sion. The license allowed by this bill will increase the number of these races for the sole purpose of gambling. Under it I cannot see how there would ever be a violation of law. Two men would bet a certain sum, each would put his amount of money in the hands of a stake-holder, and then it would be called a purse or stake. There would be no betting of money. Each would in fact bet or wager money, but when paid in and united with his opponent's bet, it would be christened a purse or stake, or the money might be temporarily invested in some valuable thing, and so the wager would be made legal. With the most stringent laws every good citizen must feel that there will be opportunities enough for the indulgence of this kind of gambling. The occasion brings together crowds of persons who live by gaming, and the young and thoughtless who visit the race-course from curiosity are drawn in and taught the ways of the vicious. In our densely populated communities the race-course is very objectionable to the residents near the grounds. They are much disturbed by the intrusion of lawless persons whom it is hard to control even with a large force of police.

Surely no encouragement should be given by law, to increase the number of these places, which produce no good result, but, on the contrary, much evil. So far as I can learn, no one petitioned for a change in the law, and there is no complaint of its interference with the proceedings of associations whose purposes are worthy, in any part of the State.

I am quite sure that the bill was passed under a misapprehension of its true character, and that on a reconsideration. the Legislature will decide that it is wiser and more in accordance with the sentiments of the people of the Commonwealth to strengthen rather than to weaken the law.

[To the House of Representatives, May 28.]

I have the honor to transmit herewith, for the information of the Legislature, the reports of the special agents who were sent to Europe under authority of chapter 201, Acts of 1869; the same being furnished in compliance with the request expressed in the House Order of April 13, 1870. Previous to the adoption of that Order only verbal reports had been made to me, and Mr. Walker's absence from the State necessarily caused some delay. As his agency was deemed the more important, and as he spent more time in Europe than Mr. Loud, the latter desired to see Mr. Walker's report before making his own. I deemed this request reasonable, although it caused further delay, and prevented an earlier transmission of the reports.

[To the House of Representatives, June 20.]

I return without my approval the Bill entitled "An Act to aid in the construction of the railroad of the Boston, Hartford and Erie Railroad Company."

The people of the Commonwealth began to see very soon after the introduction of railroads into this country that the prosperity of this State depended upon establishing a direct communication with the canals of New York and the railroads of that State and other States west. Private enterprise was at that time inadequate to the construction of so great a work, and the State was obliged to decide either to aid the corporation which was attempting to build a railroad to the Hudson River or to let the enterprise as a through route be abandoned. The aid was granted, as from time to time it was needed, and the railroad was completed successfully.

Other railroad corporations have been assisted in like manner, and they have proved of immense advantage to the State and sufficiently remunerative to the stockholders.

The success of these enterprises has induced other parties to enter upon new plans to bring the people of the Commonwealth into more intimate connection with the great railroad routes to the West. A charter was granted for the Hoosac Tunnel route, with State aid, upon the usual conditions. The company failed to procure funds to any considerable amount from private persons, and the grants from the State being entirely unequal to the accomplishment of the work, the corporation abandoned it, and it has been assumed by the State. In all these instances the State acted upon the principle in granting the aid, that it was to have the first security on the road, and the best that the corporation could offer. This principle was not observed in giving aid to the Boston, Hartford and Erie Railroad Company; but the State agreed to take security, in partnership with private persons, in Berdell mortgage bonds,-upon the express condition, however, that before any bonds of the State should be issued to the company, the directors should satisfy the Commissioners and the Governor and Council that they had, with the amount loaned by the State, funds sufficient to build the road to the Hudson River.

After careful scrutiny the Governor and Council, and the Commissioners, on the sworn statement of the directors, and the evidence laid before them, became satisfied that the corporation had sufficient funds to carry out the contracts for building the road, and accordingly issued the bonds of the State to the corporation towards the close of the year

1868. The last Legislature modified the original Act by increasing the amount of the aid to five millions of dollars upon certain conditions which, in my estimation, were quite as favorable in the matter of security to the Commonwealth as the former Act. Under the two acts three millions six hundred thousand dollars of State bonds have been issued, and a like amount of Berdell bonds, so called, is in the hands of the State treasurer. Before any bonds were issued the Council made careful inquiry into the condition of the funds of the corporation, and were assured most positively that they were securely invested, and were sufficient, with the aid to be furnished by the State, to complete the track to Fishkill.

Subsequent investigation has substantially proved this statement correct, although it shows that much waste had then occurred, and a series of transactions in stocks had already been entered upon which were totally unwarranted by the charter, or by any custom of properly managed railroad corporations.

