number of industries, or at least exert a constantly increasing influence upon the rates and charges of quasi-public industries. Under these circumstances our present duty is to institute, both in public and quasi-public industries, a thoroughgoing system of cost accounting, so that we shall understand upon what footing each branch of the industry rests. Our second duty, which falls primarily upon economists and statesmen, is to develop a far more satisfactory theory of public charges, for at the present time we hardly understand the many factors that must be considered in this problem, much less the net meaning or resultant of these factors. QUESTIONS r. What proportion of the public receipts comes from the public domains? What gives importance to the question of revenue from government ownership? 2. Are public debts a burden when represented by paying investments? by non-revenue-bearing investments? What is 3. Do State debts indicate impoverishment of the people? Why? 4. What expenditures should be met by taxation? by loans? the natural limit of each? 5. How was the State supported in primitive times? What connection is there between taxation and representative government? 6. What has been the principal aim of the United States in the management of public lands? How has this aim changed? 7. Why do the poorer classes benefit least by the homestead acts and by the sale of the public lands at prices below their real value? 8. Have as many acres of land been given to individuals by the homestead and similar acts as to the railways? 9. What kinds of land should be both owned and managed by government? Why? 10. What are the advantages and disadvantages of the royalty or lease system? To what kinds of land should it be applied? II. What conflict is there between modern industrial methods and the project of giving land to the landless? 12. What connection is there between "natural right" and the singletax scheme? 13. Is there any absolute, inalienable right to life? to anything? 14. Should State industries be managed so as to yield a profit? Is a profit inconsistent with good State management? Is any general tendency, with respect to profits, discernible in the management of particular public industries? REFERENCES ADAMS, H. C. Public Debts, and The Science of Finance, Part II, Book II, Chap. I, "Revenue from Public Domains," pp. 237-260; Chap. II, "Revenue from Public Industries," pp. 261-282. BASTABLE, C. F. Public Finance, Book II and Book V, Chap. II, "The State Domain, Lands and Forests," pp. 157-178; Chap. III, "The Industrial Domain," pp. 179-218; Chap. IV, "The State as Capitalist, Administrative Revenue," pp. 219–232. BULLOCK, C. J. Selected Readings in Public Finance, Chap. IV, "The Views of Bodin and Smith," pp. 50-60; Chap. V, "Revenues from Domains," pp. 61-72; Chap. VI, "Revenues from Public Industries," pp. 80-116. Census Bulletins, Nos. 20, 45, 50. "Statistics of Cities," passim. Census Report. Wealth, Debt, and Taxation, Part II and Part IV, pp. 953 963. COHN, GUSTAV. The Science of Finance, Book I, Chap. II, "The Public Economy in Process of Growth," pp. 82-103. DANIELS, W. M. The Elements of Public Finance, Part III, Chap. I, pp. 285-314; Part II, Chap. IX, "Public Income from Quasi-economic Sources," pp. 207-223. PLEHN, C. C. Introduction to Public Finance, Part III, pp. 278-324. SELIGMAN, E. R. A. Essays in Taxation, Chap. IX, "Classification of Public Revenues." Senate Document No. 189, 58th Congress, 3d Session. Report of the Public Lands Commission, pp. iii-xxiv. SCOTT, W. A. The Repudiation of State Debts. U. S. Department of Agriculture, Forest Service. The Use Book, 1906, passim. CHAPTER XXXIV PUBLIC REVENUES: DERIVATIVE REVENUES, FEES, Definitions. If the reader will run over the classification of public industries given in the preceding chapter (page 598), he will notice that the corresponding payments which descend, it will be remembered, from prohibitive to gratuity charges fall into two main classes: those imposed upon the consumer or purchaser who specially benefits by the service, and those like the revenues devoted to the maintenance of education and public parks-imposed upon the tax-paying public generally, irrespective of the benefits conferred by the service. Moreover, as we move from the prohibitive to the gratuity group, there is a general though not regular change in the degree and kind of compulsion exercised by the State in collecting the contribution. The State does not encourage the purchase of intoxicating liquors under the Gothenburg system in order that the revenue may be as large as possible; it actually discourages their sale: the use of the postal money order is mildly encouraged, but you may send your money by express if you desire; one is not forced to marry, but if one marries one is compelled to take out a marriage license; and whether one uses the public schools or not, one must help pay for their maintenance. Finally, it will be noticed that as the element of compulsion increases, the public interest in the service changes, and generally though not always