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National General Expenditure


1. Expenditure of the Executive Proper.

2. Maintenance of the presidential mansion and grounds.

3. The Executive Departments.

4. Classification of officials.

5. Officials of the first class.

6. Extension of the civil service.

7. Same subject.

8. Departments must make reports.

9. Expenditures are either permanently or annually authorized. so. An appropriation cannot be diverted from its original purpose.

1. Limit of discretion only in using contingent funds.

12. The mode of contracting for supplies.

13. Bidders for contracts may still act in concert.

14. Good effects of recent uniform action in purchasing supplies.

15. The adoption of continuous contracts.

16. Principal officers in the Treasury Department.

17. All income and expenditures go through this Department. It is the accounting office. x9. Former mode of accounting. 2o. Delays caused by so many examinations.

21. No system of accounting can prevent frauds and errors.

22. The object of so many examinations.

23. Exception in the application of the system to the land office.

24. The present method of accounting. The first or adminis tration audit.

25. The second or auditor's examination.

26. In what cases there is further action by the controller.

27. His duties further defined.

28. Mode of paying money to a disbursing officer. 29 Mode of paying a claim. 3o. Good results of the present method.

31. What claims are audited before payment.

32. Expenditures of the Department of the Interior.

33. Expenditures of the other Departments.

1. Having considered some of the principles that should serve as guides in expending public money, we will begin with the expenditures of the Executive Proper. The President receives an annual salary of $5o,000, and the Vice-President $8,000. For the President's private secretary $5,000 is allowed, and $2,500 for an assistant secretary. Four clerks are attached to the office, one of whom is a disbursing clerk, whose duties, as he belongs to an important class of officials, may be briefly described. He draws drafts on the Treasury for money appropriated by Congress for the use of his Department, and deposits them with the Treasurer, or an assistant treasurer, of the United States. With this fund he pays in checks the salaries of the persons employed in his Department, and makes a monthly return to the fifth auditor of the Treas ury Department. He is required to give bonds to secure the government against loss should he not faithfully per form his duties. A similar official is employed in each Department.' 2. Besides his salary, the President has the use of the presidential mansion, which is furnished at public ex pense. The grounds also are maintained in the same manner. The mansion and grounds are under the con trol of the superintendent of buildings and grounds, who disburses the money appropriated for keeping them in order.

3. By the constitution, the government is divided into three Departments, the Legislative, Executive and Judicial. The work of the Executive Department is again subdivided into eight Departments : State, War, Navy, Treasury, Justice, Post-Office, Interior and Agriculture. Of these Departments, the work of the Department of the Interior is the most complex. Its three most important subdivisions relate to the payment of pen sions, Indian affairs and the sale of public lands. Each of these subdivisions has a chief, who acts under three most important subdivisions relate to the payment of pensions, Indian affairs and the sale of public lands. Each of these subdivisions has a chief, who acts under the direction of the Secretary of the Interior. A vast amount of work is done in this Department, especially in the Pension Office, and the roll of employees exceeds that of any other bureau of the Government. Beside pay ing pensions, surveying and selling lands, and looking after the Indians, the Secretary of the Interior is charged with a great variety of other duties. One of these per tains to the railroads in which the Government is in terested as a lender of money or as grantor of lands. Another duty is the governing of the Territories, man aging of the National parks, the Patent Office, educa tional matters, the work of the Fish Commission, and of various institutions for the insane.

4. The persons who conduct each of these Depart ments are divided into three classes. In the first class are persons appointed by the President who are con firmed by the Senate ; in the second class, persons who serve by appointment of the President, or the head of a Department ; and in the third class, employees under the Civil Service rules, who obtain their positions by sub mitting to an examination.