In my message of the 5th of March I called the attention of the Legislature to the condition of the company. Previous to that time an examination had been made by the Council which revealed a state of things altogether new to this Commonwealth in her dealings with corporations. By that examination it was proved that the funds of the company had been diverted from their legitimate uses to purposes of speculation and other purposes still worse; that in that diversion the corporation had lost large amounts, and over two millions of dollars in direct speculation in the course of a few months; and that at the date of the message there were no funds in its treasury. From time to time a floating debt amounting nominally to more than eight millions of dollars had been created, and there was no provision for its payment.

By this bill the road is put under a new mortgage of fifteen million dollars, which will swell such indebtedness to the amount of thirty-five millions of dollars, with interest at the rate of seven per cent., amounting after the year 1872, provided all the outstanding coupons are exchanged for second mortgage bonds, to the large sum of two millions four hundred and fifty thousand dollars annually. No one at all conversant with the earnings of railroads can possibly expect that the income from the road will approximate this amount, for many years to come. The State is asked to give up the security for her loan, and take in place of it these new bonds, which certainly can be of very little value.

The Commonwealth has performed her part of the contract generously, and in good faith. The necessity for this new loan is admitted to arise from losses made by the directors in outside transactions, and not in the legitimate business of building the road. The parties in interest, who will receive the whole direct benefit of the loan, are asked to surrender less than twenty-five per cent. of their bonds, while the State is to surrender the whole of hers. The bill increases the indebtedness of the corporation at least ten millions of dollars with but a very small increase of means, -certainly not more than two and a half or three millions of dollars. What hope of success can there be with funds borrowed at such ruinous rates? Such a sacrifice of property, for I can call it nothing else, is not just to the people of the State; and to me does not seem necessary for the completion of the enterprise.

It

By the bill the State is made responsible, to some extent, for the character of the directors of the corporation. The assumption is that those having the conduct of its affairs, in the past, have proved derelict to their trust, and that a supervising power must confirm the election of new directors. seems to me that the State should assume no such responsibility. Before granting aid let the legislature become satisfied with the character of the company. The corporation should appear before the legislature purged of suspicion. The State ought not to continue its association with the corporation, which has shown such reckless disregard of the great interest committed to its keeping. The stockholders have taken no steps to repudiate the action of their directors; and any future board of directors will represent the same interests. It should be an indispensable condition to the granting of any further aid by the State, that the trustees under the Berdell mortgage should first be put into the full possession and control of the railroad and all its concerns, in order that there may be assurance that the means provided will be faithfully devoted to the purpose for which they are intended. By this course, the debt of the corporation will be kept down to the lowest limits now possible, and the responsibility of the State for its future management will cease. The holders of Berdell bonds will also have a much greater inducement to furnish means sufficient for the completion of the road.

My objections to the bill may be briefly recapitulated as follows:

I cannot consent to the exchange of first mortgage bonds for second mortgage bonds secured by a mortgage on the

same property. It is true that the mismanagement by the corporation has seriously diminished the value of the security of the first mortgage; but this would hardly justify the gift of the bonds to the same corporation, notwithstanding this loss of assets. I cannot regard these bonds as entirely worthless. On the other hand, I cannot doubt that if the enterprise be placed in honest and competent hands, a large portion, if not the whole, of the cost of these bonds may yet be secured, and we cannot answer to the people of the Commonwealth for surrendering them without an effort to appreciate them.

It does not comport with the dignity or the interests of the Commonwealth to maintain the relations involved in this bill, with a corporation which has shown itself so incompetent and unfaithful to its trusts. The shares have only a fictitious value, depending solely upon the manipulations of operators; and so long as the holders of worthless stock elect the directors, the nominal control by the governor and council, or even by the trustees under the second mortgage bonds, will be of little avail. My own experience has proved how little such control is worth; and I should be unwilling to assume for myself or to transmit to my successors a responsibility supported by the semblance of power.

I cannot justify myself in consenting that the Berdell trustees be dispossessed, as this bill practically aims to do, of all control over their trust. They are the legal guardians of this enterprise; they have been appointed in accordance with a mortgage which has received the sanction of the four States through which the road passes, and I am happy to say they are gentlemen in whose capacity and integrity the public has entire confidence.

Anxious as I have been and am to see the flats of the Commonwealth filled in connection with this enterprise, I cannot escape the conviction that, if the State is to furnish, substantially, the entire means for this purpose, the contracts for the work should be made at the lowest cash prices, and the work should be done under the direction of the trustees of the Berdell mortgage.

I might feel less confidence in these objections if the bill presented the only or the best plan for protecting the Commonwealth as a bondholder, or for securing to all parties in interest the best results now attainable from this enterprise. In the present bankrupt condition of the corporation, I cannot think it safe or wise for the State to give any further aid to the building of the road west of the Connecticut River. It may, however, be well for the legisla