Indiana Bicentennial 11.7: Matt Welsh (1961-1965)

Matthew Welsh (1961-1965)

Matt Welsh was a Democratic governor who served from 1961 to 1965. He was born in Detroit in 1912, but his parents came from southern Indiana. During World War I, when his father was traveling for work, the kids and his mom moved back to southern Indiana. After the war, his father was involved in the financial industry, and the family moved to Vincennes. Matt went to college at the Wharton School, then studied law at IU-Bloomington and finished his law degree at the University of Chicago. (While in law school, Welsh co-authored a law review article on special legislation with future law professor Frank Horack.)

After law school, Welsh opened a law practice in Vincennes. He won election to the General Assembly in 1940 and, again in 1942, but resigned to enlist in the navy once World War II broke out. He did not see much action during the war and returned to his law practice in 1946. He served as the U.S. Attorney for the Southern District of Indiana from 1950 to 1952. In 1955, he was elected to the Indiana Senate where he was largely powerless as a Democrat in a Republican dominated chamber. He became minority leader in 1957 and served in that capacity until 1959.

Welsh had lost a bid for the Democratic gubernatorial nomination in 1956 when he lost to Terre Haute mayor Ralph Tucker. But, his attempt in 1960 was successful. The general election campaign was against Crawford Parker. The main issue was the looming budget deficit and, to some extent, the national civil rights debate. Both candidates promised to support civil rights, but Welsh gave the stronger statement in favor. He called for fair employment laws, decent housing without discrimination, and improved educational opportunities. He also promised to strengthen laws on equal access to public accommodations.

Ultimately, Welsh won a very narrow 1% victory (about 23,000 votes) over Parker. In an unusual twist that was permitted by Indiana’s Constitution at the time, Welsh’s lieutenant governor was Republican Richard Ristine — the office of governor and lieutenant governor were split between the parties.

The most immediate challenge for Welsh was a looming $18 million budget deficit. His predecessor, Governor Handley, had attempted to reform the tax system and impose a gas tax. The public didn’t much care for that, and this had hurt Handley’s chances when he ran for the U.S. Senate. Nevertheless, Welsh proposed a tax increase of his own.

The Indiana General Assembly, however, was divided with Republican strongly controlling the House, and the Democrats with only a two-vote majority in the Senate. This created deadlock on most of Welsh’s taxing measures. He was able to advocate the passage of the Property Tax Assessment Act of 1961 which improved the efficiency of the revenue department, gaining the government money in administrative savings, and reimposing a small state property tax; the state property taxes had only recently been repealed in the state. A second reform bill was passed creating the Division of Tax Review which had power to review and reassess property taxes statewide. The Division of Audit was also created, which for the first time which allowed the government to audit tax data and forcibly collect it and also begin cross-checking state tax returns with federal tax returns. Warrant officers were hired who, with the assistance of a local sheriff, could seize money and property to pay delinquent tax debts. This led to thousands of individuals statewide having their unpaid back taxes seized by the government. Despite all the activity, state revenue still fell short forcing the government to use its reserve funds; an even larger deficit was predicted for the 1958 tax year.

. . .

[Welsh] advocated a plan of tax increases in every many area he called the “2-2-2 plan”. It would impose a 2% sales tax for the first time in the state, raise the state income tax to 2% on net income for individuals, and 2% on the net income of corporations. Additionally, he advocated an increased tax on cigarettes to construct two new bridge in the state.

The 2% sales tax that was implemented at the time cost Welsh some of his popularity. (Ristine, the Republican lieutenant governor cast the deciding vote in favor of the sales tax, possibly costing him the chance to become governor in 1964.) Voters took to calling him “sales-tax Matt” and bumper stickers began to crop up, saying “Indiana – Land of Taxes.”  

During Welsh’s term, the state’s Department of Administration was created to help streamline state government, and the Highway Department’s patronage system was replaced with a merit-hiring system. School consolidation was accelerated, and the number of public schools in the state was cut in half, from 966 to 466. Satellite campuses for the state’s universities were created in order to expand access to higher education for Indiana’s citizens.

Another accomplishment was the establishment of the Indiana Civil Rights Commission in 1961. While southern states often imposed its racist traditions by law, white Hoosiers often shared the sentiments of their southern counterparts, but implemented the bigotry through tradition and culture more than through explicit legal provisions.

Control of the civil rights movement in Indiana was tightly guarded by the powerful white majority. Media reports of the destructive battles in the South made Hoosiers all the more determined not to allow the movement to rage out of control in Indiana. The line of separation between blacks and whites in Indiana had been clearly understood and rarely discussed in public until the early 1960s.  

The initial legislation that passed in 1961 was less strong than Welsh had proposed. The Commission had investigatory powers but not much in the way of enforcement powers. In 1962, the Commission conducted a survey, attempting to discern the reasons for unfair accommodation in public services. “The fear of a loss of business and white customers’ reactions were the most common reasons given by business owners for their refusal to serve blacks on an equal basis.”

In 1964, Welsh threw his hat into the Presidential ring, mainly to block the aspirations of George Wallace. Wallace was opposing LBJ for the Democratic nomination for the 1964 campaign and was known for his 1963 declaration, “segregation now, segregation tomorrow, segregation forever.”  Wallace wanted to find electoral support in the North. Indiana is the middle finger of the South thrust up into the north, so it probably seemed like a likely place to campaign, particularly since Johnson was content that he had enough votes from caucus states to take the nomination without competing in the primary states.  Welsh was a strong supporter of civil rights and thought that a win by Wallace in the Indiana primaries would be damaging to the state’s Democratic party. Welsh was able to capture the state’s delegates and, at the convention, he released them to vote for LBJ. Welsh’s campaign slogan was, “Clear the way for LBJ, vote Welsh the fifth of May.” Welsh won that primary with approximately 70% of the Indiana votes compared to 30% by Wallace.

That year, Welsh participated in centennial celebrations of the Civil War. One thing he did was return Confederate Battle Flags captured by Hoosiers. However, he declined to do so for Wallace’s Alabama, leaving those battle flags on display at the Indiana War Memorial.