of the Sinking Funds for the payment of the debt. Out of the fund come also deficiencies in Sinking Fund requirements—last year amounting to nearly $150,000 — while the income from assessments upon estates benefited contributed only about $50,000 of this. Perhaps the small income was influenced by the decision in the case of Warren vs. Boston, which came from the Supreme Court very early last year, and will be published in Mass. Reports, Vol. 181. Its instant effect was to arrest new street making, and to deter assessment debtors of the City from making any payments. An appeal to the Legislature for power to reassess, and to allow future street construction here to be done as it is done elsewhere in the Commonweath, resulted in limiting the power of the City to assess betterments for only one-half of the benefit, instead of the whole benefit, as recently, and the whole cost a short time ago. This result was reached against the official protest of the City, and was mainly promoted by citizens of Boston most vitally interested in having new streets laid out, by reducing the income of the City 50 per cent. from assessments. This reduction of the income of the City by 50 per cent. from assessments thereby so much reduced the resources of the City to do precisely what these citizens desired. The power of the City to borrow under the $6,000,000 limitation is practically exhausted — $1,000,000 was authorized last year and bonds to the amount of $500,000 are issued. Apparently not more than $200,000 more can be authorized and this amount may have to yield to the Sinking Fund instead of being available for land damages and construction. A lonely off-set hope is in the payment of such assessments as the law now permits. It is manifest that in new street making we have gone to the limit of financial safety under existing law, and that we cannot proceed further in the same direction until we find our bearings. Moreover, to some great and necessary public improvements the City is already pledged, or will soon be committed. Cove-street Bridge will cost about $1,000,000. The money can be raised by loan outside of the debt limit, but is not provided. The new Cambridge Bridge will cost the City about $1,000,000, and the approach on the Boston side an indefinite amount. - We owe for the taking of the abandoned road-bed of the Old Colony Railroad Company, in South Boston and Dorchester a very considerable sum, and there is yet no provision made to pay it. It may cost $700,000. The merchants and teamsters of Boston unite in a request for the widening of Atlantic avenue, between Rowe's wharf and Eastern avenue, by reducing the width of the sidewalks and thereby increasing the width of the roadway for vehicles. This would greatly relieve the traffic congestion in the district, and would probably not cost more than $100,000. The City Engineer is now studying the problem.

The City pays the interest on its bonds for the construction of the East Boston Tunnel, now nearing completion. It will also have to issue within the next three years some $5,000,000 bonds for the construction of the Washington-street Subway and provide the money on similar terms. No rental nor income of any kind can reach the City Treasury until the completion of the works and the entry of the tenant into possession. In the interval the taxpayers must bear the load.

These suggestions are not in the nature of a complaint, but merely as a warning that for at least three years to come the City is mortgaged to the extent of its reasonable ability to pay.

When the City owned, and therefore had entire command of its water works, supply as well as distribution, the confident hope of the water takers was that the system would be adjusted financially so that the water-takers themselves, as distinguished from the general tax-payers, would ultimately get their supply at cost. This was the popular theory at the start, and it probably would have worked out to the expected result if the State had not stepped in and taken the supply property, paying the City therefor in principal and interest $12,768,948.80.

Under the order of the City Council of September 16, 1898, the first two instalments amounting to $5,000,000 were invested in City bonds and the income used towards paying the Metropolitan Water Assessments. This was rational financiering, but under an order of the City Council of November 5, 1900, the whole principal sum of $12,531,000 then existent was used to caneel the following bonds:

Water Debt . e to * e & . $5,608,356 70 Sewerage Works * e to 2,000,000 00 Laying-Out and Construction of Highways . 2,315,000 00 Blue Hill and Other Avenues . o * * 990,000 00 Market or Other Public Purposes . o o 616,000 00 Stony Brook Improvement © * te e 316,000 00 New Cambridge Bridge . o g © o 250,000 00 Cambridge Bridge . * so e so ge 200,000 00 South Union Station te e to © * 100,000 00 Atlantic Avenue Extension o © wo * > 125,000 00 Charlestown Bridge o g & {} e 10,000 00

$12,530,356 70 Premium on Bonds purchased . e se go 643 30

$12,531,000 00

This was clearly a diversion of a fund amounting to nearly $7,000,000 belonging to water account, and carried to cancel general debt. This partially accounts for the large deficit which had to be met last year out of general current revenue for the support of the Water Department.

It is presumed that when Chapter 427 of the Acts of 1898 was passed, it was expected that the Water Department would be self-supporting, including ability to extend new mains, for Section 3 prohibits the City from incurring debt for that purpose without further authority from the Legislature. This Act to take effect required acceptance by the City Council. Both branches voted to accept. On July 19, 1898, the Mayor vetoed the acceptance order, and the veto was sustained. Thus rested the Act until January 2, 1902, when my immediate predecessor recommended its acceptance, and both branches of the City Council passed the order of acceptance without debate, the Common Council voting for it less than forty-eight hours before the present Mayor took the oath of office. Why this Act, once rejected, and dormant for three years and six months, should have been thrown into a moribund City Council in the last days of its existence for hurried and undebated action is a question that I cannot officially 3.0 SW62I’. The Water Department, like all other great branches of the government, has new constructive work to do from time to time, and when such work is urgently needed for the public safety, current income being insufficient, the obvious and rational alternative is to borrow the money for it. This condition meets us now, and while not publicly disclosing the special reasons, lest the timid may take fright, I am compelled to ask that the borrowing power of the City for the extensions of mains be restored.