. Mr. Gates: Surely. In addition to the expert examinations I have referred to, the commission employs two or three men who make it their business to examine and audit the applications of companies, and subsequently, we make it our business to examine their affairs for the purpose of ascertaining if there is any fraud, and, it is my opinion, that therein lies the most important service we can give the public. In numerous instances, we have had cases of companies who have gone back to the places where they have come from and voted large sales or have taken stock for intangible assets without approval. By periodical examinations we find those things out, and in many cases the commission has revoked their licenses. There is not a great deal of publicity given these matters for this reason. Michigan people invest in these companies, and if we can help the people by putting these companies on a sound basis, I believe more is accomplished than might be by publicity. I might say here that it is the plan of the present commission to prepare a report which they will submit to the legislature next session. While the law does not contemplate that we do this, in order to inform the people of the state just what we have done, we expect to file that report this year and we can probably estimate, in a definite way, the amount of wild- cat stock that we have prevented the sale of in this state. Roughly, I would say it would run pretty near to one hundred million dollars. Mr. Lord : How deeply do your examiners go into the affairs of cor- porations when they make periodical examinations? Mr. Gates : Mr. Olmstead is right here, we will ask him to answer that question. Mr. Glmstead : I am just now writing up a report of the examination of one company; we go in and find out just how much money-is taken in from the "sale of stock and if it agrees with the amount approved by the commission, and to find out what they do with the money. 122 The first item here is a small amount, being cash on hand ; we go to the bank and reconcile their bank account; I found that of the 19,600.00 stocks and bonds, $200.00 was Liberty Bonds, and $9,400.00 was invested in a subsidiary company of their own. After they came to the commission, they organized a company which we are going to investigate further. Mr. Lord : How do you determine the value of the assets ? Mr. Olmstead: The value was placed here by the commission from reports by State Geologist Allen, and other reports. Here is an item of $75,630.72 on their plant, some in cash, and $51,250.00 for land. I got the contract from the company and found out it agreed, also took their vouchers and checked those back with checks they had drawn, checking back with the bills of lading also, to show that the money actually went into the plant. Numerous other amounts were checked out in the same way. They show an expense of $8,061 .09 ; practically $2,500.00 was for advertising. We check this all out as near as we can ; also they show $3,635.00 for salaries and that item was checked out to find out who got the money because they were not to receive any salaries as officers of the corporation. Mr. Lord : The examination really consists of ascertaining whether the corporation, or company, has complied with the rules of the com- mission. Mr. Olmstead: Well, yes. Here is $21,465.00 commissions on stock sales. The commission sets the rate of commission they allow them to pay on stock sales. In some other states they pay as high as 40, 50 and 60 per cent on some stock, which is unreasonable. The commis- sion allows them 15 per cent, invariably. We check those amounts out and have sometimes found they were not correct. We examined a corporation a short time ago which we made put back $18,000.00. Mr. Lord: Are these items a copy of the statement? Mr. Olmstead: I make my own statement, they are regular book accounts. The liabilities only consist of two items. Mr. Lord : Are your examinations made subsequent to the sale of stock? Mr. Olmstead: Yes. Mr. Lord: How long does it take to make an examination, ordinarily? Mr. Olmstead : Well, it all depends. If the institution is clean, that is, the books kept up well, it does not take very long. Mr. Lord: After you have made these examinations, in what manner do you handle the fees paid b,v the corporation examined? Mr. Olmstead : We usually ask them for a fee to cover the cost of the examination. Mr. Lord: You make them pay the fee in advance, then. Mr. Olmstead : Yes, sir. Mr. Lord : What are the charges ? Mr. Olmstead: The law provides for $7.00 a day for the time we are away from Lansing, and our traveling expenses. Mr. Lord: What is done with the money you collect in advance? Mr. Oates: It is put in an unapplied account and deposited with the State Treasurer. Mr. Olmstead : I make out my bill for the time I am away from Lansing, so much to Olmstead and so much to the state ; the bills are approved 123 by the commission and paid out of the money on deposit with the State Treasurer. Mr. Lord : Approved by the commission, but not audited by the Auditor General or by the Board of State Auditors? Mr. Gates : Bills are approved by the commission. Mr. Lord: Are any of your bills audited by the Auditor General? Mr. Gates: Gh, yes, all except these. Mr. Lord : That is, if you make the examination first, your expenses are paid from the general fund and those accounts are audited by the auditing department. Mr. Glmstead: Just the other day I made up a bill; we went up last fall to Alpena and did not have any money up there ; my bill was put in through the Board of Auditors, and we afterward got in touch with the corporation and they paid the money. Mr. Lord : Where you don't receive a deposit, your course is to bill the corporation for the amount? Mr. Glmstead: Yes, sir. Mr. Lord: Where there is no deposit made, you bill the corporation, collect the fees and turn them over to the State Treasurer? Mr. Gates: Yes, sir. Mr. Lord : In cases of that kind are the expense vouchers audited by any part of the state government? Mr. Gates: Where examinations are made, the examination expenses are all approved by the Board of Auditors. Mr. Lord : Are there any corporations examined which do not pay the traveling expenses? Mr. Gates : Not to my knowledge. If, for instance, we should examine a company who had not filed an annual report and our examination should reveal the fact that the company has gone out of business, the expenses of that examination would go to the Board of Auditors for approval. Mr. Merrick : The deposit account consists only of amounts deposited by applicants. Mr. Lord : What is the object of having funds received by the commis- sion credited to so many different funds? Mr. Merrick: This deposit^ will ultimately work itself all out; it will either go to the examiner or be returned ; it is a temporary account. Mr. Lord: The point I wanted to make is that your expense accounts are not audited by any state auditing department. Mr. Gates: Just those accounts. Mr. Lord: Don't you think it would be a pretty good thing for the commission if that was required? Mr. Gates : Personally, I see no objection to it. Mr. Merrick: I would not have any objection to it. The only. interest is between this department and the applicant. Mr. Lord : The fact that it is a corporation that pays a fee doesn't mean that it is not public business. Mr. Gates : All our records are public records. Mr. Lord: The fact is that we should have uniformity in the matter of checking up all the expenses of the state, and in the accounting system. 124 Mr. Merrick: Well, that is the point; there is no expense to the state.; Mr. Lord: Well, you could say that about several departments of the state; the Insurance Department, for instance, and your own depart-.] ment, Mr. Merrick. In your department all of that money goes intoi the general fund and your vouchers are all audited ; now, isn't that the easiest and best way to do it? Mr. Merrick : There would not be any objection but, of course, the appl cant has a right to object to these bills. If they are wrong th( would have to be made right. I think it would be better to have the other way. Mr. Lord: My contention always has been thai all moneys of evei kind and description collected by any agency of the state shoul be turned into the state treasury and paid out only on warrant the Auditor General ; then you have a complete transaction that tl public will understand. Then, if anybody wanted to find out wlu the actual expenses of the state government are, they would go the Auditor General; now, under this system would he have an; record of the actual expenditures of this department? Mr. Gates: He would, except those particular examination fees. I will tell you that this question of economy should be taken i'roi another angle. The question of centralizing the authority of tin departments and getting down to the root of the thing; we have ii the Secretary of State's office a corporation division, which it eosl a great deal of money to conduct; there are companies that fi] articles of corporation there and then they have to come here rigl afterwards to get permission to sell their stock; that work ought be done here. Take the Game Department and the Fish Department they are doing duplicate work. Von could have the present force the Game Department take care of all the Fish Commission worl Mr. Lord: Your idea would be to create a corporation department that would pass on the whole thing. Mr. Gates: Yes; now here are the companies that organize and pay franchise fees, admitting them to go ahead and do business; we could tell, if we had jurisdiction, whether it should do business in the state and we could do it with practically the force we have now. I tell you there is a tremendous field for centralization of work in the state. Mr. Thompson: Which way ought it to be handled? Mr. Gates: I believe the management of same should go to this depart- ment. The Secretary of State's office simply goes through the form of procedure of passing on articles of association, in which they | allege they are turning in so much real estate or something of that kind; they have no way to determine, as we have ; they have to admit | the^ corporation as a matter of course. Mr. Lord: The question I raised in regard to auditing of accounts! had no connection whatever with the economical conduct of this department, simply whether this department should not have its accounts pass through the same channels as do the accounts of other] departments. How many examiners have you? Mr. Gates : We have three men on the pay roll. Mr. Lord: What are those men paid? 125 Mr. Gates : Our chief examiner gets $3,500.00 a year, one other exam- iner $2,500,00, and one $2,000.00. Mr. Lord: Who fixes those salaries? Mr. Gates: The commission, and they are approved by the Board_of Auditors. Mr. Lord : What do you pay your special examiners ? Mr. Gates : $25.00 a day to expert examiners, such as a patent engineer or mining engineer. Mr. Lord : What do you pay men who make the appraisal of property ? Mr. Gates : That is usually done by our own men. Mr. Lord: Do you have many examinations that are made by expert examiners ? Mr. Gates : Why, during the year I suppose Mr. Allen might make from twenty to twenty-five of those examinations. Mr. Lord: What does Mr. Allen get as head of the Geological Survey? Mr. Gates : I think it is $5,000.00 a year. Mr. Lord: And he is paid extra at the rate of $25.00 a day for your work ? Mr. Gates : No. At a recent meeting I think his salary as State Geolo- gist was fixed at $5,000.00 a year with the understanding that the money for all examinations made for this commission should be credited to the fund of the Geological Survey. Mr. Lord: What does this man Gdell examine? Mr. Gates : W T hy, he is a consulting engineer, examines patents, good will and other intangible assets. Mr. Lord : Will you tell us what procedure is taken by the commission in the matter of stock placed in escrow ? Mr. Gates: At the time of the hearing on the application, if the com- mission determines that a certain amount of stock issued for any form of intangible assets shall be deposited in escrow, they issue an order to that effect and require the corporation to file certificates with this office at the same time they execute an escrow agreement, which agreement together with the stock certificates is sent in here and filed with the State Treasurer. Mr. Lord : Is the agreement made with you or with the State Treasurer? Mr. Gates : They come here first for approval and we deposit with the State Treasurer. That is done on formal resolution of the board. Mr. Lord: Do you make any subsequent modifications of these orders? Mr. Gates: We have in some instances, that is done on resolution of the commission. There is no matter of any importance passed on by any officer without the approval of the commission. Mr. Lord: What are the requirements for the return of the stock placed with you in escrow ? Mr. Gates : The general provision of the agreement is that the company must be on a 6 per cent earning basis before it is released and when the corporation desires it to be released it makes a formal applica- tion. The commission refers it to one of its examiners and he makes an examination to find out the condition of the corporation. Gne examination Mr. Glmstead made a short time ago, he found some of the stock had been sold, and the commission ordered that a certain amount of the stock be cancelled and returned to the Treasurer. Mr. Lord: What authority have you over promissory notes? 126 Mr. Gates : It is one of the exemptions in the law that it does not affect the sale of unsecured commercial paper. Keferring again to approval of stock issues, I think that the sub- scriptions to the stock of all companies whether the stock is original or otherwise should first be passed on by this commission. I think this original stock exemption should be omitted from the act. Mr. Merrick : That may be true but I do not agree witli you on that, Mr. Gates. I think if you or I want to organize it should be given the corporation rights of the state. If we want to organize and want the stock ourselves, I cannot see why we should not do it. Mr. Gates : It would be a very difficult matter for us to follow a trans- action of that kind if it got into the market. I think it ought to regulated in its inception. Mr. Lord : You think in that case there would be a possibility of sul quent distribution of the stock? Mr. Gates: The great difficulty would be in following up a sale that if made by some fellow who has subscribed for some original stocl The principle that Mr. Merrick contends for is undoubtedly correct and thereby lies the confusion on these two acts. Mr. Lord: What do you do in a case where articles of incorporatioi have been refused by the Secretary of State? Mr. Gates: We never get them here. Mr. Lord : Is that true also in cases of foreign corporations ? Mr. Gates: Absolutely, yes sir. They have to file certified copies oi their articles certified to by the Secretary of the state where th< corporation was organized. Mr. Lord : But, if not admitted to do business by the Secretary of thij state, then what? Mr. Gates: That is two different legal propositions. Mr. Lord : Now, the question is whether they would sell their stock in violation of the corporation laws of the state provided you gave them permission to sell stock. Mr. Gates : There is a possibility of that under the present laws. That is another reason why we ought to determine whether they ought to do business in this state. I think section ten should be amended. Mr. Lord : Getting back to the corporation matter ; isn't there more or less of a duplication of effort between this department and the cor- poration division of the Department of State? Mr. Gates : Why, I don't know whether you would call it duplication ; we pass on the same matters as the Secretary of State's office. Mr. Lord : Yes, and there is more or less expense incurred for filing and keeping records, etc., isn't there ? Mr. Gates : Yes, there is ; I believe there is duplication of work. It is also true in the filing of reports by companies. I don't think that the state should require unnecessary duplication of reports from com- panies. Gur act requires them to file with us an annual report, the Secretary of State's office requires the same thing. Mr. Lord : Does your act prescribe the form of that report ? Mr. Gates: Yes. Also for increase in capital stock. Lots of them, when they file for record an increase in capital stock with the Sec- retary of State's office, think they have complied with the law, but it 127 should have been filed here also. Fifty per cent of them think all that is necessary is to file it with the Secretary of State. Mr. Lord: In case of railroad corporations, for instance; they would have to file three reports, wouldn't they ? Mr. Gates : They are exempt from the provisions of our law, the public utilities all are. Mr. Lord : Your idea would be to have one department pass on all cor- poration matters. Mr. Gates : Pass on all securities. Mr. Lord : In that case, would you advocate the employment of a state engineer? Couldn't a state engineer, a competent man, do all the work now done by your expert examiners and appraisers ? Mr. Gates : I never knew an engineer that was versed in all these branches of the work. Mr. Lord: If the engineer himself did not do it, he would probably have someone in his office that could do it. Mr. Gates : Yes, that might be done. Mr. Lord : Don't you think it would be a good thing ? Mr. Merrick: I think it would be a good thing provided the engineer could work along all lines required by the Securities Commission and the Railroad Commission ; it would be a very good plan, I should think. Mr. Lord: What annual salary do you get, Mr. Gates? Mr. Gates : $4,000.00 ; the chief examiner gets $3,500.00. Lord : What is the procedure now when an examination of a cor- poration is ordered ? Are you directed by the commission to go to a certain place, Mr. Glmstead, and make the examination? Glmstead : Yes sir, by letter. Lord : So that the transaction is a matter of record ? Glmstead : Yes sir, and I file a typewritten record of my findings. Gates : In addition we have something of a card record so that we can tell anybody very quickly what the history of the whole corporation is. I think the commission attempts in every instance to see that the corporations are in proper shape, that there is no fraud in them. Gne of the big things we can do is to become a clearing house to the public on these companies. All these companies should be subjected to periodical examinations. There is reason why the money of investors should be protected; there are thousands of companies operating in Michigan that were in this old manual list proposition which was repealed. Now, every company, no matter whether it is the Goodyear Rubber Company, Armour & Son, or some little com- pany out in the country, have to come here. Mr. Merrick : I think the list of manuals required a certain amount of investigation before they could be listed. Investigations in the last year or so developed the fact that this was not the case. Mr. Lord: What are the necessary qualifications required for appoint- ment to a position with this commission, such as examiners or clerks ? Mr. Gates: Most of our clerks are stenographers. We have one filing clerk who had considerable experience in the Auditor General's office, and we have one bookkeeper. Mr. Lord : How do you pick your examiners ? Mr. Gates : They have been largely selected on account of qualifications 128 in other lines of business. Mr. Olmstead was for many years a bank examiner ; Mr. Towne was in the Auditor General's department ; Mr. Munshaw's work is of a special nature. He makes examinations of certain companies, but most of his work is in running down viola- tions of the blue sky law that we don't get at. Mr. Lord : What are the penalties for these violations ? Mr. Gates : Fines and imprisonment. Mr. Lord : Where does the money from fines go ? Mr. Gates : Goes to the counties. Mr. Lord : Don't you think it should go to the state ? Mr. Gates: The act never contemplated that we would be a self-sup- porting institution, but as a matter of fact we have probably turned over to the state $40,000 or $50,000 since our operation. Mr. Lord: I do not see why the county should get all the benefit by way of fines, etc. When did this commission start the deposit fund? Mr. Gates : Before I came to this department. I think, the early part of last year. Mr. Lord: What disposition was made of the money before that time? Mr. Merrick: My recollection is that it was handled by the Securities Commission themselves. The money was retained, I think, up to about two years ago. since that time it lias been deposited with the State Treasurer. Mr. Lord: Are your various orders all authorized by resolution of the commission ? Mr. Gates: Each matter is handled separately, each order separately authorized, that is the rule. Mr. Lord: The expenses and per diem of these expert men, is it a gen- eral authorization that they each receive *_!.">. 00 a day and expenses, or are they told what compensation they will receive every time an examination is ordered? . Mr. Gates : They put in their bill for what their services are. Mr. Lord: I understood you to say that the charge has been f 25.00 a day. Mr. Gates: That is what has been allowed. Mr. Lord : That is the uniform rate of pay ? Mr. Gates : Yes, for engineers. Mr. Lord : So that it is handled by the presentation of a bill, approv by the commission, authorizing the treasurer to pay that amount of money? Mr. Gates : Yes, sir: (Records show the following amounts paid to expert examiners) Mr. Allen, July 1st to Gctober 30th, 1917 $ 374.75 (Mr. Gates: That was under the old arrangement before the Geological Board made the change.) Mr. Allen, from date above to June 26th, 1918 $1,011.45 Mr. Gdell, from July 1st, 1917, to June 26th, 1918, services and expenses $1,194.13 Mr. Vedder, from July 1st, 1917, to June 26th, 1918 $1,036.55 Mr. Lord: What position does Mr. Vedder hold at the Agricultura College? Mr. Gates : I think Professor of the Engineering Department. 129 Mr. Lord: Do you know whether he gets an annual salary at the College? Mr. Gates : I think so. Mr. Lord: No allowance made, possibly, for the time he is engaged in the Securities Commission work? Mr. Lord : Do you make a record of the authorizations of the Board of Auditors fixing the rate of salary of yourself and of the other sal- aries in the office? Mr. Gates : Gh, no. ;Mr. Lord: Do you have any record of their authorization by the com- mission ? Mr. Gates : I think when the board of auditors approve it, it. is authori- zation enough. PUBLIC DGMAIN COMMISSION. Mr. Lord: You are the Secretary of the Public Domain Commission, Mr. Carton? Mr. Carton: Yes sir. Mr. Lord: Will you state what your duties are as Secretary of this commission, and what the various activities of the commission are? What you have done, what you are doing and what you propose to do in the future? Mr. Carton: Gne of the things we have done has been to classify the lands as we went along, so that those lands that don't have anything on them, cut over lands, are so noted on our records so that they could be eliminated from the trespass list. We are working that out so that we will probably be able to eliminate from one-fourth to one- third of the acreage, and will not have to look after that nor include it in the trespass list. The Public Domain Commission has charge of all the lands owned by the State of Michigan, which comprise, approximately, six hundred thousand acres. In addition to that, they have charge of all of the work along reforestation lines; have charge of all the lake bottoms in the state, including the handling of the St. Clair flats ; selling of sand and gravel from the lake bottoms ; have charge of such work as Michigan is doing along what is known as immigration lines and the settlement of such land as is suitable for agricultural purposes. In all cases where state lands are made available for state settlements, a thorough examination is made of every piece to see that it has agri- cultural possibilities before we either dispose of it or allow it to go to homesteaders. All of the original records of every man's home and of every man's farm in the State of Michigan are here. We are the custodians of the original records of every foot of land within the State of Michigan. The handling of the activities along the land line is largely the hadling of homestead property which is now somewhat limited and getting more so all the time, and the disposing of or handling of city and village property which comes to the commission through the Tax Homestead Law. There are about 500,000 acres of land which came to the state through channels of the Tax Homestead Law. About 100,000 acres in addition to the 500,000 acres are the 130 remnants of land received from the United States Government und< the act which admitted Michigan into the union ; this act allowing Section 16 of every township in the state to become state property Later on, swamp land was made which gave to the state other land there were at different times some 2,400,000 acres which reverted the state for non-payment of taxes for a period of five years. Tl State of Michigan at one time or the other has owned some 11,000,0( acres of land. We also do the work formerly carried on by the Stale Land Depai ment. That is, the furnishing of plats, writing of field notes, and a of those things which originally the Land Department did. Ah we have the work of conservation. We have about one-half of th( lands in the State of Michigan set aside for reforestation purpose* and this list shows the number of acres in the different reserves ii the different counties. It is our hope that with proper fire prol tion and the planting of such acres of land that have from extrem fire or other causes become almost cleared, that in time we can repr< duce in Michigan, to a limited extent, at least, some of the timli that we originally had. There is set aside for that purpose 27-l,<)( acres of land and these exchanges that Mr. Lord just read about ai for the purpose of allowing us to block solidly this land. The I'ni States Government is doing the same thing. The\ have two reserve " one in losco county and one in Marquette county. By this exchanj with them .they are getting all the state lands within their bonndari( and we are getting all government lands within the boundaries of m reserves. When these exchanges are completed, the state will ha 1 20,000 more acres of land. Mr. Lord : What has been the cost of effecting those exchanges ? Mr. Carton: We have that. The cost of trespass and examination; can give you those figures. Mr. Lord : What we would like to get is the exact cost of effecting tl exchanges of these lands. Mr. Carton: I might say this. With our system of keeping track affairs, which we think is very good and we hope you will think so, we can tell you the cost of every horse on any one of our reserves and what it costs to shoe them, or feed them. Mr. Lord: Under the rules of the commission, what constitutes a tres- pass ? Mr. Carton: A man going on any land and taking property without the consent of the owner of the land. Mr. Lord: Have you prosecuted many cases for trespass? Mr. Carton : Not very many. Mr. Lord : Do you usually effect a settlement with the trespasser ? Mr. Carton: That is according to whether it is a wilful trespass or whether it is a mistake. Sometimes it is a mistake and if we deter- mine that it was not a wilful trespass, it is settled. If a man delib- erately and knowingly steals timber, we prosecute him. Mr. Lord: How many did you prosecute last year? Mr. Carton: Now, let me say to you, Mr. Lord, that our department, for the purpose of carrying on this thing, has a supervisor of field division. He has a record of all those things, and when we take up that branch of it, we can get it. 131 Mr. Lord: Do your trespass agents do anything else beside looking after trespasses? Mr. Carton : They make examinations as well. Mr. Lord : So that the cost, as shown, will show both costs of examina- tions and trespass? Mr. Carton : We divide it in two. If a man works a day and makes an examination and while there if he spends another day looking over trespasses, when the reports come in, there is a division made as to expenses, etc. Mr. Lord : Trespass agents last month cost $1,166.91 ; does this figure include traveling expenses? |Mr. Carton : I think it does. We have two men operating in the Upper Peninsula and others in the Lower Peninsula. JAIr. Lord: What is this item of $4,626.72 for laborers in connection with trespass work? Mr. Carton : That is for repairs on reserves. Mr. Lord: In your classification of disbursements, you show the cus- todians at 5,190.00, and in this statement it is |525.00. How is that? Mr. Carton: That statement is for the month of June isn't it? Mr. Lord : So that your trespass agents really cost in the neighborhood of 114,000.00 last year? Mr. Carton: You really couldn't figure a trespass agent at much less than |2,000.00 a year, including his traveling expenses. Mr. Lord: How many have you? Mr. Carton: Seven. They have practically done all the trespass and examination work. Mr. Lord : You have an item of cost for land examiners, f 171.00 ; that would show that the big cost was for the trespass agents. Mr. Carton: I will tell you what we do. If we should get an applica- tion for exchange in the neighborhood of some of these reserves, we would send one of our men from the reserve over to examine the land. I will tell you what there might be about this. The month of June might have been a very limited month as to applications for exchanges, and that figure is probably for the month of June. You would have to take it for a whole year instead of a month. Mr. Lord : Your total cost according to classification of land examiners was only |4,314.93, so that the cost of examinations does not compare with that of trespass agents, which is $8,545.03. Now, the question is, whether it is profitable for the state to pay for these men to go around and see if anyone has stolen fifty cents worth of property. Mr. Carton : That is always a question. The same thing applies to the question as to the value of the trespass agent, as to the question of the value of a policeman. While it is true that a balance to the profit of the state never can be shown, the fact remains that they are on the job and that their presence prevents a lot of things being done that probably would be done if they were not there. There never has and never can be shown a profit, so that there is always a question in the minds of the people, and in my mind, whether it is highly profitable or not. I think it is or I would not be in favor of retaining it. Mr. Lord : Are these land examiners, and you have several of them, kept busy at $4.00 a day? 132 Mr. Carton": The trespass men are practically kept busy all the time. They get paid when they work, and they work perhaps seven-eighths of the time. Mr. Lord : When you have effected all the exchanges you want to effect, what will these men have to do then? Mr. Carton : With the working out of the classification, the work of the Public Domain Commission along certain lines is going to get less every year. After the lands are gathered in blocks, they will be ! under the State Forester and the work of the trespass men and I examiners will be over with. If we are able to do certain things without being misjudged, in two or three years we could consolidate all of our lands in blocks. If we could go out and get a statement from individuals of what they wanted for their lands inside of these reserves, and work with them and help them, we could effect a great number of exchanges. If we could get all the lands consolidated into blocks, then the trespass agent could go and the examinations would be over, but the duties of the forestry department would increase. The real object of the consolidation is reforestation. The real object of the abolishment of the land office was to stop the selling of Mich- igan's chief lands to people who went out and exploited the other fellow. We hold up our hands in horror to the individual that does those things, and still we were doing the same thing ourselves. Mr. Lord: Are there any efforts being made by your department now to dispose of those lands? Mr. Carton: We don't want to sell them because the lands that Mich- igan has today are the remnants of 2,400,000 acres of land that people would not pay taxes on. These lands are practically worthless except for reforestation purposes, game preserves, etc. All of these things go hand in hand, it must all be worked out in harmony. Mr. Lord: Would it not be a good policy for Michigan to dispose of the lands that are suitable for agriculture? Mr. Carton: We are allowing them to be homesteaded. Whenever we find suitable land for agriculture, it is open for settlement. What we have been strenuously avoiding is the putting a fellow on a piece of land that we know he cannot be successful on. We make an inves- tigation of the individual also before we allow them to homestead the lands. There is no use of giving a man a contract if we know he| cannot fulfill the same. This whole idea of Michigan selling hei lands to get them on the tax rolls has been fought out here. The organization of the Public Domain Commission was for the purpose | of preventing that very thing. We could put up these lands in Mich- igan today, but it would be the most short-sighted policy that Mich- igan could pursue. Mr. Lord: To what extent have you carried reforestation? Mr. Carton : I will give you the exact figures. This year we put in aboul two thousand acres. We intended to put in about four thousand acres, but the war broke out and we turned in and raised pota toes, etc. Mr. Lord: What are you going to do with this land that is reforesl when you get the forest started? Mr. Carton : There is nothing to do but to protect it and let it grow U] Then will come the removing of the volunteer crop, which will have 133 to be removed to make room for pines or what is coming up. In sev- eral of these reserves we have to cut out the oak, etc., to give room to the other things coming up. Things have changed a great deal ; what used to be a liability to the state is now an asset. Timber that a few years ago had no value, today has a stumpage value that makes a nice profit. Some of the timber has a stumpage value and also a value for chemical purposes. Mr. Lord: What do you do with the crops raised on these agricultural lands? Mr. Carton : We sold some to the custodians on the reserves at market price. The balance we sold in the market and the money was sent in. Mr. Lord : Do you sell any tinlber at all for fuel purposes, etc. ? Mr. Carton : Yes, we sell timber right along. We have reports showing that. I might also say that we are just closing up our last transac- tion for the sale of sand and gravel. Mr. Hinkley: Please briefly outline to the commission, the sixty-year plan of reforestation. Mr. Carton : The sixty -year plan is simply this ; it covers the period in which all of the 600,000 acres of land that Michigan has, will be planted. When I say planted, I don't mean that we plant every acre. If we should go on to a tract of land and three-fourths of that land had a voluntary growth that was going to have some value, we would not plant it, we would simply plant in bare places and later on the timber that was growing voluntarily would come to maturity. The sixty-year plan covers the completion of the planting program of the 600,000 acres. We have figured out the rotation of cutting and planting, etc., so as to have a continuous revenue coming into the state. I don't mean it will be sixty years before it commences. Perhaps in ten years we will commence to remove the volunteer crop. Our sixty-year plan shows how much it will cost each year; how much money will actually be spent. Mr. Hinkley : When did you enter into that sixty-year plan ? Mr. Carton : One or two years ago. Mr. Hinkley : Then you are practically two years along. At what time do you figure this plan will be self-sustaining? Mr. Carton : I don't know just the year, but can give you a copy of the sixty-year plan. Mr. Hinkley: Will it be one hundred years, two hundred years, or what? Mr. Carton : In thirty or forty years, it will commence to go the other way. Mr. Hinkley: Do you think that these seedlings planted now will mature in forty years? Mr. Carton : Some varieties of them. But we must take into considera- tion the great body of growing timber, the timber which is already there. There is quite a start of timber upon a lot of these reserves. I think during the next year, or two or three years, that we will commence to remove timber in Roscommon county. Mr. Hinkley: Why do you remove this cover timber if it is valuable for seedlings? Mr. Carton : It gets such a size and then it stops. The life of the pop- 134 lar is very short as compared with others. Really, I believe the proper thing to do is to remove while it has a value, Mr. Hinkley : Then, as I understand your program, you expect that the pine will mature in fifty years? Mr. Carton : I don't say mature ; but there is a time in the life of tim- ber, according to the best authority on forestry, when it can be cut at a benefit and more produced. There is a time in the reforestation business when you can cut it at a benefit and not wait until it matures. Mr. Hinkley: Do you wish to state that ninety-five per cent of the seedlings you plant grow up, and develop into trees? Mr. Carton : That is asking me to guess. Mr. Hinkley: What per cent will come through? Mr. Carton: All that should come through. If on an average there are six hundred trees to the acre out of the two thousand, it is all that we want ; the others are put there for the purpose of filler. Mr. Hinkley: You figure that jack-pine is a good, valuable timber? Mr. Carton: We figure it is a valuable timber to do what we want it to do. Mr. Hinkley: What are the activities of the State Forester? Mr. Carton: He has charge of all matters pertaining to reforestation. Mr. Hinkley: What has he done during the last thirty days? Mr. Carton: Well, in the last thirty days, I should imagine he was hunting most of the time. Mr. Hinkley: Well, the last sixty days? Mr. Carton: He has supervision of the nurseries, passes on all ex- changes of lands made by examiners, supervises all of the custo- dians, etc. Mr. Hinkley: How many men have you at the Lake Superior reserve? Mr. Carton : I think two. Mr. Hinkley: How many acres in that reserve? Can two men tak< care of them ? Mr. Carton : I think there are about 119,320 acres. Mr. Hinkley: How far out is the headquarters? Mr. Carton : Twenty-five miles north of Newberry. Mr. Hinkley: What appropriation did you get in 1913 for prevention of forest fires ? Mr. Carton: 110,000.00. We got f 20,000.00 in 1915 and last year 140,000.00. Mr. Hinkley: Did the Public Domain Commission take any action ' recently about dividing the duties of the Forest Fire Commissioner ? j Mr. Carton : That is, having the work of the Forest Fire Department by itself, separating the work from the Game Department? Mr. Hinkley: No. I mean make two fire divisions, one for the Upper and one for the Lower Peninsula. Mr. Carton : We took over the Upper Peninsula Protection Association. They abandoned that organization and we took it over, including Mr. Wyman. He is in charge of all the territory north of the Straits. Mr. Hinkley: In creating the two sub-departments; where you for- merly had one, you now have two. Will you tell the commission on what grounds the Public Domain took that action? Mr. Carton : What do you mean, by what authority? 135 Mr. Hinkley: No; what reason for the double expense of two depart- ments ? Mr. Carton: Mr. Wyrnan is simply a warden under the Game Depart- ment, the same as any other warden. Mr. Hinkley: Has he an office in the Upper Peninsula? Mr. Carton: I don't know. Mr. Hinkley : The point I want to get at is this : The Public Domain Commission created this other department and we want to know the reason. Mr. Carton: I don't think it is any extra expense, neither do I think it is creating two departments. Mr. Wyman is appointed by Mr. Baird, the game warden, as special assistant. You have to have somebody up there in the Upper Peninsula to look after everything. I don't think there is any added expense, and there is no reason why the state should not protect the Upper Peninsula the same as the other divisions o the state. Mr. Hinkley : The point I want to get at is what the commission's rea- sons were. Mr. Carton : I don't think that they had any particular reason, except that this organization was going to discontinue and the state took it over. Mr. Hinkley : Was the fire supervision work of the state unsatisfactory in the Upper Peninsula before this time? Mr. Carton : No, it couldn't have been for that reason. It was not the state organization that was discontinued. The work of the state organization was so satisfactory that they disorganized the Upper Peninsula Protection Association, and the state took that over. Mr. Thompson: Mr. Carton, the Public Domain Commission has taken over the question of fire protection for definite areas of Michigan, has it not ? Mr. Carton : The fire protection to start with is under the Game War- den's Department, which is a branch of this department and the ter- ritory which they protect is north of the Bay County line. Mr. Thompson : You have not quite answered my question. Do you take over the fire protection in definite areas of Michigan? Mr. Carton: No. Mr. Thompson : Have you not done that in the Upper Peninsula ? Mr. Carton : No, not any more than anywhere else. The fire law covers everything north of the Bay county line. If you had a private organization in Alcona county, and you wanted to disband, and said you were to get out of the territory, why, you would have perfect right to do it. No, we don't take over the fire protection for certain territories as you mention. Mr. Thompson : Are there any organizations of any breadth covering any of the territories enclosed in the territory north of Bay county? Mr. Carton : The Hardwood Manufacturing organization. Mr. Thompson: Is there a fire prevention organization in the Upper Peninsula now? Mr. Carton : Not that I know of. Mr. Thompson : Then the state is now carrying all the public activities as to fire prevention in the Upper Peninsula ? Mr. Carton : Yes, sir. 136 Mr. Thompson : And it is possible it will do so in the Lower Peninsula ? Mr. Carton: Yes. Mr. Thompson : What proportion of the lands which are so protected belong to the state? Mr. Carton : A very small amount. I would say that north of the Bay county line there is probably two-thirds of the area of the state, 24,000,000 acres, and in that area we would not have over 500,000 acres. Mr. Thompson: Why should the people in that territory receive such services any more than people down here? Mr. Carton : It is a matter of state policy. It is a well known fact to every student of economy that when forests burn up it is a loss to everybody. The wood-working establishments in the lower part of Michigan are as much interested as those north of Bay line. Mr. Lord : Your point is that all the people are interested in conserva- tion and protection of the forests, and that allthe people would feel the loss, if any occurred? Mr. Thompson: As I gather your policy as to Michigan lands, you believe that they should be divided into forestry reserves, which pre- sumably would include lands not suitable for agricultural purposes, and the agricultural lands included in the limits of those territories: second, agricultural lands not in forestry reserves which will become homestead lands; third, miscellaneous lands to be disposed of by sale. Mr. Carton : Yes. Mr. Thompson : As I gather your activities, they are office management, including sale of lands from this office; trespass activities; ex- changes, fire prevention ; question of reforestation, which includes planting and sale of forestry products; immigration; St. Clair flats' activities; sale of gravel and other under-ground materials. Does this classification cover all of your activities? Mr. Carton : Yes, that covers it very well. Mr. Thompson: What do you estimate the cost or value of land that is put into forestry reserves, at the time it is put in ? Mr. Carton : I think we give that in our report. Mr. Thompson: Can you, from your own memory, state it? Mr. Carton : f 1 .50 an acre. Mr. Thompson : What other uses would that land have, other than foi estry reserves or uses? Mr. Carton: The bulk of them would have no other value, except for reforestation work and, perhaps, the following out of the plan of making game preserves. Mr. Thompson : What would you estimate would be the cost of seeding per acre, getting the seedlings, planting, etc.? Mr. Carton : As I remember, the cost runs in the neighborhood of from four to five dollars per acre. Mr. Thompson : And how long a time would it take the average acre to get to a productive point? Mr. Carton : That would depend largely on the class of timber that you planted it to. The class we are planting is white pine, Norway, etc. Some of those questions are more for a forester to answer than a 137 layman, but I think the plan figures up about forty years' time before they come to a stage where they can be cut. Mr. Thompson : So that the average period from the time you would undertake the planting to the time it reaches its maturity, would be about forty years? Mr. Carton : Yes, I think so. Mr. Thompson: What would you estimate the annual cost for that to be? Mr. Carton: Now, Mr. Thompson, those are things that have been all worked out by the forester, and are a matter of record by the Public Domain Commission. Those are matters that trained foresters use tables, etc., for, and could work out according to the accepted rules and regulations of foresters in computing those things. Mr. Thompson: Estimates as to the cost of the care of these reserves, fire protection, loss by reason of land being withdrawn from the tax rolls, probable interest on investment, and the over-head cost during that period. Mr. Carton : What do you mean by loss of taxes ? Mr. Thompson : If you had sold the land to individuals for clearing, it would have been paying taxes, wouldn't it? Mr. Carton: You are proceeding on the ground that the land could have been sold. A lot of this land, Mr. Thompson, was splendid good land and some of the land was very poor. Mr. Thompson: I appreciate the fact that most of the land left was either remnants of poor land, or was distant from the centers of civilization. Mr. Carton: We have in our vaults detailed reports giving complete information regarding these lands, even to the kind of weeds growing on every one of those forty-acre tracts. Mr. Thompson : What policy do you adopt as to making those matters public ; the results of your examinations ? Mr. Carton : We have no particular policy in making public the reports of examinations, except as they are asked for. We give them out in a general way in advising of the activities of the department. Mr. Thompson: If an individual came to you and asked for activities or records on a certain parcel of land, is it your policy to give it out or not ? Mr. Carton: I don't believe we have ever denied anybody. They are open records the same as any others. Mr. Thompson : Do you do any thing on developing of park systems for the state? Mr. Carton: The last legislature passed an act providing for the pur- chase of land at Interlochen to be set aside for a state park. The day is coming when the State Highway Department, together with the Public Domain Commission, should co-operate and get together in making these fifty-two reserves useful for the public and make state parks out of them ; make them available for the people of the state and school children, forestry classes, etc. ; make them useful for the fellow in the city, and if we could work out some plan with the Highway Commission so that these would be connected up with good roads, it would be a fine thing. Mr. Lord: What supervisory authority do you have over the property on Mackinac Island? 