5. The officials included in the first class are the heads of the Departments, their principal assistants, am bassadors and consuls to foreign countries, postmasters of the first, second and third classes, and customs officers. The entire number whose appointments must be confirmed by the Senate are 4,815.' 'See Rep. of Civil Service Corn., 1899. One of the most forci ble arguments against the Civil Service was made in the House by J. M. Griggs, Feb. 5, 1901, during the debate on the remun eration of postoffice employees. After giving clear proof of the existence of an organization among them to obtain an increase of salary, Mr. Griggs asked: "Is he organized against capital? He is organized against supposed oppression or wrong some where. He is necessarily organized against the Government of the United States. The Government is merely the agent of the people. He is not only himself one of the agents of the people, but he is one of the people. Wherever such organized effort is made by Government employees to bring pressure on Congress for the purpose of changing their relations to the Government, they are engaged in an effort to coerce not only Congress, but 6. One of the most needful political and economic reforms is to bring more of the persons employed by the government within the scope of the Civil Service rules. It is generally admitted that the government would be better served if persons were permanently employed. Even politicians are beginning to realize that the power to bestow offices yields disappointing results. As the pressure for places increases, disappointed applicants often do more to tear down the popularity of the appoint ing power than the successful ones to sustain it. Thus the idea of a reformed Civil Service is growing among the class who were once its most strenuous opponents. Concerning the superiority of a reformed Civil Service, its merits are so evident, and have been so fully described, that nothing more need be done than to refer the reader to the reports of the Civil Service examiners.

7. As the duties of most officials are quickly learned, the rotation system, so its defenders strongly contend, is more in harmony with republican ideas. A fatal defect of this system is, appointees can bring no vouchers for the people of the United States. That which would be de nounced as treason and conspiracy on the part of soldiers is commended as a patriotic effort to redress wrongs on the part of civil employees. The great body of the people, Mr. Chair man, do not draw from the Treasury of this Government for their support; on the contrary, the Treasury draws on their resources, and they must pay the draft. Should the entire ofilceholding class become organized into a great body of salary grabbers, making its annual demands on Congress, it would not be a case of the labor union protecting its members against the aggressions of capital; it would be rather the aggregation of capital oppressing labor. It would be the salaried man against the unsalaried man, who must meet whatever demands the Government makes upon him. Once in two years only has he the opportunity of declaring his approval or disapproval of our acts. The Government employee is perennial in his de mands. He is an ever-blooming rose, Mr. Chairman. There are about 300,000 employees in this Government. If once thor oughly organized and voting solidly, they could turn the scales in any Presidential election. In almost every Congressional district in the United States an active organization of Govern ment employees may be able now to turn the scales at every election." 34 Cong. Record, 2176, 2179.

their faithfulness, which is an indispensable element of efficient service. An employe may be highly competent for his task, but if he is lazy, feigns sickness, in short, is without pride or honor and seeks to draw his salary and make only the slightest return therefor, he is un faithful, and, consequently, an unfit servant. Further more, his faithfulness can be established only by trial. It is therefore a serious thing to displace a servant whose faithfulness is firmly established for one whose faith fulness is a matter of trust and conjecture. What would be thought of a great corporation that adopted the rota tion system? And how would the leading officers feel if their assistants, whose competency and faithfulness were well known, were constantly displaced by order of the directors for others whose competency and fitness were to be proved? 8. The head of each Department must render an annual report of its expenditures, of the number of per sons employed and their compensation, and a full account of everything done in his Department; and the head of every subordinate Department must render an account to his chief of all matters within his narrower province.' Through these reports, the general and minor ones, very complete information can be gained concerning the work of every Department. Of course, irregularities are not reported, but many of these are discovered through in vestigation by the Departments or by Congress. The principal defect concerning these reports is the faulty method of distributing them. Only a few persons know their worth ; they are like a buried city of the far East, wherein is entombed the records of the activity of the various Departments of government. An effective plan should be adopted for their general distribution. Were this done, the people would read them and take a deeper interest in the public business. From time to time a re port has been made on the subject by some committee of Congress, but no adequate plan has been adopted. We would suggest the introduction of the British system, with some modifications. Let the government prepare and print from time to time a list of its publications, affixing a small price to each, and send the list to all of the more important post-offices to be put in a conspicuous place, charging the postmaster with the duty of getting reports for all who order them.' 9. Expenditures by the Departments are authorized by Congress. A part of them (like the interest on the public debt) are of a permanent character; the remainder are authorized by annual appropriations.

