EXPENDITURES AND PAYMENTS OF THE NATIONAL GOVERNMENT, STATES, COUNTIES, AND INCORPORATED PLACES HAVING A POPULATION OF 2500

AND OVER: 1913

$2,966,992,825 $30.56 $952,600,857 $9.81 $382,551,199 $3.95 $385,181,760 $4.49 $1,246,659,009 $27.29

5.10

383,649,721 8.40

If access can be had to reports covering a considerable number of years and different countries, it will be found that an examination of them will throw an immense amount of light upon the nature of modern civilization and its direction.

It is also instructive to compare expenditures on account of the head of the State in various countries, and particularly to contrast monarchical and republican countries. It is important to discover great historical tendencies, and to contrast different periods of time, especially as regards monarchical expenditures. It is beyond all question that relatively, in the civilized world, that is an item of declining importance. At the present time, the king of a great country like Prussia or England supports a magnificence of state which is altogether out of keeping with the ideas of a democracy or a republic. Four or five millions of dollars per annum for a modern monarch is not a large expenditure. On the other hand, in contrast, the expenditures of the President of the United States (including those connected with the executive mansion, contingent expenses of all sorts, and presidential clerks) amount roughly to $150,000. However, as regards the expenditures of a modern monarch (the German Emperor, for example), a detailed examination shows that custom and tradition, as well as the will of the monarch, cause a large part of his income to go for public purposes, and that his wealth has been largely socialized. The king is no longer the typical rich man.

On the other hand, the expenditures on account of the American Congress are unprecedented in amount among the expenditures incurred on account of legislative bodies. The world has never seen anything of the kind before, and nothing parallel to it can be found in any other country. Among other things, this goes to indicate, as contrasted with Germany, the great importance of the legislative body which is supposed to represent the people directly and immediately and to carry out their will. In aristocratic countries the legislative office is sometimes an unpaid office. This was until recently the case in British and German parliaments, the idea being to favor wealth and to counteract democratic tendencies an aim which was not accomplished. A democracy, however, is more likely to insist upon a legislative office being a paid office; and, in some of the German states, although the payment is small, its acceptance is compulsory.

Expenditures incurred in the administration of foreign affairs are of increasing importance on account of growing economic internationalism. We would here have two main classes; namely, (1) expenditures on account of diplomacy, those representing the purely political side of government, and (2) expenditures on account of the consular service, representing the business interests of the country. Expenditures connected with boundaries and surveys are expenses which would come under this general heading.

With regard to the administration of foreign affairs, any one nation is limited in what it can do by international customs. We Americans, for example, cannot force our ideas on other nations. Certain standards of

dignity and propriety have been established with respect to the mode of life for diplomats, and, if we depart from these, we do so at a loss which every diplomat in the service of the United States keenly feels. The most that we can do is to exercise pressure in what we believe to be the right direction, and that is the direction of democratic simplicity.

When we examine expenses incurred in the administration of justice, we notice a large increase with the growth of democracy. In earlier times in countries like England and Germany, the administration of justice was to a greater or less extent "patrimonial," being connected with certain estates. The duty of administering justice went with the great estate or manor and involved little expense. As people take things into their own hands they must pay their own expenses. Democracy, in its progress, means large public expenditures.

The new humanitarianism of the age, which, in a way, is one expression of democracy, involves large expenditures, as seen in education, modern reformatories, etc. But it is believed by the advocates of humanitarianism and democracy that these expenditures are worth while.

It is when we come to expenses incurred in the promotion of the general welfare that we see the most remarkable and encouraging phenomena that greet us in the treatment of public expenditures. This has been seen in the data already given, and will become increasingly manifest as the student carries on his statistical studies in this field.

QUESTIONS

1. Define public finance. Why should it be regarded as a part of economics? Can you give any reasons why it should be regarded as a separate science?

2. Can we spare money for taxes only when we have an income affording a surplus over and above necessities? If the money paid for taxes is used to provide us with necessities, is there any good ground for the doctrine that an income sufficient to afford a minimum of subsistence should be exempted from taxation in the case of an income tax?