138 Mr. Carton: None at all. It is all under the control of the Mackinac Island Park Commission. Mr. Lord: Couldn't you handle that business without very much addi- tional cost; or rather, don't you think as a matter of good business on the part of the state, that all real property belonging to the state should be under the control of the Domain Commission? Mr. Carton: I am a firm believer of this, that there should be a cen- tralization of all the things pertaining to that particular work. That is one of the objects of the Public Domain Commission. Mr. Lord : You think that if- we are to maintain a Public Domain Com- mission, it should have charge of all state lands? Mr. Carton: We could handle it, there is no question about that. I think the State Forester could attend to all that. Mr. Lord : You say that you sold the potatoes that you raised. I notice that you spent $1,085.00 for seed and sold only $795.00 worth; in other words, $290.00 less than the seed cost. Mr. Carton : I don't know whether the potatoes are all sold or not. I imagine that our farming operations have not been a great money- making proposition, but it was a move in the right 'direction. Mr. O'Brien : Does this money from those sales come to you or direct to the State Treasurer? Mr. Carton: It all comes to us and we turn everything over to the treasurer. Mr. Lord: What is the object of embodying in your report all this detail about the proceedings of the meetings of your board? Mr. Carton : That is our official record. Mr. Lord: Yes, but of what benefit is it to the public to publish such a big book as that? Mr. Carton : My theory of a record is that it should contain everything pertaining to our board meetings. Mr. Lord: You have to have the record, but isn't it more properly an office record rather than a public record? I don't think it is neces- sary at all, except for the convenience of the board members. What disposition do you make of printed proceedings? Mr. Carton : One copy is sent to each of the slate libraries in such states as have forestry departments. Others sent to different libraries in the United States where they are interested in forestry propositions. COMMISSIONER OF INSURANCE Mr. Lord : Mr. Ellsworth, you are the Commissioner of Insurance ? Mr. Ellsworth : Yes, sir. Mr. Lord: Will you state to the commission the various activities of your department, just in a general way? Mr Ellsworth : What do you mean ; what we have jurisdiction over and what our duties are? Mr. Lord: Yes. Mr. Ellsworth: We have jurisdiction over all fire, life and casualty companies; over all insurance of every kind. The total number of insurance companies reporting to this office at the present time are six hundred and thirty-nine. This department collected in fees and 139 taxes last year over f 900,000.00. The expense of operating the depart- ment was about $38,000.00. This expense will be increased some- what this year by reason of moving the office out of the Capitol building. Also, in accordance with the law passed by the last legis- lature, his department has installed a fire rater, his duty being to investigate and report all complaints that may come in from over the state in reference to fire rates established. At the present time we are employing one man at a salary of $2,500.00 a year. We are sup- plying him with clerical help from the insurance office. The Commissioner of Insurance has complete supervision over all insurance matters and we employ at the present .time four examiners, who are in the field constantly examining the home companies of the state. Our Chief Examiner makes an examination of the leading life and fire companies and has two assistants. We keep one exam- iner constantly at work examining Farmers' Mutual companies. We have operating within the state one hundred and fourteen Farmer's Mutual companies. Business in Michigan includes resident and non- resident companies, known as domestic and foreign. All insurance companies report annually to this office and these reports are exam- ined and compared by the Actuary Department. The help in this office consists of one first deputy, one second deputy, two stenographers, license clerk, and assistant, chief clerk, five people in the Actuary Department and a janitor. Mr. Lord: What is the object of having a second deputy? Mr. Ellsworth : The law provides that the Actuary has to be a second Deputy. We issue annually between thirty and thirty-five thousand licenses to insurance agents and insurance representatives throughout the state. Every agent who solicits fire insurance or life insurance must be licensed by this department ; all companies operating within the state must first be licensed by this department before doing business. Mr. Lord: What is the required qualification of an agent in order to secure a license, any standard at all? Mr. Ellsworth : He must be reputable and reliable in order to secure a license. A license is issued usually upon recommendation of the company. We would not appoint an agent for the Home Insurance Company unless we sent to the Home Insurance Company to get the approval. The agent makes application, and we treat it as a mutual affair. Mr. Lord: What fee do you charge for the agent's license? What is the charge per license and what was the total amount you collected last year for such licenses? Mr. Ellsworth: Solicitors' licenses are $1.0.00 each, and we issued about 860. LTnder our statute we are supposed, if other states are letting our companies go free, to let their companies go free in Michigan, but if they charge, we charge the same amount they do. Our record shows a total income for the year ending June 30th, 1917, as follows : 3% tax on gross premiums of fire and marine companies. .$335,494.46 2% tax on gross premiums of life insurance companies. . . 392,973.26 2% tax on gross premiums of casualty companies 110,229.06 Total income from retaliatory and statutory fees 63,215.10 140 (The last item includes all income to this office except the tax as prescribed by statute). Mr. Lord: Following this up, 1 would like to ask if the specific tax paid by these various classes of insurance companies is all the tax they pay; they are not subject to any other tax, are they? Mr. Ellsworth: Not unless they own real estate. The Commissioner of Insurance is also Ex-Official Fire Marshal. We have eight persons employed in that department. The work of this department is largely the inspection of theatres, school houses and churches, and all public buildings ; to see that all buildings com- . ply with the requirements of the state statutes. All fires occurring throughout the state are reported by the fire chiefs to this department, and these fire chiefs receive a fee of 25 cents for every fire reported. This report specifies the cause of the fire, if known, extent of damage, value of the property, the amount of insurance carried; also fatalities, if any should occur. A record of these reports is kept in this office. A fee of #10.00 is charged for the inspection of every theatre; none is made for other buildings inspected. The number of theatres inspected each year is about six hundred. These are inspected twice a year and they pay a $10.00 fee for each inspection. Mr. Lord: Are those fees included in the #03,000.00? Mr. Ellsworth : No, they are included in the Fire Marshal's statement. Mr. Lord : Isn't it a fact, Mr. Ellsworth, that the Labor Department per- forms practically the same duties in regard to inspections? Mr. Ellsworth: Only on factories. Mr. Lord: Don't they inspect hotels? Mr. Ellsworth : Yes, I think they do. Mr. Lord: A large part of work by way of tire inspection is duplicated by the Labor Commissioner, I believe. Mr. Ellsworth : That really ought to belong to one department. I think that would be the proper taring to do, either the Fire Marshal's Department or the Labor Department. Mr. Lord: Which department do you think ought to do this? What work would your Fire Marshal have to do if the inspections were all placed in the Labor Department? Mr. Ellsworth: We would still have jurisdiction over all fires occur- ring. This year, our inspectors have been very busy in the conserva- tion work ; in inspecting theatres, mills and food supply, and storage places throughout the" state. Mr. Lord : Isn't it a fact that, oftentimes, you will find an inspector from the Labor Department and an inspector from the Fire Marshal's Department in the same town ; one inspecting theatres and the other factories and hotels, and isn't it a fact that the same man could do all the work? Mr. Ellsworth: That might happen, and I should think some of that work could be done by the same man. Mr. Thompson: Logically, under whose department should those come, the Labor Department or yours? Mr. Ellsworth: Don't know as I can answer. Where there are other 141 factors involved as with factories and hotels, possibly the inspection of those buildings ought to be with the Labor Department, r. Thompson : Following the question of Mr. Lord ; where you are sending an inspector to a factory in reference to the fire hazard, and they would also have a man there inspecting other conditions, couldn't you get a man competent to handle both inspections? Mr. Ellsworth : I should think so. The only thing it" is in two depart- ments. Mr. Lord: It would not only eft'ect a higher degree of efficiency in the conduct of the work, but also a larger degree of economy in that it would save costs to the taxpayers. Mr. Lord : Would you be willing to have that work transferred to the Labor Department or do you prefer to have their work transferred here; I mean the inspections? Mr. Ellsworth: I don't know as it is up to me to say. We would be very glad to get rid of this factor of it, if you see fit to turn it over to the Labor Department. In fact, the whole fire marshal's office is an additional work, it possibly should be a department by itself and this work of fighting the fire loss in this state could be made possibly more effective. Some effort should be made all the time to reduce the fire loss. r. Lord : Where do you think that should go? Mr. Ellsworth : Don't know as I am prepared to say. We have worked at it as hard as we could this year to keep down our fire losses. Mr. Lord : What was the income of the Fire Marshal's Department last year? Mr. Ellsworth: $ 15,000.00 was appropriated for the Fire Marshal's Department and, in addition, they are allowed to use any fees thej collect, and turn back the excess into the State Treasury. Mr. Lord : Don't you think it would be an improvement to have that department's expenses paid entirely by appropriation and all fees turned into the general fund? Mr. Ellsworth : We always have something to turn back and will have something this year. We never are able to tell just what the income of that office is going to be. Fees Collected. Total fees for January, February, March, April, May and June * - 17,100.00 Cash on hand January 1st, 1917 7,219.67 114,319.67 Disbursements 9,839.58 Balance |4,480.09 We have made eighty-seven investigations of incendiary fires; have had nearly one hundred complaints; thirty-five arrests and ten con- victions up to date. Mr. Lord : Do you know of any way by which you could increase the efficiency of your department, or is it satisfactory? Mr. Ellsworth : Well, sir, I don't know of any way we can increase the efficiency of this department. It is efficient now. The only improve- 142 ment that I can recommend is a saving on the printing of our report The reports in this office have been costing somewhere from five to six thousand dollars a year, and this department has been publishing one thousand of the Fire and Marine reports and one thousand of th( Life. We expect to cut that expense in half. We expect next year to get out one volume instead of two. All we can do this year to approve the bills contracted for by the former commissioner. Mr. Ellsworth : I did have in mind recommending a report that woul< give detailed information as to Michigan companies and a synopsis of the operations of foreign companies, but this might be unsatisfac tory. We have concluded, therefore, that we can give the detaile< information by putting it in table form, which will give one volume instead of two and reduce the expense at least one-half. Mr. Lord: Of what benefit is so much detail in your reports? Mr. Baxter: We have lots of calls for it; from insurance agencies par- ticularly. Mr. Ellsworth: They feel that their payments are liberal and that they ought to be furnished this information. The department has always endeavored to give them as complete information as possible. Mr. Lord: I think it is important that you have this information on file in your office, where it can be given if they desire it, but, because of the late printing of these reports, and by the time your report is out of press and ready for distribution, the figures it contains are of little value. Mr. Ellsworth: I agree with you that the delay is very often great and there should be some provision made to get our reports out sooner. Mr. Lord: Where is there any more sense in publishing the detailed statements of insurance companies, than there would be in the Sec- retary of State publishing detailed statements of the manufacturing companies that report to that office? Mr. Ellsworth: The insurance companies are dealing with a fund, that belongs to the masses. The fire insurance companies are liable to the people for these losses and when you place your insurance with an insurance company, you might want to know something as to the nature of investments; what their assets were invested in. Mr. Lord : In what other way could you increase the efficient conduct of this department, other than by cutting down the size of this report ? Mr. Ellsworth: I had already figured on reducing the annual report by putting it up in table form. This year we reduced the number and can still reduce it two hundred copies. This department issues a bulletin every two weeks and we mail nine hundred copies. We have also this year mailed notices at several times to the Fire Chiefs throughout the state calling attention to the fire conditions. We have also mailed notices to the mayors of cities and presidents of villages with reference to fire and water conditions, and have had many compliments from the government with reference to the fire activities in Michigan. This department also has supervision of the Accident Fund, which insures on workmen's compensation. This department collected last year in premiums about 1110,000; and we have at the present time a catastrophe reserve of approximately $50,000.00. 143 Mr. Lord : Will you state to us your method of procedure in licensing companies who want to transact business in Michigan ? Mr. Baxter : We first require from the company a certified copy of the report of examination made by its own department (the insurance, department of its own state), and, if this report is satisfactory, blanks are forwarded and the company submits a copy of its last annual statement and other papers required by the laws of this state. After everything is in order, and the company complies in every way with the laws of this state, it is admitted and a certificate of authority is issued. Mr. Lord: Don't you cause an examination of the company to be made before permitting it to do business in Michigan? Mr. Baxter: We accept the report of the insurance department of that state, except under certain conditions ; Wisconsin requires our com- panies to be examined and we have, in sometimes past, made the same requirement. Mr. Lord: Do you accept, outside of that, the report of the Commis- sioner of Insurance from every state where a certain company wants to do business in Michigan? Mr. Baxter : We do. Mr. Lord : Do you think it is safe ? Mr. Baxter: Yes; we know in a way the standard of the departments and are governed a good deal by^that in the admission of the com- pany. So far as I know, in all the time I have been here, we have always relied on the home department. Mr. Lord : You do occasionally make examination ? Mr. Baxter: The only case I know of where this department has done anything like that was in the case of a casualty company where its showing was not good, so this department caused an examination to be made. Mr. Lord: So there have been times when the examination made by the state office from which the company comes was not a good exam- ination ? Mr. Baxter : Only one instance that I know of. Mr. Lord : What do you do in the' matter of domestic insurance com- panies? Do you license those? Mr. Baxter: Yes; upon examination. We examine them. Mr. Lord : The point I want to make is 11 f domestic com- panies which want to transact business in Michigan, but do not examine the foreign companies. What do you do in case of com- panies that apply to do business in Michigan from foreign nations? Mr. Baxter : They make a certain state in the United States their state of entry, and make statutory deposit in that state. In the matter of deposit, capital is usually of the same amount as capital required of domestic companies. Mr. Lord: Where a deposit is made with some state, do you require a similar deposit in Michigan ? Mr. Baxter: We do not unless as a retaliatory means. If Indiana would require it of us, we would do the same by them. Mr. Lord: What security would that be to citizens of Michigan? Mr. Baxter : It is for all policyholders alike. Mr. Ellsworth : We expect the local commissioner to look after the com- 144 panies of his own state, and with the co-operation between the coi missioners of the different states, we are getting excellent results Should we hear of any company that is lacking in its payments, 01 where we have any information that anything is wrong, we imm< diately insist on examination of that company. Mr. Lord: Mr. Ellsworth, I wish you would state to the Budget Coi mission, the benefits derived by the people of the state by the oper; tion of this department. Mr. Ellsworth : This department stands between the people of the stal and the companies. It is our duty to see that the people are pr tected and to see that the companies comply with the statutes this state. Mr. O'Brien: Are "reciprocal underwriters" permitted to do busim in Michigan? Mr. Ellsworth: Yes, sir. Mr. O'Brien : Under what regulations ? Mr. Ellsworth : The regulations are somewhat unsatisfactory. Mr. O'Brien: Will you please define to the commission the assets of a reciprocal underwriter ? Mr. Ellsworth : It is a specie of the mutual company, not necessarily a domestic company. The state permits them to operate under certaii conditions. They have to have subscriptions amounting to $25,( These companies must have at least one hundred separate risks aggi gating not less than one and one-half million dollars, as represented by executed contracts or honafidc applications. We have the privi- lege of examining any company doing business in this state, but the National Association of Insurance Commissioners have a committee and we operate through that committee. We examine our own resi- dent companies once every year. Mr. O'Brien : In your report, your receipts show that the fire insurance companies paid into your department something over $335,000.00, which is practically one-third of the receipts of the annual business. Your disbursements are f 37,000.00; assuming the same proportion, you pay out for that department approximately |1 2,000.00, leaving! a net profit, you might call it, from the fire insurance companies, of 1323,000.00. Now, in your opinion, which I would like to have you | state as briefly as possible, don't you think that $323,000.00, which, in a way, enters into the payment of the rate by your taxpayers of Michigan, could be used in the enforcement of building laws, whereby I the fire loss could be materially reduced, giving direct benefit to thej insuring public of Michigan ? Mr. Ellsworth : I am not in a position at this time to make any recoi mendations as to the course to be pursued to secure a reduction ii the fire loss, but I do think the subject should be investigated thor- oughly and some recommendation should be made along that line,i as our fire losses will be in the vicinity of eight million dollars. Mr. Lord: Will you tell us briefly about your Industrial Accidem Fund? Mr. Ellsworth : This department has jurisdiction over a fund known the Accident Fund. It permits citizens throughout the state to sub- scribe to this fund to protect themselves or their companies 01 workmen's compensation. By this law, all state institutions ai 145 compelled to become subscribers to this fund, and we have a total membership of about nine hundred and fifty at the present time. This fund, collected last year in premiums, is approximately 1116,000.00, and has at the present time a catastrophe reserve of about $50,000,00. The fund is popular, is growing and the mem- bership is increasing daily. This is virtually a mutual insurance company, and the fund pays all operating expenses; no portion of the expense of the operation of this business is paid by the state. The rates of insurance are below the stock company rates, between 15 and 30 per cent, which is a saving to the manufacturers and persons desiring protection. All premiums collected are turned over by the manager of the fund to the State Treasurer, the Insurance Commissioner giving a bond of $50,000.00 for this purpose. The manager of the fund gives the commissioner a bond back in the sum of $10,000.00 which is a private matter. This institution has on hand in municipal bonds about $130,000.00 worth, and has recently purchased $15,000.00 worth of Liberty Loan Bonds. Mr. Lord: Who makes the investments? Mr. Ellsworth : The treasurer and myself. Mr. Lord : So that it is really all under your direct supervision ? Mr. Ellsworth : There is one thing right there that is confusing. We are given the name of "Accident Fund" ; the claims against the Accident Fund are heard by the Industrial Accident Board. This board treats the Accident Fund the same as any insurance company, and this insurance department examines the Accident Fund the same as we do any insurance company. Mr. Lord: So that the Industrial Accident Board really makes the award and you pay the money? COMMISSIONER OF LABOR Mr. Kirby, Chief Assistant, and Fred W. Castator, Deputy Com- missioner, present. Mr. Thompson: Mr. Kirby, will you tell us of the various activities of your department? Mr. Kirby: The inspection of factory work shops, public buildings, stores, etc., and to gather statistics relating to those institutions. The inspection of factories is to see as to the safety for the people employed therein, protecting the life and welfare of the workers, to ascertain and remedy any defects in the sanitary conditions of the factories and stores; to enforce the provisions, in a general way, of the labor law; and also to inspect coal mines, and boats of inland waters of the state. We inspect the condition of the boats and issue licenses. Mr. Thompson : Name the various classes of buildings you inspect. Mr. Kirby: Public buildings, such as school houses, stores, etc.' Mr. Thompson: Take up the character of your inspections, what you have to see, what has to be done as to each class of buildings. Mr. Kirby : Stores, public buildings, bank buildings, school houses, etc. ; they must be inspected as to fire safety, see that they are safe to work in and stay in, and that they are provided with proper exits and fire escapes. 146 Mr. Thompson: To what extent do you examine as to fire protection? Mr. Kirby: While the law is not specific in that matter, it only requires tkat they have proper fire escapes, in most cases the fire inspector sees that a fire drill is used in schools. Mr. Thompson: What is the character of your inspection of factories? Mr. Kirby: To see that all machinery is properly guarded and that all place's that might be dangerous to the worker are properly guarded. Mr. Thompson: Do you make fire inspection there as well? Mr. Kirby: No, that is under the Fire Marshal's Department. Mr. Thompson: You pay no attention to tire inspection? Mr. Kirby: Oh, yes; we pay some attention to that, but it is not required by law. Mr. Thompson: What other classes do you inspect as to these matters? Mr. Kirby: Well, that covers about all the buildings in the state; we inspect all with the exception of private homes. Mr. Thompson: Do you have anything to do with the housing laws? Mr. Kirby: I think the Health Department has something to do with that. Mr. Thompson: The matter of egress is regarded as important? Mr. Kirby: Yes, sir. Mr. Thompson: How are these inspections carried on? Mr. Kirby: By factory inspectors commissioned by the Commissioner of Labor. Mr. Thompson: How many have you? Mr. Kirby : W r e have eighteen. Mr. Thompson: How do you divide up as to territory? Mr. Kirby: There is no basis of division really. We place about twelve or fourteen hundred factories under each man. Mr. Thompson : So you divide by factories ? Mr. Kirby : Yes, sir. Mr. Thompson: How do you find out the number of factories? Mr. Kirby: By inspection. Mr. Thompson: Is there any requirement that the owner of a factory must report to you ? Mr. Kirby: No, sir. We have to look them up. Mr. Thompson: What do you do as to hours of labor? Mr. Kirby: We enforce the fifty-four hour law for women and for boys under eighteen years of age. Mr. Thompson : How do you do that ? Mr. Kirby: By prosecution and by issuing orders. Mr. Thompson: What character of inspectors do you use for that purpose ? Mr. Kirby: Factory inspectors. Mr. Thompson : Do you use women inspectors ? Mr. Kirby : We have some women inspectors. Mr. Thompson : How many ? Mr. Kirby: We have three. Mr. Thompson : You have a total of eighteen inspectors, three of which are women? Mr. Kirby: No; eighteen men and three women inspectors. Mr. Thompson : What reports do you receive from these inspectors? Mr. Kirby: Their daily report of inspection. 147 Mr. Thompson : What control do you have over conditions of labor except as to fire escapes, fire protection, sanitary protection and safety as to machinery? Mr. Kirby : That is about as far as our jurisdiction extends. We have nothing to do with fixing wages or anything like that. Mr. Thompson: How about the minimum wage? Mr. Kirby: We have nothing to do with that. Mr. Thompson : How is that disposed of ? Mr. Kirby: There was a minimum wage commission appointed in 1913 and they made a report to the 1915 legislature, but I don't believe any action was taken. Mr. Thompson: What other things ought to be done by your depart- ment as to labor? Mr. Kirby: Well, there are many things. We believe in a minimum wage law, and also in regulating the hours that men should be employed as well as women. Those are the most important. Mr. Thompson : What do you do as to mines ? Mr. Kirby : We have jurisdiction over coal mines only, not copper mines. They are taken care of by local inspectors. Mr. Thompson: What is your inspection as to coal mines? Mr. Kirby: All phases of coal mining, below ground and above, as well. The inspectors must see that the rooms are properly ventilated and that the runaways are in proper and safe condition. Mr. Thompson: What do you do as to boats? Mr. Kirby : The inspectors inspect boats as to safety, and see that they have the proper number of life preservers. Mr. Thompson : Is yours the only inspection in the state? Mr. Kirby : There is a national inspection, but we have just the inland waters of the state. Mr. Thompson: How many boats do you have to inspect? Mr. Kirby : We have about two hundred in Michigan. Mr. Thompson : How many inspectors ? Mr. Kirby : One. We have also connected with this department ten free employment bureaus that are located in the state. It is their duty to find employment for men out of employment and find workers for manufacturers who seek men. Mr. Thompson: You become a clearing house for labor? Mr. Kirby: Absolutely. Mr. Thompson: In what towns do you have employment agencies? Mr. Kirby : Bay City< Battle Creek, Detroit, Jackson, Flint, Kalaniazoo, Saginaw, Grand Rapids, Muskegon and Lansing. Mr. Thompson : None in the Upper Peninsula ? Mr. Kirby : No, sir. Mr. Thompson : Why not ? Mr. Kirby : Well, when the legislature gave us power to establish these agencies or bureaus, they limited us as to appropriation, and we never have had money enough to have one up there. It is my belief that we should have. Mr. Thompson : What benefit is that to the public ? Mr. Kirby: Well, it is a great benefit. For instance, during the months of July and August, this year, we were able to send to the farmers 148 from our free employment bureaus between four and five thousan workers. Mr. Thompson: To what extent does your employment bureau help th farmers ? Mr. Kirby: That is pretty hard to say. We have always been able t take care of them when they made request. We have been able t send out very good and efficient help from these bureaus. Mr. Thompson: How many men do you find employment for, or act a clearing house for, during the year? Mr. Kirby: In 1010, a total of 104,048 men and women. Mr. Thompson: What is the character of the statistics you gather? Mr. Kirby: We gather statistics from every manufacturing establish ment of the state that is inspected. They are gathered and publish in the aggregate and averages. For instance, all the superintenden and foremen, office help, etc., the skilled workers, both men an women, and others besides skilled workers, those between sixtee and eighteen years of age, all those between fourteen and fifteen years of age, and all the female workers in factories and work shops. All this is gathered, tabulated and put together showing the aggre- gate and average. Mr. Thompson : The only class of labor you endeavor to cover is con nected with factories? Mr. Kirby: Yes, and stores, restaurants, hotels, etc. Mr. Thompson: Your inspectors collect these details? Mr. Kirby: Yes sir. Mr. Thompson: Could they not be as well, collected by correspondence? Mr. Kirby : No sir, they could not. Mr. Thompson: Why not? Mr. Kirby: They pay no attention to you. Mr. Thompson: Could you not enforce a penalty? Mr. Kirby : If we had the power. Mr. Thompson: Would that be cheaper? Mr. Kirby: I think not. They have to visit the factories as to safety. Mr. Thompson : Of what value to the people are those statistics? Mr. Kirby: It shows the people the average daily wages paid in every city, and from the number of requests we have for our report, it would seem that people are interested. Mr. Thompson: What number of reports do you publish in a year and circulate? Mr. Kirby: Sometimes five thousand. The law limits us to that many. Last year it was only thirty-one hundred. Mr. Thompson: What class of people are the bulk of such statistics valuable to? Mr. Kirby: Laboring people. Mr. Thompson: How many look over them? Mr. Kirby: Could not tell you. Different unions call for them to be given to their members. I couldn't tell you how many look at them ; couldn't give you an estimate. Mr. Thompson: In your judgment, could your report be curtailed in any way, with fairness to the people of the state and still give them the information ? Mr. Kirby : We have cut it down as much as we possibly could. 149 Thompson : Would it be fair to reduce the statistics in your report ? Kirby: It would be fair if we could do it by law. The only pub- lication we give is required by law. Mr. Thompson: Assuming that protection could be given as to people in buildings, as to fire risk, inspection as to schools, sanitary con- ditions, and safety of people employed, what reasons are there fo* the labor department ? Kirby : There has to be some department to enforce the labor laws and to see that the laboring man is furnished a safe place to work. Without the assistance of the labor department, you can readily see where the manufacturer would become negligent in guarding machinery ; they also would not pay much attention to the hours of labor for women and children. Thompson : Have you anything else you want to put on record as to your department? Mr. Kirby: No, that's about as concise and clear a statement as could be made, I believe. Mr. Thompson: How many prosecutions a year do you make? Mr. Kirby: A good many. We average all the way from one hundred to two hundred prosecutions. Mr. Thompson : You feel that the labor laws are fairly well obeyed ? Mr. Kirby: Yes sir, they are. The larger industries of the state are seeking, and have sought for years, to comply with all the provisions of the labor laws. The ones we have the most trouble with are smaller ones where they employ few people. The larger industries of the state seek to obey the labor laws. Thompson : Does the Workmen's Compensation Law affect this department? Mr. Kirby: Yes, it has. The Workmen's Compensation Law has tended to make the factories observe and keep their plants in a safer condi- tion than ever before. Thompson : Can you conceive of any plan by which inspections made by your department, the health department, dairy and food department, and fire marshal's department, could be either consoli- dated or correlated, to accomplish the same results? Mr. Kirby: We overlap on fire protection, and as to certain industries with the dairy and food department. For instance, like the butter and cream business. Of course, the dairy and food department only inspects sanitary conditions in the creamery, while we look after the machinery and safety. Mr. Thompson : Because of the fact that many of the plants are isolated and the time consumed going to and from them, isn't it possible that by a better co-operation of inspections, a saving could be made ? Mr. Kirby : There might, in some smaller industries. Mr. Thompson : Could the man who is taking care of a country district, for example, for any one of these departments take care of all of these activities? Mr. Kirby: It would be possible, but it would be some work for him. And, besides, a man who is competent and capable to look after sani- tary conditions of a creamery might not make a good factory inspector. A man competent for factory inspector has to be a man who has a knowledge of machinery. 150 Mr. Thompson : Couldn't your men be readily trained in those things Mr. Kirby: I don't think they could. Mr. Thompson: Could the Fire Marshal cover the inspection of fir protection ? Mr. Kirby: Yes, that could be easily done. Mr. Thompson: Is that more logically a part of their work or you work? Mr. Kirby: Their work. Mr. Thompson: How about health conditions? Mr. -Kirby: The health laws of Michigan are not very strict. Mr, Thompson: Could the laws be so changed so as to cover these 1 one inspection ? Mr. Kirby : So far as health is concerned. Mr. Thompson: I understand that in a hotel, for instance, an inspect io by your department is made as to safety of employes; by the liealt department an inspection as to sanitary conditions; an inspection b the dairy and food department as to cleanliness, etc.; inspectio made by fire marshal as to safety of guests, etc.; can you conceive of any plan to co-ordinate those? Mr. Kirby: Well, I don't know. Mr. Thompson: Do you think it would be a good plan to put them under one department ? Mr. Kirby: I don't imagine for a moment that the Fire Marshal could take care of health conditions. Mr. Thompson: If the Commissioner of Labor, Secretary of Board of Health, Dairy and Food Commissioner, Commissioner of Insurance, all work together, do you think they could devise a plan to save effort? Mr. Kirby: I think if the public buildings everything but factories- were taken from under our control as to fire protection, it would be quite a saving. Mr. Thompson: What do you do about occupational diseases? Mr. Kirby: There should be a medical inspection as in New York, Massachusetts, Illinois, California, etc. Mr. Thompson: How do the Michigan labor laws compare with the laws of other states? Mr. Kirby: Most of the laws of other states are modeled principally after the Michigan laws ; they have been enlarged in most cases. Mr. Thompson : In what respects is Michigan behind the other states? Mr. Kirby : In the matter of occupational disease. Mr. Thompson: Can you conceive of any way to reduce the expense of your department and still keep up its activities and efficiency? Mr. Kirby : We ought to have more money to establish more free employ- ment bureaus. Mr. Thompson: How about the inspection of state institutions? Mr. Kirby: We inspect the machinery in the state institutions. Mr. Tompkins : How long have you been doing that ? Mr. Kirby: Ever since I have been here. Mr. Tompkins : Do you examine the machinery of private contractors in prisons ? Mr. Kirby : Yes, but I don't know as there is any now. Mr. Thompson : Yes, I think there is at Ionia. 151 *Mr. Thompson : What moneys do you collect ? Mr. Kirby: We collect fees from" boat inspections, and from private employment agencies. Mr. Thompson : What are the fees you collect ? [Mr. Kirby: $25.00 outside of the city of Detroit and $100.00 in the city. These are the only two sources. !Mr. Thompson : How many private employment agencies? Mr. Kirby: Thirty-one. |Mr. Thompson : What is the basis of licenses; what examination do you make ? Mr. Kirby: They have to give a bond of $1,000.00, sureties to be approved by the Prosecutor or one of the Circuit Court Judges of the county. Mr. Thompson: What is the condition of that bond; that is, why do they give the bond ? Mr. Kirby: They give the bond as surety for non-violation of the state law. Mr. Thompson : How are your expenses paid, by appropriation or from the general fund? Mr. Kirby: The Commissioner's and Deputy Commissioner's salaries come out of the general fund, and the traveling expenses out of the appropriation. Boat inspectors' and mine inspectors' salaries and expenses are paid out of the general fund of the state. Mr. Thompson: What was vonr last appropriation? Mr. Kirby: $65,000.00. Mr. Thompson : How much did you spend in addition to the $65,000.00 ? Mr. Kirby: I'll look it up. We spent, in addition to this amount, the salary of the Commissioner and Deputy, boat inspectors' and mine inspectors' salaries and expenses, and the expense of printing and binding and stationery. Mr. Thompson : Who audits your claims ? Mr. Kirby: The Board of Auditors audits our claims for printing and binding and stationery; also our mine and boat inspectors' expense account. The Auditor General audits our payroll and our expense accounts. Receipts from private employment agencies last ; Total expense account, $62,828.27. COMMISSIONER OF BANKING year, $3,448.22. Mr. Lord: Mr. Manning, you are the Deputy Commissioner of Banking? Mr. Manning: Yes sir. Mr. Lord : Will you state to the Budget Commission what the activities of the banking department are, in a general way? Mr. Manning: We, of course, administer the provisions of the banking law, and the trust company law, and at the present time the steam- ship law. The bulk of our work comes under the banking law. In a brief way, we have to do with the organization and supervision of banks. Now, in the organization of banks, the procedure at the 152 present time in organization of the bank is that we require an appli cation to be filed, signed by five or more of the incorporators. We also require them to furnish us with a separate list, if possible of the persons whom they think will own the majority of the stock That application gives the financial worth of the incorporators an< their banking connection, if any. We endeavor, through commercia agencies and other sources, to verify these figures, and, if ther happens to be another bank in that locality, we take testimony an< ascertain as to the necessity of another bank in that locality. we deem everything satisfactory, we approve the application an< send them articles of incorporation. We send three copies of article of incorporation and all three come back to this department, wher they are examined and approved. We are required, before a bank is authorized to do business, to mak an examination, which we do, and have in every instance during the past eight years. That preliminary examination, which we make, we charge for at the rate of $10.00 a day and expenses. If the report of the examiner is satisfactory and they have complied with all pro- visions of the banking law, they are given a charter. They then can commence business and from that time on the bank is subject to two examinations a year. We have practically the same system with reference to the organiza- tion of trust companies ; we follow practically the same routine. By the way, there are not very many trust companies in the state at the present time; I think there are ten altogether. We had, at the close of business in November, five hundred state banks, one indus- trial bank, ten trust companies. Mr. Lord: What is this industrial bank? Mr. Manning: The Morris plan bank. It is under a separate law and they are subject to practically the same supervision as the state banks. The Morris plan is for the purpose of giving the small bor- rower an opportunity to borrow money and get away from the loan sharks. Mr. Lord: About what percentage of banks that make application for charters do you grant? Mr. Manning: I should think about two-thirds, perhaps 60 per cent. Mr. Lord : So that you turn down quite a good many. Mr. Thompson: What are the grounds on which you turn down a bank? Mr. Manning: The character of the man, and possibly if we thought there were already enough banks in the community. So far as the law is concerned, we would not have any right to refuse the articles of incorporation, but we have done so, and in only one case have they insisted on going ahead. In that case he was not a good loan man and was a trouble-maker, as we knew through his former con- nection with a state bank. Mr. Lord: How many examinations of banks did you make last year? Mr. Manning: Nearly one thousand. Mr. Lord: Did any of these banks fail last year that were examined? Mr. Manning: No sir; we have never had a failure since the failure of the bank at Clarkston. Mr. Lord: Have you found very many of the banks with capital impaired ? 