1o. The laws provide in precise ways for the ex penditure of public money, but formerly the Departments exercised great authority in transferring appropriations made for one purpose to another ; this can no longer be done. Furthermore, if expenditures properly authorized are not made within a fixed period, two years in most cases, they lapse; in other words, the law regards them as no longer authorized, and the money appropriated cannot be used, unless re-appropriated.' 1. The only discretion left to the Departments is in the use of contingent funds, which Congress has been steadily diminishing. If executive officers were always conscientious and capable, the public might be better served by making some appropriations less specific ; as their authority to expend money has been greatly abused, the wisdom of narrowing it none will question.

12. For the same reason discretionary authority has been largely taken away from public officials in making contracts for supplies. The present method is to prepare specifications of the things wanted, and to invite, through advertisement, bids for supplies and work of all kinds needed by the government. This practice has become general, and in the main is satisfactory. The law does not require the selection of the lowest bidder, but the lowest and most responsible one; by this requirement the government is much better served than it was before. The law provides for the inspection of everything pur chased, and bidders must give bonds for the proper execu tion of their undertakings. In this way the government succeeds in getting supplies at the lowest prices from those who are able to furnish them. 13. Of course there is nothing to prevent bidders from secret, concerted action ; probably they do act to gether on some occasions.

14. Another improvement has been made within a short period. Formerly, the supplies for the Depart ments at Washington were advertised at different times ; were furnished irregularly, and the prices varied greatly. By the new plan, a board has been created con sisting of an assistant secretary of the Treasury Depart ment, with representatives from the other departments, who fix uniform days for inviting proposals for fuel, ice, carpets, stationery and other miscellaneous supplies for the Executive Departments. The board compares all the bids received and recommends which shall be accepted or rejected. By this law uniformity of prices as well as a considerable reduction is secured.

15. In 1890 Congress made a radical departure in authorizing the government to make continuous contracts. This new system authorizes the government to ascertain the expense of an undertaking, and having done so, to make a contract for work, reserving, however, authority to make appropriations therefor at such times and for such amounts as Congress shall determine. Unquestion ably the system is more economical than the other, as individuals are willing to undertake such contracts at lower prices than by the old system, under which they had no sure knowledge concerning the future action of the government in completing its undertakings. The new system was first applied to the Congressional Library building, and was soon extended to contracts for improv ing rivers and harbors. The objection to the system is that it is likely to result in greatly increasing appro priations. Thus the fifty-first Congress, which created the system, authorized contracts amounting to $13,282, 979; and the fifty-second Congress, $31,760,521. The next Congress authorized no new contracts ; but the first session of the fifty-fourth Congress authorized contracts requiring an expenditure of $59,659,550.' 16. Passing from the mode of making contracts to the Treasury Department, it may be remarked that in this more persons are employed than in any other except the Interior Department. The Secretary of the Treasury is aided by three assistants. Besides these are the treas urer, controller of the currency, director of the mint, controller of accounts, six auditors and the commission er of internal revenue. The Treasury is divided into nine divisions." 17. As all the income of the government runs into this Department, so do all expenditures run from it. By its own immediate direction are all expenditures for con ducting the Treasury Department, collecting the revenue, besides the expenditures of the supervising architects, the marine-hospital service, the light-house and life-saving and steamboat-inspection service, and the coast survey.

