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The Development of Contributions and Expenditures in Kind into Contributions and Expenditures in Money and the Limits of Each Class

THE DEVELOPMENT OF CONTRIBUTIONS AND EXPENDITURES IN KIND INTO CONTRIBUTIONS AND EXPENDITURES IN MONEY AND THE LIMITS OF EACH CLASS.

§ 174. It is well known that, for reasons familiar to every one, the course of historical development due to the division of labor and to technical improvements in industry, has constantly tended away from the employment of barter and payment in kind, and towards the use of money. The public administration has not only taken part in this general economic development, but has distinctly furthered it.

It is a mistake, however, as has already been pointed out in the general discussion of economic theory (see vol. i. secs. 246-249) to regard this course of development in the division of labor and the use of money as a supreme law of nature. It should rather be our aim to reach a valuation of the subject con sidered as an ethical matter and not as a matter of natural law. In the absence of such a valuation from an ethical point of view, we shall simply be amazed at the fact that in the midst of the highest development of modern national life, our financial system has, for some of the most important purposes, retained, or rather returned to, the method of receipt and expenditure in kind.

This qualification will of course not prevent our recognizing the fact that the great mass of financial transactions has contin ually more and more been assuming the form of money transac tions, just as has been the case with regard to the products and articles of consumption in private economy.' For most purposes the public administration, in like manner as is the case in private life, makes use of money as its means of purchase, and it must therefore require the contributions of its members in the form of money. Indeed, the fact serves to mark the character of this development, that it is in times of war, that is to say, at times when the accustomed course of industry is violently disturbed, that to a greater extent than usual recourse is had, and must be had, to transactions in kind in place of money transactions.

§ 175. But there is also another respect in which the employ ment of a division of labor and of money transactions is subject to limitations within the sphere of the military activity. Within this sphere whose function it is to build and maintain the founda tion walls of political autonomy by the development and mani festation of power, both at home and towards external enemies— which will presumably have to fulfill this function for a very long time to come ; in military matters, and precisely in their latest developments, the character of the human material required for military service on the one hand, and the special character of the arms, munitions, fortifications, war-vessels required on the other hand, leave considerable room for the employment both of expenditures and of contributions in kind.

The most highly developed modern system of defense does not require of its citizens the money with which to hire mercen aries ; it requires the citizens themselves personally to bear arms, and this for the reason that such general military duty results in a more effective defense than any and all payments of money for hiring defenders of the Fatherland. But this also is no new discovery on the part of the modern state. On the contrary, the idea of a universal military duty has never been entirely extinguished, from the very beginnings of national life and through all subsequent changes ; it has only been neglected and lost sight of, and with the awakening of the national spirit it has broken forth with renewed vigor and has set an example that all other nations, even those which have resisted most stubbornly, have been constrained to follow. And the fact that this phe nomenon has become such a prominent feature in the life of the modern commonwealth serves to bring out the significance, for the present and the future, of this element which does not par take of the nature of a money transaction.

A second fact of the same character is the extensive factories, navy-yards, fortifications, barracks with their attached cooking establishments, bakeries, etc., by which the state (the Empire) provides, without the interposition of bargain and sale,' the weapons, munitions, vessels, provisions, which it may require. This is partly due to the fact—frequently underrated—that for purposes of production on a large scale the government may possess advantages equal or superior to those possessed by private industry.' To some extent it is due to the presence of certain facts of a technical character, such as the possession of exclusive knowledge of new discoveries and inventions in the art of war, which incite to the effort to keep the state independent of private industry.

Of course these transactions in kind, in modern financial management, go on side by side with money transactions; they occur only, as it were, scattered through the texture of a system of bargain and sale which predominates in the economy of the state in like manner as it does in the general economy of the people today ; but they do, after all, have a definite significance, and are indications of the future course of development.

transactions, character, modern, military and life