made last year in the case of the Swett-street extension, - an important public work, which will prove valuable in several ways, and will never be regretted, though, perhaps, it might have been postponed if the severity and continuance of the depression in business had been foreseen. There was also an exception in the Sudbury-river scheme, for which about $2,100,000 of borrowed money have been appropriated. But notwithstanding this addition to the gross debt, the net debt will show a considerable reduction; and this, too, although the tax levy was less by more than a million and a half than it was in 1874.

I may remark here that if that class of persons who reside in the city the greater part of the year, and transact their business here, but elect to be taxed elsewhere, would enrol themselves as legal residents of Boston, and thus share with the rest of us the burdens, as they already do the benefits, of our expenditure, the rate of taxation would be still further materially reduced.

I am not without hope, which seems to me not altogether chimerical, that the policy of paying as we go may be so strictly adhered to, that

the entire debt may be virtually extinguished in a few years. We are required by law to raise by taxation, every year, a sum sufficient to pay the interest on the entire debt, and the surplus left after paying the interest on the net debt must by law be added to the Sinking Fund. It has been calculated by careful experts in figures, that this process would make the Sinking Fund equal to the debt (exclusive of the water debt) in eight years; and then there is no longer any real debt. I leave out the Water Debt,

because the interest on that is more than paid by the net water rates. There may be an interval of two or three years between paying for the Sudbury-river improvement, and the bringing of the new supply into use, during which the water rate will not be sufficient to pay the interest, but the most competent judges assure me that practically the water debt will never be a burden on the taxpayers, except through the water rate as at present established. Of course the debt would not be cancelled within the time mentioned, except on the condition that we abstain absolutely from contracting new loans.

I do not think such abstinence absolutely impracticable. Last year we paid, by taxation,

for improvements, which according to the previous practice would have been provided for by loan, the sum of $255,500, and the year before last the sum of $1,072,000; and at the same time we have been lowering the rate of taxation, and diminishing the levy. We can do the same hereafter; and I do not believe it will be necessary to depart from this "pay-as-we-go" policy, even when we come, as we shall once in a while, to a very large and costly improvement, taking care, as of course we shall and can, not to have more than one such enterprise in hand at any one time. In any operation of this character the work and the payments will be distributed over a period, say of three years or more, and the payments of any one year might be assessed in the taxes of that year without any serious increase of the rate.

Our people will more cheerfully pay for an improvement actually going on before them than they would pay an equal amount (which they are doing now) for meeting the interest on an old debt incurred, very few of the citizens knowing when or for what.

Beside the economy of getting and keeping out of debt, it is a safeguard against serious

perils; for if ever the city government should fall into bad hands, in the interest of corrupt rings, it is obvious that extravagance and fraud would find their amplest opportunities and their safest hidingplaces among the mysteries of a large, intricate and ever-shifting indebtedness. It would be difficult to hoodwink and cheat a people when the amount of the plunder has got to be paid by them in the very next tax-bill, instead of being hidden amid the confusion, easily made inextricable, of an extensive book-keeping and a tangled computation of loans, payments, sinking funds and interest accounts.

Debt is a treacherous, as well as an oppressive, master of cities as of individuals.

A great city, absolutely clear of debt, and determined to incur none, would in this age be indeed a city set on a hill. It would be a wonderment to all its sister cities, an object of pride to its inhabitants, and almost the paradise of taxpayers. The mere prospect of such a consummation, could it be reasonably entertained, would at once enhance the value of all our fixed property, and speedily fill our sparse districts with new industries and an enterprising population.

New City

Charter.

The subject of reorganizing the City Government upon the plan transmitted with my inaugural address of last year received considerable attention from the last City Council, but the two branches failed to concur in the adoption of any specific recommendation, and the whole matter is referred to the consideration of this body. In the discussion of any scheme involving the application of new principles and the substitution of new forms in the government of the city, differences of opinion will naturally be developed; but, if the subject is approached in a spirit devoid of personal feeling and party prejudice, with the single purpose of devising a system which shall meet the requirements of the city, not only for the present but the future, a basis for intelligent action can easily be established.

My experience during the past year has strengthened the conviction which I then expressed, that the growth of the city renders necessary a change in our form of government as complete as that which was made in 1822, when the town system, under which the people acted directly upon all matters of local government, gave place to the city system, under which a