18. As it has the entire resources of the government the other Departments must get the means from it for paying their expenditures. If the War Department needs money, a requisition is made on the Secretary of the Treasury, which is duly honored, assuming that Congress has made an appropriation for the purpose desired. This,

therefore, is the great accounting office of the government, and the larger number of persons employed therein are engaged in accounting for the receipts and expenditures of persons in the employ either of the Treasury Depart ment or of other Departments." 19. In the beginning, the officers of the Treasury Department consisted of a Secretary, controller, auditor, treasurer and register. Of these, the only officers whose duties related to accounting were the controller and auditor. The Secretary superintended the business of collecting revenue, and signed warrants, countersigned by the controller, for the payment of money ; but he was endowed with no authority to adjust or settle accounts. These were settled by the auditor and revised by the con troller. Nor was the treasurer an accounting officer, authorized to pass on the accounts of others. The regis ter had no authority over either settlements or payments ; he simply kept the books of account and registered all settlements and payments. The need of a register to keep the books and preserve the accounts has always been questioned, as this work might have been performed, either by direction of the secretary or controller. This plan worked well in the early days, when the business of the government was not great, and there were no com plaints of delay in transacting the public business.

2o. Until 1894 there were three, and sometimes four, examinations of accounts. So many examinations with the increase of business causedireat delay in the settle ment of accounts. Advances were continually made to disbursing officers as requested by them without any knowledge by the Treasury Department of the condition of their accounts. Enormous balances, often running into millions, were charged against them on the books of the Treasury Department. A disbursing officer received an advance in December, 1893, though there was charged against him on his account over $8,oao,000. The accounts of the Indian agents were kept in the office of the first examining officer in the Indian Bureau, perhaps for a year, before they were taken up for examination ; then they remained in the office of an auditor for another year before he could examine them; then they were sent to the controller, who perhaps retained them another year before passing them. During all this time, however, advances were made to the Indian disbursing agents. During the Civil War, the account of a paymaster in the United States Army, stationed at New York, was settled Novem ber 1, 1867, which included his disbursements to De cember 3, 1863, four years behind the settlement. It showed an aggregate amount of $168,376,00o. On No vember 1, 1867, a balance was brought down and charged against him, for which he had not accounted, of $142, In some form he had accounted for this money to the paymaster-general, but not to the accounting branch of the government. The officer had a bond for only $40,00o. The officers who were thus charged with money suffered greatly in mind from long delays in settling their accounts. Though not suspected of wrong doing, they were desirous of having their accounts closed, and so were their bondsmen.

21. No system of accounting can be devised that will protect the government against all corrupt practices and irregularities. These have happened from time to time for considerable amounts. Doubtless the crookedness in many an account has never been discovered by the ac counting officers.

22. The principal object of re-examining accounts is to secure the government more perfectly against fraud ulent practices. One officer is supposed to act as a check on another. Besides, errors may occur in accounting which might be detected on a second, or perhaps third, examination. In a report made to Congress in 1842 by a select committee on retrenchment, it was remarked that responsibility is rarely increased by multiplying agents to do the same thing. Instead of acting as checks to prevent wrong-doing, too often they promote negligence and fraud by distributing the responsibility for what is done.

23. This system was so elaborate that in 1849 a change was made in settling the accounts of the land office. From that time they have been audited and settled in that office, and sent directly to the controller for review. Again, in 1836, an auditor was appointed for the post office department, whose audit is final and conclusive, un less an appeal is made to the controller.

24. Having described in outline the old method of accounting, we will briefly describe the present method. Two audits are made of most accounts ; the first is by the Department in which they originate, and is called the administration audit. This audit is as complete as any by the best conducted corporations or commercial houses. When this is done, accounts go to one of the six auditors who are appointed to audit them. They are known as auditors for the Treasury Department, War Department, Interior Department, Navy Department, State and other Departments, Post-Office Department, and are numbered from one to six in the order above given.

25. An auditor's examination is a review and check on a department's audit, and no claim is paid until that Department is notified of the result of the audit by the proper auditor. There are a few claims, such as back pay and bounties, which go directly to an officer without an administrative examination, but the law provides for an independent examination of this class of claims in the Treasury Department itself.