153 Mr. Manning: Not recently. Mr. Lord: What steps do you take when you find a condition of that kind? Mr. Manning: If impairment is not made good voluntarily, we take steps to levy an assessment on the stockholders. Mr. Lord: The percentage of failure of banks in Michigan has been very small for several years, hasn't it? Mr. Manning : Very small. jlMr. Lord: Do you think it is the result of the close supervision made by the Banking Department? Mr. Manning: History of receiverships will show you that they have become less, whether it is due to the department or to general pros- perity of the country, I can't say. This we know, we make a good many recommendations that the public know nothing about. We correct a lot of very dangerous conditions about which nothing is ever said. Mr. Lord : What is the nature of these conditions ? Mr. Manning: One of the conditions that we have found in the past is the over-loaning of bank funds by officers to those concerns in which they are interested. The over-extension of credit to those who have management of the bank. Mr. Lord: In the matter of savings banks, do you ever take any steps to appraise the physical properties covered by mortgages? Mr. Manning : We rely on appraisals made by directors or by appraisal committees. Up to seven years ago, very little attention was paid to that factor of it, but we have kept constantly at it and there are very few loans in Michigan today not accompanied by an appraisal. Ordinarily, it is accompanied by a signed appraisal, or it is indicated on the mortgage register. Of course, since the segregation law was enforced, we have been more particular to definitely ascertain what mortgages were good. I think it was under Mr. Doyle's administration that, in the smaller banks, cities smaller than Lansing, we traced every mortgage. It cost us a lot of money, but it was for the purpose of tracing out cases such as I cited a few minutes ago. Mr. Lord: Do you make special effort to ascertain the actual value of quick assets in your examinations? Do you ever take any pains to see whether or not collateral security to a note is ample? Mr. Manning : Our men are instructed, where banks have any collateral, to ascertain whether or not there is a statement on file with that borrowing company, but if stock is there only, they are supposed to get some idea as to the value of that stock. If the loan is of any considerable size, we verify it in some other way. We try and find out someone who knows the general reputation of the company. Part of our credit system consists of going once a year to the Secre- tary of State's office and copying all the statements of every corpora- tion in Michigan. That is bound in book form. It also contains the names of the principal stockholders and directors. If a man goes to Bax Axe, Grand Haven, etc., he takes with him these books. We keep these reports here and, if there is any question raised, we compare with these reports. They are not always authentical but 154 they are better than none at all and a great deal better now than a few years ago ; we have more detail and they are more reliable. Mr. Lord: Isn't it true, Mr. Manning, that the close supervision by your department has tended to make the banks improve their methods of handling loans? Mr. Maiming : I think it is safe to say that you will find ten statements now where you would not have found one five years ago. Both Mr. Merrick and Mr. Doyle have insisted on a lot of changes being made in bookkeeping systems in banks. For instance, they have insisted that they keep a permanent list by name and the amount of cash items. It is a good thing to .have on record so that the examiner can tell the condition of the cash from time to time. Another matter, is the item of a liability ledger. It has been a hard matter in country banks to bring them around to see it in the right light, but the majority of them, after the} 7 have had it, would not be without it. Mr. Lord: What are the fees now that you charge the banks? Mr. Manning: One one-hundredth of one per cent. Mr. Lord: What were the receipts of the department last year? Mr. Manning: The receipts from examinations of all kinds, annual, preliminary and special, were f 57,483.92; collections from other sources $517.23. Then we take credit for the amount of money that we turn over to the Secretary of State on account of franchise fees ; that amounted to $2,544.50, making a total of $60,545. (15. Mr. Lord : What was the cost of the department? Mr. Manning: Our total expenses up to December 1st were $72,956.(>l. Mr. Lord : All this money you collect from banks goes into the general fund? Mr. Manning : Yes sir. Of course, there is one thing to be considered in this department, that is the constantly growing number of banks. The resources are increased and we are increasing our work; our examinations are being improved from year to year. Mr. Thompson : Will the Federal Reserve system add to those exami- nations? Mr. Manning: It will add in this way that eventually we will have to pay more attention to statements. Largely, the increase in the work will be copying in the office, making duplicate copies of thai report, sending one to Chicago and one to Washington. Mr. Thompson: Will the banks all become members? Mr. Maiming: I think they will: it may take five years but I thinl they will eventually. Mr. Lord: Tell us about your examining force. What are the neces sary qualifications for examiner in this department? Mr. Manning: We generally pick out men who have had banking experi ence. Mr. Lord: You don't pay any attention to politics? Mr. Manning: We don't know anything about that. We haven't foi eight or twelve years. Doyle used to say "religion or politics doesn' count anything with me." In fact, the more they try to get a positioi by political pull, the less chance they have. Mr. Lord: Do you find it very difficult to get desirable men at th present time? 155 Mr. Manning: We do at the present time. Salaries have been increased in banks or men with experience can get higher salaries in other lines. . Lord: Have you lost any competent men because of low salaries paid by the state ? . Manning: A great many. . Lord: Do you think the department and the state has suffered On that account ? . Manning: There is no question about it. During the last eight years we have lost at least twenty men, whom the state has educated. At one time we could not pay them over $1,700.00 and another time over $2,200.00 a year. '. Lord : What is the maximum salary now? *. Manning: $2,500.00 a year. *. Lord : Hew long does an examiner have to be in your service before he reaches the maximum? Mr. Manning: He starts in at $1,700 and is raised $200.00 a year. Vlr. Lord : Is it not a fact that men going into your department expect to leave as soon as they get educated ? . Manning: Yes, that is usually so. We don't hire our men in the first instance as examiners. We hire some at $900.00, $1,200.00 or $1,500.00 a year. After a man works three months, or one month, he is given an opportunity to pass an examination and, if he passes, he is made examiner. It is an examination that would apply solely and only to a department of this kind ; largely on law and general banking methods; more particularly along our particular system here. We know that a man, after passing that examination, will not get himself or us in wrong in the ordinary bank. I think Mr. Doyle instituted this system. \ Lord: Do you know of any way by which the efficiency of your department could be increased, or -is there any equipment you need that would increase the efficiency of your department? Mr. Man-ning: Yes, we ought to have more clerical help. We' are limited by law to five clerks. Mr. Lord: Have you always been limited? Mr. Manning:. For fifteen "or twenty years. Mr. Lord : Notwithstanding the increase in your business, you have not been granted an increase in the number of your clerks. Mr. Manning: That doesn't include our chief clerk or assistant exam- iner. This man divides his duties between running the liability ledger and assisting in some of the examination work. Sooner or later we will have to have more clerks. Mr. Lord: Have you ever called the attention of the legislature to that? Mr. Manning: Mr. Doyle did at one time, but couldn't put it across. Mr. Thompson: How many clerks should you have? Mr. Manning: If we brought up our credit department to where it should be, we ought to have at least five more clerks. Mr. Thompson : Why should there be a limitation at all ? Mr. Manning: There should not be, and I don't know why it was put into the law. Mr. Lord: It is not limited in other departments. 156 Mr. Manning: We have no limit on examiners or assistant examiners, but we couldn't appoint young ladies as assistant examiners.^ Another thing is the present salary law. We don't get competent j help for the salaries we ha*ve to pay. Our salaries must not exceed] |1,100.00. According to the salaries they are paying outside, this is not enough. Mr. Lord: What do you think of an amendment to the graded salary law, having a maximum, but no minimum ? Mr. Manning: I would be in favor of increasing the average to $1,200.00 and having no minimum. Mr. Lord: Your department ranks high with similar departments in other states, does it not? Mr. Manning: Our system of examination has been accepted by the Federal Reserve Board at Minneapolis, Chicago and Washington; the national bank examiners have told us that we were one of the three states to have our system accepted without any changes. Of course, conditions are changing, and we are forced to change. I could take you, if I had the time, through an examination that we considered a good examination ten years ago and compare it with: an examination of today. Mr. Thompson: What effect would it have if the state building and loan activities were brought under this department? Mr. Manning: We are not asking for it. Why, 1 don't know as T would want to answer that question. Mr. Thompson: It would add to your expense? Mr. Manning: Certainly it would add to our expense, and we would have to educate our men to do that kind of work. It is a different kind of work entirely. Mr. Thompson : This is the logical place for it, is it not? Mr. Manning: A great many think so; I think so. Mr. Lord: What do you do in cases where you find a loan has been made to somebody by the cashier or president of the bank, and it has not been authorized by the Board of Directors? Mr. Manning: We require them to authorize it at their next meet ing. We take the position that their records should show the specific name and the amount of every loan. FOOD AND DRUG COMMISSIONER Mr. Lord: Mr. Woodworth, you are the Dairy and Food Commissioner? Mr. Woodworth: Yes, sir. Mr. Lord : Will you state to the Budget Commission, in as brief a man- ner as possible, the various activities of this department? Mr. Woodworth: This department was created in 1893 to regulate the food -sold and manufactured in Michigan, and to foster and encourage the dairy industry ; later we were given certain duties in connection with the drugs, very similar to those connected with the foods. Still later, there was added to our work the "weights and measures," previously held by the State Treasurer, and each suc- ceeding legislature has added detailed duties in connection with those foijr lines. 157 Our food work is taken care of by about six inspectors, who try, as near as they can, to cover each food establishment in his territory, and when they see any article of food that looks to them as though it should be investigated, they at once buy a sample and pay for it, send it in to the laboratory, and that becomes what we call an "official sample." This sample goes to the laboratory, where it is examined, then they make a report to the front office and the office reports to inspector and, in case it seems wise to make prosecution, we lay the case before the Prosecuting Attorney in the said territory. The same procedure is followed as to drug samples. We have two inspectors who try, and have succeeded, in making every drug store in Michigan once a year. They take nip samples of standard drugs, have them analyzed, and make prosecutions. In our dairy work, we have a head of the dairy department and two inspectors all the time, and occasionally, in some extraordinary circumstances, we put on a special inspector at a smaller wage. These inspectors try to visit every creamery and milk establishment in the state once a year, and in addition to that we try to assist dairy men, and more especially creameries, to solve any problems that are vexing to their business. -For instance, if some creamery manager advises us that his butter is off-grade, and that he is getting a low price for it, we try to have our inspector go to his creamery and find out where the trouble is, whether it is poor raw material, defective machinery, or whatever it is. They usually succeed in help- ing to locate the cause. We have a constant call for men to go to dairy meetings and speak, and these same inspectors do that work. On the "weights and measures," we have one of our regular inspect- ors assigned to that work, and he is the only one that attends to that, has sort of a general supervision over that, and more than that, we borrow the Federal track scale car and he usually goes with that car. The Federal Government sends a man also who examines track scales. Mr. Lord : Where you are advised of a defective scale, what steps do vou take? Mr. Woodworth : All of our regular Food Inspectors have a small scale testing outfit, and when they find a scale incorrect they attach a tag to the scale saying it is condemned. A great many times they can fix it themselves, as nine times out of ten, the scale has just a trivial defect. It is a peculiar condition, but we find about 8 per cent of the scales that we test are robbing the merchant, and if you stop to think of the conditions under which they work, you will see - how this happens. In order to make weight it "must move. A lack of oil, dust, or anything like that, makes it move a little slower, of course. Mr. O'Brien: Do you prosecute the cases where you find scales incor- rect? Mr. Woodworth : We never prosecute unless we think it will do some good. Mr. O'Brien : Have you ever had any prosecutions ? Mr. Woodworth : I think there are twelve or fifteen cases on the docket in Wayne County court today. There are two or three scale cases on right now. 158 Mr. O'Brien : What period of time does that cover ? Mr. Woodworth: I think we have had, perhaps, six or eight cases a month that really have to go to the courts. Nine times ont of ten, the procedure of law rather prevents them going to the court. If the scale is not right, they send word to the man they bought it from, or we fix it ourselves. Mr. O'Brien: Is there really no penalty for the man himself? Is it up to the maker ? Mr. Woodworth: Well, yes, there is a penalty if they don't fix it. We put a tag on it. Mr. O'Brien: What is to prevent him from removing the tag? Mr. Woodworth: The law makes it an olt'euse. The "weights and measures" law has been rather shaped to effect a cure without courts, on account of expense, I suppose. Mr. Lord: You had nearly three hundred cases commenced the year this report was gotten out? Mr. Woodworth: The cases commenced are a very poor indication of the amount of work done, because our best inspectors are the fellows who get along with very few cases. They say to the merchant, "This is wrong," and the merchant says, ".Just tell me what 1 can do to remedy it and I will do it." The inspector will perhaps show him the law in connection with it, and the merchant says. "That scale goes to the dump." Mr. O'Brien: You intend to make annual inspections? Mr. Woodworth: We try to, but our funds are not sufficient to allow us to do so. Our inspection of counter scales is better than of heavy scales, because every inspector now- carries an equipment for testing the counter scales. Mr. O'Brien: The coal weighing scales are not inspected? Mr. Woodworth: Only on request, or in case the county has a proper equipment. A number of the counties have their own equipment for testing the heavy scales. Mr. O'Brien: How expensive is that equipment? Mr. Woodworth: $60.00. Mr. O'Brien: That is usually kept in the county? Mr. Woodworth: In most counties they have a weights and measures man and he tests these heavy scales with the equipment belonging to the county, on request. When the law was passed, it was sup- posed that every county should do that, but some of them did not do it. In many counties it is the County Clerk and in main 7 counties a separate official. Mr. Lord: Yon don't make much of an attempt to inspect wagon scales, do you ? Mr. Woodworth: Yes; we do make an attempt, but we simply haven't the money, and it is a very feeble attempt. Mr. Lord: The inspections made don't look very good. Seventy-eight of the wagon scales were found correct and one hundred and fourteen incorrect. Mr. Woodworth: They are very often incorrect. I think it is only fair to say that my estimate is that 80 per cent of the products of Michi- gan go over heavy scales. 159 Mr. O'Brien : Would you just outline your procedure in inspecting these heavy scales? Mr. Woodworth : We attach a tag to them and it is up to the man who owns them to get them fixed before the tag can be taken off. Mr. O'Brien : Suppose he doesn't make any effort to get them fixed ? Mr. Woodworth : That tag is a warning to buyers or sellers that the scales are wrong. Mr. Lord: How many cities in the state have inspectors of their own who inspect or test all scales, including wagon scales? Mr. Woodworth : About six or eight. Mr. Lord: Are those men appointed by common councils? Mr. Woodworth : Usually. In Detroit the inspector is a member of the police force; in Grand Rapids, the same condition exists; but in practically every other city, he is a special official. Mr. Lord : What recommendations have you to make in regard to this inspection, to make it more effective? Mr. Woodworth : I would advise that the law be changed so that every county be required to have a set of heavy weights; either that, or supply this department with a motor truck sufficiently heavy to carry these weights. Either one scheme or the other. It is a question under the law whether we could compel those counties who have not these outfits to get them. In addition to this, we test the scales of each state institution once a year, and more than once if they so request. Mr. Thompson : One motor truck would not be enough, would it ? Mr. Woodworth : Yes, it would cover quite a territory. Mr. Thompson: How is this handled in other states? Mr. Woodworth: I understand that most of the states have motor trucks. Mr. Lord : It seems to me that having correct weights and measures is a very important thing. Mr. Woodworfh : I look on it as one of the most important parts of our work. I think accurate and reliable weights are as necessary to a community as an accurate system of coins. Mr. Lord : What is your authority over measures ? Mr. Woodworth: Same as it is over weights. This department has quite a complete outfit to handle weights and measures ; weights to make test with ; outfit to test gasoline tanks ; outfit to test the num- ber of feet of thread on a spool, etc. M r. Lord : How much additional appropriation would you require to make the weights and measures division of your department more effective? Mr. Woodworth : Well, I would think that $2,500.00 would put us in position to get to each platform scale, once a year. That is, in addition to what we are spending now. Mr. Lord : If you need f 1 0,000.00 for the work, you should have it. It is a very important thing. Mr. Woodworth : Perhaps I am low, but our present outfit is costing too much, considering the results we are getting. We are really not completing the work, are not getting as far as we should. Mr. Lord : I am very glad you brought that out ; it is a very important thing. 160 Mr. Woodworth: At the last session of the legislature I had a bill introduced placing a charge on every inspection of heavy weight scales, and we failed in getting it through. I had hoped that that bill would cover this feature. Would say, however, that one reason we failed to get the bill through was that we had a charge for testing railroad scales and, of course, the railroads were against it. Mr. Lord: What was the basis of their objections? Mr. Woodworth: They said they had an inspection car themselves and also that the companies that put the scales in inspected them; my contention was that it would remove trouble and give general satis- faction. Mr. Lord : If the state inspected them, it would not be necessary for ' the companies to incur that cost. Mr. Woodworth : Your incident in Grand Haven, Mr. O'Brien, illus- trates our weakness. We try and test every heavy scale where there is a request for the inspection, and then in time not occupied in that way, we come just as near as we can to testing all the others, but the result is that our work is not completed and a town such PS Grand Haven might be missed several years in succession. We should have a system whereby we would be sure to visit every town (very year. Of course, in drawing the law, the legislature presumed that every county would get a set of their own, and we have hesitated to tell people generally that we were ready to make inspections, simply because the work was piling up and we couldn't deliver the goods, that's all. Mr. O'Brien: Just this one question before we leave weights and meas- ures. Where would you assume that the ordinary citizen of Grand Haven would be advised of the fact that he could make a complaint to this department of an assumed shortage in his coal? Mr. Woodworth: Nothing except the law and our bulletins. I will say that I wrote to the Chairman of your Board of Supervisors (to ail chairmen of Supervisors) asking them to put in a set of heavy weights. Mr. O'Brien : Did you have any reply ? Mr. Woodworth : I don't think we did. It might be that your county has a set of scales and are not using them. Mr. O'Brien: If they had a set of scales, you would know it, wouldn't you? Mr. Woodworth: Yes. (Looked up the matter.) The city of Holland has secured a set, but not the city of Grand Haven. If a county or city would get this $60.00 outfit, any county official could settle almost all difficulties. Mr. Lord: Mr. Woodworth, are any of the other activities of your department made ineffective or neglected because of lack of sufficient money ? Mr. Woodworth : We would put in a better inspection of food work if we had more money. Mr. Lord : How much would you need to make it as effective as you would like? Mr. Woodworth: I really believe we ought to have one food inspector for each congressional district. As it is now, our districts are larger than that by considerable ; we never have more than eight in 161 the state, and the city of Detroit ought to have about four. The City Board of Health in Detroit has one man assigned to that work. Lord: Would four be enough to cover the city of Detroit, taking in all the lunch counters, etc. ? Wood worth: We have four there now and we wish we could do the work better. Lord : How much would that additional cost be ? Woodworth : I should say that it would cost about f 20,000.00 more. That would bring our total cost about equal with the Labor Depart- ment's. We run on an appropriation of $35,000.00 a year and some fees? Lord: How many additional inspectors would $20,000.00 provide? Woodworth : It would mean about eight more. Lord: $20,000.00 would cover all that cost, salaries, traveling expenses, equipment, etc. ? Woodworth : Yes, and every one of those eight would have a set of counter weights and test weights and measures. We find that the same inspector can be taught to inspect various things. Lord: How much in fees did you collect last year? Woodworth : $13,288.00. Total amount available from appropria- tion and fees, $48,288.00. Lord: What charge is made for the various licenses you collect fees for? Woodworth : Well, creameries, etc., $5.00 a piece ; ice cream manu- facturers, $5.00 a piece; milk dealers, $1.00; commission merchants, $25.00; manufacturers of carbonated beverages, soda water, grape juice, other soft drinks, and syrup licenses, $10.00. Lord : Was the total amount of $48,288.00 used up ? Woodworth: Not quite all. This is the reason. I took office the first of January, and I was, I rather think, too cautious. We couldn't afford to go over our appropriation and I think we had about $1,000.00 unexpended balance. Simply because I had to have a little leeway for unusual expenses. Lord: Do you draw anything from the general fund? Woodworth : No. These fees represent some special service. The ice cream manufacturers' license was put on at the time when the ice cream law was passed and the idea of the legislature was that the fees would just about make up for the extra cost to the state, to give them the extra service contemplated in the law. The milk dealers' license was simply to bring the milk dealer on record. Thompson: On what grounds should the state make charges for any special services ? Woodworth: My idea is that the only ground is that we give them some service. I think that where an activity is necessary for the public welfare, the proper policy would be to have the public bear its proper pro rata of the expense. Thompson : Ought the activity to bear a pro rata of public expenses ? Woodworth: Yes, insofar as the activity is benefited. Every activity which is inspected and bears approval of the state, should be simply self-supporting to the state. 162 Mr. Thompson: What, in your judgment, should be done with those fees? Mr. Woodworth: I think that they should all be turned in to the general fund of the state and we should depend on appropriations for expenses, etc. Mr. Thompson: You, for instance, carry on a series of dairy inspec- tions for the purpose of giving the people of Michigan good service as to dairy products; one reason why we don't get better products is ignorance on the part of people in charge of that work. It is perhaps true that a greater publicity and a campaign of education along that line would increase the efficiency of producers of dairy products; ought those license fees, for instance, to cover that phase of it? Mr. Woodworth: In that particular instance, I doubt whether the state would have the authority. As a general rule, I think that, where the state gives some special service, the special service should pay. Mr. Lord : Isn't it a fact that, if you settle the expense on the activity, ultimately the consumer would pay it? Mr. Woodworth: In some cases. Mr. Lord: In most cases, wouldn't it be true? Wouldn't the expense of dairy inspections be put on to the cost of dairy products ? Mr. Woodworth: In nine cases out of ten the inspections lessen the cost rather than increase it. One reason is that we usually increase the efficiency of that plant. For instance, we inspect a creamery and perhaps before the inspection that creamery is making butter that grades as second ; our inspector goes there and sizes up the plant, finds the trouble and has, or the owner has, it remedied. As a result, the next shipment of butter is of such an improved quality that the whole thing is adjusted and a better price allowed for the product. Mr. Thompson : Following out Mr. Lord's thoughts ; suppose the inspec- tion of some certain line of activity is added to the cost of that activity, what is the argument for inspection then? Take milk dealers, for instance ? Mr. Woodworth : The higher quality of the food supply and the public health. Mr. Lord : What other activity in your department could be made more efficient by an increase in appropriation? Mr. Woodworth: Well, like every department and everyone that is engaged in some special work, we all see many things we would like to improve. I have already indicated what we could do in the weights and measures proposition. As I said, I think we ought to have smaller areas for food inspectors. I think the drug inspection is now carried on in a satisfactory manner. Mr. Woodworth: Several laws, and those laws have been the occasion for most of the fees, have been passed giving us special work in con- nection with different branches. For instance, carbonated beverages now require state inspection and a certain fee has been put on that. The carbonated beverage licenses amounted to $1,280.00 and one man does it in a sort of a way. Mr. Lord : In a sort of a way ; what do you mean by that? 163 Mr. Woodworth: Two men would do it much more effectively.- We would like about twice as much money. They operate in about five months' time and that means the inspections have to be within that time. In the city of Detroit we have found bottling establishments in back of stables, and have found inferior products being put in bottles of good dealers. We go to that sort of a fellow and usually a warning will stop him. In fact, we go to all the plants and have them try to bring their production up to the state standard. Mr. Thompson: What is your thought as to carrying on your dairy activities ? Mr. Woodworth : It is a question in my mind whether the extension work in dairy industries should be in this department, because, in Michigan, we have the Agricultural College doing similar work. The Federal Government bears one-half of the expense of this extension work and, while I am not prepared to say absolutely, it is a question if it would not be better to have the work done either one place or the other and preferably at the college. Mr. Thompson: Assuming that you would have this work done at the Agricultural College, what saving would that be to this depart- ment? Mr. Woodworth : Why, I would guess that our dairy work costs us 110,000.00 a year. That would be a total saving to this department, but it would cost the state of Michigan $5,000.00. Mr. Thompson: So it would be a saving of $10,000.00 to this depart- ment and a net saving of $5,000.00 to the state? Mr. Thompson : Have you any other suggestions as to dairy work that you do ? Mr. Woodworth : I think it is a very important work and should be extended. It is work that pays the state good dividends on the investment, but I think it should be done at the college. Mr. Lord: Dr. Olin, Secretary of the State Board of Health, took up with us the matter of centralizing the chemistry work of the state, along the lines of co-operation between his department and yours. What do you think of that? Mr. Woodworth: As it is now, we are running two laboratories, one here and one in the Board of Health. In all laboratories, the ordi- nary equipment is standard and it would seem to me as though it would be possible, in some way, to combine the laboratories and have one chemist in charge. Mr. Lord: What other state activities would use it? Mr. Woodworth: The Securities Commission would use it very often; and practically every department has some problem. For instance, we loan a man to the Game and Fish Department to investigate the polution of streams. Mr. Thompson : Assuming that that was done, would the "result be in a saving of money simply, or efficiency of service also ? Mr. Woodworth : It would tend to secure a better and, more efficient man for a position of higher class, of course. Mr. Thompson: It would give the people much better service then. How much of a saving would be effected to the state? Mr. Woodworth: I don't know just the cost of Dr. Olin's work. I imagine it would cut off one-third of the total present expense of 164 the chemistry and bacteriological work in both departments. Mr. Thompson : About how much is that expense in this department ? Mr. Woodworth: I should say that it was about one-quarter of the expense of the department, probably $10,000.00. Mr. Thompson : The next line of thought is inspections and duplica- tions of them. What inspections of public activities should be added to those now carried on by the state? Mr. Woodworth : You mean what added work ? Mr. Thompson : Yes, sir. Mr. Woodworth: I think there are quite a number of food establish- ments that are not covered by our laws. We work under specific statutes. Personally, I think* it would be much better if our food law was generally remodeled and patterned after the federal law. In that case it would simplify our work a great deal. Mr. Lord: Your supervisory powers to be more general instead of specific ? Mr. Woodworth: Yes. We have never felt it so much as we do now. I think that the present inspection of commercial feeding stuff, which is done at the college, should be done here. Our equipment is suitable to that work. It is practically police work, and that part could be better handled by us and the educational done by the college. Mr. Thompson : How much added expense would that be to your depart ment? Mr. Woodworth : That is taken care of by fees. I think also that there should be inspections as to the health of employes in every foo< manufacturing and serving establishment. Mr. Lord : Should this be done by the health department ? Mr. Woodworth : Well, I think it should be done, but in any way yo\ please. Mr. Thompson : Is there anything else, Mr. Woodworth ? Mr. Woodworth : Under the new law passed by the last legislature, w( have a general provision, copy of a section of the federal law, tha gives us sort of general power. Don't know of anything else. Mr. Thompson: How would you suggest that inspections now made be better correlated so as to give better efficiency, better service to the public and save money to the taxpayers ? Mr. Woodworth : Just how to work that out, I don't know, but it i true that where three departments inspect in the same place, we doing the inspection of food conditions; the labor department, the fire escapes; and the health department some things, I have won dered if it would not be possible to combine that work. Mr. Lord : The fire marshal's department makes some inspections. Mr. Woodworth : Yes, I guess it does. Seems as though one man coul< make one place and do it all. Mr. Lord : For that kind of work, could you establish a central bureau of inspections? Mr. Woodworth: I don't know whether that would work out all right or not. Mr. Thompson: Suppose, for example, your department, the healtl department, labor department and fire inspector's department wer 165 to co-operate and correlate your work, ought you not to be able to work it out and effect a saving? .r. Woodworth : Seems to me that it would be possible to effect quite a saving there, and certainly would bring about a greater efficiency, .r. Thompson : Taking on of that class of inspections, as a whole, what proportion of costs do you think that method would save? .r. Woodworth: Speaking as to my own department, I would say it could not help but save 50 per cent for that class of work, .r. O'Brien : Would it not be 75 per cent ? Woodworth: It might be, but I would say that it would be at least 50 per cent. r. Thompson: Tell us, Mr. Woodworth, your idea of the effect of prohibition. IMr. Woodworth: As you know, the last legislature has put the enforce- ment of the liquor law in our department. I have spent most of my time since then studying the question. Kecently I was in West Virginia and looked over the work there. It is a considerable problem as to what that enforcement is going to mean. We are wondering just how much expense it is going to involve and how much help. I Mr. Thompson : You have no idea at the present time? |Mr. Woodworth: I imagine that the way it will work out is that we will say to every Prosecuting Attorney and Sheriff, "What can we do to help you?" and it will be our experience in the first two or three months that we will have to base our work on. i Mr. Thompson: It probably will add to your expense. I Mr. Woodworth: The legislature left the expense proposition open so that our expenses are authorized by the Governor and paid on war- rant of the Auditor General out of the general fund. Mr. Lord: In regard to the enforcement of this prohibition law, how many additional men will you need in your department to enforce this law? I Mr. Woodworth: In West Virginia they have one for every county, or did have one for every county, but now they are finding, after the first educational period has passed, that they have comparatively little to do. I think the proper thing for us to do would be to select about one man for each congressional district, men who have had proper experience ex-sheriffs, for instance. There will be a whole lot of people dissatisfied with the Prosecuting Attorneys' and Sher- iffs' work and we will have to have someone who will investigate those complaints and then, too, we will have to look after the ship- ment of liquor over the border. Under the federal law, it is an offense to ship into a dry state and the prosecutions will be, of course, in the federal courts. I don't think the employes taken on for this work will exceed fifteen men. Mr. Lord : What will you pay those men ; have you given that any thought? Mr. Woodworth : The law says that we can pay them up to $1,500.00 a year and expenses. Mr. Lord : As a rule, what are the expenses of that class of a man ? Mr. Woodworth: The expenses of our inspectors will run along about $60.00 or $70.00 a month each. 166 Mr. Thompson: Those men would each probably cost about $2,500. a year. Mr. Woodworth: Under this new law there is no limit placed on ou expenditures. For the next year I feel that it is up to me to be ver; careful, because my expenses under an unlimited law will be mea ured by the expenses under the limited law of last year. Mr. Lord: Then it would necessitate at least fifteen additional men and their cost would not be less than f 40,000. 00 a year, anyway. Mr. Woodworth: No. It might be #60,000.00, you can't tell. I don't feel competent to make an estimate. Mr. Lord: What other expenses would be incurred in connection with that law? Mr. Woodworth : Just now, I don't see any. There is going to be a whole lot of liquor confiscated in Michigan and there should be some plan to save that liquor to distill the alcohol out of it. Mr. Lord : Your department last year cost $48,288.00. The additional cost of the enforcement of the prohibition law will be about 160,000.00. It will be safe to say, then, that next year it would not cost more than $1 10,000.00? Mr. Woodworth : I don't think it would. Mr. Lord : And if there is some changes made in the work, possibly 1100,000.00 will cover the cost? We have talked about your outside work. How about your office work? What, if anything, can be done to increase the efficiency o your department? Mr. Woodworth : That is a line of which I am not nearly so competen to judge as you are. Mr. Lord : From your observation, what do you think ? Mr. Woodworth: We have a very small force, only four. They are quite efficient. The chief clerk has been here since the department was formed and the bookkeeper was appointed under Governor Bliss. The State Accountant tells me that he has never found the slightest thing wrong with the books at any time. We have a janitor and we have one woman who works part of her time in the laboratory and part of her time here. Mr. Lord: Do you send out a large quantity of mail? Mr. Woodworth : Quite a good deal. Mr. Lord: What is the character of it? Mr. Woodworth: We usually get out perhaps eight or ten issues o bulletins. Mr. Lord: How many in an issue? Mr. Woodworth: About 4,000. Mr. Lord : Are they mailed to the same people all the time ? Mr. Woodworth : A good deal of the time. We have an addressograph. Mr. Lord: Does it belong to this department? Mr. Woodworth: Yes. Then there is never a day but that there a about twenty-five or fifty copies of our laws go out and we wri and refer them to some phases of the law. Mr. Lord: What would you think of a central mailing division whe these bulletins could all be sent, addressed and sent out; all sta departments to use this mailing division? Mr. Woodworth : Why, I don't see any reason why we could not do oui 167 work that way. I would simply say that I want bulletin number so and so sent to list number so and so. LP. Lord : Have you examined your annual report very closely with a view of cutting it down? LP. Woodworth : None whatever. However, I imagine it could be done. Lr. Lord : In looking over your report, it occurred to me that it could be cut down at least one-half ; and then people would be more liable to read it; there would be less detail and it would be a considerable saving. Lr. Woodworth: I will take my report and analyze it and then I will tell you what I think. Lr. Lord: I wish you would do that. Our printing is costing 1150,000.00 a year and it ought to be cut in two. .r. Woodworth: One reason for our printing is the educational work in the dairy business. Our report would be comparatively simple if that work was transferred to the college. Lr. Lord: Take the statistical part of the report, for instance; people are not particularly interested as to the amount a certain company pays this department, but they are interested in the aggregate amount collected for similar services; so that if statistics of that character were published in the aggregate instead of in detail, people would read it, whereas they don't now, and your report would be much more valuable. Woodworth : I don't think I had ever studied the Dairy and Food Department's report, or the report of any other department, before I came in here. Thompson: What benefit would it be to Michigan if all the mate- rials used by the state were purchased collectively and according to specifications ? Woodworth : The state would get all the benefit that is secured from purchasing in large quantities and the added security of know- ing exactly what is delivered. It would serve to bring a benefit in one way or the other, or probably both ; either a lower price or better quality. Thompson : To what extent do you think it would save money by purchasing collectively? Woodworth: It is hard to estimate that. I have talked to whole- sale grocers who have stated that, on purchases as large as the state makes, they could save them 10 per cent, at least. Thompson : Have you any suggestions as to the plan that should be pursued to organize centralized state purchasing system? Woodworth: My own opinion is that all purchases should be passed over to a state head and every institution should present what they think their requirements will be. If it appeared to the purchasing head that it is not correct, it should be called to their attention with a view of cutting it down. 168 GAME, FISH AND FOREST FIKE COMMISSIONER Mr. Lord : You are the Game, Fish and Forest Fire Commissioner, Mr. Baird? Mr. Baird : Yes Sir. Mr. Lord: Will you make a statement to the Budget Commission rela-i tive to the various activities of your department? Mr. Baird: Well, in what way? Mr. Lord : Tell us the nature of your work, what have you accomplished, what the benefits are to the people of the state, what you are doing now, what your plans are for the future, and, if you have in mind any changes to be made to the law relating to the game and fish bus- iness in Michigan, please state them. Mr. Baird: I would rather have the chief clerk state that, he is more familiar than I am with that line. Mr. Lord: Mr. Hoyt, what position do you hold? Mr. Hoyt : I am the chief clerk of the department. Mr. Lord: Will you state to the Budget Commission the various activ-: ities of the game warden's department, what it lias accomplished, ; what the benefits are to the people of Michigan, and what it proposes ' to accomplish in the future, etc. Mr. Hoyt : It's main object is the conservation of wild life. It also has the duty of the prevention of forest fires in the state. During the last five or six years the activities of the department havei been along the lines of enforcing the laws relative to preserving the game in the fields and the fish in the waters of the state, and we have, for that purpose, Deputy Game and Fish Wardens, whose duties are to enforce the laws. As a result of their activities, there has been from one thousand to one thousand eight hundred convic- tions in the state for violation of the game and fish laws every year ; during the past year, I think it will go much more than that. Prior to 1911, this department could only employ ten deputy wardens for the enforcement of the laws, and the funds at the disposal of the department were very limited, being those which accrued from the sale of deer hunting licenses, and when funds were exhausted, the ac- tivities of the department ceased, as we had no appropriation from the state. When the department was first organized, it had a stand- ing appropriation of f 2,000.00 a year, and- during Mr. Chapman's first term as State Game Warden, he decided not to use any of this 12,000.00, and it was turned back, or in other words, it was not used. All the funds he used were the funds coming from the sale of licenses. In 1911, I think it was, a new hunting license law was passed which provided that any person hunting, outside of the county in which he lived, should take out a hunting license. This increased the proceeds of the department to such an extent that the law was changed so that more deputies could be employed. This fund was some- what limited, but it did give us a chance to perform more work, em- ploy more men, and look after the commercial fishing interest of the state and inland fish as well as the game of the state. In 1913, this law was changed so that it included all persons when hunting for protected game, both residents and nonresidents. This change in the law gave the department more funds, more deputies were em- ployed and the deputies employed were kept in service during the 169 entire year, and much better results were obtained under the oper- ation of this law after it was amended. In 1917, or rather before the Legislature of 1917 convened, Mr. Gates was state Game War- den and, owing to the fact that the work of the department had increased, he conceived the idea of making the department self-sus- taining. He prepared a bill and presented it to the Legislative com- mittee, placing the department upon a self-sustaining basis. After the law was enacted and became operative, all expenses of this depart- ment, including office expenses, printing expenses, field work, cleri- cal expense, etc., have been paid from this fund into which all of the different proceeds have been credited, and the state has not been called upon since that time to pay any of the expenses of the depart- ment. Mr. Lord : You say it is self-sustaining. Do you draw any money from the general fund for any purposes at all, salaries, etc ? Mr. Hoyt : None whatever. Mr. Baird: There are really two departments here. One is the Fire Department, the expense for the operation of which is drawn from the general fund of the state. The entire salary of the game depart- ment is now paid from fees, but the iire department salaries are paid by appropriation from the legislature. Mr. Hoyt: Prior to 1911, there was an appropriation of $10,000.00 a year for the purpose of extinguishing and preventing forest fires. We found that the fund was not sufficient to take proper care of the work of prevention of forest fires. In 1915 that law was amended and an appropriation of $20,000.00 was made for this purpose. Every Supervisor in a fire zone is a fire warden who performs certain ser- vices, employs certain men, at times when it is necessary to extin- guish fires. That expense was increasing, so that the fund was in- creased in 1917 to $40,000.00. That amount is' divided equally between the northern and southern peninsula fire zones. Mr. Lord : Where do you draw the line on the two fire zones ? Mr. Hoyt: The Straits of Mackinac. The upper peninsula constitutes one zone and the lower peninsula the other. Mr. Lord: Under how many specific statutory measures are you oper- ating ? There are a number of laws governing your department ; tell us about them, what they are ? Mr. Hoyt : We have one act which defines the powers and duties of the department, in connection with the Public Domain Commission; We have a general game law which provides for the protection of game in the state ; we have a general fish law which provides for the protection of fish in the inland waters of the state; we have a general commercial fishing act which provides for