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PART II-FEDERAL REVENUES IN THE UNITED STATES

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PART IV-INDEMNITIES AND THE ALLIED DEBTS

Expenditures and Revenues of the Federal Government

By EDWARD B. ROSA, PH.D.

Bureau of Standards, Washington, D. C.

Introduction

phasized. Some writers, while saying

CRITICISM of the Federal Govern- little of their usefulness or the increased

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ment is the vogue nowadays. With taxes and surtaxes that are direct

and heavy enough to be seriously felt, the industries slowed up and wages and prices in readjustment, nearly everyone finds some reason for criticism. The executive departments are charged with being inefficient, extravagant and overdeveloped, and are popularly supposed to be wasting large sums of the people's money. It has even been suggested that the high cost of living is due to the high cost of government,

and that if reasonable economies were

introduced in the executive depart

ments the cost of living would be appreciably reduced. If it were stated that high prices and the high cost of living were due to the direct and indirect consequences of the war, the truth of the statement would not be questioned. But when it is asserted that they are caused by the high cost of government, it appears desirable to inquire: -What is the cost of government? What are the functions of government? And what becomes of the four or five or six billions of dollars annually collected in taxation?

Since the war the expenses of the government have increased enormously, and it seems to have been assumed by some that the civil bureaus and departments have increased their activities and expenses in the same proportion as the total has increased. Much has been said and written about the great expansion of the bureaus, and the need for curbing their growth and cutting their estimates is often em

need of their services, say much of their inefficiency, extravagance and overdevelopment, and of the duplication of work by different bureaus or departments. These statements are usually made in general terms and without proof or particulars, but they appear to be made in good faith and apparently with the belief that bureau officers are more anxious to expand their functions and spend money than to increase the efficiency and usefulopinion is so seriously at variance with ness of their respective bureaus. This what one should expect that it appears

worth while to examine the facts in the case.

A prominent western paper recently said:

The people are willing to pay the cost of the war. They are willing to pay adequate salaries and wages for all the public officials and employes actually needed for

government work. But everyone knows that government expenditures in the nation, the state and the municipality are enormously swollen by unnecessary departments, commissions, bureaus, boards, officials and employes, to swell the list of soft places for party workers. The biggest issue today in this country is the tax issue. The government may take warning now; the people will not stand for increasing burdens of taxation for party loot and public waste.

Such ideas have been expressed over and over again, in editorials, on the platform and in resolutions of public bodies. But some writers go further and assert that not only is there a large surplus of federal employes in the de

partments, but that taken as a class they are inefficient and unprofitable. Such a serious indictment of the government deserves to be examined, and if found to be true the responsibility should be placed and the remedy applied.

Congress has already acted in the matter of appropriations and has made radical reductions in many directions. It has also under consideration an executive budget, a rearrangement of some of the bureaus, a classification and standardization of the personnel of the government, and other constructive measures looking to increased efficiency in the public service. Nobody will welcome efforts to increase the efficiency of the government service more cordially than the permanent civil service staff of the government,or what should be the permanent staff, but in these later days is anything but permanent. Such efforts are timely and will perhaps be facilitated by further discussion of the functions and cost of government; for there is a good deal of misunderstanding and misconception in the public mind regarding the work of the Federal Government, its scope and value and cost.

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The Functions of Government Henry C. Adams, in his treatise on the Science of Finance, classifies governmental functions into three groups: (a) The protective functions of government, (b) the commercial functions of government, and (c) the developmental functions of government.

(a) The protective functions of government are divided into three principal classes: (1) Protection against invasion or encroachment from without is provided by the Army and Navy, and this has always been an important and relatively expensive department of a national government. (2) Protection of life, property and reputation,

which is accomplished through police, fire departments, and the courts. (3) Protection against the spread of disease, either physical or social. As crime is looked upon as a phase of social disease, this will include prisons, asylums, sanitary provision, public charities, etc.

(b) The commercial functions of government include those which render a service for which payment is made by the individuals served, and are in general self-supporting. They address themselves primarily to the personal needs of the citizen rather than to the social needs of the state, and are performed by the state because it can render the service better or cheaper than private agencies. These services are generally such as can be rendered better by a single agency having a monopoly, rather than by many competing agencies. Hence it is usually a choice between the government performing the service or supervising the private agency which does so. Examples are the post office, railways, canals, telegraphs and other public utilities, patents and insurance.

(c) The developmental functions of government "are such as spring from a desire on the part of society to attain higher forms of social life." Society is not merely a collection of individuals, but is a conscious organism, and the interests of society require collective action in its development. This includes: (1) Public education, (2) public recreation, (3) providing those legal and administrative conditions in which

private business will be conducted in a just and equitable manner, (4) investigation and control of public utilities, (5) developing the resources and wealth of the state, which includes scientific and industrial research and the coöp-eration of the government with scientific and engineering societies and the

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