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Although, as a rule, sovereign States are not, and the Republic of Ilawaii by its own laws was not legally bound to recognize in damages claims arising from such cases; and there is nothing in the brief message from the Federal Government which makes it clear that the President intended to authorize a departure from the usual rule and IIawaiian law, my view of policy in this matter is as follows: The bubonic plague with the resulting deaths, the losses by fire and the danger which for four months menaced the whole Island population, was a national misfortune, which should as far as possible be borne approximately by the whole community. Consistently with this view the tax payers should assume a reasonable proportion of the losses of the sufferers in this calamity, but no logical theory requires them to assume the whole of such losses, as the sufferers are equally called upon to bear their share also. What that proportion should be is difficult to say; it can only be decided arbitrarily.

The fact, however, that many householders and proprietors of premises that became infected by their own culpable neglect of cleanliness in their surroundings not only invited infection, but gave plague germs a foothold from which it was most difficult to dislodge them, is a circumstance that should greatly reduce awards of damages to such persons if not indeed cause their claims to be refused altogether.

The matter of awarding damages is one of such difficulty and delicacy that provision should be made for the establishment of a court or commission composed of persons of integrity and conservative judgment for this work.

The project of recognizing these claims in damages being one of Government bounty rather than of legal requirement, the Legislature is not called upon to impede the progress of the country in its treatment of the subject, but simply to extend reasonable and appropriate relief to the innocent sufferers in this great disaster.

Although the Estimates cover an aggregate annount near to the limit of prospective revenues, a large part of the item for interest on Government indebtedness will probably not be required, as the Federal Government may be expectd to carry out the provision of the joint resolution of annexation assuming the payment of interest on four million dollars of the indebtedness of the Republic of Ilawaii. This reduction of that item will amount to $381,726.96. For the same reason the interest paid by the Territorial Government since the 14th day of June, 1900, on this account may be expected to be refunded by the Federal Government. This amounts to $106,069.44. There will therefore be a saving in the Estimates of $487,796.40, which will be available toward the settlement of the fire claims.

Since the cessation of the bubonic plague the health of the community has, with the exception of one or two localities, been generally good.

With regard to the unfortunate class, confined for the public safety in the settlements of Kalaupapa and Kalawao, it is a satisfaction to be able to report that their condition as to their surroundings and the comforts of life is improving from year to year. It is probable that more can be done to alleviate the hardships of their situation. Legislation providing for appeals fron: the decisions of the District Magistrate whose jurisdiction includes the settlement would doubtless add to the content of the community. Such appeals, except upon points of law, should be heard in the settlement. Any other arrangement would seem to be impracticable under the circumstances. It is to be hoped that the Legislature will during this session send a Committtee of its members to visit the settlement and report on its condition.

While the sanitary state of Honolulu has been growing worse for several years, owing mainly to the entire absence of a system of sewerage, and the rapid increase of population, and to some extent to the unhealthy character of that portion of the drinking water which is supplied from the Nuuanu reservoirs, the prospects for an immediate improvement are most encouraging. A system of sewerage covering a large portion of the city has been nearly completed, at a cost of $400,000, and is already partly in

Estimates necessary for its completion and extension are before you. I recommend this vital matter to your faithful consideration.

Estimates are also submitted for the construction of a filter plant for the filtration of all the water supplied to the mains from Nuuanu Valley. It is the experience of all cities that have required the filtration of their drinking water that a marked decrease of a certain class of diseases and the death rate is the immediate result of such precaution.

One of the valuable lessons of the bubonic plague was the importance of the removal of garbage from the vicinity of human habitations. It was decided that the most effective way of getting rid of this menacing material was to destroy it. The machinery of a crematory for this purpose has been purchased and the building begin. The completion of this important enterprise requires a further appropriation.

I would call your attention to the important work accomplished by the Board of Health through the Food Commissioner. I deem this service to be most vital to the public health. Invalids and children are especially susceptible to food adulterations. The recent decision of the Board to publish the names both of vendors and manufacturers of adulterated foods, drinks and drugs is most

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essential to the success of the campaign against these base attacks upon the public health.

I fully approve the recommendation of the President of the Board of 1sealth that an appropriation be made for the salary of a purchasing agent for the Board. In all probability a competent man in such a position would save many times his salary.

In the financial report of the Queen's Hospital it appears that the reduction of income of that institution, on account of the loss of real estate through an adverse decision in the construction of the will of Dr. Rooke, and the cessation of the passenger tax, amounts to $49,335.38 for the biennial period. In view of this loss on income and of the important work the Queen's Hospital is doing, I have recommended an appropriation equal to double tho amount of the old one, on condition of free treatment of Government patients and the maintenance of a free ward for the

poor

of all nationalities.