the protec- tion of the fish in the Great Lakes; then we have numerous local acts which apply to certain sections or localities in the state relative to fish. We have a special act which provides for the taking of fish' from the inland waters of the state on petition ; we have an act which provides that people can spear steel-head trout at a certain time of the year, under regulations of the department, and for which they pay a license ; We have an act which provides for the taking of white fish and cisco in inland waters during a certain time of the year; also the law provides that certain permits may be issued for other pur- 170 poses by the department, for which a fee is paid ; we have a new law, passed by the last legislature, known as the "breeder's act," which provides that any person who desires to enter into the raising of game, may, under certain regulations, sell game that is raised in 1hat manner; persons operating under that law must be licensed by this department and the activities are under the supervision of thig department; the last legislature also passed an act which was termed the "discretionary power act," placing power in the hands of the ( \>m- missioner, on approval of the Public Domain Commission, to close certain seasons which have been made open by legislation, for the purpose of conserving any specie of game which is liable to become extinct by climatic conditions. Mr. Baird, since he has had charge of the office, has acted on this provision of law and closed the season on deer in Mason, Newaygo, Lake and Emmet counties. He has also closed the season on beaver in the lower peninsula and the hunting of partridge in Crawford and Iron counties. Mr. Lord : Is closing the season in the various counties done on you! own initiative or on petition? Mr. Hoyt : On petition of the Board of Supervisors. Another duty imposed by law upon this commission is the taking of] spawn during the spawning season, of certain kinds of fish, and? turning the same over to the State Fish Commission and the United: States Bureau of Fisheries. The commissioner is required to make such rules and regulations as he shall deem advisable. We have in- past years taken white fish in the Detroit River, saved the same un- til they have been ready to spawn and then have turned them over to the Michigan Fish Commission. They have been stripped and eggs; placed in hatcheries of the state or Federal Government, and then planted back in the waters of Michigan. This year, the commission has opeated under a new theory. During the spawning season for trout and white fish, owing to the fact that there was a scarcity of food, we decided to let all commer- cial fishermen, who were fishing after the fish became ready to spawn, take these fish and turn them over to the state, and they were paid a certain price per pound for the fish. The fish were stripped and eggs turned over to the hatcheries. There has never been a time, in the history of Michigan, when hatcheries have been as well supplied as they are this year. We expect to have good results from these hatch- eries. Mr. Baird found on investigation, before starting into this good work, that the big producers, as they call themselves, Booth and Bobbins, were handling very nearly all the fish caught in Michigan waters and that at least forty per cent of which never found a market in Michigan until after they were shipped into the state from Chicago or from some other place outside of the state. Mr. Lord : What brought about such a condition as that ? Mr. Hoyt: We couldn't tell. We know it was not a legitimate propo sition. These fish were turned over to these big corporations because it was the easiest way for them to dispose of them in most cases- They have agents who took the fish when they came to shore anc paid for them immediately, although the price was small, but tht fishermen were glad to do it. 171 Mr. Lord: Do these corporations, or big producers, have any exclus- ive fishing rights ? Mr. Hoyt: No. I Mr. Lord: The fact remains, however, that all these big corporations got all the fish and that very little reached our markets. Mr. Hoyt: When Mr. Baird took office, we found that markets were getting 26 cents per pound for trout and from 20 to 30 cents for white fish. Mr. Baird succeeded in getting over 200,000 pounds of fish which he put in the markets of the state and which was sold at 12 and 13 cents per pound. That price provided a profit to the seller, and also a better price to the fishermen than they had been receiving. People were furnished in twenty days 200,000 pounds of fish. Mr. Lord : Do you propose to carry on the same work in the future ? Mr. Hoyt : I think that is the idea. Mr. Lord : Is that one of the means that you intend to follow to crush this monoply? Mr. Hoyt: We believe that there should be a campaign of education both with consumers of fish and fishermen. A fisherman must be edu- cated to the fact that the fish that he is taking belong to the people of the state, and another thing is to educate the people of the state to eat fish. That has been done this fall. We put fish in certain places, especially in Lansing, and a ton of fish would last only one hour and people left standing in line to buy when the fish were all gone. When they found they could buy fish cheaper than meat, they began to ask for them. In Saginaw they had a ton of fish that lasted thirty-three minutes. We put thirty tons of fish in Detroit which were sold in seven days, and the only trouble was we did not have the facilities for distributing; we had to have policemen in line to keep the crowd back. Mr. Lord : It is a fact, Mr. Hoyt, that, notwithstanding the activities of the game warden's department, our people have been paying a larger price for fish than they did ten years ago. Isn't there some weakness in the law ? Anyway, such a condition ought not to exist. Mr. Hoyt : The weakness in the law comes from this fact ; that the peo- ple whose fish are being taken have had no say as to what the law should be. Mr. Lord: In other words, you think that it is special fish interests, such as the Booth interest, that get the laws through the legislature. Mr. Hoyt : Well, the fishermen themselves are selfish people. Mr. Lord: It is the intention of this department to carry on a cam- paign of education and teach the people of Michigan so that they will better know what the fish business means to them and their rights in regard to it. Mr. Hoyt : I think so. Mr. Lord: What would you do, or could be done, by way of legisla- tion to improve conditions? Mr. Hoyt : I would place the whole matter in the hands of this depart- ment with authority to set prices to the fishermen and authority to fix the prices to the consumer, and provide means and methods of distribution. Mr, Lord ; Would you license people who sell fish? 172 Mr. Hoyt: No, no one except the man who goes out and takes th< people's fish. Mr. Lord: How could you enforce the law unless you had a licem system? Some people would be selling fish for 18 cents and soim people for 20 cents per pound. Mr. Hoyt: If we find that the dealer does not sell at the price we se1 we will have to stop sending him fish. We have told people this fall that they could sell the fish provided that they do certain things and told them that when they didn't do those things, they would no1 get any fish. We fixed the limit and told them they couldn't be sol< for more than a certain amount. We fixed the prices at an amount where they would make some money, and where it would an object to the fishermen to furnish the fish. If we had the powei to say to the fishermen "you can fish provided you sell the fish to ui at a certain price, and if you don't do so, you will have to stop fish i 113 or we will stop you," then we could regulate the retail of the fish saying "you can sell the fish as long as you do certain things." Mr. Lord : Isn't it a fact that foreign corporations come into our stal hire the fishermen and contract for the delivery of all fish they catch? Mr. Hoyt : I think that is true. Mr. Lord : Isn't there someway by which that business could be curbed ? Mr. Hoyt : I think there is ; that is a matter for the legislature. Mr. Lord: I should think it would be a very important thing for this department to take up with the members of the legislature. It take men who have made a study of it, like yourselves, to make recom- mendations. The fact remains that the outside people get most of the fish am and what little we get we pay altogether too much for. Mr. Hoyt : My idea is that if it can be done in one state, it can be don< in another. In California they are making a success of handling th( fish business. Mr. Thompson : How do they handle it ? Mr. Hoyt: It is all placed in the hands of the Fish Commission an< they are given authority to regulate the sale and distribution, department would have to be equipped with funds and men enougl so that they could do some of the things that big corporations ai doing now. We have not the money now to go out and buy the twine like the Booth people have, who say to the fishermen "why, we will furnish you all the twine, and you give us a mortgage on your outfit." Now, the department would have to be in a position to help those fellows. Mr. Lord: Your idea would be to give the department general super- visory powers over the fish business. I think that is a pretty good suggestion. Surely something ought to be done. There has been a good deal of complaint on the part of the citizens of Michigan about the fish being shipped out of the state and Michigan people not get- ting them. Mr. Hoyt: Just to show you what has been done. The great catch of trout is in November ; fishermen go out then and bring in tons of fish where they would not get one hundred pounds at other times. These big people have taken advantage of this. Four years ago, the price they gave to the fishermen was four cents per pound. The fishermen 173 who got the fish got large trout and they made them take the heads off and then paid them cash at the rate of four cents per pound for the bodies. These fish were placed in colr. Rich: Chiefly pay; $25.00 a year isn't a great deal of money, and it don't give them much ambition to look after the work. Olin : Most of these cases are in country districts, where they appoint some farmer or supervisor, or somebody with nothing else to do, as the health officer, and the result is a great deal of incompe- tency on the part of the health officer. If they were compelled to appoint a competent health officer, we could handle it better. Thompson: As I analyze the public health work, it is to prevent all infection and communicable disease. To that end, you first make your rules; second, you provide methods for making diagnosis and reports; then you take up the matter of quarantine and prevention, and the laboratory work. Then comes the other phase of work which is under the control of Doctor Rich, the sanitary engineer. Lord : What publication do you get out, Dr. Olin ? Olin : We publish a monthly bulletin which is descriptive of things going on along different lines of interest to the layman, but not in a technical way. Last month, our mailing list was something around twenty thousand, but on the back of the bulletin that is coming out now, we have put a statement, asking that they fill it out and return to us if they desire to receive these bulletins. I expect to cut our mailing list in two. These bulletins are used for school work. They use them in the teaching of hygiene, good health work, etc. In that journal the vital statistics or the disease rate for the month is shown and contains our report for the month. I understand that the vital statistics division of the Secretary of State's office gets out something similar to that. Lord : Do you cover all the vital statistics ? Olin : Yes, sir, we state everything that is reported to this office. Lord : How often do you collect the information ? Olin : Every day ; in fact, every mail. We make a compilation and publish it in tabulated form in our annual report. Lord : It is practically a duplication of what the Secretary of State issues, is it? Olin : It would be if they agreed. Lord : What is the object of two departments collecting and pub- lishing the same information? Olin: We have to use that information in keeping track of epi- demics. The Secretary of State's office gives purely vital statistics just as they occur. We show different methods of control of dis- eases. Lord : You gather this yourself and classify it ? Olin: Yes, sir. Mr. Thompson : You cover every phase of the things that the reports of the Secretary of State cover? Dr. Olin : Except births and marriages. We get the deaths from them. Now, there is a situation here that I think is wrong. We get death reports from them and, for instance, last week our statistician got out a lengthy table and it did not prove to be correct. Our statis- tician went over to the Secretary of State's office and they said they had forgotten to send in twenty or thirty reports last week. 200 Mr. Lord : Couldn't the Vital Statistics' Department be under the State Board of Health? Dr. Olin: I see no reason why it could not. As I told you, we have been held up in getting out our annual reports on account of the vital statistical division of the Secretary of State's Department not being able to agree with the United States Government on classifi- cation. Mr. Thompson : What, in your judgment, should be the ideal conditions in this office ; the ideal plan of operation from a point of view of the whole state, and its activities in public health matters? Dr. Olin: In my opinion, the laws should be re-vamped in such a way that we would have a single appropriation. As the appropriations are made now, every appropriation covers a different phase of our work. If a single appropriation was made to the State Board of Health to carry on all its activities, then in case one department should have some peculiar thing come up; for instance, some large epidemic appearing, or something like that, we could, in our discre- tion, use this money where we would get the best results; and by doing this could use the funds so appropriated to better advantage and do better work in the department. Some of our expenses are increasing right along. For instance, two years ago we could hire bacteriologists and chemists in our laboratory for a great deal less money than we can today because all those fellows have gone to the front. Mr. Lord : Of course those are abnormal conditions. I have always thought that the Vital Statistics Division should be under the Board of Health. They have somewhere around twenty or twenty-five clerks and the average salary would be f 1,000.00 a year for each clerk, leaving out the chief of the division who gets f 1,500.00. That would make it run from twenty to twenty-five thousand dollars a year for salaries and postage expenses. Then, they send out approximately 9,000 of their Vital Statistics Bulletins every month, and besides they have a large correspondence, sending out for cor- rections of reports, etc. The total cost of that division is not less than $30,000 a year, in my opinion. Now, can you tell us just about how much you think the same work could be done for in this depart- ment? That is, in addition to what the cost of this department is now. If the Vital Statistics Division was placed in the Board of Health Department, what saving could be made to the taxpayers of the state and of what additional benefit would it be to the people of the state? Dr. Olin : That is pretty hard to say. Mr. Thompson: What additional expense would it be to your depart- ment? Dr. Olin: What is the cost of the publishing of their bulletin? Mr. Lord : We have a record of that at the office. Dr. Olin: Well, the cost of it would be largely eliminated. It would simply add in this department the necessity of a sufficient number of clerks to handle that work. What that would be, I don't know exactly. Mr. Lord: What information do they get now that you don't receive? It is very important that we know this as we may make a recom- mendation in regard to it. 201 Mr. Thompson: Undoubtedly it would be a saving in at least half of the amount spent to carry on the Vital Statistics Department as it now is. Dr. Olin : If I could see what it is costing them to run it at this time, I could easily tell you. Mr. Lord : Not less than f 30,000.00. Dr. Olin : How much of that is for publications ? Mr. Lord : That bulletin is all they publish. The cost of that is not so very much. Do you send to the same mailing list ? Dr. Olin : We possibly cover at least a part of the same report, and we have practically the same information. Mr. Lord : That part of it would be entirely eliminated. Dr. Olin: You could absolutely eliminate the cost of their publication including postage. We might have to add a few more names to our mailing list. Dr. Olin : To me, the key-note of this department is that every day that we let a man suffer from a communicable disease, or a life is lost from such a disease, it is an economic loss somewhere. Mr. Lord: Dr. Olin, these financial statements show the amounts dis- bursed from your f!5,000.00 appropriation. What is the amount you draw from the general fund in addition to that? Dr. Olin: The medical inspection fund is the only additional fund we draw from. Mr. Lord : What I want to get at is the total cost of the entire depart- ment for the last year. Dr. Olin: $57,938.68 is the total cost for everything during the fiscal year ending June 30th, 1917. Mr. Lord : Now then, Doctor, what additional activities, if any, do you propose to engage in in the future? Have you anything at all in mind? Dr. Olin: Well, there will of necessity be an increase of the activities in the department, along the venereal line. Mr. Lord : Is that going to cost very much ? Dr. Olin: The greatest amount of cost is coming during the first few months. The War Board is taking care of that. Mr. Lord: The War Board is going to meet that expense? Dr. Olin: Yes, except the doctor's services, which come under the medical inspection act, and what traveling I do personally will come under that act. Dr. Rich: Also along the line of additional activities, the last legisla- ture passed an act, requiring an examination of all the streams in the state with reference to the pollution of same. The Public Domain Commission is to report these matters, the Attorney Gen- eral to co-operate with them, and the Board of Health to furnish the engineering services. Mr. Lord : Has the Public Domain Commission made any effort to carry out the provisions of that law ? Dr. Kich : I don't think so. I was talking with Mr. Carton about this matter; how to go at it; how much it would cost, etc., and it was left to Mr. Oates and myself to make the canvass and report to the Board of Auditors as to how much it would cost. Mr. Lord : Have you ever made this report ? 202 Dr. Rich : No, sir. Mr. Lord : This is undoubtedly why the Public Domain Commission has not taken any action on the matter. Can you tell us how much the cost would be? Dr. Rich: The cost would be unlimited to carry it out as the act now stands, $200,000 or more. I think, however, we can get at it without any such expense as that. We have information in the office now, enough to enable us to draw our conclusions and make recommenda- tion to the legislature. Mr. Lord : Doctor Olin, what examining boards do you have under this department ? Dr. Olin : Nothing but the Embalmers' Board. Mr. Lord : Tell us very briefly about that licensing board for emba liners. How often do they hold examinations? Dr. Olin : Twice a year. Mr. Lord : Why should embalmers be licensed ? Dr. Olin : The law requires them to have eighth grade certificates from the public school, and certain knowledge in Anatomy and Physiology. Mr. Thompson: What other examining boards in your judgment ou^lit to be consolidated with this department? Dr. Olin : That is a question that I don't know. There is a board that I am a member of, by virtue of my being Secretary of the State Board of Health, the Board of Registration of Nurses. Personally, I do not think much of this board. They are raising the standard of nurses right along. It is their idea that no nurses can be licensed to practice nursing in the State of Michigan unless they are graduates of a high school. This nurses' board is a sore spot in my side. I would like very much if I could be relieved from acting on this board. Mr. Lord: Who are the members of the board? Dr. Olin : Dr. Peterson, who has been in charge of the hospital at Ann Arbor, and three women. These women are all, with the exception of one, connected with some training school for the graduation of nurses. If you were at the head of a training school with a board in back of you passing on these examinations, it would be pretty hard to be unbiased. It is a fight to see which school shall be represented on the board most of the time. Mr. Thompson: The same thing would exist as to medical schools and the Board of Registration in Medicine. Dr. Olin : The law covering the Board of Registration in Medicine reads that no member of said board shall belong to the faculty of any medical college or university. And the Board of Registration of Nurses should be the same way. No one connected with any training school for nurses should be on that board. Mr. Thompson: Should nurses be examined and registered? Dr. Olin : I don't think it is of much importance. Mr. Thompson: How about pharmacists? Dr. Olin : They should be examined. Mr. Thompson: Should that class of board examination be conducted under the auspices of the State Board of Health? Dr. Olin: I would hardly want to say. Mr. Thompson : To put it briefly, would it not be wise to have the med- ical examinations, examinations as to optometry, dentistry, medi- 203 cine, registration of nurses, barbers and embalmers, all carried on by the State Board of Health? Dr. Olin: It would be a great saving of expense and it would be done just as efficiently. Mr. Thompson: What other activities should be licensed? Dr. Olin : The food dealers, particularly restaurant and hotel help handling food. Mr. Thompson: These should be passed upon to what extent; in what way and how often? Dr. Olin: Either semi-annually or annually for the assistance in pre- vention of tubercular and venereal diseases. A board could be formed, consisting of the Dairy and Food Commissioner, Commis- sioner of Labor, Secretary of the Board of Health, and the Pure Food Inspector. They could have police powers over this class of busi- ness, and could enforce the law with no added cost to the state. Mr. Lord: Can you think of anything else that should be covered by examination for licenses? Dr. Olin : I don't, just at this time. Mr. Thompson : Then, as I understand the reason of these examinations, it is to protect the public and raise the standard. Dr. Olin : Yes, I believe also that barbers should be under this board more than any of the rest. There isn't any class that scatters dis- ease like barbers. Mr. Thompson : Is there any way that a central laboratory might be worked out, for yourself and for the pure food department? Dr. Olin: I believe there should be a laboratory for the Pure Food Department, Sanitary Live Stock Commission, and the State Board of Health. One state laboratory for the different departments to include the bacteriological work, medical work, etc. It could all be done in the same laboratory. Mr. Lord : What is the idea of having two state laboratories for the Board of Health, one here and one at Houghton? Dr. Olin : Well, as a matter of convenience and protection. A swab comes in from a diphtheria case and they want a report on it in a very few hours. The efficiency of one of these laboratories depends on the quickness of the work, and by having a laboratory in the Upper Peninsula we can attend to these matters within a short length of time. I have a great many complaints saying that they don't get their report in the length of time that they think they should. For this reason, I have just placed here in the office a book where everything is registered when it arrives and the clerk can tell when it should be reported out, and it is up to her not to let me catch any of those things not reported at the proper time. This morning I found a sample that I thought should have been reported out yesterday > but on investigation I found that it was a doubtful case and that they wanted to make another slide of it. Mr. Thompson: Do you think of any other activities that should be centered in this department? Dr. Olin : No, I don't think of any other. Mr. Thompson: With your present facilities, what would be the cost per individual if your department was to furnish the required treatment, if it should be furnished, to the inmates in the prisons? 204 Dr. Olin : That is very hard to tell just now. We have received notice that the German patents have been put out of use and that the gov- ernment has issued permits to certain companies here to manufac- ture these drugs. Mr. Thompson: Are those treatments so that they could be prepared in your laboratory ? Dr. Olin : Yes, I think so. Mr. Thompson : With a central laboratory it would mean a consider- able saving to the people of the state. Dr. Olin : There is another situation that could be made a great saving to the people over all the state; the antitoxin for diphtheria has been made by one-half dozen different companies until just recently. The United States Government has now taken it over and are estab- lishing a standard. The local health departments furnish in many cases, and should in every case, antitoxin and vaccination to the delinquents, to the poor of the district. The charge for those things has depended upon the part of the state in which it is used, their accessibility to the city, etc. Mr. Lord: Who does vour laboratory work now? Dr. Olin: Dr. Spoor. Mr. Thompson: What line of procedure, as to prevention of disease, particularly relative to vaccination, etc., would reduce and possibly eliminate any public disease we now have? Dr. Olin: If we could furnish and compel vaccination as they do in Germany, it would wipe out smallpox in a very short time. Mr. Lord : Getting back to the matter of transferring other boards, etc., to the State Board of Health; what do you think of the proposition of transferring the Board of Registration in Medicine? Dr. Olin: That is done in other states. Mr. Lord: The Board of Examination of Osteopaths? Dr. Olin : I don't know about that. Mr. Thompson : Presumably it should be. Dr. Olin : I think it should. Mr. Lord: Under the law, do they have to have some knowledge of medicine ? Dr. Olin: Yes, they should have a good knowledge of anatomy at least. Mr. Lord: It seems to me that all matters relating to public health should be under one board. Don't you think that is true? Don't you think that these matters could all be handled by your board? Dr. Olin: Yes, I think that is true. We have some excellent men on this board. Mr. Lord : There are so many boards connected with the public health question that the average citizen doesn't know to whom to go for information. Dr. Olin: If these boards could be centralized and a little something paid each man so he could afford to leave his practice, it would be more satisfactory. 205 STATE TAX COMMISSION Mr. Lord: Mr. Benton, you are a member of the State Board of Tax Commissioners ? Mr. Benton : I am. Mr. Lord: Will you state to the Budget Commission what the various activities of the Tax Commission are, what you do, what you have accomplished, and what you propose to do? Mr. Benton: Well, now, gentlemen, you perhaps will appreciate the fact that this is my first year, and I can only speak for what has happened during the past year. We have made reviews in various counties : Baraga County: Special review of property of Sturgeon Kiver Land and Development Company in the townships of Baraga, Covington and L'Anse. Chippetva County: Work in charge of Mr. Snody. Reviews held in all districts except Dafter, Detour and Trout Lake townships. Leelanau County: Work in charge of Mr. Baker. Reviews held for all districts except Centerville, Solon and Suttons Bay. Lcnawee County: Work in charge of Mr. Hatch. Reviews held for all districts except Hudson City. Mackinac County: Work in charge of Mr. Snody. Reviews held for all districts except Garfield, Hudson and Marquette townships. Menomince County: Work in charge of Mr. Snody. Review for Nadeau township only. Roscommon County: Work in charge of Mr. Barrett. Review for Nester township only. Schoolcraft County: Work in charge of Mr. Snody. A regular review was held for Thompson township and a special review on property of Blaney and Southern Railway Company in Mueller town- ship, and of White Marble Lime Company in Doyle township, which had been omitted from the assessment rolls. Washtenaw County: Work in charge of Mr. Thorington. Reviews held for all districts. A special review was also held at Ypsilanti to correct valuations of bank stock. Wayne County: Work in charge of Mr. Harris. Reviews held for all districts except Detroit City proper, which was held last year. A special review was also held in the city of Detroit on special prop- erties. Mr. Lord : You say that in School craft county, some property had been omitted from the roll entirely; for how long? Mr. Benton : I would have to ask Mr. Burtless. Mr. Burtless: I think just this roll. It was property of the Marble Lime Company and they had no property in previous years. Mr. Benton: In addition to what I have already outlined, we have, or are now at work on the following counties : Alger County: Work in charge of Mr. Snody. Farm lands com- pleted. Timber examinations now being made. Clare County: Work in charge of Mr. Thorington. Now in progress. Benzie County: Work in charge of Mr. Hatch. Now in progress. Isabella County: Work in charge of Mr, Thorington. Now in progress. 206 Lapeer County: Work in charge of Mr. Hatch. Now in progress. Midland County: Work in charge of Mr. Twiss. Now in progress. Manistce and Mason Counties: Work in charge of Mr. Harris. Now in progress. Luce County: Field books were made in the spring. No examina- tions made. Grand Traverse County: Work in charge of Mr. Barrett and com- pleted. Tax Commission figures adopted by the supervisors. Iron County: Work in charge of Mr. Harris. Examinations made of the city of Crystal Falls and the township of Iron River. Wexford County: Work in charge of Mr. Jaehnig. Making field books. Mecosta County: Work in charge of Mr. Phillips. Making field books. Ontonagon County: Work in charge of Mr. Barry. Making field books. Mr. Lord : In addition to holding reviews, etc., what other activities do the Tax Commission have? Mr. Benton: Well, we meet with the Supervisors. We have made an effort, and it is my intention, and I think the other members will agree with me, to meet as many of the different boards of super- visors as possible, and we are also contemplating the taking up and holding of county conferences, in order to get back to the taxpayers themselves. Have a conference with the taxpayer's or the assessing officer and explain the object of our commission; what benefits are to be derived, etc. We find that a great majority of the assessing officers of Michigan are familiar with our work and agreeable to it, but the people whom they represent are not in position to know very much about it, the Supervisor has to be, or is, in a great many instances, guided by what his constituents want, whether it is right or wrong. Our idea is to get to the taxpayers and explain to them, and thereby relieve the assessing officers of a lot of that responsibility. Mr. Lord: What have you done by way of covering the state in the matter of reviews? How nearly are you through? Mr. Benton : Ten counties, or a few more, that have not been com- pleted, around fifteen, I guess, isn't it Fred? Mr. Burtless: Only ten that have not been at some time reviewed by the Tax Commission. Mr. Lord: What force will you require after you have completed the reviews of the remaining ten counties? Mr. Benton : Now, gentlemen, this is my own idea ; I think that twenty men will take care of all the work of this state. Have less in num- ber and, with the aid of the Supervisor, I am of the opinion that at no time will we require more than twenty field men. Mr. Lord : How many have you now ? Mr. Benton : About fifty ; forty-nine at present. Mr. Lord : How long do you expect it to take to complete the reviews of the state? Mr. Benton : It is our intention to finish the state this year. Mr. Lord: After that you think that twenty men will about cover the field? 207 Mr. Benton : That is my idea. Mr. Lord: Have you talked with the other commissioners about that? Mr. Benton : Not to any great extent. Mr. Lord: What will your men have to do after the reviews are over? Mr. Benton : My idea would be to have the men make investigations to see that the assessments had been kept up in accordance with the provisions of law, and where it was found that the Supervisor had attempted to fall back to the old way of assessing, the commission would take it up. By a process of reasoning and teaching they could do the work themselves and do it properly. I want to say that the work that we contemplate doing, getting into the various counties and talking with taxpayers and assessing officers together, to my mind is going to relieve the situation greatly, I am firmly of the opinion that as soon as we can educate the people to the justice of this proposition, so that they understand and know definitely that they are fairly and honestly treated, that a large amount of this trouble will be obviated; also a large amount of expense. This work is going to lend us a great amount of aid. When you go out and put a few hundred million dollars on the tax rolls, and make no reduction of tax rate, it is pretty hard to explain to the people the great amount of good done. Mr. Lord: Would that not mean a cutting down of your office force? Mr. Burtless: Not very much. Our office work continues about the same. Our office force is not very large, anyway. Mr. Lord : What do you do in the matter of assisting the State Board of Equalization? Mr. Benton : That is a matter that I have as yet had no part in. I understand that by law we are supposed to gather data to submit to the State Board of Equalization, showing the value th of February now; we have between that time and the first of June, when the roll has to be in the hands of the Auditor General. Mr. Lord: Do you think that is sufficient time to give it proper atten- tion and consideration? Mr Kearney: I do. Mr. Lord: That is because all the data is gathered, examined and passed on before that by your secretary and office force? Mr. Kearney : Yes. We have thought that a re-valuation of railroads should be made. Mr. Lord : What is the basic valuation that you follow in making your assessments ? Mr. Kearney: Cooley- Adams appraisal in 1900; then, that has been checked up by Mr. Parker, but no late valuation has been made since that time. Mr. Burtless : The first appraisal was made after actual inspection andi examination of physical property; after that no examination was made. Mr. Lord: What would be your plans in making a re-valuation of the railroads ? Mr. Kearney : I have never attempted to lay out a plan. Mr. Benton: I couldn't give you any definite ic|ea. It is a problem that would take quite a lot of thought. Mr. Lord: Have you talked it over among yourselves in meetings oi the commission that such a thing ought to be done and have yon decided to make any recommendations in regard to it? Mr Kearney: We have talked it over in a general way, but have nevei come to any decision in the matter. Mr. Lord : Don't you know what the cost would be ? 211 Mr. Kearney: Have no idea. Mr. Lord : Is it your idea that the valuation of railroads would be increased under such appraisal, or would it be a more equitable adjustment ? Mr. Kearney : I think there would be a more equitable adjustment and unquestionably the valuations would be increased. Mr. Burtless : And the Tax Commission would have a more recent basic valuation to work on in the future. That work was done during the year ending June 30th, 1901, and the total cost was $120,152.00. There was never any separate account kept of railroad appraisals. I should judge they would estimate it around $100,000.00. Mr. Lord : What are the primary causes of the increase in taxes and tax levies, both local and state? Mr. Kearney : Of course, that is due to general conditions ; it costs more to live now than it did fifteen years ago ; labor is higher, everything you buy costs more. A dollar don't go as far as it did then. I couldn't say that there is any waste or extravagance as far as our department is concerned ; we try to keep it down as low as possible. Mr. Lord : I am speaking now of all taxes levied ; not the cost of state departments, but all taxes levied. Mr. Kearney: It applies all down the line; it costs a farmer more to live now than it did in 1900 ; everything he buys is higher, farm tools and everything is higher. Mr. Lord : Isn't the primary cause, that the people look for a good deal more nowadays and spend more? Mr. Kearney : People are not satisfied now with what they put up with a few years ago; they want recreation, automobiles, better clothes, etc. ; they lose time from their work and spend more money. All those things enter into it. Mr. Lord: It is a fact, isn't it, Mr. Kearney, that the taxes have increased at a much more rapid rate than the increased valuation? Mr. Kearney: Yes, that's true. Mr. Lord: And, really it is a condition that is somewhat alarming, because there is no telling where it will end. Mr. Kearney: That's true. Of course, one of the causes possibly for the increase in taxes is due to the fact that now nearly all the taxes are paid from assessments on real estate. Even with the work we are doing, it is pretty difficult for us to get a great amount of per- sonal estate, and the trouble is that under the law now so much is exempt. That throws the burden upon real estate. Mr. Lord: What would be your remedy for that? Mr. Kearney: Well, I have never quite agreed with the legislature. I believe, in fact, we should recommend that the mortgage tax be repealed, and I don't believe that all forms of bond securities should be exempt (foreign and municipal bonds are exempt and I guess nearly all are) . I know that I may have been wrong, but, at the time, I opposed it in the legislature and talked with some of the members about it and plso to Governor Ferris. Mr. Lord: Your idea is that that class of security should be taxed the same as all general property? 212 Mr. Kearney : No, I do not think that. I think the constitution should be amended so that we could classify property. We should have a low rate of tax that these intangibles should pay, three or four mills, and I believe the people would disclose the personal property. A large amount of money would be realized and it would be no hard- ship upon the people that would have to pay it. No, I don't think it would be right to tax mortgages and bonds at the regular rate of taxation; that's confiscatory in many instances. If money in the bank, mortgages, bonds, etc., would pay three or four mills, I don't know how much it would bring, but it would bring a lot of money to the treasury of the state and would not be a hardship to the people. Mr. Lord: An annual specific tax on that class of property would help out a lot, would it not? Mr. Kearney : Yes, that would be a great improvement. Mr. Lord: Do you make any particular efforts to get at the personal property ? Mr. Kearney: Yes, we do. We have a man for that purpose but there is so little of it. Of course, in Detroit, we get millions of it in land contracts. Mr. Lord: What was the aggregate assessed valuation last yar of all the public service corporations that you assessed? Mr. Burtless: The total assessments made by the State Board of Assessors last year were $271,451, 500.00. Mr. Lord : What was the aggregate amount of taxes paid on that valua- tion last year? Mr. Burtless : The amount levied was $4,628,720.91 ; we have no record of the amount actually paid. Mr. Lord: How does the amount of taxes paid on the levy last year compare with former years; was it more or less? Mr. Burtless: It was less than some of the other years. Mr. Lord: That's by reason of lowering the average rate of taxation caused by your increasing the valuation of general properties in local communities; have you heard any criticism of that? Mr. Kearney: I have not. Mr. Lord: Getting back to the matter of appraisals of railroads; have you ever given any thought to a re-appraisal of all the public service corporations which you assess? Mr. Kearney: Nothing ^except the railroads. Mr. Lord: You couldn't approximate the cost of a re-appraisal of all the public service corporations? Mr. Kearney: No, I could not. We have a pretty good check on the Bell Telephone Company; we have had several appraisals and there is their report to the Railroad Commission for bonding purposes. We have considerable information, except as to railroads. We have a telephone man employed all the time on telephone work Mr. McCormick. So that I believe that an appraisal of the other properties that we assess as a State Board of Assessors would not be immediately necessary. Mr. Burtless: I might say right there that a complete appraisal of all telephone companies was made under direction of the board in 1909. Mr. McCormick was engaged on that work and has been in the deDartment ever since. 213 Mr. Lord : What do you think of the proposition of creating an office of State Engineer who would work under the supervision of the Rail- road and Tax Commissions; who would have charge of re-appraisals? Mr. Kearney: I have never heard it spoken of before. Mr. Lord: Would it save any money in the matter of re-appraisals? Mr. Kearney: Yes, because if you had a man big enough to do that work, he could do it cheaper undoubtedly than to employ men like Mr. Cooley or Mr. Adams. Mr. Lord: That question came up in connection with the survey we made at the Railroad Commission offices. We ascertained that a very large amount of money had been paid out in the last few years for appraisals of public service corporations. Mr. Kearney: Yes, I presume that that is constantly before the Rail- road Commission. Mr. Lord: Do you ever use any of those appraisals made by Professor Cooley, and his men, either for your assessments or reviews, as a basis for your valuations? Mr. Kearney : We always get copies of those reports from the Railroad Commission. Mr. Lord : In some of those cases there has been a very large difference of opinion between various men as to actual values. Mr. Kearney: Yes, the reports that they make for the Railroad Com- mission for bonding purposes, and reports to the Tax Commission or assessors for tax purposes, differ widely. Mr. Lord: Mr. Kearney, after you have completed your review work, what reduction of your field force will you make, approximately? Mr. Kearney: We have made a big reduction now, and when our field work is once completed, we have not decided how many men we will need. I should imagine that we would not need over twelve. Mr. Benton : I put it at twenty. Mr. Kearney : I may be putting it too low. The expense of our depart- ment after next year will be very materially reduced. Mr. Lord : Is there any way, Mr. Kearney or Mr. Burtless, that you could increase the efficiency of your department? Mr. Burtless: There is no question in the world but that we could make some improvements. I think that when we come to the weeding out process we will increase our efficiency. Mr. Kearney : We have been very careful in selecting our field force to get only efficient men. All the men in charge of the work have been in the employ of the commission for years; some of them since it was first organized. Mr. Lord: Is there anything at all that you need, or can do, which would tend to increase the efficiency of your department? Mr. Kearney: By constant care and supervision on the part of the com- missioners themselves, which we have been doing. We have not left this to the men; we have been devoting all the time to supervision of the work, so that we are familiar with the work of the men. Our foremen are men of intelligence and men of large experience in this work, and they are required to keep in constant touch with the field force under them. I sometimes marvel at the knowledge of the foremen of certain work in some counties. I held reviews over in Lenawee County last year in some tweaity townships. We had a 214 foreman over there and, at the reviews, he worked right along with the examiners and seemed as familiar with the property as the men who actually did the work. They are all trained in that regard. Mr. Lord: When you appoint a man on your field force, what con- stitutes the necessary qualifications of the applicant for the position? Mr. Kearney: In the first place, we see him and talk to him and we can pretty nearly tell in talking to a man whether he is a competent man. We give him a verbal examination, and, if we think he is competent, we put him in as a field clerk with a good field man. If he makes good in that, he is promoted in time or, if not, he is dropped. Sometimes we have had men who claim to have had experience as supervisors in this work, and we could not use them at all, and again we have had men with no experience in that line of work until they came with the Tax Commission, who have proven themselves to be capable men. Mr. Kearney : In the first place, we have schools for inspection. We get our men together and assign subjects to the different men to prepare papers on, and those subjects are all discussed. The commissioners themselves talk on different phases of the work. We also have a question box and if there are any questions that they care to ask, they can put them in the box, and all those questions are answered and discussed. They are also told how to appear and are given an identification card, for, when any of our men go to a taxpayer, he must introduce himself. They are not permitted to get any informa- tion in any underhanded way. They must at all times maintain themselves in a gentlemanly manner. We want them to be clean- shaven, neat and clean. We start a new man with a good field man and tinder a good foreman. The foreman sends in a report to us on the character of his work. Mr. Lord: Have you a foreman in every county where you are working? Mr. Kearney: Yes, sir. Mr. Lord: He is constantly moving around among the men? Mr. Kearney: Yes, and we look to him for the success of our work in that particular county. Mr. Lord: What is the nature of the report he makes to the commis- sion? Mr. Kearney: In the first place, the men working in a county are required to make weekly reports to their foreman. The foreman sends those reports to the Tax Commission, with any memorandum or note upon them that he desires to make. These reports show the number of days, the number of hours they work, the number of pieces of property they examine and their expenses ; show just what is done each day. Mr. Lord : Do you have a similar report of the work done every day by your office force ? Mr. Kearney: No, that's under Mr. Burtless, our Secretary. We couldn't keep track of our men if we did not have those reports. We know what a man is doing. We know if he is cheating by the amount of work he does. We know how many pieces of property he should examine and, in a few instances, we found that they were cheating and dropped them, even if they were competent. Mr. Lord : Are you under the graded salary law here ? 