26. An auditor's examination is conclusive, unless exception is taken ; when this happens, the account goes to the controller for further action. Only one is now em ployed, and among other gains from abolishing the office of second controller is uniformity in decisions. Again, as he simply considers questions relating to the construc tion of laws, usages and prior rulings, and does not attempt to review the details of an account unless the nature of the dispute requires an examination of them, his work is more quickly performed. The controller's de cisions are guides to the auditors, and preserve uniformity in their work.

27. The controller also passes on every advance to a disbursing officer; and if he has not complied with the law in rendering his account, or the balance against him is too large, refuses to countersign the warrant for the ad vance. A similar authority rests with the Secretary of the Treasury.

28. The way is now prepared for explaining more fully the method of making settlements and issuing war rants for the payment of money under the new system. Let us first take the case of a requisition for an advance of funds to the disbursing officer of the War Department. A requisition of the Secretary of War is presented to the division of bookkeeping and warrants in the Treasury Department. The condition of the officer's accounts ap pears on the books of the division, and is duly stated on the face of the requisition. It is then sent to the auditor of the War Department for his action. If the disbursing officer has complied with the law in rendering his ac counts, the requisition is approved and returned to the division of bookkeeping and warrants. The appropria tion for the purpose desired and the individual account of this officer are than charged with the amount of the requisition and a warrant is drawn. This is signed by the Secretary and countersigned by the controller, and the necessary entries concerning the appropriations are also made in the controller's office. The warrant then goes directly to the Treasurer, and after it has been en tered and signed by him is ready to be mailed or deliv ered, as the case may be. The requisition for the money accompanies the warrant until it reaches the office of the auditor for the War Department, when it is filed with the accounts of the disbursing officer. Much time is saved by this new method of drawing money.

29. Let us take the case of a claim pertaining to the same Department. After an examination and audit by the War Department it is sent to the auditor for the War Department for his action. After his re-examina tion he certifies it to the division of bookkeeping and war rants, and a copy of the certificate is presented to the Secretary of War. A warrant is issued on the certifi cate thus issued by the auditor, which is signed by the controller, and then sent to the Treasurer, who makes the necessary entries on the books of his office, and signs and delivers it as in the case of a warrant for advances of money to a disbursing officer. The certificate is then detached from the warrant, returned to the auditor of the War Department, and filed with all the papers per taining to the claim.

3o. The best results have followed this radical change in the method of accounting. Accounts are now rapidly settled. Had this system of disbursing not been adopted, chaos would have reigned in the administration of the finances of the Government.

31. Perhaps many will 'be surprised to learn that only the smaller number of accounts are adjusted before pay ing them. Nearly ninety per cent. of the money of the Government is disbursed, and settlements are made after ward. In the office of the first auditor, these claims are divided into forty-eight classes ; in the second auditor's office, thirty-seven classes ; in the fourth auditor's office, nineteen classes ; in the fifth auditor's office, seventeen classes ; and in the sixth auditor's office, none.