3. What various meanings do you ascribe to the enormous increase in public expenditures during the nineteenth century?

4. What should be the consequences if the government of the state in which you live should strive for the largest possible amount of revenue, and then govern its expenditures so as to consume the entire state income?

5. Discuss the differences between public expenditures and the expenditures of a private household. Would you regard it wise on your part to make any expenditures with the idea that a benefit to some one would accrue one hundred years later? fifty years later? twenty years later?

6. What considerations must govern us when we attempt to answer the question, "What is the proper proportion between public expenditures and the total income of society?"

7. Discuss Wagner's rule. Is the fact that public ownership increases the permissible proportion of social income that may be used for public purposes an argument for public ownership of railways? If so, why? If not, why not?

8. Discuss economy, parsimony, frugality, extravagance in public expenditures, and give as full illustrations of each as you are able (a) from your own observation, (b) from your reading and conversation and correspondence with others, public officials included.

9. Discuss the historical order in which items of expenditure appear in national, state, and local governments. Give illustrations from the state and from the local political unit in which you live. Give any illustration which may occur to you of taxation which lightens the burdens of the taxpayer.

10. If you were permanent Secretary of War, would you desire to know for a long number of years in advance the yearly sums that could be expended on the army? Could you thus make the same amount of money accomplish more than if dependent upon annual grants uncertain in amount? What would be your view as a member of Congress? Is a state university to be controlled in its expenditures by the legislature as rigidly as Congress should control the administration of the army? If so, why? If not, why not? Would you make any distinction in this respect between the army and the navy?

II. Present such statistics as you may be able to gather showing relatively. and for as long a time as possible the increases in public expenditures in the federal government, in your own state, and in your own local political unit (city, county, town, etc.), and give all the evidence that you can secure showing the significance of the movement.

REFERENCES

Government publications generally.

As illustrative particularly of the expansion of government expenditures and public work, the Year Book of the Department of Agriculture.

For growth of militarism, take publications of the Department of War and publications of similar departments in other countries.

For general statistical data, the Statesman's Year Book is as reliable as anything in English. For our own country, see annual Finance Report of the Secretary of the Treasury, and census reports, especially the reports on Wealth, Debt, and Taxation. For making a broad survey of the federal expenditures of the United States, perhaps no single publication is more useful than the annual Letter from the Secretary of the Treasury transmitting Estimates of Appropriations. A striking exhibit of the growth of federal expenditures will be found in Senate Document No. 528, 60th Congress, 1st Session, entitled Expenditures of the United States Government, 1791-1907.

CHAPTER XXXII

PUBLIC RECEIPTS FROM LOANS AND GOVERNMENT

OWNERSHIP

Public Debts. The modern State follows a policy of deficit financiering. The great and increasing expenditures, which have been described in the preceding chapter, entail burdens too heavy to be borne, at least in the first instance, by taxation alone, and recourse must constantly be had to the public credit. Even before the European War, about one fourth of the annual revenue of England was used in the payment of debt or interest upon debt; and, as is shown in the French budgets given on page 659, more than one fourth of the total expenditures of France was devoted to the same purpose.

In the last half of the nineteenth century, the aggregate public debt of the civilized world increased enormously, According to the best estimates, the indebtedness of the national governments of the world, which amounted to $7,627,700,000 in 1848, had risen to $27,525,000,000 in 1890, and since that time it has greatly increased. Figures showing the total and per capita debt of all governmental divisions of this country are given in Table I. From this statement it appears that between 1902 and 1913 the aggregate public debt of this country increased by over $2,000,000,000, the greater part of the increase being ascribable to the astonishing growth of municipal and local indebtedness, which increased by 113 per cent in the interval. It is true that the total public debt is less than it was in 1870, that the per capita debt has fallen from $82.99 in 1870 to $49.97 in 1913, and that according to Census estimates of national wealth (not very trustworthy), the public debt covered only $2.58 of each one hundred dollars of national wealth in 1912, as against $2.85 in 1902, $3.06 in 1890, $6.97 in 1880, and $10.64 in 1870.