215 Mr. Burtless: Yes, as far as the office force and field clerks are con- cerned. Mr. Lord: Do you have any trouble to get help to start at $800.00 a year that is, competent help? Mr. Burtless : Not much, because the men that we hire, if they make good, are promoted as fast as possible. Mr. Lord : What do you think of a proposition to remove the minimum salary from the law and fix a maximum and an average salary, so that it would give the executive head of the department some little leeway in determining what salaries should be paid? Mr. Kearney: That matter was up last year and I appeared before the Senate and favored the bill to make a maximum and put it up to the different departments as to the minimum. We certainly would run our department as cheaply as possible. The average is a little dangerous, because, when you get things going, you have to keep somebody down low to give someone else a high salary. Mr. Lord: Don't you think that such a change in the law would be a pretty good idea ? Mr. Kearney : I do. I was surprised it did not go through last session, as I know the chairman of the committee and two or three others agreed with me at that time. Mr. Lord : What was the reason it was killed ? Mr. Kearney : That I don't know. Mr. Burtless : The bill was passed finally, but it left the minimum and increased the maximum to |1, 300.00 and the average to |1, 100.00. Mr. Lord: What do you think of the vacation period allowed by the statute to department clerks? Mr. Kearney : Twenty-four days ; well, I think that's all right. I favor that. Mr. Lord : You don't think it is too much ? Mr. Kearney: Well, the men in our office don't take it. For instance, Mr. Harris, I don't think he has taken a day off in two or three years ; then there are others that want every day that is coming. Mr. Burtless: You take men working outside all the time, away from home, two days a month is not too much to give them. Mr. Kearney: No, I believe it is a decent thing to do. They work better for having had the days to go home and are more contented. Mr. Lord: I refer mostly to clerks in the offices. I don't think many private offices give that much vacation. Mr. Kearney: They probably don't give them that much, usually two weeks, and I believe that it is right to give them vacation. You get better service, your employes feel better, and they take a better interest in their work. Mr. Lord: They should have a vacation, no question about that. But should an employe in a political office enjoy a longer vacation period than the ordinary employe doing a similar work in a private office? Mr. Kearney: Whatever would be a fair general average throughout the state would be fair in the state offices. Mr. Lord: Would you say that same thing about hours of work? Mr. Kearney : Yes, their hours are not very long anyway. But in this office our clerks work from 8 until 12, and from 1 until 4, and fre- 216 quently in the evenings. If there is any work to be done, they don't stop. Now, you take a man or woman who will sit steadily during all that time and do work in this office, it is time for them to quit when it is 4 o'clock MICHIGAN RAILROAD COMMISSION Mr. Lord: We would like to have you make a statement to the com- mission, setting forth the various activities of the Railroad Commis- sion. Mr. Glasgow:' Of course, when the commission was created, September 28th, 1907, we succeeded to the work of the Railroad Commissioner, in a large measure ; some few things having been added. Then, the legislature of 1909 added to the duties of the Railroad Commission, which you undoubtedly largely understand. They pertained largely to physical conditions, such as train operations, track conditions, stations, crossing protection, etc., which have heretofore been gen- erally under the jurisdiction of the Railroad Commissioner. Then, as I stated, the legislature of 1909 thought there was more that three men could do, so they began to add new duties, jurisdiction over rates as to railroads and express companies, the handling of claims, etc. In 1911, they gave us jurisdiction over the water- power that is generating electricity ; over telephone companies ; the control of electric light companies and gas companies, and other public utilities; also over the issuance of stocks and bonds. Our jurisdiction over these public utilities was just so far as securities were concerned, and not so far as rates were concerned. The legis- lature of 1911 simply strengthened some of the acts which gave us" jurisdiction over some of the utilities named. The work of the commission is practically divided among the three members of the commission in this manner : Commissioner Cunning- ham looks after all business pertaining to physical condition of railroads, furnishing of empty cars, removing of loaded cars, speed of trains over dangerous tracks, determining whether track is dan- gerous or not, the protection of crossings in cities, highway crossings in the country, and by a law passed in 1913, I think, in connection with the highway department, he has, representing this commission, authority to determine whether a highway shall cross a railroad or not, and, if so, at what point. In matters relating to telephone companies, those come primarily to Commissioner Keiser, as does also correspondence in relation to the issuance of securities; also the settlement of claims, which do not originate from an erroneous application of rates. The matter of rates of every character, except telephone, electric light, express and freight rates, comes to me. No decision of any member is rendered except that the matter is either heard by or submitted to the full board. In matters of minor importance we have found it necessary that the party before whom the work pri- marily comes, may sit at the hearing, if necessary, alone, but ordi- narily two out of the three sit at the hearing and then submit a record of the hearing, or make concise statement of same to the 217 other member or members of the board, before an opinion is given. That, we find necessary by reason of the fact that when we all attempt to sit at all the hearings, we couldn't do the work, or begin to do it. There has been application made for an advance in rates by approxi- mately one hundred and forty telephone companies in the last thirty days. Those varied conditions demand a separate hearing in every case and, in some^ cases, the appraisal of property. In some cases we accept the appraisal of property made by themselves. Mr. Lord : Who makes those appraisals ? Mr. Glasgow: If the appraisal has been made within a recent period by a person in no way connected with the company, a man who has a standing recognized by the public in general, we accept that appraisal. If there is any question in our mind as to sufficiency of information or correctness of appraisal, or anything which leads us to believe it might be colored in the least, then the commission appoints the appraiser. As a rule, we have employed someone in connection with the University at Ann Arbor ; we have had Professor Cooley do a lot of work for us in telephone line matters. In water- power appraisals the law permits us to send for information, and, if not sufficiently complete to meet our approval, we have the property appraised by Professor Cooley's staff, or if conditions surrounding that particular appraisal do not make it advisable, then we have somebody outside of his staff. Mr. Lord: Do you know what expense it has been to the state on an average, each year, for making those appraisals? Mr. Glasgow: As I recall, the only expense the state has been put to is the appraisal of a property now before the department. The expense of the state for expert engineering services was in one case an electrical line examination, $48.63 ; another case of the examina- tion of tracks. $22.50. Mr. Lord : Are those bills paid by the applicant to the parties making the examination, or is the cost paid through this office? Do you bill the applicant for cost of appraisal and then pay the men who made the appraisal? Mr. Glasgow : The applicant pays direct. Mr. Lord: Tell us in a general way the methods employed in making the appraisals. Mr. Glasgow: Of course, different appraisers have different theories. In the larger cases, or in the applications from the large companies, the question of intangible value has, at our request, not been included by the appraiser, but listed and we have been allowed to pass upon it. The appraiser would list the intangibles, whether a long time franchise contract with a certain concern, where light is furnished, or whatever it was. He would give the actual value of the physical property; the value of merchandise, etc., and a history of the industry or company itself. Then, when it came to intangible values, it would be left to this department as to what should be allowed for them. Mr. Lord : When you get a statement of intangible value, what do you do with it when it comes here ? Mr. Glasgow: As a rule, we allow very little for intangible values. 218 Take, for instance, a telephone company in a territory that has its connections with a line in one direction and a line in another direc- tion ; if it is connected with the Bell or Automatic for long distance services ; that serves a certain territory where possibly their solicitor has gone out and spent $1, 500.00 in working up the business, explain- ing use, etc. ; or, if ; t is an electric plant, going out to people having them install electricity in their homes for different purposes; or going to some plant and convincing a man that it is better to use electricity than his steam or gasoline engine. When that electrical company has become installed and got ten or fifteen hundred ens tomers, it is a different thing than when they start and don't have any business. The good will Of that business is worth some money. It is really worth whatever it cost. Mr. Lord: Would it be safe, however, to capitalize that good will for the purpose of fixing rates? Mr. Glasgow: Oh, no What we consider when fixing rates is the physical value. Mr. Thompson: What rules do you follow as to depreciation, reproduc- tion, etc.? Mr. Glasgow: If it is a plant. already installed, we get first what the plant is worth, in the judgment of an appraiser, as it stands; what it would cost to reproduce now, and, if it has been built for several years, we get the depreciation. We consider whether it has run ten years and been allowed to run down rapidly, or whether it lias been kept up to 85 or 90 per cent of its efficiency. Ordinarily in telephone property we apply a depreciation of (> per cent per year. Mr. Thompson: To what extent do you consider rights of way? Mr. Glasgow: Not at all, unless on public property, because we assume that any fellow could get it. We do to this extent; where the applicant has been to the expense of having a special election held, we allow them that expense. Mr. Lord: Don't you think it would pay the state, in the matter of making appraisals, to have an expert engineer in its service? Mr. Glasgow: I have always contended that. You go to any state where they do this business in a large way, like New York, Wisconsin, Minnesota, and a number of other states we might name, and they employ their own engineering force, getting a good deal more data and more reliable information. It removes the man from any possible relation to the applicant for an appraisal. Mr. Lord: Will it become necessary to do that as your work increases? Mr. Glasgow : I think it will. What we have tried to do at two sessions of the legislature is to make this a Public Utility Board. Mr. Lord : Would you endorse a recommendation of this commission if it made it concerning employment by the state of an engineer? Mr. Glasgow : I certainly would. I think this, firstly, that instead of the applicant paying the outside engineer, he should be required to pay the state for the services and ; t would be self -sustaining ; and we would have a man under our control at all times for any kind of engineering services we desired. The department has a man under the head of "engineer" very well posted on the physical conditions of railroads in the state. He has been connected with this department for about eighteen years and 219 I don't believe you can call up a crossing or highway of the state, or any railroad in Michigan, that has been viewed by this department, or where any protection has been made, that he couldn't sit in his chair and describe it to you; but he is not in a position to go out and determine the safety of a bridge. Appraisals Statement of expense St. Joe Power Company, on first appraisal f250.00 Michigan Gas and Electric Light Company 483.65 Appraisal of Pere Marquette Railroad, made in 1914 : Payroll for month of May $3,796.43 June 7,963.88 July 15,715.56 August 20,848.31 September 15,765.26 October 9,685.92 November 3,912.30 December 1,814.54 $79,502.20 Detroit United Railway Appraisal, 1914: Tangible property- Payroll preceding month of September $862.58 September 6,154.84 October . . . 12,981.11 November 17,346.05 December 21,270.94 Further item of 1,975.84 1915 : Payroll for January $21,643.20 February 19,750.63 March 16,813.60 April 18,159.47 May 6,961.43 June 5,152.74 July 3,282.79 August ." 3,074.27 September 2,854.98 October 2,754.34 November . 309.09 Total cost for appraisal of tangible property $161,347.90 Intangible property: 1915 Payroll for April $912.29 May 699.33 June 997.29 July 532.75 August 266.90 September 397.87 October 486.99 $4,293.42 Total cost of the Detroit United Railway $165,641.32 220 Mr. Glasgow: The matter of rates of all kinds, whether railroad, express, water-power or electric light, comes to myself, and all claims originating from the application of erroneous rates, differences of ; their schedule or charges come to me. Ther6 are many little things that come up from people whom we attempt to serve, no matter whether it is a stale or interstate matter. Fifteen minutes ago I had a call from an electric light power plant who was furnishing power to a steel plant for the manufacture of j government war material. They were out of coal and had sent a representative to Chicago to see if they could get some and finally found they could get coal in Chicago, if they could get the cars. They asked us to take it up with the Michigan Central to furnish cars in Chicago for bringing the coal to their city, and we did and were able to give them cars in Chicago for this coal. Also people call us up and say they have had a car on the way for ten days and ask us to see what we can do. Mr. Lord : So that you are really a clearing house for various purposes? Mr. Glasgow: Our authority in the adjustment of claims is in the matter of erroneous application of rates. Generally, this is caused by some local agent misinterpreting his tariff, or getting the figures from the wrong line on the schedule. Claims might amount from the minimum of 23 cents to $2,300.00, according to the shipment. They come to us just as quickly for |2.00 as for $200.00. If a gentle- man in Lansing buys a ticket to Detroit and has occasion to leave the train at Ann Arbor or Howell; if he brings the unused part^of his ticket to us, we can take it up and get his money refunded. Mr. Lord : Can you tell how many complaints you received and adjusted during the last year? Mr. Glasgow : Ninety-four claims amounting $3,971.22. Mr. Glasgow : We have a number of calls that come in here for services and to avoid the expense of the telephone, we endeavor to arrange the matter by the first mail. Quite often conditions make it neces- sary for us to telephone. For instance, some men have three cars of stock loaded ready for the train to take them out, and through the independence on the part of the train crew, they go by and don't take them. Cases such as that demand our immediate attention. Mr. Lord: Outside of the establishment of an engineering department here under vour supervision, in what other manner could you increase the efficiency of your department, if any? Mr. Glasgow : I think the limitation of the number of employes should be removed. Mr. Lord : What is the statutory limitation in the matter of clerks ? Mr. Glasgow: Not to exceed five. Mr. Lord: When was that law enacted? Mr. Glasgow: Guess it has always been that way. Mr. Lord: Notwithstanding the increasing activities of your depart- ment, it has never been called to the attention of the legislature? Mr. Glasgow: It was sent in last session, but unfortunately it was handed to a man who gave more attention to other things than legislation, and it did not reach the committee in time to have attention. 221 Mr. Thompson : What do you think of the graded salary law ; how does that work out? Mr. Glasgow: We have always figured that that pertained to people who worked in the capitol and not here. We have never followed it for this reason. If we were a department that employed a large number of clerks to perform what clerical service was needed / it would be different. But we find this condition as to our employes , if we have a statistician, we only have one ; if we have an engineer, we only have one ; if we have a telephone expert at the head of our telephone department, we have to pay what he asks; we can't get him for $800.00. We try to hold ourselves within the bounds as to stenographers. We commenced paying stenographers $850.00 and soon we found them leaving us ; we paid them $850.00 the first year, $950.00 the second year and $1,000.00 the third year. Then we com- menced and paid them $1,000.00 the first year, $1,100.00 the second year and $1,200.00 the third year. We have to have better stenog- raphers than the average; we have to have stenographers who can take a hearing. They really have to be better than court reporters, because three people are liable to talk in three different languages at one time. We find people appear before us, when they see a stenog- rapher taking dictation, who will go to that stenographer and ask her how much she is getting, and say "come with me, and I will give you $1,400.00." We have lost two to the Gier Pressed Steel Company, one man to the Prosecuting Attorney's office in Wayne County, one man to the stenographic force in Grand Rapids, and in every instance it has been because commercial and industrial people have outbid us. They take them from us on all sides. We can't go down to the $800.00 proposition, as almost everybody in the department has to be an expert in their line. We have not a person in the department working for less than $1,000.00, except a new stenographer that we put on two weeks ago. Mr. Lord : Will you tell us next about what you think would be the ideal way for. the handling of public utilities from the standpoint of state supervision? Mr. Glasgow : My opinion expressed in answering your question would undoubtedly bring me in conflict with a great many people, because I am not a believer in home rule at all. If the state board is going to have control over utilities operating outside of municipalities, I believe the state should have control over municipally owned plants. If the city of Detroit, or any other city, is going to assume the right to control, net only their own municipal plant, but any privately owned plant operating in the city, the privately owned plant is going to be the loser. They can exercise control over a plant within the limits of the city, yet the privately owned plant operates in territory outside of the city; for instance, the Michigan Railway Company. If the state had had control of the city street car plant in Detroit, its troubles would have been settled long ago. If Detroit is going to say what a telephone company shall charge, Ann Arbor shall charge a different rate, and Jackson may fix rates in Jackson, you will have at once a lack of uniformity in service caused by placing the control in the hands of the municipal authorities. Any enterprise, even though purely local, can be regulated and its rights determined as 222 to its reasonableness in the service of the local people, more properly and fairly by disinterested authority than by conflict of local and interested authority. There is no local enterprise but what gets and demands certain concessions and rights. It may observe a certain condition in one portion of the city, in compliance with a request of an alderman from that district, and may not be in position to make the same concessions to some other alderman in another part of the city, and the cat-hauling that goes on in the control of utilities is the very element that places them under the control of local authorities. Mr. Lord: In regard to this Public Utilities Commission; would you have such a commission in place of the Railroad Commission ? Mr. Glasgow : Well, it would take more men with the utilities all under our supervision. Mr. Lord : How wide a scope would you give it ? Mr. Glasgow : Have it take in everything, the same as Wisconsin, New York, and other states. Everything of that character that serves the public. Mr. Lord: How about steamboat companies running between home shores ? Mr. Glasgow : I had occasion to write a letter on that question a short time ago. It was regarding the proper rates to apply to handling of freight between certain points, and I had to say that we did not have jurisdiction in Michigan. We have no regular intra- state water service. Our law says we shall have jurisdiction on rail and part by water, but we have no such jurisdiction. We have tried to exercise control over the rates on shipments by water between points in Michigan, but they avoid coming under our jurisdiction by refusing to issue a through bill of lading. If they did issue a bill of lading clear through, they would be under our control; they make the local rate rather than the through rate. There are shipments taken by water, largely from Detroit, Port Huron, Bay City, Macki- nac and Saginaw. Somebody ought to have some jurisdiction over the water rates between points in Michigan. Mr. Lord: You couldn't get state supervision over local utilities with- out an amendment to the constitution, could you ? Mr. Glasgow : In the last bill submitted to the legislature, to create a Public Utilities Commission, that was the great issue, and I don't recall in that particular instance that it specifically referred to any constitutional amendment. The fight before the committee was that the bill as drawn would place the control of all utilities in the hands of the commission. At the same time, Mr. Groesbeck, who drew the bill, was not in favor of it. Mr. Thompson : How large would your ideal Public Service Commission be in order to handle the problems in Michigan? Mr. Glasgow: Well, when this last bill was considered, the Governor wanted five members. We recommended not to exceed three, at least just three for two years ; first, because it would take the larger por- tion of that time to reconstruct the entire department, get it in working condition, and for the general public to find out we had supervision ; second, that it would demonstrate the necessity of more commissioners. We take the position that you can hire a better 223 man than you can appoint. Supposing we wanted five commissioners and wanted one of them to be at the head of the Engineering Depart- ment ; we believe you could hire a better man for that position than you could appoint. Also, it is easier for one man to agree than for three, and easier for three men to agree than five. You are liable to have five opinions on the same subject. Mr. Lord : Don't you think where a public service corporation makes application to this commission to issue bonds, necessitating investi- gation on the part of the commission, that the corporation should be obliged to pay something to the state for this service ? Mr. Glasgow: I have never given the matter sufficient study to kno\v what the arguments would be for or against it. Mr. Lord : Would a charge of this kind add to the burden of the public by way of increase in rates ? Mr. Glasgow : A charge of that character would be so slight that, after a number of years of service, the charges would be entirely lost. Supposing, for instance, that when such a company is incorporated, it costs them f 1.00 a thousand, and they were incorporated for 1500,000.00. When you spread that |500,000.00, say over the charge which would be made to the customers served by that company, for the full length of time for which the security shall run, it would not be one-tenth of a mill to the taxpayer. Mr. Thompson : If such a charge was in force, the rates of one-tenth of one per cent, during 1917, how much would it have netted the state? Mr. Glasgow : A nice bunch of money. The securities, stocks, bonds, notes and other evidence of indebtedness authorized by the Michigan Railroad Commission, for period from January 1st, 1916, to July 1st, 1917, was $269,929,226.00 ; from January 1st, 1917, to July 1st, 1917, was f 226,194,505.00. Mr. Thompson : What conflict would there be between your department and the Securities Commission in making such a charge? Mr. Glasgow: There ought not to be any. It would be very proper if they would make the same charge. Mr. Thompson: What are the arguments in favor of a double charge? Mr. Glasgow : They don't pass on the same securities as we do. Mr. Thompson: Ought there to be a single board passing on all those securities ; in other words, ought the Securities Commission and the Railroad Commission to work together? Mr. Glasgow : I have not given it any consideration at all, and possibly, in view of the fact of their being separate boards, it might be a rather delicate thing to express an opinion on at this stage of the game. I do think that the consolidation of boards, where it reduces expense and does not lessen efficiency, is to be commended. In making up a list of those things, which in the aggregate represent the expense of incorporations and launching of a new business, there appear items which would be as large as any fee which might be charged by the state for granting authority to issue securities, in the form of incidentals, legal expense, etc., which are not actual, but which, as a matter of custom, seem to have been allowed. So that if the small fee which the- state should charge was considered, it cer- tainly couldn't be looked upon as a burden while all these other like 224 charges are being allowed. I question that the corporations would offer much of any objection to paying a small fee. Mr. Thompson: And you think one-tenth of one per cent would be a reasonable fee? Mr. Glasgow: I couldn't speak from experience, of course; I haven't given it any thought. The Securities Commission has been trying it out. It is possible there ought to be a graded charge. If a company is organized for f 100,000.00, they are quite liable to ask to have issued a very large proportion of that amount, whereas a company whose activities are expected to continue indefinitely, oftentimes is capi- talized for $1.000,000.00, but don't wish to exceed, for a number of years, two, three or four thousand dollars. Mr. Thompson: You spoke this morning about i\ tax derived from water-power. Mr. Glasgow: Of course, they might raise an objection to that by saying that the general tax they pay is heavy enough, but, on the other hand, no corporation should be permitted to step in and utilize the natural benefits derived from the streams simply by paying taxes on the physical value they have put into it. There is a natural ele- ment there that thev naver created. Mr. Thompson: Would such a charge as you outline be an added burden to the public? Could not the same end be attained for the public by reduction and regulation of rates? Mr. Glasgow : You might if you were going to tax them on the number of kilowatts produced and sold. The difficulty would be that any charge in the rates would be so much greater than a reasonable tax. The tax would be so small it would be borne by the producer rather than the consumer. Mr. Thompson : What % classes of business operations ought to be included in public utilities ? Mr. Glasgow: Everything not purely private in character. Railroad systems, express systems, telephone and telegraph lines, gas plants, electric light plants, water transportation companies, street-railways, power companies, heating and lighting companies, transportation companies of all kinds, including jitneys, dray lines, taxi lines, etc. Mr. Thompson: All public transportation, all means of communication and all public transfers of power, heating or light. Mr. Lord: Have you an efficient office force? Mr. Glasgow: Yes, sir. Mr. Lord: Does your work here in this department bear any relation- ship whatever to work being done in any other department of the state government? Mr. Glasgow: None whatever. Mr. Lord: No duplication of efforts? Mr. Glasgow : No, sir. Mr. Lord : The only place from whom you get help is the Tax Commis- sion, occasionally? Mr. Glasgow : Occasionally we call them to ascertain what property has been assessed at or to verify figures we have. 226 INDUSTRIAL ACCIDENT BOARD Mr. Lord: Mr. Smith, as Chairman of the Industrial Accident Board, will you state in a general way to the Budget Commission what the various activities of the board are? Mr. Smith : The board is organized for the purpose of carrying out the provisions of Act 10 of the Public Acts of the First Extra Session of 1912, commonly called the "Workmen's Compensation Law." Under that law, there are about twenty thousand private employers of labor who have accepted the act by filing their acceptances. I think that I might state here that every private employer of labor must accept the act by a statement in writing, that all those private employers of labor must insure in an insurance company, approved by the Industrial Accident Board, unless the board sees fit to give them the right to carry their own risk and that is done only when they are considered sufficiently financially strong by the board. There are about forty-five insurance companies that have been authorized by the department in Michigan to write workmen's com- pensation. Whenever an employer accepts the act, the board must see to it that he procures insurance. We have what is called an "insurance and acceptance" department, or, more properly speaking, an "acceptance and insurance" department. In that department we keep a record of the acceptance of every employer and a record of the insurance he carries from year to year. We have to do that, and we have to Save that record accurate, because when any employe is injured, the board must be able to tell the employe the name of the insurance company that his employer is insured with. The "acceptance and insurance" department takes all of the time of three persons and really the three persons are not able to do all of the work and keep it up. I might say in that connection, and here is something that I believe you gentlemen will appreciate, that some employers have been claiming that they could accept the act in part and reject it in part, and that they could come under the act for part of their activities and stay out for the rest of their activities, and some insurance companies have been claiming that they could insure a portion of the business of the employer. Just at the present time the board is troubled considerably with those propositions. There have been two decisions of the Supreme Court in regard to this and an important case is now pending on that proposition. If it is found that this can be done, it will be pretty nearly impossible to carry out the provisions of the Workmen's Compensation Law, and instead of three in the acceptance and insurance department, we will need twelve. In addition to the private employers of labor, there are about ten thousand public employers of labor, consisting of fifty-nine or sixty state departments and institutions, some eighty odd counties, some one hundred and twenty-five cities or thereabouts, three hundred and thirty-five villages or thereabouts, and some seventy-five hundred school districts or thereabouts. The last legislature changed the law somewhat, and it became necessary for the board to write to every employer in Michigan, both public and private, which it did, except only that we did not write to country school districts. We 226 thought that, judging from the past, we had had so few accidents in those districts, that it was unnecessary to go to the expense of writing to every district. We wrote to all others some twenty-five thousand letters and sent them all a copy of the law, rules of the board and a lot of blanks for them to comply with the law on. The law requires all of those thirty-thousand employers of labor to report to the Industrial Board any accident that happens to any of their employes, no matter how trivial in its character the accident may seem to be. In 1916 about forty-six thousand accidents were reported by employers of labor to the board. Mr. Lord: Let me ask a question right here, Mr. Smith. What disposi- tion do you make of these accidents reported when they come in? Mr. Smith: In that connection, I will say that of these forty-six thou- sand, about nineteen thousand six hundred, as I recall, were com- pensable accidents. Some twenty-six thousand were non-compensable. In case of non-compensable accidents, nothing remains to be done as soon as the board is satisfied that it is a non-compensable accident. In case of the nearly twenty thousand compensable accidents, the usual amount of correspondence is necessary. Of course, it is the duty of the employer or insurer, as these reports come in, to comply with the law by filing an agreement setting up +he man's wages, what he is entitled to and agreeing to pay one-half of his wages during his disability or, for the cutting off of his finger or the knocking out of an eye, or whatever the accident may be. In a good many of the twenty thousand accidents, correspondence was neces- sary in order to get their agreement correct; it very frequently comes in wrong. Mr. Lord: You have to write for corrections. That constitutes your principal correspondence, does it? Mr. Smith : The correspondence relating to all these accidents does constitute the bulk of it. I might say that at the end of 191(5 the number of private employers under the act was eighteen thousand six hundred and forty-seven. We have more now about twenty thousand I believe ; that at the close of 1916, according to the best information we could obtain, there were seven hundred thirty-nine thousand, four hundred and thirty-six employes who were working for employers who were under the act. The exact number of acci- dents reported, to which I referred, is forty-six thousand five hundred and two; of those forty-six thousand five hundred and two accidents, three hundred and eighty-nine were fatal accidents, a little over a death a day; of those accidents, seventeen hundred and thirteen resulted in permanent partial disability ; of those accidents, sixteen thousand nine hundred and sixty-one resulted in temporary total disability. The exact number of compensable accidents I find was nineteen hundred and sixty-three. The total number of cases com- pleted and filed away last year was fifteen thousand seven hundred and forty-five. The total number of claims which were executed and "approved last year was seventeen thousand five hundred and sixty- three. The total amount of compensation paid in current and com- pleted cases as per our record last year was $1,723,617.73. Mr. Lord: Was that paid voluntarily by the employer? Mr. Smith : No, that compensation was paid partially under agreements 227 made voluntarily, partially as a result of arbitration in disputed cases. In all cases, gentlemen, where agreements are not entered into by the parties through correspondence, when we reach the point that we cannot get an agreement, then either the injured employe, the employer or the insurer files what is called "notice and applica- tion for adjustment of claim." When that application for adjust- ment is filed, the other party must be notified, under the rules of the board, and the case set for arbitration. The law requires that the arbitration must be held in the locality where the injury occurred. Last year there were three hundred and sixty-three applications for arbitration, where agreements could not be entered into. Of those three hundred and sixty-three applications, there were three hundred and eleven hearings actually held. Those are held by the two deputy commissioners, and by the members of the board mostly by the deputies but by the members of the board when they get time or when the deputies are unable to go. Of the three hundred and eleven cases and I may say that they are practically a law-suit most of them take half a day in order that the warrant on arbitra- tion may be any good and that the Supreme Court may not set it aside, each party must be fully notified in order that he may bring his witnesses, etc. These three hundred and eleven cases were tried in that way and out of the three hundred and eleven, the injured employe was entitled to compensation, and so found, in one hundred and eighty-two. In one hundred and nineteen of the cases, it was found that the injured employe had no just claim, and he was denied compensation. Mr. Lord: You say "committee on arbitration" does that consist of somebody besides the deputies? Mr. Smith: The law requires that at the hearing, the case shall be heard by a member of the board or a deputy commissioner, and also that each party shall appoint an arbitrator. The applicant appoints one man and the employer another man, and these three form the board. These arbitrators must be paid by the state the law says |5.00 a day. We, I am frank to say, have been paying them $2.50 a session, even though more than a half a day, we have paid them |2.50, and if it requires all day we pay them |5.00. I will say to you that in practice the arbitrators do not cut much of a figure. The deputy is generally the only man who knows the law. Mr. Lord: Suppose the arbitrators don't agree, then what? Mr. Smith: Two of them must agree, because there are only three, and, if two agree they make the decision and the other man makes his dissent upon it. Mr. Lord: Are the witnesses paid by the state? Mr. Smith : The witnesses are not paid by the state and it is a serious question in the minds of the board, where the state is paying all the expenses of arbitration, whether or not it could be made to pay under the law. We have construed it to mean that they shall pay only the arbitrators. Of these three hundred and eleven law-suits, some are $3,000.00 cases, some |2,500.00 and some $4,000.00 cases. Some- times the employe may not have an attorney probably the insurer and employer would. When the injured employe does not have an attorney, the Chairman of the arbitration committee examines wit- nesses, if necessary. Mr. Lord: Where does the money come from to meet the expenses of arbitration that you pay? Mr. Smith: The arbitrators are paid out of the appropriation of the Industrial Accident Board. The deputies are also paid out of that, the only other expenses would be witness fees, I take it. Our expenses come from a state appropriation. We were given this year and next year f 70,000.00 from the state. This $70,00u'.00 is plain contribution for carrying out of the act. We do not turn in any money to the state from fees. Mr. Lord: So that employers of labor do not contribute anything? Mr. Smith: No, sir; only their proportion of expenses and taxes. Mr. Lord : What benefit is this work to the state as a whole ? Mr. Smith: I believe it is a great benefit in that hundreds of damage cases of employes against their employers were in the courts prior to the enactment of this law. There are not many more damage cases of any importance, because nearly all employers now come under this act. Mr. Smith: What I was going to say is this: I believe that every employer should be made to increase, to some extent, the compensa- tion that is now paid to the injured employe. I think that instead of taking care of a man who is injured for three weeks, they ought to take care of him for three months, if necessary. I would say further that instead of making a poor injured employe wait for fourteen days before the compensation starts, that it should start at the end of seven days. Mr. Lord : Why shouldn't it begin at the time of action ? Mr. Smith: It was alleged when workmen's compensation law was being discussed, that if the employe drew compensation immediately upon being hurt, he would magnify his injury, that little accidents lasting only one, two or three days, would be made to seem more serious, and that something should be in the law to make the employe be more careful himself, and if he was slightly injured, a little of the burden should fall on him. Mr. Thompson : As I understand your efforts here, they are as follows : First, to determine your rules of operation ; Second, work out methods of acceptance by the employer of the law ; Third, to determine the question of carrying the risk which involves investigation and licensing of companies, the administration of the industrial fund and the determination of whether or not the employer is justly able to carry risks himself ; Fourth, question of determination and disposition of accidents. Mr. Smith: I might say to you that we have nothing to do with the State Industrial Accident fund. In a general way you have stated our efforts. I think at this point it would be a good place to state that last year, out of three hundred and eleven arbitration hearings, application was made to appeal one hundred and ten of them. Mr. Lord : Where is that appeal made ? Mr. Smith: To the full board. All those one hundred and ten were heard and enough others pending to number one hundred and thirty 229 for the year. When these cases are appealed, all the testimony taken before the arbitrators is set up in the appeal. Mr. Lord: Who pays the expense of the appeal? Mr. Smith : The party who appeals, and I might say that in eight cases out of ten, it is the employers and insurance companies. If the employe is beaten, he is usually too poor to appeal. Mr. Lord: Do you think that they lose any appeals because they are financially unable to carry them up ? Mr. Smith : I doubt it very much, for the deputies and members of the board are very careful, or try to be, to see that the employe gets an opportunity to present his case on its merits, or on facts. Mr. Lord: He has to present it in person, while the employer presents it through an attorney. Mr. Kennedy: Most of the lawyers representing employers of labor say that they would rather run up against a lawyer representing an employe than members of the board. Mr. Lord: Does the deputy or member represent the laboring man? Mr. Smith : The deputy represents the state. If, in his judgment, it is necessary for that injured man to get in any other witnesses, he tells him so. The deputy or member seeks to get the truth and, if neces- sary, he adjourns the hearing to get the truth, and asks the parties te bring in witnesses. I do not believe that the deputy or member closes a hearing without feeling assured he may be wrong about it that the employe has had an opportunity to present all the truth of the case and the deputy will aid him in doing so. Mr. Lord: Is he cross-examined? Mr. Smith : Where the injured employe has no attorney, the deputy or member of the board examines him and asks him for the facts, and then permits the attorney on the other side, if he likes, to cross- examine him. The deputy always examines the witnesses produced by the respondent. They are empowered to make any investigations that they deem necessary. That is a pretty broad power. I might call your attention to the fact that Section 8 of Part 3 provides that the committee of arbitration shall make such inquiries and investiga- tions as they deem necessary. I might say as to these arbitrations, that the board insists that these deputy commissioners shall make a detailed finding and statement of the facts of every case to the board. Mr. Zierleyn and Mr. Keeves are the two deputies. At night, when they have finished an arbitration, if they have time, they write out in longhand a statement of facts of that case, brief of testimony. This is not required by law, only by the board. Sometimes they don't get an opportunity to write it all out and can only make memoranda and, when they get into the office, they get it in shape for their report. These three men held three hundred and eleven hearings and they were just like three hundred and eleven law-suits. And we require that they shall make their findings, together with the three hundred and eleven hearings, on the two hundred and eighty-two conferences. Mr. Lord : Are appeals from your decisions to the Supreme Court made largely by employe or by employer? Mr. Smith: Employer. Mr. Lord: Isn't it a fact that the employer is the one that fights the decision of the board to a large extent? 