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purposes an argument for public ownership of railways? If so, why? If not, why not?

8. Discuss Wagner's law of increasing public expenditures and show its significance.

9. 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. Make this the subject of a topic for a

class report.

10. 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. Does it afford you satisfaction when you buy postage stamps to know that the money paid flows into the public treasury, and not into the treasury of a private corporation?

11. If you were permanent Secetary 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?

12. Point out the different kinds of public expenditures and distinctions between expenditures and investments, and show their significance. If public parks, like publicly owned railways, yield permanently services to society, why should different rules of financiering apply to them?

13. 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.

14. Show the various ways in which the increasing degree of self-government and the growing altruism of the age bring about an expansion of public expenditures. Is it worth while?

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, Martin's Statesman's Year Book is as reliable as anything in English. For our own country, see Finance Reports of the Secretary of the Treasury and census volumes, especially the volume 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."

CHAPTER XXXIII

PUBLIC REVENUES FROM LOANS AND GOVERNMENT OWNERSHIP

Classification. Having decided what expenditures it is possible or desirable to make, the question next arises how the necessary revenues may be raised. Differing classifications of public revenue have been almost as numerous as the writers who have made them. Without entering into a discussion of the reason for such differences, we may present at once a classification which is in general harmony with the usual treatment of the subject. It should be distinctly understood that the figures accompanying the classification are only approximately correct, as it is still impossible to fit public accounts, particularly those of the national government, to that classification which long study has shown to be most serviceable to the economic student.

The figures in Table I are derived from the Census Report entitled Wealth, Debt, and Taxation (Part II, Table 2, and Part IV, Tables 2, 12, 13, 14, 15, 18), and from Census Bulletins 20, 45, and 50. The figures refer, for the most part, to the fiscal year ending June 30, 1903, but this is not true in all cases. In addition to the "receipts from revenues,'

33 as defined by the Census Bureau (Wealth, Debt, and Taxation, Part IV, Table 1), Table I includes $119,722,845 for public debt and $11,391,791 for revenue from public domains, not included in the census totals. The $119,722,845 represents the increase of public debt in one year, i.e. the difference between the receipts on account of the public debt and the payments on the same account, but it takes no cognizance of the increase of cash and other assets available for the payment of the debt. In arriving at the total, $4,000,000 has been allowed for the increase in the debt of the minor civil divisions other than counties and cities having more than eight thousand inhabitants. The $11,391,791 represents an estimate of the receipts from the sale of public lands by the national and state governments. This item is classed by the census statisticians with the nominal, or, in their designation, the "temporary" receipts, on the ground that when real estate is sold, the revenue is offset by a corresponding decrease in the capital assets or the aggregate

TABLE I

CLASSIFICATION OF PUBLIC REVENUES WITH APPROXIMATE ESTIMATES OF THE YIELD OF EACH CLASS —

NATIONAL, STATE, AND LOCAL REVENUES: 1902.

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II. Public loans by the issue of treasury notes, etc.

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1. Derived directly from government ownership.
a. Revenues from public domains.

b. Revenues from public industries

c. Revenues from interest, investments, etc.

2. Derived from the incomes of private persons and corporations. a. Fees

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II. Irregular and miscellaneous, fines, forfeits, subventions, gifts, etc..

Grand total.

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value of the fixed possessions of the government. The justice of this treatment is plain in the case of municipal buildings and other real estate forming. part of the fixed plant of the municipality, but it is not so clear in the case of the public lands of the state and national governments which for the most part yield no revenue and resemble the merchandise or stock rather than the capital or plant of the private business. In the figures given in the table, ineradicable duplications to the amount of about $70,000,000 occur, although most of the common duplications such as transfers and refunding operations generally have been eliminated by the excellent classification employed in the Census Report. It should be added, also, that in practice it is impossible to differentiate clearly among taxes, fees, revenues from public domains, and revenues from public industries, and that the assignment of the detailed items to these classes is in some cases quite arbitrary.

Temporary Revenues and 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. One year with another, about one fourth of the annual revenue of England is used in the payment of debt or interest upon debt; and as was shown in the French budgets for 1906 and 1907, given on page 570, almost one third of the total expenditures of France is 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 $7,627,692,215 in 1848, had risen > to $27,524,976,915 in 1890, and since that time it has probably increased. Figures showing the total and per capita debt of all governmental divisions of this country are given in Table II. From this statement it appears that between 1890 and 1902 the aggregate public debt of this country increased over $800,000,000, the greater part of the increase being ascribable to the astonishing growth of municipal and local indebtedness, which increased nearly 90 per cent in the interval. It is true that the total public debt has diminished since 1880, that the per capita debt has fallen from $82.99 in 1870 to $35.50 in 1902, and that according to Census estimates of national wealth (not very trustworthy), the public debt covered only $2.85 of each one hundred dollars of

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