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National Expenditures of France Compared with Population and Property for Dates Named

NATIONAL EXPENDITURES OF FRANCE COMPARED WITH POPULATION AND PROPERTY FOR DATES NAMED.

• De Foville, La France icessavique. p. 9. t De Foville, La France lteamaatigut, p. 516.

The exhibit submitted for the United States does not ex tend beyond the year 1840, and the first safe estimate of wealth is for the year 1850. Nor would it be desirable, were it pos sible, in this somewhat cursory survey of the subject, to en ter upon an investigation of the early years of this century. There is little in common between the industrial character of the period prior to 1840 and that of the period subsequent to it. While it is true that machinery was, to some extent, employed in the earlier years, it cannot be said that society was in any marked degree influenced by the development of the factory system. When, however, we confine our attention to the fifty years subsequent to 184o no country reflects so clearly in its financial and industrial history the character giving forces of the nineteenth century as does the United States.

The exhibit for the United Kingdom extends from 1822 to 189o, and represents a continuity of political and industrial life for sixty-eight years. It will be remembered that Eng land stands as the most advanced industrial nation of the world, that in 1822 her wealth was very considerable when placed in comparison with that of other nations, and that the period of her expansion in national expenditures was during the Napoleonic wars.

The statement for France covers the years from 1853 to 1886. The estimates of property appear to meet the approval of M. de Foville, those of 1878 and 1886 being the result of • Alf. de Foville, La France konosnique Statistique Raisontsle et Com parative, p. 515.

his own computations. A calculation based upon the returns of succession duties warrants Mr. Giffen in asserting " that the growth of property in France has been very rapid, as rapid during the present century as in the United Kingdom." For the last twenty years, however, it may be doubted if there has been any marked increase in money values in France, from which it appears that any further expansion of public expenditures must tend to become a serious matter for the French people.

The data presented in the above summaries will serve as a corrective to some of the erroneous applications that have been made of the general fact that public expenditures tend constantly to increase. Of the three nations subjected to analysis the tendency has been for property to increase at a rate relatively more rapid than national expenditures; and for the United States the growth of population also appears to be more rapid than national expenditures. This fact leads to several important conclusions which, regarded as contri butions to the practical rules for fiscal administration or as a statement of current sociological tendencies, are believed to be new as well as important.

In the first place, while it is true that public expenditures have continuously expanded, it is not true that they have be come correspondingly more burdensome; and should the financier discover that the fiscal system rests with ever increasing weight on industry as time goes on, he must look for an explanation of so culpable a result to the structure of that system and to the manner in which it makes appeal to the citizen for payment rather than to the amount which it demands. This remark cannot be construed as in any sense an apology for unnecessary expenditure. It is no excuse for lavish appropriations that the government leaves relatively more in the hands of the people each year than it takes from them. It does, however, direct attention to the truth, too frequently overlooked, that the burden of the fiscal system lies rather in the rules adopted for collecting revenue than in the amount of revenue collected—a truth of especial pertinence to the fiscal conditions of the States, municipalities, and minor civil divisions in this country.

The second observation suggested by the data contained in .the above table is that the expansion of public expenditures does not call for a corresponding expansion of the basis of taxation. The facts in the case give no support to the assump tion so generally applied in the reasoning of financiers that a continually larger number of sources of revenue must be opened to supply the growing demands of the State. On the contrary, the growth of property at a rate more rapid than the development of the demands of government would lead to the conclusion that, other things being equal, the in crease in public expenditures might be met even though the basis of the fiscal system were narrowed year by year. The

practical conclusion from this is that the financier performs his whole duty when he meets current demands without im pairing the patrimony of the State, and without obstructing the development of national riches. When it comes to ques tions of investment he is doubtless obliged to have regard to the future, but so far as current ordinary demands are con cerned he may limit the horizon of his observation to the present. The " elasticity of revenue " necessitated by the " law of increasing expenditures " is amply provided for so long as wealth tends to outstrip expenditure in its growth.

• The third observation is sociologic in character. The facts portrayed in the above statement do not lend their support to the prevailing idea that government in these later days is encroaching upon the domain of private initiative, and that coercive association is expanding more rapidly than volun tary association. Were this true it might indeed be the oc casion for alarm to those who believe that the continuance of our present form of society demands a stable balance be tween governmental and private activities. The impression that government is growing at the expense of private asso ciation is doubtless due to the rapid expansion in certain directions of governmental functions; but it should be held in mind that this is balanced by an equally rapid expansion of functions non-governmental in character. The proof of this assertion is found in the fact that among peoples of a high grade of industrial attainment public expenditures do not in crease at so rapid a rate as the property from which they are met; and when it is recognised that a continually larger share of social income exists in the form of earnings from labour and enterprise rather than as earnings from capital, it is also clear that public expenditures do not increase at so rapid a rate as social income. The financial statistics of govern mental administration offer no proof of the assertion that the /development of public functions tends in any degree to destroy the established balance between public and private activities.

18. Growth of Local Expenditures. It is clear what the tendency in local expenditures ought to be if the analysis of governmental functions presented in the fore going chapter, and of the shifting of their relative impor tance with increased differentiation of social functions, be correct. It was there claimed that " expenditures for the developmental functions tend constantly to increase." It would not be correct to assert that local expenditures are exclusively assigned to the support of the develop mental activities, and national expenditures to the protec tive activities, of government. The large appropriations for rivers and harbours by Congress in the United States, or for schoolhouses and education by the Assembly in France, would contradict such a generalization. Notwithstanding numerous exceptions, however, it remains true that the velg inerpctions predominate over the protective func tions in local government, while the protective functions pre dominate over the developmental functions in national govern ment; from which it follows that the relative increase in local and national expenditures may be accepted as a test of that portion of our general theory of public expenditures which pertains to the developmental functions of the State. With this explanation the summary on page 97, which gives the per centage of national and local expenditures for the United States, the United Kingdom, and France during the past half century, must be accepted as significant.

There seems to be no doubt respecting the modern ten dency in local expenditures. In France there has been a steady increase in the percentage of local expenditures, and a relative decrease in the percentage of national expenditures, since 1864. In the United Kingdom, with the exception of the period in which national expenditures were influenced by the Crimean War, the same tendency may be discerned; while in the

public, functions, united, rapid and local