230 Mr. Smith: Perhaps. He thinks that the board is inclined to look after the employe. The Supreme Court has decided ninety-six cases on appeal from the final order of this board. Of those ninety-six, my recollection is that ninety-one of them were appealed by the employer or insurance company, and that five of them were appealed by the employe. This mav not be exact, but it is pretty close. Mr. Lord: In how many of the cases appealed to the Supreme Court was the decision of the full board sustained? Mr. Smith: At a rough guess, I would say that out of ninety-six this is a guess probably fifty-five, not far from half and half. Mr. Tompkins: You say that you arrange your conferences by bundles in order to save money for the state. In the meantime, what is the injured employe doing for compensation? Mr. Smith: Possibly I should correct my statement by saying that we round up these conferences, but that is limited to the fact that we endeavor to get to the man as quickly as we can. It may be that he has to wait a little longer than he should. If we see that he is not going to be reached in the proper time, we go to a little extra trouble or possibly expense. Mr. Lord: Getting back to the disadvantage of the employe in the matter of hearings on appeal, we will take for illustration a case where a man living in the Upper Peninsula is killed. He is a poor man and leaves a wife and large family. The employer of that man appeals from the decision of the arbitration board to the full board in Lansing. How is it possible for that widow to be represented here as she ought to be, under this law? Cases are appealed and, in cases such as I cite, the employer would send his attorney down here and fight it hard, of course. That poor widow has no means to enable her to hire an attorney or anybody else, and couldn't come down here herself. Mr. Smith : If the facts were actually brought out in the testimony before the arbitration board, the Accident Board will see to it that she gets just as good protection under the law as if she had six attorneys. Mr. Lord: Isn't it a fact that you hear only one side on appeal here? Isn't it a fact that the board works under a disadvantage because of it? Mr. Smith: To a certain extent, that might be so. Mr. Lord : And, because of this fact, isn't there a danger of an employe not getting a proper settlement? Mr. Smith: No, I don't think so, Mr. Lord. Mr. Lord: The point I want to bring out is that this widow should be properly represented before this board on appeal, and that the employer of labor should not have it all his own way. Mr. Smith: In many instances, she does have an attorney. In cases where she couldn't have an attorney, this board, and pretty often in her locality there would be a lawyer having enough humanity about him, who, after she went to him and stated her case, would take the case and tell her to pay him if she got a settlement, and if not, there would be no charge for his services. Mr. Lord : I don't believe there are many attorneys of that kind. Mr. Kennedy: Quite a few of them throughout the state. 2ai Mr. Lord : There is some complaint I have heard it myself that they don't get quite a square deal as far as proper representation is concerned. Mr. O'Brien: In your opinion, is it necessary that provisions be made in the law for attorneys to represent injured employes? Mr. Smith : No, sir, I don't think it is necessary. Mr. Thompson : Ought there to be a provision for them to get additional evidence to show on appeal? Mr. Smith: Ordinarily not. I think that when instances arise of that kind that the Industrial Accident Board is empowered to see that this additional information is secured. Mr. Thompson : You stated that, in some instances, it was true that you worked to a disadvantage. Mr. Smith: I might explain that by saying that, when the employer has an award issued against him and he appeals, he takes some more testimony by deposition, giving reasonable notice to the employe, which is required by the law of the state, and he takes that testi- mony often with the idea of neutralizing the facts of the testimony which were taken before the committee of arbitration. If the employe has no attorney, he isn't able to appreciate the effect of that testimony that was taken subsequently by the employer, and the case may come here with this additional testimony taken by the employer in the absence of the employe, and that testimony be pre- sented before the whole board, when really the injured employe never .has awakened to the fact that it had been taken or was important. Mr. Lord : Isn't that one thing alone strong enough to prove that the state should provide proper representation for the employe? Mr. Kennedy: When we find that the employe is at a disadvantage, we have additional evidence taken for him. Mr. Smith : Possibly. I want to say that there is in the Supreme Court this minute, forty-nine undecided Industrial Accident Board appeals from the full board to the Supreme Court. Of these forty-nine appeals, thirteen have been submitted to the Supreme Court on briefs. Thirty-six will be upon the January (1918) calendar. Of these appeals, one, I believe, was appealed by the injured employe, and the balance were appealed by employers or insurance com- panies. Mr. Lord : Isn't the reason for that that the employe hasn't the means to carry appeals to the court? Mr. Smith: I don't think so. In close cases where defense is tech- nical and in many of these cases it is I haven't any hesitancy in saying, and some people might say I am liable to criticism for saying it, that the board desires to have some of these questions settled, and in a close case where the board ought to have a settling for its guidance, the case is decided so that the employer or insurance com- pany will appeal th^ case and settle that point, of law. Mr. Lord: Is thr.t the reason for so many of the appeals? Mr. Smith: For a small per cent of them. Mr. Lord : So that still it would leave a very large per cent of employers appealing to the court, as compared to the employes? Mr. Smith: For instance, of all those cases, I could pick out fifteen that were carried to the Supreme Court for no earthly reason and the Supreme Court will dismiss them as soon as they are presented. Mr. Kennedy: We had a bill before the legislature providing that the ; Prosecuting Attorney of each county should represent the injured man and that the state should pay the expense, and that the Attorney General should represent the injured man in the Supreme Court cases, but both were defeated. Mr. Lord: So that really the board has recognized the fact that the employe should be more adequately represented, otherwise you would not have presented the bill, would you? Mr. Kennedy : Yes, sir, we did recognize it. Mr. Smith : Speaking for myself, not the board, I will say that if any assistance should be granted to the employe, the law should be revised giving the Industrial Accident Board an investigator or an assistant, who was not a member of the committee of arbitration, who in proper instances might act as an advisor for the employe, j Mr. Lord: Why couldn't the Attorney General or someone from his office do that work ? Mr. Smith: Well, Mr Lord, there will be this year twenty thousand compensable claims, and more, I believe. Correspondence will iron out some and conferences will iron out some, but there will be arbi- trations and hearings to be held on a great many of them. Mr. Lord : All that the employe would get a lawyer for would be to ] appear before the board. Couldn't an assistant in the Attorney General's office attend to that? Mr. Smith : One assistant could do it as far as work is concerned. Mr. Lord : Would it not be fair to the poor man that he have that assist- ance from the state 9 Mr. Smith: I don't believe that since I have been on the board, that one injured employe has suffered any. I think that where an employe should be represented is at the first hearing, because there is where he gets his grilling. Of course, attorneys could be selected from localities in which the hearings are held and, I think that under Section 10, Part 3 of the act, that a reasonable construction of that section would make it necessary for the state to pay all of those expenses. The reason that they have not been carried out is that our appropriation was so low that the board could not pay it. In Section 10 of Part 3, you find this provision : "The arbitrators ' named by or for thp parties to the dispute shall each receive $5.00 a day for his services, but the Industrial Accident Board or any mem- ber thereof may allow reasonable amounts in extraordinary cases. The fees of such arbitrators and other costs of such arbitrators, not exceeding, however, the taxable cost allowed in suits at law in the circuit courts of this state, shall be fixed by the board and paid by the state as the other expenses of the board are paid. The fees and the payment thereof of all attorneys and physicians for services of this act shall be subject to the approval of the Industrial Accident Board." I don't want the commission to think that the hearing of the one hundred and fifty appeals is the only thing to be heard by this board. Mr. Lord : Where an appeal is made to the board, do you have to grant the petition ? 233 Mr. Smith : They have a right to appeal as a matter of course, within seven days. If they do not appeal within the seven days, they may yet appeal if they can show the Industrial Accident Board that justice permits the appeal. Mr. Lord: So that really every appeal is made within seven days? Mr. Smith : Yes, that is a statutory provision. Mr. Lord: .Now, Mr. Smith, tell us what can be done, if anything, to increase the efficiency of your department. Mr. Smith : Thai is a pretty broad question, Mr. Lord. I hardly know. I think I ought to say, as a part of the answer to your question, that we have here seven stenographers who are writ- ing letters and papers for the full board, the deputies, secretary and assistant secretary. In addition to these seven, there are two other stenographers, one of whom is writing letters for the acceptance department every minute and the other is working on the card index. Now, the work of the assistant secretary and secretary, a lot of it is taken up in writing or dictating letters regarding individual cases. They have to know the "Workmen's Compensation Law," decisions of the Supreme Court, rules of the board, etc., in order to do their duties well. We have been endeavoring to improve the work of the board by standardizing the work of the department. For illustra- tion, every accident that happens in the state must be reported within ten davs. Probably this year we will get in one hundred and fifty or two hundred thousand reports of accidents. Each of these accidents has to be reported a second time on the fifteenth day. The board has spent a good deal of time during the last year trying to work out a system by which the work of the office can become more automatic, but I think I am safe in saying that probably 90 per cent of our cases result from agreements being made, many others from the work of the secretary and assistant secretary in being able to quote the law, etc. r. Lord : How long do your clerks work ? Seven hours a day, the same as all capitol employes. How about vacations ? They have the usual twenty-four days' vacation. What do you think about vacations ? Do you think it is too [r. Smith Mr. Lord: Mr. Smith Mr. Lord: much? Mr. Smith Mr. Lord : I don't know as I am the right kind of a judge. You know about the conditions and regular rules for office help generally. Mr. Smith: I think the vacation is too much. I will say this about Saturday. All other departments, or nearly all of them, close at 3 o'clock. We run until 4, eight months of the year, and in June, July, August and September, the four hot months, we stop at 1. Personally, I think the state departments ought to run from 8 to 12 and from 1 to 5. I think there ought to be an eight-hour day. Mr. Kennedy: In our department, they work beyond their regular hours all the time. Mr. Lord: Do you think an eight-hour day and two weeks' vacation a year is fair ? Mr. Smith: I believe an eight-hour day would be fair and two weeks' vacation would be enough. 234 Mr. Lord: Are your employes appointed because of their capabilities or because of political influence? Mr. Smith : There have not been so very many changes since I have been here. Mr. Lord: In employing help, what has been the general rule followed? Have they been appointed on political recommendations, or because of their being capable and efficient? Mr. Smith: I might say, without specifying, that I know of only one political appointment since I have been here. Mr. Lord: What are the requirements for appointment to a clerkship in this department ? Mr. Smith: Nothing, except personal examination of applicant. Mr. Gloster: The fact is, that for the last few years it has been hard to get a good stenographer and, until lately, we have not had very many applications. Mr. Smith: Of the ordinary clerks, we have one clerk and stenographer getting $1,100.00 per year. She is worth more than that to any man's business, either public or private, but until the present year our appropriation was so small that we couldn't pay any more. Mr. Kennedy: We come under the f 800. 00 salary law and you can't get a first-class stenographer for f 800.00. Mr. Lord: We want you people to give us your views as to the graded salary law whether it has hampered you in getting efficient help, or not. Mr. Smith: I don't think it has, Mr. Lord. The graded salary law has not bothered us. Mr. Lord: What is the object of your paying such low salaries then? Mr. Kennedy : The law is one reason. We are limited to an average of 11,100.00. Mr. Lord: Don't you think it is very important that you pay high enough salaries to get efficient help? Isn't it unwise to "do otherwise? Mr. Smith: I think we have as efficient a crew of workers in this department as in any other state department. Mr. Lord: That may be very true, but the point is, is there any way you can increase the efficiency ? Don't the low salaries tend to keep down the efficiency of your help? What do you think of the graded salary law? Mr. Smith : I think there should be some limit. As to just whether it is correct as it is, I would not want to say, but I think there should be a graded limit. My experience tells me that the state of Michigan has a whole lot of people working for it that don't earn the money they get. Mr. Lord: What do you think of the proposition of fixing a maximum amount for clerks, but no minimum? Mr. Smith: I am inclined to think that that T/ould be a very wise thing. Mr. Lord : Do you receive reports from the secretary or assistant secre- tary as to the work? Mr. Smith : Only as I talk the matter over with them verbally. Mr. Lord: Your salaries are not any too large. The question in the minds of the commission is whether you can get the efficient help you need by paying the salaries you are paying. 235 Mr. Smith: We have ten to whom we are paying each $800.00 a year. Take the women who handle the files in this office, they work hard. It is laborious work. They need an education about such as a coun- try school teacher needs and I believe the ordinary school teacher in the graded school receives $800.00 or $900.00 a year. I believe that some of our clerks and stenographers are attracted to the positions here because of the seven-hour day and twenty-four-day vacation. I would like to see the vacation cut to two weeks, the hours raised to eight hours per day and the salary increased. Mr. Lord: If every clerk worked eight hours instead of seven, would you need less clerks? Mr. Gloster: It might not make much difference in this department, because most of our clerks work eight hours a day now. Mr. Lord : How much money did you say the legislature gave you last year? Mr. Smith: $70,000.00 per year. Mr. Lord: You have to pay the entire cost of the department out of that appropriation ? Mr. Smith: Everything. Mr. Lord: Nothing from the general fund in addition? Mr. Smith : No. We pay for all our books, printing, paper, filing cases, salaries and everything out of one appropriation. We get back a little, but that goes into the general fund of the state. Even our rent must be paid out of our appropriation, traveling expenses, depu- ties, arbitration fees, etc., are all paid out of the appropriation. Mr. Lord: Has the efficiency of the department been crippled by the lack of insufficient money appropriated by the legislature? Mr. Kennedy: Yes, sir, it has. Mr. Lord: To what extent? Mr. Kennedy: To the extent that we could never get the proper help nor could we get the money to pa}*- the salaries. People who were working here worked right along for quite a while without their salaries, because our funds had been exhausted. We had not the money to even think about doing the work we are doing now. We had to watch everything ; in fact, we are doing the same thing right now. Mr. Lord : W T hat was your procedure when you requested money from the legislature? What was the procedure to get money for the upkeep of your department; what did you present to the legislature and what information did you furnish it? Mr. Kennedy: Why, we itemized all our financial needs. Mr. Lord: Did you do that at every session of the legislature? Mr. Kennedy: Yes. In one or two cases we had to go back for a deficiency appropriation. Mr. Lord: What reason did the legislature give, or the Finance Com- mittees give, for cutting out the $5,000.00 appropriation you asked for ? Do you remember ? Mr. Kennedy: Mr. Hinkley was chairman. Perhaps he can tell you. There were no reasons given, they simply cut it out. Mr. Gloster: We had quite a session with them. Took our records all before them, but they stopped the meeting and said they had another important meeting. 236 Mr. Lord : Mr. Smith, what legislation was proposed by way of amend- ments to the compensation law last session ? Mr. Smith: We got one bill through that we think has cleared the atmosphere in our iepartment very materially. Mr. Lord: Do you think the law needs any amendments now? Mr. Smith: I think that in some way it ought to provide for medical and surgical treatment of the injured employe that will make him well. At the present time the employer can treat him for three weeks and leave him. I would say that the best rule would be to put it at ninety days, which time would cover nearly all cases, and possibly put a provision in, that in peculiar cases where injury is so great that he ought to have more than ninety days, that upon proper application to the Industrial Accident Board, he could have it. This would compel the employer to take care of every employe for ninety days if he needed it. I have known where blood poison has set in from a little injury where the employer has taken care of him three weeks and dropped him. In that case the employer has to pay for his life and it would be cheaper for the employer and better for both sides if this amendment could be passed. I believe the state can, well afford to pay for the administration of this law ; that what the employer ought to do is to protect the injured man. This law is saving the state a good many thousand dollars a \ear that it previously spent in courts. Another way that this law should be amended, I believe, is that the compensation of the injured employe should start after the first week. As it is now it starts after the first fifteen days. Mr. Lord: Was the object of that to save expense to the employer? Mr. Smith: I wouldn't say that. If a man is incapacitated for eight weeks, the employer is obliged to pay him for the first two weeks. It was enacted so that the employe would not be tempted to deceive the employer and take a week or so off when he ought to be at work. Mr. Lord: Your idea is that compensation should start at the end of seven days? Mr. Smith: I think the eighth day is the proper time.. Pick up the first week's wages at about the fourth week. Mr. Lord : Why don't you make such a recommendation in your annual report ? Mr. Smith : The Industrial Accident Board has largely taken the posi- tion that it ought to act aloof to both the employer and employe. This board is ready to make some recommendations. It strikes me that the care of the injured man, to make him well, is the first thing he is entitled to f and the industry ought to pay that ; the next thing is, he should be supported and maintained while he is getting well, and the industry should pay that. I don't believe anyone would be in favor of giving a man such a high compensation that it would tempt him to lie down on the job. Mr. Lord: Has it been your experience with the average laboring man that he would do such a thing? Mr. Kennedy: Of course, we are dealing with some foreigners and under some exaggerated conditions, but I don't believe that there is a 237 man in Michigan who would do that. I believe most of the laboring men are honest men. Mr. Lord: The laboring man don't put very much over on the insurance company or employer either. Mr. Smith : I think that is the general rule, but there are a good many men, not only laborers, but superintendents, men of affairs as well, that if the} 7 could make almost as much sitting around and taking vacations, they would be tempted to do so. Mr. Lord: Those are very rare exceptions, I believe. Mr. Gloster: I think as a rule the man wants to get back to work as soon as he can. Mr. Kennedy: He won't rest very easy on $10.00 a week when he can make $24.00 a week at work. BOARD OF CORRECTIONS AND CHARITIES Mr. Lord: Mr. Murray, you are the Secretary of the State Board of Corrections and Charities? Mr. Murray: Yes sir. Mr. Lord : Will you state to the commission the various activities of the board, what good you have accomplished for the state and what you propose to do in the future, with particular reference to any increase in your activities, which would necessitate additional cost? Mr. Murray : I don't know how to get at that except perhaps to start in here. First we have general supervisory powers over the state penal, reformatory and charitable institutions. Mr. Lord : Tell us what the supervisory authority consists of, Mr. Murray: The board meets at each state institution once a year, when any matter relating to the general policy of an institution is considered. Twenty-two out of the twenty-eight meetings of the board during the year 1914 were held at state institutions. The last report for the biennial period ending June 30th, 1916 shows that the board held forty meetings, thirty of which were held at state, county and private institutions. That would be about twenty-six meetings that were held at state institutions. Mr. Lord: What does the board do when they go to the state insti- tutions ? Mr. Murray: They make an inspection of the institution, go through all the departments and, once in two years, consider the matter of recommending appropriations to the legislature. Mr. Lord: What do you do in the matter of determining whether or not an institution needs the money it asks for? Mr. Murray : If they are asking for additional room, they make a state- ment to the board showing the capacity of the institution, the num- ber of vacant beds, what their increase has been every year for, usually, five years. We could tell you now what the net increase has been at each of the state hospitals for the last five years. If it involves a contract for a building they figure out and present to the board a detailed statement of the cost of that contract. That is printed in the report in detail. If it is an institution asking for additional money, they are required to file with the board a state- 238 ment showing the amount of money actually expended for current expenses. That is, if the board has to pass upon the matter of cur- rent expenses, it is filed here. Mr. Lord : What do you do after it is filed here? Mr. Murray: Go to the institution and consider them. Mr. Lord : In what way do you consider them ? Mr. Murray: Simply by comparison with previous costs. If their re- quest for any particular item seems to be excessive, they are required to state to the board why it is increased. Mr. Lord: How much time does the board spend at each institution? Mr. Murray: Well, I couldn't tell you just how many hours we put in at an institution. We always figure on enough time to make a thor- ough inspection of the institution and go over in detail the matters with the Superintendent or some member of Hie board of control. Usually one or two menbers of the board arc present when we pass upon the appropriation. It happens that sometimes if the board is not satisfied with the estimates as they come in, that we request the Board of Control to appear before our board and explain their needs. I think there were three or four cases of that kind during the last biennial period. Mr. Lord: When you speak of estimates, you refer to appropriations, for new buildings, etc.? Mr. Murray: That is all included. Their estimates come in on printed forms prescribed by the State Accountant and follow out his general accounting system. If it is an institution, those estimates come in on blank forms and they are required to give their data cancerning same. For instance, the average number of inmates, per capita cost for maintaining the institution for the last year and expenses in detail for every item going to make up their current expense account. Then opposite that, they show the amount in the estimate that is needed for each year of the next biennial period. If the special ap- propriation is for a new building, they submit their estimates in detail. Those are printed in the report." Mr. Lord: The reason 1 asked how much time the board members really spent at the institution, in making an investigation as to matters of the institution in a financial way, was to ascertain whether the board actually did go into that matter or whether it was left largely to the secretary of the board. Mr. Murray: No, we do the detail work in the office. Of course, during what we call their off year, we get into the state institutions and really spend more time than we do at the meetings just previous to the legislature. Our regular meetings are held at the state institu- tions. Probably the routine work of the board will take, on an aver- age, about two hours unless something out of the ordinary occurs, then the remainder of the day is spent in the institution. When we go to the institutions previous to the legislative sesion, we work them consecutively. We go out on a trip and make five or six insti- tutions. Then, when our estimates come in, they are worked out in detail and boiled down. The board is together going from one insti- tution to another and, with everything fresh in their minds, they form a pretty general idea of what appropriations they ought to recom- mend. After all have been examined, we make up a table showing 239 the appropriations asked for. Last year we spent three days, after being to all the state institutions, considering what recommenda- tions we would make to the legislature. Mr. Lord: Do you ever cut out many items of any kinds, reducing es- timates, etc.? Mr. Murray : In answering that, I will refer you to page 13 of our last report. They requested $1,878,976.60 and the board recommended $1,326,000.00, as the total for all institutions. Mr. Lord: What was the aggregate amount that was actually appro- priated by the legislature? Mr. Murray: We have the amounts actually appropriated, but we haven't the total. SPECIAL APPROPRIATIONS Institution. Kalamazoo State Hospital Pontiac State Hospital Traverse City Hospital Newberry State Hospital Ionia State Hospital Michigan Home and Training School Farm Colony for Epileptics Michigan Reformatory Branch Prison at Marquette Industrial School for Boys Industrial Home for Girls State Public School Employment Institution for the Blind Michigan School for the Blind School for the Deaf State Sanatorium Board Legislature Requested. Recommended. Allowed. $261 ,794.90 $1 11,081.90 $55,209.00 184,500.00 84,000.00 79,000.00 49,158.50 34,697.00 24,943.50 162,622.10 77,583.10 57,200.00 19,725.13 19,725.13 19,725.13 189,250.00 189,250.00 66,000.00 404,670.40 392,170.40 232,580.40 3,600.00 3,600.00 3,600.00 73,000.00 64,000.00 17,100.00 142,781.00 142,781.00 11,258.00 65,376.00 13,776.00 4,836.00 29,738.22 17,391.27 10,894.00 18,600.00 85,317.25 93,968.10 94,875.00 2,600.00 85,217.25 35,500.00 53,125.00 1,250.00 13,250.00 38,700.00 50,575.00 Mr. Lord: Do you have anything to do with the maintenance of insti- tutions as far as current expenses are concerned? Mr. Murray : Only so far as eight institutions are concerned. Mr. Lord: Do you have anything to do with the recommendations for the purchase of lands, etc ? Mr. Murray : It is included in the estimate of the eight out of nineteen institutions. Of course, you know what the situation was at the last session of the legislature. They were confronted with a great many deficiency bills owing to the increase in the cost of food stuffs, etc. Current expenses had increased beyond anyone's expectations, and they were called upon to increase the amount. Probably no legislature for years had been confronted with the situation that confronted the last one. Of course, in the matter of contracts for buildings, it was a big item, the cost being thirty per cent up more than it was two years ago. 240 Mr. Lord : You say that you have nothing whatever to do with approv- ing the amounts appropriated for current expenses ? Mr. Murray : No, I don't say that. We would have as far as the eight schools are concerned. Mr. Lord : Enumerate those schools, will you, Mr. Murray ? Mr. Murray : Michigan School for the Blind ; Industrial Home for Girls ; State Public School; Michigan Soldiers' Home; Industrial School for Boys; Michigan Employment Institution for the Blind; State Sanatorium and Michigan School for the Deaf. Mr. Lord: In former sessions of the legislature, how closely has the appropriation, taking it in the aggregate, for these same institu- tions, met your recommendations? Mr. Murray: I don't know. As a matter of fact, this is the first time, I have ever compared the appropriations with the amounts asked for. To give you an idea of what the legislature will do notwithstanding the recommendations of this board, I will say that Dr. Christian asked for two cottages for patients with a capacity of 100 each. This board disapproved one on the grounds that the institution at Wahjaniega would be enlarged so as to take care of the Feeble Mind- ed and Epileptics now at the Pontiac State Hospital. At the time that the legislature was considering these requests, Dr. Christian had a waiting list of fourteen, the net increase in his institution for the last biennial period had been ninety; with this information before the legislature, the House cut out any appropriation whatever for additional room at the Pontiac State Hospital. The Senate Com- mittee stood pat on the proposition as they favored the granting of one cottage, and they finally came together and gave Dr. Christian one cottage. Mr. Lord : Mr. Murray, you have the authority to approve the transfer of funds in the institutions ; what does that mean ? Mr. Murray: That means if the legislature in one act makes an ap- propriation for more than one purpose and there is a surplus remain- ing in one fund, and the fund created for some other purpose is insuf- ficient, the surplus may be transferred upon the approval of this board and the Auditor General. That would not apply to two different acts. For instance, if the legislature of 1917 made an appropriation by one act to contract for one cottage, and by another act to contract for another cottage, we would not be able to transfer, but if the legislature appropriates for three or four purposes in one act, funds may be transferred. Mr. Lord: Among your activities, you are required to inspect county jails, county infirmaries, etc. What is the object of the state med- dling with the county's business? Mr. Murray: That is not even a debatable question. The state should have supervision over all county jails, etc. Mr. Lord: Don't the supervisors attend to that? Mr. Murray : They may be supposed to, but they won't. Mr. Lord: They won't because the state is constantly poking its nose into their business. Mr. Murray : No, I don't think so. Mr. Lord : Who makes those inspections ? 241 Mr. Murray : I do considerable of the work. However, Mr. Lou tit who is in the western part of the state takes eight or ten counties. Mr. Jopling used to work all the Upper Peninsular, Mr. Fisher is a com- paratively new man. Mr. Lord: Do these members make a report to the board when they make inspections ? Mr. Murray: Yes, sir. Mr. Lord : Do you have those reports on file ? Mr. Murray: Yes, sir. Mr. Lord : Do you also have authority to inspect city jails, etc ? Mr. Murray: Certainly, and village jails, police stations, etc. Mr. Lord : Do you think it is the proper thing for the state to do ? Mr. Murray: We do. We have accomplished considerable good. Mr. Lord : It would seem to me that a city the size of Lansing, for in- stance, could handle its own police station, etc, and look after it properly without interference on the part of the state. Mr. Murray : Lansing does look after them, but we can cite you a good many that don't. Mr. Lord : Isn't it a matter really of local concern ? Mr. Murray : We don't think so. There seems to be no question about it at all in any state where they have a State Board of Control. Why don't you say it is none of the business of the Board of Health what the water system is in a city ? Mr. Thompson: I would like to have you make your statement briefly as to the reason for the state board having jurisdiction over this line of work. Mr. Murray : Of course, the principal reason is that the county author- ities don't bring the standards up to what they should be. Your county jails are state institutions in a way and your circuit court is also. The principal reason is that your county authorities will not give the matter proper attention. Mr. Thompson : Better supervision by the state than by local author- ities? Mr. Murray : That would seem to be true. Before the board had author- ity to close county jails, we closed six jails through the County Cir- cuit Court Commissioner. Those were four years ago; we have not closed a county jail since 1914. Mr. Thompson : What has been the result of your supervision of County Infirmaries ? Mr. Murray: The conditions have been very much improved. Sixty per cent of the counties have had improvements made by way of water systems, lighting, ventilating, etc. Mr. Thompson: Does that result in a saving of money for the people, or improvement of service? Mr. Murray: It would result in better care of men and women in the institutions. Mr. Hinkley: In doing this work that we are discussing, are you doing it on your own initiative or because you are authorized to do it by law? Mr. Murray: The law requires that once every year we inspect every county jail and infirmary. We follow the law, except two years ago when we did not have funds enough. 242 Mr. Hinkley: When the members go out to do that work, they simply get their expenses ? Mr. Murray: That is all that they ever get, even for attending meet- ings of the board, etc. Eight out of nineteen institutions must submit to this board a detailed statement of what was expended by them during the fiscal year, also showing in detail what they estimate they are going to spend for every item, for each of the next two years. The law pro- vides that the Board of Trustees of the State Hospitals meet annu- ally with the-Board of State Auditors and fix the per capita, subject to the approval of the Governor. This board recommends to the legislature wHat appropriation shall be made, but the legislature appropriates what it may see fit. Mr. Mathews tells me that they really don't meet with the Board of Trustees. Now, here's another angle ; the per capita cost of the Michigan Home and Training School is fixed by the Board of Control of that insti- tution together with the Board of Auditors, subject to approval of the Governor. They show at that .meeting what they have expended for current expenses, and what they estimate they will spend for the next two years, and then, after it is approved by the Board of Auditors, it goes to the Governor for approval. The same thing applies to the Farm Colony for Epileptics. There really are three or four ways of getting the per capita rate for state institu- tions. Mr. Lord: These classifications are, as far as you can find out, made without reason, but are statutory ? Mr. Murray : They are statutory. I can't see any reason for them. It should be uniform. I think some board or department should pass upon the matter of estimates for current expenses. Mr. Thompson: From your experience with this State Board of Cor- rections and Charities, do you think a board to control similar in- stitutions entirely, would be advisable, or not? Mr. Murray: I don't see where you would be at any particular advan- tage that way. You would have three or four boards in place of one board for each institution, together with a board that would have general advisory authority. Mr. Lord : Do you think that the asylums would be better governed by one board than they are now ? Mr. Murray : I think where every institution has its separate board, the board members give it more attention than one board would give five or six institutions. Mr. Lord: The same argument would apply to every class of institu- tion, would it? Mr. Murray: Yes, sir. Mr. Lord: How much attention do the present boards give to their work now ? Mr. Murray: I don't know. Mr : Lord : Have you ever given any study or thought to the matter of the control of institutions in other states ; the centralization of control ? Mr. Murray: I have heard it discussed some and have read about it some. Mr. Lord : Have you ever made any comparison of costs ? 243 Mr. Murray: I have made comparison of costs with the State of Ohio, which has a board of Administration. Mr. Lord : How does the cost of institutions in Ohio, under that board, compare with the cost of institutions in Michigan? Mr. Murray: Their cost exceeds ours. (Copy given to commission). Mr. Thompson : What year was that for? Mr. Murray : Last year. Mr. Lord: You really are not an advocate of centralization of author- ity? Mr. Murray: I have not been convinced that it is any better, or as good, as Michigan's present system. I am open to conviction. Mr. Lord : Is Ohio the only state that you have ever made any com- parative, statement with ? Mr. Murray: Yes. That is the state that one member of the 1917 legislature saw fit to call attention to and that is what prompted me to undertake to find out. Mr. Lord: What did you have included in that cost? Mr. Murray: Current expenses; we did not compare with special pur- poses or expenses. Mr. Lord: There might be some differences in what constituted cur- rent expenses in Ohio and those in Michigan. Mr. Murray : I cut out a lot of costs that Ohio had that Michigan does not have. Mr. Lord : Did you send a copy of that comparison to the Board of Administration in Ohio? Mr. Murray : No sir. Mr. Lord : I think I would do that if I were you. Mr. Murray: I spent three hours in going over the matter with Mr. Shier, who is Secretary of the State Board of Charities of Ohio. I got the figures from the Auditor of the State of Ohio. Mr. Lord: 'Are you in favor of a state architect? Mr. Murray: I don't think I am. Mr. Lord: Do you know what it has cost the State of Michigan for services of architects? Mr. Murray : No, I don't know. Mr. Lord: Why don't you think it would be advisable to have a state architect ? Mr. Murray: Some three years ago, I consulted with several states re- garding the matter and, I think, with one or two exceptions, it did not appear to be working out satisfactorily. I have not gone over these and refreshed my memory, but I think it was three of four years ago I consulted with Amos Butler of the Indiana board; with the New Jersey board and a number of others. I am not strong on the prop- osition one way or the other, and have not made investigation enough to warrant me in taking any particular views on the subject. Mr. Thompson: Is it your judgment that your supervision of building buildings has been beneficial? Mr. Murray : The plans, as far as sanitary conditions are concerned, are passed on by the State Board of Health before we pass on them. Ordinarily the man at the head of a state institution knows better the kind of arrangement he wants for a particular institution. The plans are never approved by this board until the State Sanitary Engineer has adopted and passed upon them. 244 Mr. Lord: Do you know of any state institution that has farm lands that they don't use ? Mr. Murray: We know of state institutions that have farm lands that they don't use to a very good advantage. Mr. Lord : Where are they ? Mr. Murray: Well, two I would mention, Michigan School for the Deaf at Flint and the State Sanatorium at Howell. Mr. Lord : To what use do they put those lands that they are a losing proposition ? Mr. Murray: The Board took this position. We doubted the advisa- bility of ownership of farms in connection with institutions where the inmates of that institution cannot be employed; for instance, the School for the Deaf uses few, if any, of their inmates and they don't and can't at Howell. We went on record quite strongly with refer- ence to the institution at Howell. Mr. Lord : What is the nature of your supervision of the county agency system ? Mr. Murray: The county agent is appointed by the Governor upon rec- ommendation of this board, and he holds his office during the pleasure of the Governor. Mr. Lord: What supervision do you have over him? Mr. Murray: He is the agent for this board in his county, makes re- ports to this board of all work done in Juvenile Court, or in making investigations of homes where children have been placed out. Mr. Lord: What authority have you in the matter of expenses of the county agent? Mr. Murray: The County Agent in making his claim for expenses makes it in duplicate; this is approved by the institution, and then the Probate Court certifies that his report has been filed with him, and that is all we can certify to. When the claim reaches this office, after having been certified to by the Probate Court and institution ordering the investigation, and if his report is on file, we certify and turn it over to the Board of State Auditors. It would be pre- sumptuous for us to pass upon the amount of time that the county agent spent in investigating a case. So far as the Judge's signature and the signature of the secretary of this board are concerned, we can't go any further than to certify that the county agent has com- plied with the law in filing those claims with us. Mr. Lord : How much did the county agency system cost Michigan last year? Mr. Murray : We don't keep those reports. Mr. Thompson: What is your thought as to the future, and how you benefit the state by your work ; what changes in plan of operation will work a benefit; what your program would be if you put it through, and what will be the effect of war and prohibition on your work ? Mr. Murray : Of course, we have not as yet mapped out any program to present to the legislature. A year from now we would have our plan mapped out. Mr. Lord : You made a number of recommendations last year ; what additional recommendations; can you get at it that way? Mr, Thompson : We are asking you these questions because you are the 245 man who is dealing with these problems. What, in your opinion, is or will be the effect of the war on your problems? Mr. Murray : I don't know what the effect will be. My opinion is that it will increase the population in the state hospitals. It will not have any effect on feeble-mindedness and epilepsy, but it will later increase the number of" commitments to our state hospitals. Mr. Thompson : What do you think of the effect of prohibition ? Mr. Murray: Now, that would apply to the population of county jails, etc. My personal opinion is that prohibition will tend to decrease our jail and prison population. Mr. Thompson : What, in your judgment, will reduce the population, which is dependent upon charity or public aid? Mr. Murray : Do you mean the population of our child caring agencies ? Mr. Thompson : I mean all indigents. Mr. Murray: I believe the population will decrease under prohibition as regards these classes of institutions. Mr. Thompson : What do you regard as the fundamental cause or under- lying thing that increases this population dependent on the state; disease, drunkenness, or what ? Mr. Murray : I don't Ibelieve there has been any increase in the number in the county infirmaries. ADVISORY BOARD IN THE MATTER OF PARDONS Mr. Lord: Dr. Shumway, will you make a statement setting forth the activities of the Pardon Board ; just what you do, what your duties are, what you have accomplished, and what changes, if any, you would recommend in the laws relating to your functions, etc ? Dr. Shumway: Well, as you understand, this board was created for the purpose of taking up matters, and advising the Governor, who hasn't time to investigate them, of parole, pardon, commutation of sentence, etc. The board is composed of three members, and the executive clerk to the Governor is secretary of the board. The law requires this board to meet once every month at the Jackson Prison, Ionia Reformatory, and the Detroit House of Correction, and once every three months at the Branch Prison at Marquette. The indeterminate sentence law gives every prisoner, except, of course, life men who are in for murder, the right, at the expiration of their minimum sentence, to make application to this board for release or pardon or parole. In the early days of the pardon board, back in 1900, the average number of cases reviewed at each monthly meeting at the three prisons would be in the neighborhood of from fifteen to twenty, possibly twenty-five cases. At the present time our cases will average some fifty to sixty