The necessity of a hospital for incurables has long been apparent. Such cases are very properly not received at the Queen's Hospital. The matter became so urgent during last year thai several public-spirited ladies and gentlemen went to work and organized such a hospital and have conducted it with the assistance of funds contributed for the purpose. This institution was temporarily located at the beach near Kakaako and is doing a splendid work. The Council of State appropriated $5,000 for its support and $25,000 toward its endowment---the latter appropriation being conditioned on the raising of a fund of $100,000 for the same purpose by private subscription. A considerable amount of money has been raised for the construction of hospital buildings for such a hospital and for its maintenance, but as yet no beginning of the work has been made. I strongly recommend the appropriation of $9,600 toward the maintenance of the present hospital.

You will find by the report of the Superintendent of Public Instruction that the public schools are in a prosperous condition. For some years there has been a rapid increase of pupils beyond the capacity of the school houses of the country even with the considerable additions that have already been made. School accommodations are still unequal to the demand. The large appropriations recommended for this purpose are for the most part very necessary.

The Government has recently adopted the plan of building school houses of large size, with walls of fire-proof materials. This plan was carried into effect in the construction of the Princess Kaiulani School and the Kaahumanu School in Honolulu. An appropration of $75,000 is recommended for rebuilding the Royal School. The main building in the Royal School premises was found to be unsafe last year and was taken down. At present a part of the pupils are accommodated in the remaining buildings and the rest in the Aala Warehouse, which has been fitted up temporarily for that purpose. This arrangement is very unsatisfactory. The Aala Warehouse is a cheap, rongn building with unsuitable surroundings. The separation of the school into two divisions at such a distance apart is unfavorable to its administration. 1

It is proposed to put up a large building of fire-proof materials of sufficient size to accommodate seven hundred pupils. The historic fame of this school and its honorable and successful record justify the proposition of giving the new building such an architectural character as will make it a worthy monument to the famous Aliis who were its first pupils and to its later gradnates as

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I call your attention to the plan of the Superintendent of Public Instruction, as set forth in his report, to move the Reformatory School at Waialee, in the District of Koolauloa, and to designate it as the Industrial School for Boys. I emphatically approve of this project. The piece of land suggested for this purpose contains over seven hundred acres and lies partly on the foothills and partly between them and the sea. The location is most healthy, with fresh trade winds from the ocean. The place offers opportunities for a variety of farming work, including stock raising and the cultivation of field crops and taro. There is fishing and sea bathing. An industrial school located on this land would have an environment most favorable to the education of boys in many industrial lines, and to a good development of the character and the body.

The boys in the Reformatory School are taught, outside of book learning, carpentry, harness making, tin work and sewing only. There is little opportunity for teaching them agriculture.

If this plan is carried out, it is proposed to use the Reformatory School premises for an industrial school for girls, which is much needed.

Such changes in the laws as are necessary to effectuate these projects should be enacted.

There is a small number of children scattered over the Territory who are ineligible for admission into the public schools on account of their inability to pass the required medical examinations. Some provision should be made for the education of these children. As the number is small in any one locality, it may be impracticable to provide instruction for them at their homes. There does not seem to be any insurmountable objection to legislation that would gather them at some place or places, according to their numbers, and provide them with instruction and careful

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medical attendance as well as food, clothing and lodging. Such a plan would be in their own and public interest. The matter is most important; the Government cannot leave these children to grow up in ignorance and neglect without deserving the severest censure.

The report of the Superintendent of Public Instruction contains interesting information in regard to the development of manual training in the schools. This feature of public instruction is worthy of hearty support.

Your attention is invited to the proposition of the Superintendent of Public Instruction that the Department be relieved of the work of furnishing school books to school children. I have grave doubts of the advantage of such a change. The question to be considered is how pupils, particularly those in out-of-the-way districts, would be affected by it, rather than the convenience of the clerical force of the Department.

The suggestion of this report favoring the establishment of school libraries is admirable, and should have legislative assistance. With a moderate appropriation for this purpose at each session, such libraries would grow steadily and soon become in each district a most favorable influence toward taste in reading, a knowledge of the English language and growth in personal character.

('ongress has conferred on the Legislature authority to create counties and town and city municipalities within the Territory and to provide for the government thereof.

This is an enterprise requiring for its success a high degree of patriotism and civic intelligence. Careful study of local conditions and the experience of other communities in the creation and administration of municipal corporations are necessary to safeguard the country against costly mistakes. Many problems will arise in the consideration of such legislation that are difficult of solution, calling for sincere deliberation.

There are important questions to be weighed by you in the consideration of this subject. Should such local governments be established in communities that do not ask for them? Should the whole area of the Territory be occupied by such governments, or should experiments be made in one or two localities before going further? What will be the approximate burden of the aggregate taxation of the city or county and the Territory on the tax payer? How will the small proprietor be affected by such combined taxation, and by the probable greater stringency of municipal regulations? These questions are better answered before than after the character of such corporations is finally settled.

Probably the most satisfactory method of conferring such privileges is by means of a general statute, stating the conditions

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