increases. The wood sold from the government forests is merely a commercial byproduct of an enterprise maintained by the government for other purposes; the marriage license fee benefits the individual, but is imposed primarily to protect the morals of the community; while the tax to maintain the public schools is paid solely for the purpose of benefiting the general public. There are, then, three general principles of classification: (a) the assignability of the benefit of the service to an individual; (b) the degree of compulsion exercised by the State; (c) the degree and kind of public interest involved in the service. The more voluntary payments for the more commercial services made by persons who receive a special benefit from these services, are called public prices; the less voluntary payments for services in which the public interest is less commercial in character, made by persons who receive a special benefit from the services, are called fees. Compulsory contributions, "levied in proportion to the special benefits derived, to defray the cost of a specific improvement to property, undertaken in the public interest," are, in the United States, called special assessments; and compulsory contributions, exacted by public authority according to some general rule, without reference to the special benefit conferred by the services to whose maintenance the contributions are devoted, are called taxes. The student is warned that little regard is paid to these distinctions in everyday usage. The words "fees," "taxes," "licenses," "tariffs," "rates," "charges," and the like are hopelessly confused; and even the trained economist finds it impossible to distinguish with complete success between prices, fees, and some kinds of taxes. The utility of the terms is in emphasizing the important truth that these great categories of public contributions must be distinguished and differently treated by the legislator and student, by whatever terms the different categories are designated. Fees.1 - In the exercise of its most fundamental and general functions, the government frequently confers, in an incidental way, special benefits upon particular individuals. Thus the courts, whose function it is to administer justice in general, find that this function must be performed by deciding disputes between particular litigants, one of whom usually benefits by the decision. Now if the government is disposed to take advantage of the op 1 Public prices have been discussed in the preceding chapter. The small tuition charges paid by students in state universities offer a good illustration of fees; they are non-commercial in character, semi-voluntary, and in amount fall considerably short of the cost of the service. portunity, it is evident that much revenue may be raised from the individuals who, in a more or less adventitious way, benefit from the government activities; and where the nation is poor or the people averse to taxation, much dependence will be placed upon fees. As wealth increases, however, and the government becomes more democratic, there is a growing disposition to support general functions by general contributions taxes and the relative importance of fees is likely to decline. On the other hand, there is no likelihood that fees will wholly disappear, as they exercise a wholesome influence in preventing waste. Court fees, for instance, would probably have been abolished before this, if they did not serve to prevent litigous persons from carrying their quarrels to the courts for settlements. Because of this restrictive and economical influence exercised by fees, they will undoubtedly retain a permanent place in the public revenues of even the more advanced and democratic states; but their fiscal importance will probably decline. During the colonial epoch, the fee system was much abused in America, many offices being wholly maintained by fees, which should have been abolished or supported by taxation. At the present time, however, the evils of the system arise not from the number or amount of fees, but from their connection with the salaries of certain public officials. Many officials are allowed to keep the fees which they collect in lieu of fixed salaries, and this practice results in very serious evils. In the first place, some fee-paid offices, particularly those of sheriff and register of deeds in populous districts, have come to yield princely incomes, and the scramble for these rich offices constitutes a prolific source of political corruption. In the second place, fee payment of public officials often impels them to an excessive and pernicious activity, in which their own interests and those of the commonwealth are placed in direct conflict. In a few states, for instance, prosecuting attorneys are paid so much per conviction, the fee increasing with the heinousness of the offense, while in many cities and villages the police force and city courts are supported partially by fees and fines. Under these circumstances, officials bend their activity to the conviction of offenders, not to the prevention of crime and |