at most every meeting and have gone as high as eighty-two cases at a meeting. These men are allowed a personal interview, the files are gone into, and the necessary time taken to thoroughly investigate all the facts surrounding the individual case. In many cases it is necessary to visit the locality where the crime was committed and interview the officers and others conversant with the facts at the time of the commitment of the crime, so that with our increased duties, the work of the board is much greater than it was five or ten years ago. Mr. Lord : After you have made your investigations of the applicants for parole or pardon, what do you do then? Have you the authority 246 to grant the parole yourself, or is it a matter of reference to the Governor? Dr. Shumway: If they have served their mimimum sentence, it is up to the board to parole. If, in the judgment of the- board it is a matter of pardon at that time, we recommend to the Governor. Many cases come to us before the minumum has expired for commutation of sentences, sometimes through recommendations from the Judges themselves, who have had facts come to them after the trial that convince them that they have given too severe a sentence, and they recommend that the minumum be commuted. These cases go to the Governor; he alone has the power of commuting the sentences. But all cases, murder cases and all, the Governor has not the time to investigate them, and, therefore, he refers everything to the board and acts on our recommendations. Mr. Lord : Dr. Shumway, how many cases did you take up last year? Dr. Shumway: 2300. Mr. Lord : How many paroles did you grant, and how many pardons and commutations of sentences did you recommend to the Governor? Dr. Shumway: We granted 1006 paroles and .recommended 31 com- mutations of sentences but did not recommend any pardons. It takes more time now for the hearings at the prisons than it used to; for instance, the time taken now will average three or four days at Jackson, whereas one day used to be sufficient. We are allowed compensation for only two hundred days during the year, so that really we have neglected to thoroughly investigate cases where it became necessary to go to the localities where the crime was com- mitted, as we have not had the time to make thorough investigations. The result has been that cases have had to be carried over. Mr. Lord: What compensation are the members of this board allowed? Dr. Shumway : $7.00 a day, limited to two hundred days. Mr. Lord: What did your work cost last year, the total cost of the board ? Dr. Shumway: $7,473.81. While the work has increased, the expense of the Pardon Board for the last three or four years is less than it was ten years ago when I was on the Board. Mr. Lord: Don't you think you could do that work alone, as a Parole Agent for the Governor? Dr. Shumway: That is putting a great responsibility on one man. I have thought of this, Mr. Lord, and don't know as it would lessen the expense. There is no more important board if it is rightly administered. If the Governor had one good representative of judg- ment and experience ; one good outside man and the warden of each institution, acting for his own institution, I believe this would be a good board and their judgment and recommendations would be of valuable assistance in the work. This has been talked of somewhat in our Penology Commission meetings. Some objected to the Warden acting on such a board on account of discipline, claiming that, where the boys know that the warden has the say, that it will hurt the disci- pline of the prison. But it would be a help. From the warden you would get information as to the conduct of the prisoner since his entering the prison, the effect of his confinement, what effect it has 247 had on him, whether there is any evidence of reformation, what his conduct has been and whether it merits clemency at that time. From the outside man you can get the information necessary in the local- ities where the crime was committed ; these two men with the Gover- nor's representative, I believe would make an ideal combination, Mr. Lord : You would have the warden of the prison act with yourselt and the executive clerk, for instance, in his own institution ? Dr. Shumway: Yes, sir. MICHIGAN FISH COMMISSION Mr. Lord: Mr. Bower, you are the Superintendent of the Fish Com- mission ? Mr. Bower: Yes sir. Mr. Lord: Will you state in a general way, as briefly as possible, the various activities of the Fish Commission what it is doing now, what it has done, and what it proposes to do in the future ? Mr. Bower: Prior to 1896 the Fish Commission hatched what we call commercial fish, as well as fish of inland waters. We had hatch- eries at Detroit and one at the Soo and a temporary hatchery at Charlevoix where we hatched white fish, but in 1893 the Commission got into a big row with the commercial fishery and they tried to abolish the Fish Commission, and it did succeed in taking away the appropriation for commercial fish. Mr. Lord : What was the nature of the opposition ? Mr. Bower : The President of the Board, Mr. Whitaker, urged excessive restrictive laws that would absolutely do away with commercial fish. The result was that the commercial fishery attacked the fish com- mission, justly, I think. They took away our appropriation and no appropriation was made for four years. Then the United States Fish Commission stepped in and said that if we would lease our hatcheries to them, that they would operate them and it wouldn't cost the state a cent. Of course, with that proposition before us, we could not get an appropriation and never have gotten one since. Mr. Lord: Have you any more than the Detroit hatcheries that are leased to the Federal Government? Mr. Bower: One-half of the Soo Hatchery is also leased to it. Since that time our work has been confined to inland waters, or practi- cally so. We have sometimes put them in the St. Mary's and in the Detroit rivers. Mr. Lord: Are the commercial fishermen licensed in any way? Mr. Bower : The Game Warden's department has charge of that. They have a boat license. Mr. Lord : In your work is there any duplication of effort so far as the Fish Commission and the Game Wardens' department is concerned? Mr. Bower: No, not especially so. Off-hand I do not recall any dup- lication, although I think myself it is my own personal opinion that the two departments should be united. We could help them and they could help us. Mr. Lord: In what way should it be united? Mr. Bower: To consolidate the fish commission with them under one 248 head, although I think the work of the two departments should be kept separate as much as possible. However, with one non-salaried board, say five men, two could have charge of the fish commission, two oversee the game warden department's activities, and one act as Secretary. Mr. Lord : Do you think that it would save the State any money? Mr. Bower : I don't know that it would save the State any money. Mr. Lord : What benefit would there be then in the consolidation ? Mr. Bower: Well, of course, the warden's department has deputies scattered throughout the state. If they were under our control we could utilize them by having them plant fish and do field work of one kind or another. We have only five hatcheries and in some parts of the State we are not represented at all. Mr. Lord : You think by getting the services of the employes of the game department, you would be able to dispense with the services of some of the employes of your department? Mr. Bower : No, I don't think so. Mr. Lord: Do you mean that you would use them in addition to your present employes? Mr. Bower: Yes, you see our men plant no fish now to speak of. They simply operate the hatcheries and collect the eggs and do work of that kind. Mr. Lord : Then there would not be any benefit from an economic stand- point by a consolidation of the two departments? Mr. Bower: There would not be a great deal but it would increase the efficiency. Mr. Lord : Where you increase the efficiency, Mr. Bower, don't it result in the saving of money? Mr. Bower : Either that or produces more fish. Mr. Lord : We would get larger and better results from the same money ? t Mr. Bower : Yes. Mr. Lord: Now, Mr. Bower, what are your plans for the future? Mr. Bower: Well, we want to go on along much the same lines that we are. We would like to expand the demand for fish is way beyond our producing capacity. Mr. Lord : What appropriation did you have for the last two years? Mr. Bower: 1914 $52,007.00 1915 49,177.00 1916 57,056.00 1917 47,241.00 The last session appropriated for the fiscal year ending 1918 68,184.00 Mr. Lord : For what purpose was that increase asked ? Mr. Bower: To increase our output and build more ponds. We build a pond or two every year or so. The appropriation granted us for 1919 is 158,309.00 Mr. Lord : What particular benefit is this spawning of fish to the people of the State I mean the general public ? Mr. Bower: Well, it is to keep up and increase the supply of fish. Of course, in this State, for example, there were no brook trout in the greater part of the Lower Peninsula until they were planted. The 249 southern limit was Boardman River. This was also true as to Rain- bow trout. Mr. Lord: Does the general public reap any benefit at all from the spawning of these fish, or isn't the benefit confined to the sports- men and fishermen? Mr. Bower: That is true to a considerable extent as regards trout, but we are planting bass, perch, blue-gills, and other fish. Mr. Lord : What per cent of the general public reap any benefit ? Mr. Bower: There are certain benefits that you can't perhaps value in dollars and cents. Mr. Lord: What are they? Mr. Bower: Well, for instance, the outing and recreation. Mr. Lord: You think the general taxpayers of the state should have to pay for the outing and recreation of sportsmen and fishermen ? Mr. Bower: W T ell, the fair way to do it would be to pay every dollar out of the license fund. If every man over twenty-one years of age would pay one dollar a year, it would give us more money than we are getting now and we would hatch more fish and it wouldn't cost the taxpayers a cent, and nobody would have to pay unless they fished. Mr. Lord : Wouldn't the enforcement of that law and the collection of the tax cost as much as if the legislature made an appropriation? Mr. Bower: I do not think it would cost very much. Mr. Lord: Wouldn't the result of a license tax, as you propose, shut out a lot of poor people from the privilege of catching the fish? Would it not result in sort of a close corporation, consisting mostly of sportsmen and fishermen? Mr. Bower: Under our law all the fish that are in the public waters belong to the State of Michigan. Now, if a man helps himself to state property., I don't see why he shouldn't contribute to the main- tenance of that property. However, if the Superintendent of the Poor should make a statement that such a man should have a free license, I would give it to him. Mr. Lord: Couldn't we carry it much farther and say that the state should engage in raising seed for the farmers? Mr. Bower: That is a -different proposition. You can control land and can buy it. You can't buy public waters and no one man is going to see that the waters are stocked with fish. It has to be done by the state. Mr. Lord: How many states are engaged in the same kind of business on such a wide stretch as this state is ? Mr. Bower: New York has a considerable larger appropriation than we get. Mr. Lord: Well, New York is a larger state. Mr. Bower: We have far more waters than New York. Pennsylvania has a larger appropriation than we. Wisconsin does and also Cali- fornia. Mr. Lord : Have these three states that you mentioned a Board of Fish Commissioners that control these matters? Mr. Bower: Every state, nearly, has a different way of handling it. In the state of New York they have a conservation commission, by which the protection of forestry work, etc., is also taken care of. 250 Mr. Lord: Then that appropriation of which you speak in New York covers more things than fish culture. Mr. Bower: They devote more money than we do to fish culture. Mr. Lord : Are these the only three states that have any control what- ever of the fish culture? Mr. Bower: Nearly every state has a fish commission. There may be a few that have not. South Carolina hasn't. Mr. Lord : What does it cost per unit to spawn ? Mr. Bower: You couldn't fix a standard for that. The same effort one year would not get you- the same production that the same effort another year would get you. Mr. Lord: Can you give us an average for a period of, say five or ten years ? Mr. Bower: You mean the fish as they are shipped out, ready to deliver ? Mr. Lord : Yes, tell us that. Mr. Bower : That is a hard thing to figure. Off-hand, I should say that brook trout put out would cost $1.50 to |2.00 a thousand. Rainbow trout, probably not quite as much because we get aid from wild fish. We do keep a planted stock, but get a good many eggs outside. Bass, all sizes, would cost two to three dollars a thousand. Mr. Lord : Where you receive an application for planting fish, what is the nature of the investigation you make? Mr. Bower: We have application blanks that are filled out. Mr. Lord : Do you take the word of the applicant or do you follow it up? Mr. Bower: We don't follow it up. In a great many cases these waters are well known to us and we have maps, etc., to go by. Mr. Lord: Isn't there considerable danger of more or less waste where you fail to make a personal investigation? Mr. Bower: No, not if they plant according to instructions. Mr. Lord: No, but you don't know that they do plant according to instructions if you don't investigate. Mr. Bower: We have a certificate, certifying that they have planted the fish as per instructions, but of course some men will certify to a falsehood, no doubt. Mr. Lord: Especially if they want the fish. Mr. Bower: We have found that Ihey will take fish supplies from one water and put them in another water. Mr. Lord : Now, isn't it a fact, Mr. Bower, that in a number of instances where you have fish for planting that they have never left the station and have spoiled before planting? Mr. Bower: No, not in very many cases. Our men are instructed not to leave fish unless a man is there to get them. Of course, every man is requested to'go immediately and he may not do it; he may go up town to do some trading, but in most cases they are just as anxious to get results as we are to have them. Mr. Lord: Do the applications for fish for planting come to this office? Mr. Bower : Yes. sir. Mr. Lord : Then what do you do ? Mr. Bower : We enter them into a record here in this office and number them. Then we file them away by counties and get out the applica- 251 tion for the same waters and if there is more than one application for fish to be placed in the same stream, one or the other application is thrown out in order to avoid duplication. Mr. Lord : About how many applications do you receive during the year? Mr. Bower : We get in the course of a year considerably above 5,000 applications. I don't mean to say that we have 5,000 new blanks, because a good many write in asking to have their applications for the last year renewed. Mr. Lord : When you have approved all applications, do you designate some particular place, like Paris Station, to ship the fish? Mr. Bower: The applications are held until the particular kind of fish are ready to go out. Then we make a skeleton copy which we retain here and send the other copy to the station from which the fish are to be shipped. Mr. Lord : Then the hatchery reports to you that they have been shipped ? Mr. Bower: Yes, sir, we get monthly reports from all hatcheries. Tf a man fails to reply to his notice, we don't ship the fish. If he does reply and fails to get the fish we give them to someone else, or carry them on and deliver them ourselves. That is why we give a copy to the man in charge of the fish. Mr. Lord : Do you supply many fish to private waters ? Mr. Bower : Not knowingly. Mr. Lord : How do you tell that they are not in private waters ? Mr. Bower: We have a man to take his declaration that they are public waters. That is, we don't plant any fish in any waters that are not open to the public Mr. Lord: Now, Mr. Bower, I notice in your statement that in 1914- 1915, you collected $40,000.00 in non-resident licenses. What disposi- tion do you make of these funds when you collect them ? Mr. Bower: Well, we use them for a variety of purposes. We use about |8,000.00 a year to buy brook trout eggs. Mr. Lord: Do you keep the money here in a bank or is it turned over to the State Treasury? Mr. Bower: We turn the money over to the Treasurer of the board and he turns it over to the State Treasury. He is supposed to turn it it over shortly after the end of each year. Mr. Lord : So that from $20,000.00 to $25,000.00 a year is in the hands of the commission until the end of the year? Mr. Bowers : Yes, sir, it is in the hands of the Treasurer. The fees are all turned over to the state at the end of each fiscal year. Mr. Lord: You collected f 21,279.00 in 1917 up to November 21st. Now do you actually turn over that money to the State Treasury or does your Treasurer turn in the balance left after some expenditures are made? Mr. Bower : All except refunds for licenses as shown. Mr. Lord : Why does he want it in his hands until the end of the fiscal year? Mr. Bower : I cannot tell you. Mr. Lord: Can you tell me where the money is deposited? Mr. Bower: I think with the Central Savings Bank, Detroit. Mr. Lord : Have you any record here of interest on these deposits ? Mr. Bower: No, sir. Mr. Lord : You really don't know whether the fish commission gets any interest or not? Mr. Bower: There is none passing through here. If it did we would know it. Mr. Lord: You have no record whatever of interest on deposits? Mr. Bower: No, sir, none whatever. Mr. Lord : Can you tell me about what the average balance is on deposit in the banks? That is, what is your daily balance belonging to the fish commission, or to the state? Mr. Bower: Well, at the end of every month it would run five, six, eight or nine thousand dollars. Then when the pay roll is paid it pulls it down and it is built up again from appropriation. The Angler's License Fund, however, we don't touch until it is turned into Lansing st the end of the year. Mr. Lord : Then you have it for use the next fiscal year ? Mr. Bower: Yes. Last year, after the audit by the Auditor General's Department in April, we turned in f 8,000.00. Then the license funds began to accumulate, for, of course, the bulk comes in during July, August and September. Mr. Lord: I notice that you had an appropriation for a new hatchery in Schoolcraft county. What is the reason for this? Mr. Bower: That hatchery was put through by Senator Wood because he wanted one in that county. We approved it because it is all right. The money has not been drawn from Lansing as we are having trouble about the site. Mr. Lord: Is it necessary to have so many hatcheries? Mr. Bower: Absolutely. Mr. Lord : Why do we lease any hatcheries to the Federal Government when we need more for the state? Mr. Bower: Because they are used for commercial fish. Mr. Lord: Is that granting a favor to commercial fishermen? Mr. Bower: You could not use this hatchery down here for hatching bass. It is a different water. Mr. Lord: Was it built for commercial fish purposes? Mr. Bower: Yes, sir. Of course you can hatch wall-eyed pike. Mr. Lord : Is it true of the Soo hatchery ? Mr. Bower : It is true of one-half of it. One-half is used for hatching white fish. Mr. Lord : Could it all be used for lake trout ? Mr. Bower: It would cost more than f 5,000.00 to fix it and then you couldn't hatch brook trout. Mr. Lord : You say the part used by the Federal Government could be changed ? Mr. Bower : We could use it just as it is for white fish and lake trout. You couldn't use it for hatching bass, blue gills, etc. Mr. Lord: How much would it cost to change the hatchery here in Detroit for state purposes? Mr. Bower: You couldn't utilize this hatchery except for the kind of fish we hatch there now. The fault is with the water. Mr. Thompson : Couldn't you use it for some other kind of fish ? 268 Mr. Bower: Well, wall-eyed pike and it could be equipped for lake trout. Mr. Thompson: Could it be easily equipped to hatch any other kind, used in inland waters? Mr. Bower: No, sir. Mr. Lord : State the kinds of fish that you hatch, Mr. Bower. Mr. Bower: Brook trout, rainbow trout, lake trout, small bass, large bass, blue gills, perch and wall-eyed pike. That practically covers it. Mr. Thompson : Is your demand for wall-eyed pike fully covered by present facilities? Mr. Bower: We can take care of wall-eyed pike better than any other kind of fish. Mr. Lord : Would it not be advisable to cancel this lease and supply the state with wall-eyed pike? Mr. Bower: The government is going to quit it anyway. We will have it on our hands in a few months. Mr. Lord : You won't need any appropriation for wall-eyed pike ? Mr. Bower: No, sir. Mr. Lord : What we are trying to get at, Mr. Bower, is whether or not you could do with a less number of hatcheries ? Mr. Bower: The fact is, what the state needs to keep up its fish sup- plies is a hatchery for every three or four counties. A hatchery where we would not have flower beds, etc., but a small station where you could plant your own fish and then you could keep the lakes very well stocked. Mr. Lord : What would be the result if there was no planting of fish at all and a law enacted restricting the catching of fish ? Mr. Bower : I think that there would always be some fish. Mr. Lord: Would the general public get as many fish as they are getting now? Mr. Bower: Oh, no. There is a large demand on the part of the general public for trout, for instance. Mr. Lord : Isn't the demand greater for commercial fish ? Mr. Bower: We have a larger number of applications for lake fish than for brook trout. The kinds of fish that we need to hatch more and more, and the demand is constantly increasing for, are the lake fish. We come nearer to supplying the demand for brook trout and rainbow trout, wall-eyed pike, perch, etc., than we do for the lake fish. Mr. Lord : Mr. Bower, who makes the appraisal of these properties that the fish commission has control of? Mr. Bower: Years ago I used to go around and go over the grounds with the local superintendent myself, but recently I either take their word for it or go over it after the final review is done. Mr. Lord: Now, Mr. Bower, I notice in your payroll that you have a number of employes at the Detroit Station. Why is that necessary if it is under the Federal Government? Mr. Bower: We operate it for wall-eyed pike in the spring. That requires one-half dozen men or sometimes more for a short time. A part of the payment we get for use of this hatchery is from the Gov- ernment. They turn over a certain number of wall-eyed pike to us according to the success they have in making collection. 254 Mr. Lord : Is that all you get from the Federal Government for this lease ? Mr. Bower : They pay the current rent and keep it in repair. Mr. Lord : The state does not own the grounds ? Mr. Bower : They lease the ground for $425.00 a year. They have paid that and kept it in good repair. At the Soo hatchery they pay the overseer for two months and one man for two months and then they put on extra help to take care of their part of the work. We get a good bargain as far as that is concerned. Mr. Lord: Another thing in connection with the payroll is that the same names are on your payroll for different stations for the same month. How does that happen? Mr. Bower : We shift our men around a good deal. We charge the dif- ferent hatcheries for the time they spend there. Mr. Lord : Do you think that the employment of all these men is abso- lutely necessary to carry on your work? Mr. Bower: Yes, sir; we could not dispense with any of them. Our men are employed and work on their merits. Mr. Lord : What is the nature of their work ? What do they do ? For instance, give us a day's work. Mr. Bower: It depends entirely upon the season. At Paris Station, for instance, there are fish to feed, screens to clean, eggs to be col- lected, young fry to be shipped, and current repairs to be attended to. I was up there last week and went through the woods surround- ing the grounds and found a lot of down timber not valuable timber, that will be wasted unless it is cut into wood, so I told them to put a crew of three or four men on and save the wood. If we don't need it we can sell it for more than it costs. Then another thing, when we are putting out fish we send a great many out by special mes- sengers. The same way at Mill Creek and Drayton Plain station. Mr. Lord: Which is your largest station? Mr. Bower: Well, Paris and Mill Creek are really the most important stations. Mr. Lord: Harrietta is not very large? Mr. Bower : It is a new station. Mr. Lord : You had more employes there than at the other stations. Mr. Bower: We may have been doing some special work. They are really all engaged in the same character of work, outside of the work covered by special appropriation such as building ponds, etc. Mr. Lord: These hatchery superintendents are all capable, are they? Mr. Bower : Our hatchery superintendents are all experienced. I don't know how many years Mr. Marx at the Paris Station has been with us. I have been here twenty-five years and he was here when I came, also Mr. Lydell of Mill Creek. The man at Drayton Plains has been there eighteen years. Mr. Lydell is assistant superintendent and is stationed at Mill Creek. Mr. Lord: Do you have an assistant superintendent at each station? Mr. Bower : No, we call them overseers. Mr. Lord : Does Mr. Lydell do any work here in your office ? Mr. Bower: No, it's this way: A number of years ago Mr. Lydell was offered a position with another state at a salary of, I think, $2,500.00 a year. At that time we were paying him $100.00 a month. We 255 didn't want to lose him and he really didn't want to go. Finally, he said he would stay if we would make his salary so much, not as much as it is now, and we did but in order to do so and, in order that the other hatchery superintendents would not expect the same salary he was getting, they created the position of Assistant Superin- tendent. Mr. Lord : What do you pay him now ? Mr. Bower : We pay him $140.00 a month. Mr. Lord : You think he is really worth that much ? Mr. Bower : I know where he can get f 3,000.00 a year now. Mr. Lord: Who is Harold Bower? Mr. Bower : He is my son, and is clerk here in the office. He takes care of the Angler's License funds and does clerical work. Mr. Lord : How many clerks have you in the office ? Mr. Bower: We have two clerks here. Mr. Lord: What do you pay them? Mr. Bower : We pay them each $20.00 a week. Mr. Lord ^ In the matter of equipment, do you think you need any new equipment of any kind at any of your hatcheries, or in the office? Mr. Bower : Why, there is no limit, of course, to the amount of expan- sion. Mr. Lord: I am not talking of expansion. Just your present stations and offices. Mr. Bower: No, nothing now, I guess. We are pretty well provided for. Mr. Lord : You don't think you will need any special appropriation next year? Mr. Bower : Not unless we expand. Mr. Lord: Can you tell us what per cent of the people in the state make application for fish to plant? Mr. Bower: It is pretty hard to say. We get a great many applica- tions from clubs. Mr. Lord: What kind of clubs? Mr. Bower: Angling clubs, sporting clubs, etc. Mr. Lord : Most of them come from clubs ? Mr. Bower : No, I would not say most of them ; a great many of them do. Mr. Lord: You say you couldn't tell us what per cent? You have a record of the applications you receive for fish for planting. How many did you receive last year? Mr. Bower: We have probably around five thousand a year on an average. Mr. Lord: So that the per cent of the population is very small that makes application for fish? Mr. Bower : We get more applications than that. A great many are duplicates and we throw them away, of course. Many apply for fish for waters that run through several counties. Mr. Lord: Of this five thousand you receive, how many come from clubs? Mr. Bower : I should say that perhaps one-third. Mr. Lord : What is the nature of the other applications? Who are they generally from ? Mr. Bower: Well, from a variety of people. 256 Mr. Lord: People noted for sportsmanship? Mr. Bower: Yes, a good many, and we get a good many from farmers, sportsmen's clubs, etc. Mr. Lord: Are the applications from farmers for the purpose of get- ting fish for private waters ? Mr. Bower: WeJl, I suppose in some cases that is so, but he has to certify that the water is open to the public. Mr. Lord: About how many farmers make application, five hundred? Mr. Bower: Oh, more than that out of the five thousand, and a great many more of them are interested in this way. People in villages, sportsmen, apply for fish for a lake or stream and get some farmer to come to the station and get the fish. Mr. Lord: How many licenses did you issue to non-residents? Mr. Bower: About twenty-five thousand. Mr. Lord : What do they pay ? Mr. Bower: They pay one dollar for the license. That allows them to fish for everything but trout. Trout license is $3.00 and when they have a trout license, that covers everything. The last legislature raised the trout fee to $5.00 against my protest. I think it was a mistake. The great bulk of the license money comes from the one dollar license. We get one-third, yes, nearly one-half, on the licenses issued in the two border tier of counties in the south part of the state. From ten to fifteen per cent of every dollar we get comes from Cass county. Mr. Lord : Mr. Bower, what steps or methods do you take to enforce the law? Mr. Bower: We have nothing to do with enforcing the law. It is done by the Game Warden's Department, Mr. Lord: So, as far as you know, two thousand people might be fishing without paying licenses? Mr. Bower: There might be. Mr. Lord: The Board of Fish Commissioners collects the revenue from the issued licenses -uid the Game Warden's Department has charge of enforcing the law. Now, you speak of having a number of small hatcheries. Can you tell us approximately what a small hatchery would cost if you standardized them throughout the state. What the cost would be of an ideal small hatchery ? Mr. Bower: I think hatcheries such as I have in mind could be estab- lished on an average of from five to eight thousand dollars a piece. Possibly ten in some locations. Mr. Lord: After you had established such hatcheries, what would be the annual cost of maintaining one? Mr. Bower: The way I would run it, it would cost not to exceed 15,000.00 a year. I would run it in a semi-wild condition, not as a park. I would not have flower beds or any of those frills connected with the hatcheries now. Mr. Lord: The hatcheries are maintained in quite nice shape, are they? Does that require much help to take care of the shrubberies, etc. ? Mr. Bower: It requires one man at every station and there are times when he has to have a little help. Mr. Lord: You think that could be dispensed with? 257 Mr. Bower: I don't know as to those that are established, as to their being dispensed with, but there is a reason for it too. I have noticed that when the committee from the legislature goes around to look at these stations they judge from the general appearance of things. The station that looks the nicest is the one that is likely to get the most money, not the one that is the most efficient. Mr. Thompson : Tt would cost about $2,000.00 a county to maintain these small hatcheries a year. Mr. Bower : Yes, all of which and more too could be raised by Angler's License Funds and dispense with the appropriation. I would have an Angler's license applying to men only, above the age of twenty-one years. I would not make that license more than one dollar for resi- dents. Possibly a little higher for non-residents. Then I would have it arranged so that the proper officials of the township or county could write in and apply for exemptions, certifying that certain parties in that township or county were too poor to take out licenses and we would issue licenses free. I would make the fee, as I said, one dollar. After running a year or two, it is possible that the fee might be reduced, but I believe a license on that basis would give us money enough to establish these small stations over the state at the rate of three, four or five a year and maintain them. I think it would increase the efficiency of the Fish Commission wonderfully and it would not cost anybody a dollar, only the man that fished and not him if he was a poor man and could not afford to pay it. Mr. Lord : Mr. Bower, how often do you have board meetings ? Mr. Bower: The board meets very irregularly. No fixed time for the meetings. It is almost impossible to get them together. Mr. Lord: On an average, how many meetings do they have a year? Mr. Bower: Not over three, sometimes only two. One of the members lives here in Detroit, one in Saginaw and one in Houghton, and it is pretty hard for them all to get together. Mr. Lord : Do j( >u have a record of those meetings ? Mr. Bower: Yes, sir. (Kecord shown). Mr. Bower : We keep in pretty close touch with the commission because I make a financial report every month to each of them, giving a cer- tified copy of the bank balance, and this year I have begun to make a quarterly report. Mr. Lord : I notice that on the third day of last October, your treasurer had a balance in his hands of fl 9,457.00. Mr. Bower: Yes. sir. Mr. Lord: Now, your meeting previous to that October meeting was held in May? Mr. Bower: Yes. sir. Of course, they get together informally some- times and we correspond more or less. Mr. Lord: Do they really take an actual interest in the work of the Fish Commission or is it really all conducted by yourself, as an actual fact. Mr. Bower: Well, very largely by myself. They are, of course, non- salaried. It's really not the fault of the men, if there is a fault, it is with the system. 258 Mr. Lord : Isn't it a fact, Mr. Bower, that the board is entirely guided by you? Mr. Bower: Well, in many instances they approve of my recommenda- tions and then again they don't. Mr. Lord: "Mr. Bower, what is the nature of the supplies of all kinds that you purchase? Mr. Bower : That takes quite a wide range ; tools of all kinds. Mr. Lord: What kind of tools? Mr. Bower : Well, at Paris Station we have, within the last year, or two, purchased a complete set of farmer's tools because there we have fifteen or twenty tillable acres of land. This last spring I directed all the overseers at the stations to raise all the crops they could on their tillable land. Mr. Lord: Do you purchase the agricultural implements and other equipment ? Mr. Bower: The local Superintendents do most of the buying. Some- times on large matters like five hundred cans, I do the buying myself. I buy these cans of a big can manufacturing concern here in Detroit. Mr. Lord: So that you have one-half dozen, or more, men purchasing supplies for the Fish Commission. Do they buy from local people usually ? Mr. Bower: To some extent. Mr. Lord: Have you ever made any investigation, as Superintendent of the Fish Commission, as to whether the man doing the purchasing* is getting all he should get for the money he is spending? Mr. Bower: Very frequently. Mr. Lord: Have you ever had any occasion to criticise? Mr. Bower: Yes, in some cases but I think as a rule they have done the best they could. Mr. Lord : How are they supplied with money to make these purchases ? Mr. Bower: Until last year if he bought with money he furnished the money himself but during the last year or two we have made some advances to him. I think we have about eight or nine hundred dol- lars out now to the superintendents of various stations, including myself. Mr. Lord : Do you require these men to give any bonds? Mr. Bower : No, sir. They make requisitions each month. All of these hatchery purchases are made on requisitions with exception of fixed charges, which include salary of local superintendents, my own salary, office rent, telephone and lights. The rest are covered by monthly requisitions. Mr. Lord : Do these requisitions come to your office? Mr. Bower: Yes, sir. Mr. Lord : Are these requisitions supposed to be approved by one mem- ber of the commission ? Mr. Bower : Yes ; the originals are all approved. Mr. Lord: There is an item of $25.00 for incidentals here; do they have to tell what they are? Mr. Bower : That is really a mere order to spend $25.00 ; they have to submit vouchers for it. There is, of course, lots of small stuff they have to have. We allow them a small sum. The vouchers have to be submitted for approval. 259 Mr. Lord : What actual knowledge do you have that these people need, actually need, the stuff they are purchasing ? Mr. Bower: We have to have a certain amount of confidence in our men. Some of them have been with us twenty-five years and have not broken that confidence. If they put in items that should not be allowed, I talk with them ; great many items have been ironed out before they are shown. Mr. O'Brien: Could you trace out an entry of incidentals? Mr. Bower: Y^s (files and vouchers shown). Mr. Lord : Do you allow the overseers to make an overdraft on requisi- tions ? Mr. Bower: We give them a little leeway. These things are estimates, some of them, and some are actual costs. Mr. Lord: Getting back to the spawning proposition. Do you produce your own fish entirely? Mr. Bower : We sometimes buy a few brook trout and salmon. In fact I have thought best, and would now recommend, that we buy all our brook trout eggs. The only draw-back is that you couldn't always get what you needs You can buy them cheaper than producing them. The main reason is that the Eastern brook trout hatcheries are rais- ing brook trout for the market, and what they get out of their eggs is largely velvet. Mr. Lord: You say you can buy all the eggs cheaper? Why don't you do that? Mr. Bower: I have recommended this to the board, but they are in doubt as to getting them. Mr. Lord : How much would you save if you did buy them ? Mr. Bower : For instance, we would save at Harrietta the cost of plant- ing brook trout the year around. Mr. Lord: About how much? Mr. Bower: I think we could save at that one hatchery $2,000.00 a year. Mr. Lord: And how much could you save at the other hatcheries? Mr. Bower: We could save about the same proportion at hatcheries where we use brook trout eggs. Mr. Lord: Eight or ten thousand dollars in the aggregate? Mr. Bower : No, I should say about $5,000.00 a year provided we bought all the brook trout eggs ; that might be a little high. Mr. Lord : Could you also buy your other spawn to advantage ? Mr. Bower: No, there is no place where it is produced. We would not save $5,000.00 a year for this reason ; because at the Soo we now buy all our brook trout eggs, and some at the Paris station. I think it would be safe to say that we could save from three to four thou- sand dollars a year. Mr. Lord : Can you tell us about how many privately owned hatcheries there are in the state ? Mr. Bower: Yes, sir. There is a private hatchery near Evart owned by Mr. Postal's nephew of LeRoy, Michigan; W. H. Fray of Sand Lake has one, and I think there are from fifteen to twenty privately owned hatcheries in the state. Mr. Hinkley: The 1915 legislature appropriated a certain amount to be used for investigating sites. What was done about that? Did the Commission make any recommendations? 260 Mr. Bower: I don't know, but I do not think they did. Mr. Lord : In order to complete our record about your board meetings, I want to ask a few questions. Your record shows that from August 4th, 1915, to October 4th, 1917, Commissioner Hunsinger attended six meetings only; Mr. Postal, five meetings, and Mr. Mann only two meetings in over two years. Mr. Bower: That record is correct; but, of course, as I say, Mr. Huns- inger and Mr. Postal get together informally. Mr. Lord : Although Mr. Postal lives in Detroit, Mr. Hunsinger has attended more meetings than he. Mr. Mann has paid no attention to it, having attended only two meetings in over two years. Mr. Bower: They correspond quite frequently and monthly reports are sent to them. The meetings used to be held more frequently. Mr. Lord : You have had just six meetings during that time and Mr. Hunsinger has attended every meeting. None of these records are signed by anybody except yourself. Why is it that the board has not signed the records; haven't the minutes been approved by the board? Mr. Bower: Yes, all have been approved; just overlooked the signing, I suppose. MICHIGAN HISTORICAL COMMISSION Mr. Lord: Mr. Fuller, you are the Secretary of the Michigan Histor- ical Commission? Dr. Fuller: Yes, sir. Mr. Lord: Will vou state, in a general way, what the activities of the commission are? Dr. Fuller: The fundamental activity is collecting and publishing materials on Michigan history. Mr. Lord: Putting it MS briefly as possible, tell us something about the nature of these collections and publications. Dr. Fuller: That is quite a long story. I perhaps might say that we have a set of collections, 39 volumes ; the first volume was published in 1877 by the Michigan Pioneer and Historical Association; they have been continued by the commission since the association was discontinued, but they are now distinctly documentary. Heretofore, the collections have consisted of a great variety of materials which have been distributed to the schools. There is, however, a great deal of the material that could not be used by the schools, and so the idea was to distribute the material in some way so that it could be more wisely sent about. The documents now go to colleges, universities and public libraries. We have now taken the papers read at the meetings of the Pioneer Society which used to appear in the docu- ments, and we publish them in the Michigan Historical Magazine; these documents and the magazine are the two fundamental publi- cations. Mr. Lord: What is the cost of publishing these every year? Dr. Fuller: About fifty cents a volume. Mr. Lord : How manv do you publish ? Dr. Fuller: 2,500. Mr. Lord: Do you dispose of all of them? 261 Dr. Fuller : Yes, sir. We have a regular mailing list and send the volumes out just as soon as possible. We have 2,000 on our perma- nent mailing list, schools, libraries, etc. We sell the volumes to indi- viduals that desire them at a cost of f 1.00. Mr. Lord: Do you sell many? Dr. Fuller : We don't try to because they are more valuable in libraries and schools. Mr. Lord: How many of these annual reports have you on hand now? Dr. Fuller: Thirty-nine volumes of those plus one volume of the new University series. Mr. Lord: I mean, Mr. Fuller, the number of copies of these volumes that you have on hand now. Dr. Fuller: I couldn't give it to you definitely. Those volumes were kept over in the House and Senate store room and Charles Pierce had them taken down to the Oakland Building, and they were all put in there without counting. Mr. Lord: Well, those have been hanging around the Capitol for many years, so they could not all have been disposed of. Dr. I uller : No. 22 and No. 27 are out of print, and they should not be disposed of entirely until the right places are found to put them in. Mr. Thompson : Is it advisable, Mr. Fuller, to make a larger number of these books than you would use ordinarily? Dr. Fuller: We have calls for them constantly; we have immediate demands for 2,000, and we print 500 more while the type is set. It costs very little more to print the 500 extra. Mr. Lord : Where does the demand for the extra copies come from ? Dr. Fuller: From Michigan libraries that have been overlooked in the original distribution, and public schools, principally high schools, that had not received them before. Mr. Lord: Do you issue any pamphlets now, other than the one you sent to us? Dr. Fuller: Once on a while a serial bulletin. That is a little venture the commission undertook to encourage children to study Michigan history. We have published eight of those bulletins ; No. 9 is in press now and contains prize stories; No. 10 will be a bulletin for Mrs. Ferry's use with clubs, etc. The point in publishing them separately is so that they can be in handy form for special use; probably not more than one or two will be published a year. Mr. Lord: You can't tell us approximately how many sets of volumes you have in the Oakland Building ? Dr. Fuller : I should think there might be two hundred sets, thirty-nine volumes in a set. Mr. Lord: So that there is really about eight thousand books? Dr. Fuller : Yes, but undoubtedly those will be taken up. Mr. Lord: Have you always published twenty-five hundred volumes? Dr. Fuller : That has been the maximum for a long time. Mr. Lord: Now, the publication of those last year cost f 2,076.86, pub- lications altogether. Dr. Fuller: I believe Mr. Munson reported to the Senate committee when I was present that the cost was approximately -13,000.00 for our publications. We would print very much more than that if we could. Our limitation is from two directions ; in the first place, state 262 printers, and second, the size of our staff. The purpose of bur com- mission is to place before the people Michigan history and in a way that they can best use it. Mr. Lord: Yon spoke of a mailing list; tell ns about the mailing list you have. Are they principally the same people every year that you send to? Dr. Fuller: Yes, the public libraries of Michigan, the public schools of Michigan, principally high schools, colleges and university, and in- stitutions in other states where we get value received in the way of exchanges. Mr. Lord: Do you send those by mail or express? Dr. Fuller: The sets go freight and single volumes by parcels post. Mr. Lord: That accounts for your heavy postage bill? Mr. Fuller: Yes, sit. Mr. Lord: Do yon use the addressograph in addressing wrappers? Dr. Fuller: Yes, Lampson does our work on the addressograph. Mr. Lord: What does it cost? Dr. Fuller: The cost varies, figures up a great deal less than if we did them by typewriter; the plates cost us 2 l /2 cents apiece and they are, of course, all made up now. Mr. Lord: Did you ever make any effort to get the addressograph that the state owns, and do your own work? Dr. Fuller: I could buy Lampson's for about f 40.00. Mr. Lord: Well, the state owns two of these at the present time; one in the Board of Health and one in the Public Instruction Depart- ment, and they are not in use all the time. Dr. Fuller: Well, we have simply turned our mailing proposition over to Lampson. Dr. Fuller: What does Lampson charge for addressing envelopes? Dr. Fuller: It depends on the mailing. Our books are all wrapped, and he does the wrapping and ties and stamps and addresses the whole job. Mr. Lord: How much does that cost a year? Dr. Fuller: Mailing of seven hundred volumes for the first series cost us $4.50; that means wrapping and stamping and doing everything; going and getting them, addressing them and carrying to the post- office. It cost us fo.OO to mail 2,500 copies of the Fourth Annual Report, that is the handling of the entire thing from the bindery. Mr. Lord: Now, in the statement that you have in your report, it is somewhat misleading, for the reason that you have no statement whatever of the amounts that you have drawn from the general fund, only from your special appropriation. The people of the state would think that it only cost the state |5,028J)4 for this commission, whereas the cost was really between nine and ten thousand dollars. Dr. Fuller: That is very true, and I brought it up before the commis- sion at the first meeting and their direction was to make it this way; also the Governor said that it was alright. Of course, it wouldn't occur again because we are now entirely on appropriation. Mr. Lord: How much did you get last year? Dr. Fuller: $15,000.00 last year. Mr. Lord: What new activities are you engaging in to make the addi- tional appropriation necessary? 