32. In making expenditures no one will question that those for a single purpose ought to be made as far as possible by a single department, instead of dividing the work and responsibility among two or more. Such a divi sion tends both to wastefulness and inefficiency. During the Administration of President Arthur, and when Mr. Chandler was Secretary of the Navy, he discovered that the economy and efficiency of the Department were seri ously impaired through the neglect of this principle in the different yards and bureaus. These were thoroughly re organized, specific limitations were imposed on all, and the improvement was so manifest that the reorganization, though not strengthened by force of law, has been con tinued by his successors." Of late years the navy has been seeking to invade the field of the geodetic and coast sur vey. To many during the debate on this subject in the House during the winter of 19oo it seemed as though the navy was peculiarly qualified to do this work and with economy. Yet it was clearly shown that the specially or ganized body for doing this work could perform it better and far more economically. In truth, there had been a fair and thorough trial. After the Spanish War the Coast Survey had surveyed the waters around Porto Rico, while the navy had surveyed under the same conditions those around Cuba. But the results, economically, were very different. 'The soundings taken by the Coast Survey cost 35 cents apiece, while those taken by the navy cost $1.o8. It was clearly shown during the debate that naval officers proceed by slow, cumbrous and costly methods, and with little or no regard for economy while the Coast Survey did its work in a speedier, less elaborate and less costly manner." One other illustration may be given. A few years ago the Government was sustaining several geologi cal commissions, who were duplicating to a considerable extent each other's work. Besides, a fierce jealousy sprung up between them, and each was angered by the appro priations made to the others. At length the tangle was straightened out through the aid of the National Acad emy of Sciences, and the existing Geological Survey is the sole survivor or successor." 33. There is a tendency in all departments and bureaus of the government to expand, and often in so doing to invade the field of some other department or bureau. Thus, at the present time, there is a strong tendency on the part both of the navy Geological Survey to cut into the clearly defined field of the Coast Survey. Not content with doing this, the Geological Survey is cutting out new work for itself in many direc tions and asking for larger appropriations. Indeed, the work which it can easily discover worth doing in a coun try so vast as ours is boundless." 'For amount of expenditures of Executive Proper, see Ap pendix A.

'For a more detailed account of the duties of the officers of the different Departments, see the U. S. Statutes; Webster Elmes' work on The Executive Department of the U. S. at Work, Their Powers, Functions and Duties; G. N. Lamphere's U. S. Government, Its Organization and Practical Workings. Elmes and Lamphere are rather old, but there are no better works on the subject.

'See first and second Annual Reports of the Supt. of Does., 1895, 1896.

'Sections 3690, 3691, Rev. Stat. 1875, p. 734. See Ch. xv1., Secs. 13, 14.

'See some very interesting remarks on this subject in Secre tary Francis's Report, Dep. of the Interior, 1896, 116-118, with reference to purchases by the Columbia Institution for the Deaf and Dumb.

'For the economy of the contract system, see debate on the Sundry Civil bill, 29 Cong. Rec., 1882, 1892, 1907, 1934.

"Appointments; Bookkeeping and Warrants; Public Moneys; Stationery, Printing and Blanks; Loans and Currency; Revenue Cutter Service; Mail and Files; Special Agents; Mis cellaneous.

"On this subject, see an elaborate report by Senator Cock rell, chairman of a select committee to examine into the Meth ods of Doing Business in the Executive Departments of the Government, March 8, 1888, 50 Cong., 1 Sess., No. 507. Also a series of very valuable reports made by a joint committee of the House and Senate in 1893-1895. These have been published as House Reports, 1 Sess., 53 Cong., 1893, Vol. 2. See also Senate report on the Books and Methods of Accounting in the Treas ury Department, 44 Cong., 1 Sess., No. 371; "Control of National Expenditures," E. J. Renick, 6 Polit. Science Q., 248; same sub ject, a different view, by N. H. Thompson, 7 Polit. Science Q., 468; "The Controllers and the Courts," E. J. Renick, 5 Polit. Sci ence Q., 214.

"See the annual reports of Secretaries of the Navy Chand ler, Whitney and Herbert.

"See a very interesting debate on this in the House, 33 Cong. Record, 4720-4736; Id., 5521-6529; Id., 5633. The subject was debated in both houses at great length, the Senate favor ing a large appropriation to be expended by the Navy in mak ing surveys and the House opposing it. It was not until after several conferences that the two houses agreed, the House at last yielding.

"See article by S. Newcomb in 170 North American Review, 666, entitled "Science and Government." "Concerning the work of the Geological Survey, its charac ter, its rapid extension, see a very interesting debate, both in the House and Senate, 33 Cong. Record, 7355; Id., 6676; Id., 1154; Id., 6736.

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