263 Dr. Fuller: Additional publishing and collecting, archives, the making of biography of Michigan ; and for instance, we had a man here that worked all summer in the Archives Department and it cost us about f 300. He was, or is now, a member of the faculty at Ann Arbor, and of course the work of collecting is a work upon which you can spend any amount of money. Wisconsin spends every year $80,000.00, Iowa 160,000.00, and Illinois $40,000.00. There isn't a state in the whole northwest that spends as little as we do. We are at least forty years behind Wisconsin. Mr. Lord: Do you think, Dr. Fuller, that your work here is of real benefit to the people of the state? Dr. Fuller: I can best answer your question in this way. The people of Michigan have instituted a university which has a department of history, for the training of students in the study and research in history. The head of that department is Prof. Van Tyne, a man who is a writer and scholar known internationally; and a man like Bur- ton of Detroit, who spent thirty years in collecting certain materials ; Jenks of Port Huron, Attorney ; O'Brien of Kalamazoo, perhaps the best known man on ecclesiastical history, especially in the Catholic church ; Clements, Regent of the University, and L. T. Hemans, who was a member of the commission before his death ; if men like these can spend time, without pay, it is my idea that it is a very high endorsement of the work and it would indicate that there is some- thing in historical study. On the other hand, the states about us, the states we look up to for ideas, the eastern states, they all began this work many years ago and have gone away on in advance of anything we have or can have for many years; the states all around us, particularly Wisconsin, Illinois, Minnesota, Indiana and Iowa, have all gone ahead of us Ohio is broken up because they could not get together in the work. Now, when you get over into Canada, that is so far away from us because they have the record office in back of them as formed in England. Mr. Lord : What use do you make of the reports that are sent to you ? Dr. Fuller : We publish whatever is worthy of publication. Mr. Thompson : What means have you for knowing that this informa- tion is all accurate and true? Dr. Fuller : We, of course, do not have any. We cannot actually check up every item, but the best thing we can do is to send it to some man with good historical judgment and ask him to check the work for us. Mr. Lord : The question is, how many people read these publications? Dr. Fuller: Well, they are used in most of the leading city libraries, city schools and many of the rural schools. Mr. Thompson : What is there of actual value to the community ? Have you any knowledge as to whether they are actually read and studied J)y pupils of the schools ? Mr. "Fuller : We had last year at the Historical meeting a talk on that very thing, made by Mr. Cody. He sent out a questionnaire and the conclusion he reached was that these volumes were not useful for the public schools, and for that very reason we discontinued that collec- tion ; there was no use in sending it out to schools. It has been, as I 264 said, discontinued in the form of one, and is broken np in two series, documentary series and university series. You can't go on with this sort of thing if the people are not inter- ested. Now, if it isn't of any value, I want to get out of it. If it has value, we have got to convince the people of its value. Mr. Lord: Of what value are the various biographies to a school, for instance ? Dr. Fuller: I think it is one of the most important studies for young- sters. You take the life of such a man as General Shafter. I presume few know that he lived down in Kalamazoo county. The value of it is in the inspiration that it gives to the youngsters. Of course, there are various ways of writing biographies, one that simply tells names, dates, etc., is of no value whatever, but one that interprets the life of the man, the obstacles he met with and overcame, etc., is a very valuable thing. Another thing, I believe that there ought to be in all high schools a course of American History and at least a few weeks of Michigan History, so that the students would know the leading lines of develop- ment in their own state. SUPERINTENDENT OF CAPITOL Mr. Lord : Mr. Bennett, you are the Superintendent of the Capitol and Capitol Grounds? Mr. Bennett: Yes, sir. Mr. Lord: Will you state to the Commission, as briefly as possible, what your duties are? Mr. Bennett: Well, the duties are looking after the Capitol Building, the State Offices outside of the building, and the grounds. Mr. Lord : You have supervision of all the office buildings, and all lands owned by the state in the city of Lansing? Mr. Bennett: No, I could hardly say that, for I don't have supervision over the School for the Blind and Industrial School grounds; just the Capitol grounds and two blocks owned by the state here in Lansing. Mr. Lord: What are the activities connected with that supervision? Mr. Bennett: I try to visit the different offices as often as possible, o. k. the bills for purchases of furniture, carpets and supplies, except those contracted for by the Board of Auditors. Mr. Lord : Do you do the purchasing of furniture, carpets, etc. ? Mr. Bennett: I am supposed to; once in a while the department head goes off and purchases some unknown to me. Mr. Lord: Was there an order issued, do you know, or a resolution passed by the Board of State Auditors, authorizing you to do this purchasing, or where do you get your authority ? Mr. Bennett : I can't recall about that ; whether there has been an order or resolution by the Board of Auditors, I couldn't say at present. But I know that a requisition is supposed to be made on the Board of Auditors and, if for material of any kind, it is almost always turned over to me to purchase, even if the board isn't in session. Mr. Lord : When an office orders a new desk, they are required to make 265 a requisition to the Board of State Auditors, and then that requisi- tion is passed on by the board and referred to you to make the pur- chase ? Mr. Bennett : Yes, sir. Mr. Lord: Did you receive any instructions from the Board of State Auditors, at any time, that you were to make all these purchases of furniture for all these offices ? Mr. Bennett: I couldn't say as to that, really. I don't know whether there is a resolution on record of that kind or not ; there is a general understanding that requisitions come before the board and, if the board isn't in session, the secretary turns them over to me to act on in many cases. Mr. Lord: So that, so far as you know, it is rather a "hit and miss" proposition, sometimes the requisitions are referred to you and some- times they are not. Mr. Bennett: Yes, that's true. Mr. Lord : Do you keep a record of all the purchases you make in your office? Mr. Bennett : Yes, and a record of some I don't make. For instance, if a bill goes through for material I have not purchased, they won't pass it unless my o. k. is on same. Mr. Lord : What is the object of their asking for your o. k. when you don't make the purchase ? Mr. Bennett : Don't just know, except for record purposes. Mr. Lord : Mr. Bennett, from whom do you usually purchase the furni- ture and through whom ? Do you go to the factories where you can make purchases yourself, or do you get bids? Mr. Bennett : I generally have an understanding with some local dealer here in Lansing who will give me the best discount, and purchase from him. Mr. Lord: Have you ever tried any other dealers outside of Lansing? Mr. Bennett : Oh, yes. I have got now so I know just about what the wholesale price of the goods should be and find it more satisfactory to buy here through a dealer. If I buy outside, the goods are, of course, just delivered to the station ; and we have to attend to getting them to the offices, and oftentimes they are liable to be marred or broken and need some fixing. If I buy from the dealer here, they are delivered to the offices, unpacked and in good order. If they are marred or need a little fixing the local dealer attends to that. Mr. Lord : Have you ever tried to buy direct from the factory ? Mr. Bennett: No, I never have. Mr. Lord : Did you ever visit any of the furniture factories in Grand Rapids and see what you could do there? Mr. Bennett: Yes, I have visited them but not to make any purchases or anything of that kind. Mr. Lord : The Board of Auditors have not restricted you, have they ? You would have authority to go to the factory and purchase these articles, wouldn't you? Mr. Bennett: The only thing would be that I would not like to incur any traveling expenses without the board's approval. Mr. Lord : You are a member and attend the meetings of the Michigan Institutional Buyers' Association. Do you purchase anything at all on recommendation of that association? 266 Mr. Bennett: Sometimes. For instance, some supplies such as elec- trical bulbs, etc. They have never taken up the matter of carpets, furniture, etc., which is my biggest line. Mr. Lord : Can you tell us approximately the aggregate amount of your purchases for the last fiscal year ? Mr. Bennett : I could by looking at my books. Mr. Lord : We would like to know the aggregate amount you have pur- chased through your department for the last fiscal year. Mr. Bennett: There possibly are some accounts that have come direct that I did not purchase. Sometimes they go ahead and purchase without putting through the requisition until after the purchase is made. Mr. Lord : Then, there really is no uniform system of state purchases as far as state departments are concerned. They often purchase with- out your knowledge? Mr. Bennett : Not entirely so. There are cases where it has been done. Mr. Lord : Can you think of any system whereby money could be saved in the matter of purchasing this kind of furniture? Can you see any way by which the state could be saved any considerable amount of money by any other system of purchasing for state departments, such as carpets, furnkure, etc.? Mr. Bennett : If there was a system whereby the purchases of the whole State of Michigan were combined, you might get a saving. Mr. Lord: Don't you think that money could be saved by dealing direct with the manufacturers ? Mr. Bennett : I don't think so. I'll tell you, Mr. Lord, there are many cases where a person wants furniture and wants it immediately, and I am compelled to pay a bigger price than I would have to if I had more time. They want it immediately and I am obliged to go and buy from stock on hand. Mr. Lord: Surely there could be a better system than that adopted. Departments should advise you in advance of their needs. They usually can tell a short time before if they are going to need a desk or anything like that, can't they ? Mr. Bennett: I can't say as to that. Mr. Lord: How much have you bought recently? Can you tell us approximately? Mr. Bennett: No, that would be quite a problem to tell. I presume that in the last four months I have bought f 5,000.00 worth of car- pets and furniture. Mr. Lord: On an average, about how much do you buy during the year? $15,000.00 worth? Mr. Bennett: Well, I wouldn't like to be recorded. I could give you nearly the exact amount, I will send the figures to you. Mr. Lord: Do you keep an inventory of the properties owned by the state ? Mr. Bennett: I think the Board of Auditors have an inventory; they keep track of that themselves. Mr. Lord : Do you know whether they go around in the various offices and check up the furniture, etc.? Mr. Bennett: I think so. As far back as when Mr. McCoy was state treasurer, in 1901, he had an inventory taken of state property. I 267 know they have a man that goes around and puts marks on all prop- erty bought now. Mr. Lord : Have you ever had any inventory except the one made by Mr. McCoy? Mr. Bennett: No. Mr. Lord : As a matter of fact, you don't know if there is one in the capitol or not? Mr. Bennett: No, I don't know. Mr. Lord : Shouldn't it be the duty of the Superintendent of the Capitol to keep the inventory and to take one every year? Mr. Bennett : Well, the superintendent is just working under the Board of Auditors and if they keep track of it Mr. Lord: Don't you think it should be his duty to do that? Mr. Bennett : Don't know of any reason why it should, any more than the Board of Auditors. I might find a mark on that chair and I might not. It might belong to the Senate or House of Representa- tives. The Board of Auditors might not have any record that they had bought any chairs for this committee room. There is an inven- tory taken of the Senate property, but it is done by the Sergeant-at- Arms of the House and Senate. A copy of that is supposed to be turned over to me. J don't think I had a copy at the last session. Mr. Lord : So as a matter of fact, various people have to do with the purchases of furniture, carpets, etc., and different persons take an inventory of the furniture and other property? Mr. Bennett : We have not anything entirely uniform about it. Mr. Lord : Don't you tiring it would be better if we did have some uniformity ? Mr. Bennett: Possibly. Mr. Lord : Don't you think it would be better if the superintendent of the capitol had charge of all this, and thus the responsibility be placed in one man? Mr. Bennett: Possibly it might be; but I can see how the Board of Auditors, I suppose, think they have a pretty good system in taking care of it. Mr. Lord : Do you make any purchases of anything outside of furniture, carpets, soap, towels, etc. Mr. Bennett : You mean office supplies ? Mr. Lord : Yes, any supplies at all used by the departments. Mr. Bennett : I don't purchase much like that. Sometimes a requisi- tion goes through the Board of Auditors for something special and then I purchase it. Mr. Lord : Where do you buy those things ? Mr. Bennett: No place in particular. Wherever I think I can get tjie best goods for little money. Mr. Lord : How do you buy soap ? Mr. Bennett: From wholesalers and manufacturers. Mr. Lord : Can you tell us the kind of materials and furniture you buy ? Mr. Bennett: Carpets, linoleum, tables, chairs, desks, steel stuff, not only filing cases, but steel shelving, and things like that. Mr. Lord : Do you buy much lumber ? Mr. Bennett: Why, anything we need by way of lumber. Mr. Lord : Where do you buy that ? 268 Mr. Bennett : Here in the lumber yards. Mr. Lord : Do you buy very much ? Mr. Bennett : No, I shouldn't call it very much. Mr. Lord: Do you advertise for bids on your boxes? Mr. Bennett : I generally get a list of what I need and go direct to the different lumber companies here in Lansing. We have tried outside firms, but it is quite a bulky proposition. I have been buying the legislature's boxes for the last two years here in Lansing. I buy them in the knock-down for 45 cents and it would cost from $1.25 to $2.00 to buy them made up now. Mr. Lord: Who authorizes the purchase of those boxes? Mr. Bennett : The Secretary of State. Mr. Lord : So that some purchases are made without requisition to the Board of Auditors? Mr. Bennett : In gome cases where I know material is needed, I look to see what I can get, and if the price is satisfactory I buy it, and make a requisition afterwards. Mr. Lord : How much during the year do you suppose you purchase in that way, the aggregate amount in money, I mean? Mr. Bennett: I couldn't say. Mr. Lord : Do you buy $1,000.00 worth a year? Mr. Bennett: Possibly. It is rather indefinite and would be hard to find out. We buy some things that we never make requisitions for. Mr. Lord: That is, you never turn in a requisition after you make the purchases ? Mr. Bennett: For instance, if the electrician should come to me for 100 or 1,000 feet of wire and say he needed it for repairs, etc., and needed it immediately, why you couldn't very well ask him to wait to get a requisition through. Mr. Lord: Do you keep electrical supplies on hand at all? Mr. Bennett: We are supposed to keep a certain amount on hand; we get most of that stuff right here in town as we can do just as well on it, but if I am offered any better prices, I don't hesitate to buy in advance of our needs. That would be another case where I would, or might, file a requisition after purchase. Mr. Lord : Do you have a stock room for supplies you keep on hand ? Mr. Bennett : A small stock room. Mr. Lord: What record do you keep of the material and supplies in that stock room ? Mr. Bennett: No particular record. We have what we call special requisitions and if it was for soap, for instance, they would send it in to me. Mr. Lord : What would you do with that requisition ? Mr. Bennett: File it away; I have a file for requisitions. Mr. Lord : Do you make any book entry of it ? Mr. Bennett : No book entry at all. Mr. Lord : Do you take an inventory of your stock room every year ? Mr. Bennett: No. Mr. Lord : Don't you know at the end of every year what you have given out ? Mr. Bennett : No, simply what Mr. Lord: What records do you keep of purchases you make, and of requisitions you get? 269 Mr. Bennett : We enter all on the book. Mr. Lord: What kind of book? Mr. Bennett: A regular book we have there, in which we enter every- thing as it is purchased and when the bills come in, I o. k. them. Mr. Lord : Do you have any book entry of amounts purchased, the cost of same, etc. ? Mr. Bennett: Yes; everything is in black and white, showing what it costs. Mr. Lord : You don't keep any stock account against any of the depart- ments, do you? Mr. Bennett: No, but our book shows to what departments the stuff went. Mr. Lord: What improvements do you think could be made in the present system of purchasing? Mr. Bennett: Why, if, as you suggested a little while ago, everything should come through one head, I think it would be an improvement. Mr. Lord: You think you would get better results and also get materials cheaper? Mr. Bennett: I think you couldn't help but get some of the stuff cheaper. Mr. Lord: You don't have anything to do whatever with purchase for state institutions, do you? Mr. Bennett: No. Mr. Lord : What purchases do you make for the legislature, any at all ? Mr. Bennett: Why, no, although I do supply the legislature sometimes with a good deal of small stuff, the same as I do the departments. For instance, the Industrial Accident Board have a fund and they are supposed to live within that fund. They might want some little thing that I had ; for instance, a half dozen electric bulbs, and if they were compelled to go down town and buy them, they could not buy them for less than list price and I could buy them for 31% off. Things of that kind I turn over to them without any record. Mr. Lord : How long has this present system been in force, for the Superintendent of the Capitol to make purchases of carpets, furni- ture, etc. ? Mr. Bennett: I think it is the growing tendency to have it go to one head. I think my purchases are better than if Tom, Dick or Harry had made the purchases. Mr. Lord: Isn't it a fact that, until recently, every department of the state government made its own purchases, to a great extent ? Mr. Bennett : Yes, I think largely that is true. Mr. Lord: So that, evidently, the Board of Auditors thought it would be an improvement to have one man make the purchases, and at the same time the board has not insisted that one man make all the pur- chases; it has permitted some departments to make their own pur- chases at various times, without any requisitions? Mr. Bennett: Yes, sir. Mr. Lord : What steps do you take to know that the bills are o. k. ? Mr. Bennett: If a bill comes to me from a member of the Board of Auditors, I don't take very many steps unless I know that the amount charged is too much. For instance, a bill came to me the other day from the Superintendent of Public Instruction. It was 270 o. k.'d when it came to me and I went back and asked about the bill, as it was 20 to 25 per cent too high. The girl in his office said that she had o. k.'d it; that she knew the stuff had been received, but that if the bill was not correct, they, of course, did not want to pay it. It was simply a question of discount. The firm they bought of was giving 25% off and I could get 40% off. I took it up with the people they bought from, and after a while they said they would give us 40% off, so that it resulted in a saving of f 30.00 to $60.00 in that par- ticular case. Mr. Lord : Do you refer now to the new furniture bought for the Super- intendent of Public Instruction? Mr. Bennett: It was some furniture bought for that department. Mr. Lord: You say the original discount was 25' .{ and you gol it increased to 40% ? Mr. Bennett: Yes, sir. Mr. Lord: Are you quite sure that the bill was settled on a 40% dis- count basis? Mr. Bennett: I am sure because I o. k.'d it after the discount was on the bill and I put it through the Board of Auditors. Stowell-David Company of Grand Rapids had quite a bit of talk with Mr. Ellsworth of the Insurance Department trying to get him to buy their line of furniture; they even had a large cut made showing him how nice his office would look. They took the matter up with me, and DeKline was with them, i then- local dealer). I said to him, "Why is it, I can't get as much discount from you as from other concerns?" They said that their goods were better goods, and all this and that. I told them I couldn't look at the furniture as I could buy cheaper elsewhere. They were only allowing 25% discount and I could get 40%. Then they said, "If you will buy all your furniture of us, we will give you 40% discount." I told him that I would buy nothing of him if he didn't give me 40 % off and that if he did, he would stand as good a chance as anybody else. I got the 40% off, except on steel stuff, and better on chairs. I got the chairs for 10% increase over cost. Mr. Lord: Do you buy any furniture through Allen & DeKline, the local dealers here? Mr. Bennett: Sometimes a party will send in a requisition for a filing case or something that they want to match, something they have previously bought from them, and, in such cases, I do sometimes send the order to them. Mr. Lord : They get a commission, of course, for such sales ? Mr. Bennett: Yes, sir. Mr. Lord: That commission would be saved if you bought direct from the manufacturer, wouldn't it? Mr. Bennett: I figure that I can do as well buying from parties that deliver the goods here in the building. They pay the freight and stand ready to make good if the goods are not in good condition when they arrive. I believe it is a better proposition than to buy direct from the factory and save 10%. Mr. Lord : Don't you think, Mr. Bennett, that a contract could be made with some big furniture manufacturer in Grand Rapids, or elsewhere,, 271 to supply the state departments with the various articles of furni- ture purchased by the state? Mr. Bennett: Well, what are you going to do? There is hardly two offices that want the same line of goods. Mr. Lord : Well, they may not want the same line of goods, but couldn't there be sort of a standardization of furniture for the various offices? Mr. Bennett : If you can bring that about, possibly a deal could be made. As it is now, out of a dozen requisitions, there may be eight different lines of goods. They simply refuse to make the deal unless they have what they want. I had a requisition for a safe cabinet from the Securities Commission, for instance, and it was made on the Kala- mazoo firm that the state contracts a good deal with. I took the matter up with the firm in Kalamazoo and their terms were 5% off if you paid the account before the 10th of the month. There is another firm just as good, and in some respects I like it better, which will give me 20% off. I told them this and after a good deal of correspondence they met the competition. A few days ago 'the Board of Auditors got word from them that the safe was in Kalamazoo, ready to be shipped, but that they couldn't sell it for the price we asked, and could only allow us 5%. If I had the say, I would tell them to cancel the order. I went over to the secretary of the Securities Commission and told him about the deal and that the Art Metal Company made as good a safe, etc. After talking with him, I told the Board of Auditors to cancel the order. We thought we would give them a little leeway and wait a few days, as this safe was all ready for prompt delivery, and I wrote to them that it was up to them, as we didn't want to buy the safe at that price. I expect the Art Metal Company man will be here this week, when I shall give him the specifications and undoubt- edly buy of him. Mr. Lord : As a matter of fact, Mr. Bennett, the Board of Auditors per- mits the Securities Commission or any other department to go ahead and make its own purchases, does it? Mr. Bennett : There are some departments that make their own pur- chases and I guess the Board of Auditors, in some cases, allow the bills for them. Mr. O'Brien : Is it your observation, Mr. Superintendent, that the pur- chases that are made without requisition, are made by the depart- ments who are represented on this Board of Auditors? Mr. Bennett: No, not altogether. All the departments have the same privilege. It is supposed that they do not make purchases in that way, but they sometimes do. Mr. Thompson : How long have you been here, Mr. Bennett ? Mr. Bennett: I came here in 1901 originally, but I was out for about eighteen or twenty months, two or three years ago. Mr. Thompson: You started in as superintendent? Mr. Bennett: Yes, sir. Mr. Lord : Who has charge of the vacant land in and around the capitol owned by the state? Mr. Bennett : It is under my charge, all but two lots, which were turned over to the city for parks. 272 Mr. Lord: Have you, or anybody else, to your knowledge, made any effort to standardize equipment used by the state departments ? Mr. Bennett: No, I don't think so. Mr. Lord: If the State Board of Auditors had a uniform purchasing system, it would be a great improvement, wouldn't it? Mr. Bennett: Yes, sir. Mr. Lord: Do you keep any track, Mr. Bennett, of the furniture or equipment in the various departments of the state? Mr. Bennett: As I say, I think there is a record in the office of the Board of Auditors. I don't have any system myself, and I presume the record is incomplete along this line. Mr. Lord : Do you make any reports to the Board of Auditors ? Mr. Bennett : I make reports to them of stuff that I sell. I don't specify from what office it came. For instance, Mr. Fuller might have some- thing that he does not need or want. I do with it what I think best. I may sell it or turn it over to some other department, but, now to follow right back, I don't think you would find a record in the office of the Board of Auditors that those things had been discarded. Mr. Lord: When you sell junk and stuff of that kind, what do you do with the cash you receive ? Mr. Bennett: Turn it over to the State Treasurer and report to the Board of Auditors as to what I have sold. Mr. Lord : What does that report consist of, prices received, etc. ? Mr. Bennett: For a number of years I simply turned over the cash I received for those things, but, I think it was during Osborn's admin- istration, I thought I was getting so much money that I should keep a record of it, so I took it up with Mr. Hamilton, the accountant, and we got a system of receipts whereby I am protected. It is the tripli- cate receipt system. When a man buys any furniture, or anything of that kind, and pays me for it, I give him a copy of the receipt, keep a copy and turn the other copy over to the Board of Auditors when I send in my monthly report. Mr. Thompson : Mr. Bennett, the capitol police are under your control, are they not? Mr. Bennett: Yes, sir. Mr. Thompson : Have you established any unit of work for your people ; how do you tell whether one of your employes is doing enough work or not? Mr. Bennett : Well, we watch them pretty closely. Most of our employes have a certain amount of work to do and they have to do that. We have five or six men on our payroll that we call "utility" men. For instance, if a janitor in some department is absent, we supply one of these utility men. Sometimes they work hard and some overtime. Sometimes, of course, it is a little slack. Mr. Thompson: How do you determine whether you should put one janitor or two on a certain job ? Mr. Bennett : That is sort of settled by the Board of Auditors and the department requiring the janitor services. Take Mr. Fuller's depart- ment; he has had three janitors until lately, but now has only two. Mr. Thompson: Tell us, Mr. Bennett, whether you make any effort to determine whether one man could do the work or whether it would require two men in any certain place. 273 Mr. Bennett: The trouble with the janitor work is that they can't go into a department and do the janitor work while the office force is working. It has to be done early and late. Also, some of .the department janitors are partly on my payroll and partly on their payroll. They do the janitor work and then do odd jobs for the department during the rest of their time. Mr. Thompson : You talked about boxes and about buying them. Would it be economical to buy those boxes from the Marquette State Prison ? Mr. Bennett: Not unless they could be sent down here in the knock- down. The trouble is, they don't know just the stock size they are going to use here each year. Mr. Thompson : Do you have any standard size of boxes that you use ? Mr. Bennett: No. Mr. Thompson: Isn't there any way that could be arranged? Mr. Bennett : I don't think so. We have a lot of small boxes here now that were ordered in the knock-down some years ago. Mr. Thompson: You haven't any demand for boxes of that size? Mr. Bennett: No. Mr. Thompson: What survey, or examinations, are made as to fire risk in the Capitol ; by experts, I mean ? Mr. Bennett: Well, there has been some experts around to look the proposition over. Mr. Thompson: Can you remember when the last examination was made? Mr. Bennett: I think that was done when I was away two or three years ago. Mr. Thompson: Do you know who did it? Mr. Bennett : No, I do not. There was a report and when I looked for it, I couldn't find it again. Mr. Thompson : Is there anybody who makes it his business, besides yourself, to watch for increase of fire risk here? Mr. Bennett: Why, I don't know that there is. I know I am fighting the proposition all the time to keep down the fire risk. We have moved lots of stuff out of the attic and had it put in other places. Also, ever since the war, I have hired two extra watchmen and they parole the outside of the building nights. I have arranged for extra lights to light the corners of the building. Take it inside, we have six regular watchmen, who are working, practically, eight-hour shifts. I might say that there are eight of them because there are two in the basement acting as watchmen. Also, we have a man in the Treasurer's department who locks himself in at 8 o'clock in the evening and stays there until 6 or 7 in the morning. Practically nine men inside the building and two men outside. They have watchmen's clocks that they have to visit every hour, excepting those in the basement, .who visit them every half hour. Mr. Lord: What disposition is made of your waste paper? Mr. Bennett: It is sold. Mr. Lord: Who sells it? Mr. Bennett: I do. Mr. Lord: How much paper did you sell last year and what did you receive for it? 274 Mr. Bennett : I should think off-hand from fifteen hundred to two thou- sand dollars worth of waste paper and books. Mr. Lord: Do you sell it here in Lansing? Mr. Bennett : Yes. I think I get more for it than I would by sending it away to paper mills. Mr. Lord : How much a hundred weight do you get for it ? Mr. Bennett: Last year for common paper, $16.00 a ton is as much as I got; book paper, f 34.00 a ton; but I am getting only $10.00 and $16.00 now. Mr. Lord : Can you tell us what percentage of your sales Was books ? Mr. Bennett : Possibly one-half. Mr. Lord : Do you sell lots of Public Acts ? Mr. Bennett: There was a bunch of Public Acts sold. Mr. Lord: What is the nature of the books you sell, departmental reports ? Mr. Bennett: Not so many of those; they have those figured down pretty fine. Mr. Lord: Can you tell us anything about reports and old documents of various kinds that are stored now in the Capitol Building? Mr. Bennett: Well, there are quite a good many of those stored around here. Mr. Lord: Are they used at all? Mr. Bennett: Yes, sir. Mr. Lord : Where are they stored ? Mr. Bennett: Up in the attic, the fourth floor and the basement. We have the new Compiled Laws stored down town. Mr. Lord: Who and what are the duties of the Assistant Superin- tendent? Mr. Bennett: William Hoffman. He looks after the workmen, gets the bills ready for the Superintendent's o. k. ; gets the pay roll ready, etc. Mr. Lord : Are these employes engaged by yourself, Mr. Bennett ? Mr. Bennett: Very few of them. Mr. Lord: Who are they hired by? Mr. Bennett: The Board of Auditors hires most of them, practically all of them. Mr. Lord : Do you really need all of these employes ? Do you think they are all necessary and essential? Mr. Bennett : I think I really ought to have more directly under me. Mr. Lord : Do you think that you really need all of these men ? Mr. Bennett: That is a wide question. For instance, the Secretary of State has two janitors on my pay roll. It might not be necessary for me to pay the amount I pay to do the janitor work, in the office, but the men are earning the money by doing work in the department other than janitor work. The Secretary of State's office keeps them busy the balance of their time. Mr. Lord: What do you pay the janitors in the Secretary of State's office? Mr. Bennett : Mr. Bosch gets $75.00 a month and the other one $1,000.00 a year. I don't think either one of those get anything more from the Secretary of State. Mr. Lord : What really constitutes the duties of these janitors ; that is, the janitors under your direct supervision? 275 Mr. Bennett : Well, they are supposed to keep the various rooms clean. They do this in the morning and in the evening. Mr. Lord: How many hours do they work a day? Mr. Bennett: They are on deck nearly all the time. They very often have to come earlier, but their regular hours are from 7 to 5. Mr. Lord: What do they do when the offices are filled with clerks? Mr. Bennett: Down in the Secretary of State's office they work at packing, etc. Mr. Lord: What are the duties of the hall janitors? Mr. Bennett : The hall janitors keep the halls clean, mop the floors, etc. Some of them work from 7 to 5 and some from 6 to 5. These men get 11,000.00 a year. Mr. Lord : How long have they been getting that salary ? Mr. Bennett : Not so very long ; they were raised some time in May. Mr. Lord : What about the rest of these men on your pay roll ? Mr. Bennett: Some of them are utility men, and I think are the most valuable men we have. They fill vacancies. You know that under the law, every man is entitled to one month off during the year, so that we have to fill these vacancies caused by vacations and sickness. Mr. Lord : Do you think the period of vacation is too much ? Mr. Bennett : Our legislature didn't think so. I thought the law was a little stiff at the time they made it, but of late years, especially since the war began, I think the laboring man is getting the poor end of the deal. A good many, of the men utilize their vacation to earn a little on the side. Mr. Lord: What do you think of their salary? Mr. Bennett : I thought it was a fair salary to pay them, although the board put it up to me when the janitors asked for an increase in salary. Mr. Lord : Do you know of any corporation in Lansing, or in any Mich- igan city, which gives its employes twenty-four days a year vacation, with pay? Mr. Bennett: I don't know of any. Mr. Lord: Isn't it usually two weeks' vacation they get? Mr. Bennett: I think so. Mr. Lord: What do you do in the matter of sickness? Is it charged up against the vacation or do they get sick leave in addition to regular vacation. Mr. Bennett: It is charged up unless the Board of Auditors directs otherwise in special cases. Mr. Lord : How about the janitor in the Board of Health ? Do they pay him a little extra ? He is down for |75.00 a month on your payroll. Mr. Bennett : I think they do. Mr. Lord : How much ? Mr. Bennett : Enough to make him f 1,000.00 a year, I believe. Mr. Lord: Mr. LaVaque is janitor for the State Library; isn't he also on their payroll in addition to being on yours? Mr. Bennett: The fact of that matter is that he goes there and works nights and they pay him for that. It is extra work and extra hours. Guess he is a good man and he stays in the Law Library nights or evenings at the request of some of the judges of the Supreme Court. I think he gets $25.00 a month for that. 276 Mr. Lord : All these men on the roll for $60.00 and f 75.00 a month are men who also are on payrolls of the various departments in which they are located? Mr. Bennett: With one or two exceptions, yes. Mr. Lord : How about the janitress of the ladies' room ? Mr. Bennett: She gets fl, 000.00 a year; her salary was increased a month or so ago. Mr. Lord: What work does your painter have to do? Does he attend to all the painting in the State Capitol ? Mr. Bennett : There are cases where they go outside for painters, where they want fine decorating done. Mr. Lord : How about your carpenter ? Mr. Bennett: He is the best man on the payroll. He is surely a good man and does all the repair work. Mr. Lord : How about the watchmen or policemen ; you have twelve all told? Mr. Bennett: What we call policemen includes two men outside and the man in the Treasurer's office and men in the buildnig. They are all included in that bunch. Mr. Lord: How many have you in the Capitol Building itself? Mr. Bennett: There are nine of them that put in more or less time; in fact they put in all their time. Mr. Lord: How do you arrange their work? Mr. Bennett: The men that go on from seven in the morning until four in the afternoon have a little longer shift than the others. There was a little strife about the men not wanting to go on the night or midnight shift and stay until morning, so we changed the hours and put them on from midnight until seven in the morning, so that the men coming on in the morning get the extra hour. We have three who work from seven to four, three from four to twelve, and three from twelve midnight to seven in the morning. Mr. Lord: What constitutes their duties? Mr. Bennett: They watch the building; the day men show visitors around and those that come on later, of course, look out for fire risk, etc. In the basement, the two men that stay there show the war relics, etc. Mr. Lord : Do you think all these men are necessary for that work ? Mr. Bennett: Well, it is just a question of the safety of the building and showing the people around. I never thought the two men in the basement were of much use except to show relics. You have to have two men because one man has to be relieved for dinner, etc. Mr. Lord: I notice that you have a janitress at $30.00 a month? Mr. Bennett: Well, she takes care of the judges' room in the Capitol National Bank Building, Judges Ostrander and Stone. She does that work in the evenings. Mr. Lord : What other laborers do you have and what do they do ? Mr. Bennett : We have four now and may have to increase the number when the snow comes on. They keep the walks clean and do odd jobs around the grounds. Mr. Lord: I also notice that you have an engineer. What does he do? Mr. Bennett : He looks after the steam plant, heating apparatus, etc. Mr. Lord: You don't use the steam plant, do you? 277 Mr. Bennett: When you have pipes that have been in the building as long as these have, you really have to have someone to look after them. Mr. Lord : If you were given authority to hire the janitors for the vari- ous offices, outside of the State Capitol, would you hire as many? Mr. Bennett : The janitor work could be done with less men, certainly. I could hire quite a number less men and keep it clean, but I couldn't hire the messengers for the other departments. Mr. Lord: Don't you think it would be a much better plan if you were given entire charge of that work, and let the departments look after their own work ? Mr. Bennett: It is barely possible that they might work one of these men where they otherwise would have to put in a man at full pay. Mr. Lord: Under the present system there is no uniformity in the hiring of these men? Mr. Bennett: No, nothing uniform about that. Mr. Lord : What do you know about the various offices the state rents ? Mr. Bennett : I rent the offices for them. Mr. Lord: Can you tell us off-hand how much rent we pay for offices located outside the Capitol Building? Mr. Bennett : About f 25,000.00 a year. Mr. Lord: How many offices does the state rent down town? Mr. Bennett : Oh, offices in. how many buildings ? Mr. Lord: I mean, how many departments are located outside of the Capitol? Mr. Bennett : I should say about thirty. Mr. Lord: You don't have anything to do with the offices rented out- side of Lansing for the Labor and Dairy and Food Departments, do you? Mr. Bennett: No, sir. Mr. Lord : So that they pay for their outside offices in addition to the $25,000.00 a year. The chances are, then, that the total rent would be between $30,000.00 and $40,000.00. INDEX TABLE OF CONTENTS Page Why a Budget System 3-12 Uniform Accounting 13-16 State Purchasing 15-22 State Printing > 22-24 State Institutions' 24-27 Industrial School for Boys 24-25 State Prison, Jackson 25-26 College of Mines -26 University of Michigan 26-27 State Normal Schools -27 Farms -27 State Departments 27-30 Statutory Changes 30-37 Dairy and Food Activities -30 Deeds to State Property Examination of State Lands -31 Game Laws 31-32 Michigan Fish Commission -32 Securities Commission Highway Department Activities Banking Department Activities State Tax Commission -34 Advisory Board in the Matter of Pardons -34 State Auditing 34-35 Consolidation of Offices 35-37 Proposed Law Providing for a Budget System Proposed Law Providing for a Uniform Accounting System 43-46 Statistical Tables 47-57 Comparative Statement of the Assessed Valuation and Taxes Levied 1912-1917 -47 Comparative Statement Showing the Salaries and Expenses of, and the Average Number of Persons Employed in, the Several De- partments of State Government for the Fiscal Years Ending June 30, 1908 and 1917 48-49 Comparative Statement Showing Salaries Paid Elective State Officers in Michigan and in Other States Having Population Nearest Equal to that of Michigan -50 Comparative Statement Showing Salaries Paid Deputies and Secre- taries of the Various State Departments for the Years 1908 and 1918 -51 Comparative Statement Showing the Costs for 1908 and 1917 of the Principal Departments of the State Government, Together with the Per Cent of Increase or Decrease -51 Comparative Statement Relating to State Hospitals and Charitable Institutions -52 Comparative Statement Relating to State Educational Institutions. . -53 Amounts Paid for Services of Architects for the Five Year Period Ending June 30, 1917. Also Amount Paid for Services of Archi- tects for the Fiscal Year Ending June 30, 1917 -54 List of Books, Reports, Bulletins, Etc., Printed by and Under Direc- tion of the Various Departments of the State Government 55-57 280 4 Page Stenographic Report of Examination of State Offices 58-277 Auditor General's Department Department of State 73-85 Treasurer's Office Superintendent of Public Instruction 90-97 State Highway Department 97-106 Board of State Auditors 106-120 Michigan Securities Commission 120-129 Public Domain Commission 129-138 Commissioner of Insurance 138-145 Commissioner of Labor 145-15J Commissioner of Banking 151-156 Food and Drug Commissioner 156-167 Game, Fish and Forest Fire Commissioner 168-181 State Library 181-186 State Oil Inspector 187-195 State Board of Health 195-204 State Tax Commission 205-216 Michigan Railroad Commission 216-224 Industrial Accident Board 225-237 Board of Corrections and Charities 237-245 Advisory Board in the Matter of Pardons 245-247 Michigan Fish Commission 247-260 Michigan Historical Commission 260-264 Superintendent of Capitol 264-277 TU 64764 677379 UNIVERSITY OF CALIFORNIA LIBRARY 1