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reasonable supposition that if a business is mismanaged and its disbursements get out of control, there may easily be a waste of 8 per cent in its expenditure. The sum is larger than the revenues of some countries of dignified position among the nations of the world - as, for instance, Switzerland, Denmark, and Norway. One of the reasons which John Milton gave for preferring republicanism to royalty was that it was more frugal; "for that the trappings of a monarchy might set up an ordinary commonwealth." But now we find that the waste of our republic would set up an ordinary kingdom. If that waste could be stopped, it would mean an enormous increase of the financial ability of the government from existing sources. The yearly application of fifty millions would carry a bond issue of over a billion and a half, which would be enough to build the Panama Canal and provide for river and harbor improvements, irrigation and reclamation works.

With expenditure exempt from control, bankruptcy is, of course, only a question of time in any business, public or private. During the second session of the 60th Congress, Senator Hale of Maine made a blunt avowal of his anticipation of national bankruptcy. He is Chairman of the Committee on Naval Affairs, and in that capacity has charge of the Naval Appropriation bill. On February 15, 1909, while that bill was under consideration, the following colloquy took place :

"Mr. HALE. Some day, Mr. President, Congress will be confronted with the absolute, imperative, and unescapable duty and obligation either to borrow money or to increase taxes to pay the appropriations.

Mr. BACON. Is not that day right at hand?

Mr. HALE. It is too near, but it is not in the minds of men. The Senator can hardly get any votes here in this Chamber to reduce this naval programme.

Mr. TILLMAN. The Senator from Maine must think that, else he would not say it. He asserts it with such positiveness, I suppose he has made inquiry of that side.

Mr. HALE. I have made inquiry on the other side, too. Mr. TILLMAN. I should like to cut some of these expenditures, for one.

Mr. HALE. The curtailing of expenditures is a pretty deep matter. It is more than a matter of sentiment. One man cannot do it; one committee cannot do it; one set of men cannot do it; but some day or other the Secretary of the Treasury will tell us that the money is out and there is nothing left in the Treasury; we have either got to borrow money in time of profound peace or clap on the taxes. That is coming, Mr. President, just as tides and sunrise come."

Here we have national bankruptcy declared to be the only available remedy for excessive expenditure, and the averment comes from a congressional leader who takes a prominent part in shaping and directing that expenditure. The situation is aggravated by the peculiar function which the national treasury performs under our banking system, as the agency by which coin redemption is maintained and the currency is kept at par. Hence, commerce and industry in this country are liable to distress from treasury embarrassments in ways and to extents unknown in other countries. In whatever aspect the situation may be regarded, its intense seriousness is evident.

Such are the broad outlines of the situation. The impression of unbridled extravagance which they convey is deepened when we turn to particulars. In

considering them we find that expenditure tends to increase much more rapidly than population. That with the growth of the country there should be a progressive increase in government expenditure, is, of course, to be expected, although we should hardly regard any private business as well managed if the proportionate cost of operation did not decrease with the expansion of the business. We have had an enormous national development, and upon this fact a vague plea of party justification has been based for electioneering use. It is said that the reason why we have billion dollar congresses is that this is a billion dollar country. Such excuses are not approved by serious authority. In his annual review of appropriations and expenditures, delivered in the House of Representatives on May 30, 1908, Chairman Tawney gave statistics showing that, despite the great increase of population, governmental expenditure was increasing in greater proportion. The per capita expenditure has increased from $1.34, in the period from 1791 to 1796, to $8.91, in 1907. Chairman Tawney appended to his speech an analysis prepared for the Committee on Appropriations by the Bureau of the Census. This analysis is probably the most complete statement of statistical data on the subject now accessible.1 Examination of it will correct a notion that is widely diffused, which tends to procure a leniency of public judgment that is not deserved. I refer to the notion that it is the Pension bill that makes the national expenditure seem inordinately great, so that the condition may be transitory in its nature. The statement 1 See Appendix A.

of the Census Bureau shows that this notion is erroneous. The ratio of expense on account of pensions has declined from $4.32 to $1.92 since 1869. The marked increase of ratio is due to other costs of government.

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An encouraging circumstance revealed by that analysis is that while increase of federal expenditure far outruns increase of population, it does not outrun increase of national wealth to any great extent. In the speech already mentioned, Mr. Tawney averred that federal expenditure, in comparison with national wealth, has “maintained an almost uniform proportion, except during the period of the Civil War." But on referring to the Census Bureau analysis, it appears that in 1860 the federal expenditure per $1000 of national wealth was $4.40, while in 1907 it was $6.70. The statistics given in regard to expenditure by state and local authority are scantier than in the case of the federal government, but it appears that the expenditure of states, counties, cities, and minor civil divisions, amounted to $9.30 per $1000 of national wealth in 1890, and that the ratio had increased to $12.80 in 1902. This brings into view an important economic aspect of the expansion of federal functions. Evidently the transfer of function from state to federal authority is not attended by any diminution of the cost of local government, although adding to the cost of federal government. It appears that, coincident with this tendency, the cost of local government is increasing in even greater ratio than that of federal government, and that in both fields the increase is in greater proportion than the increase of national wealth. From

1 Congressional Record for May 30, 1908, p. 7611.

this point of view there is a revelation of economic depravity in American government more impressive than is made by the absolute increase of expenditure. Federal waste is evidently but one phase of a general characteristic of American government, symptomatic of general constitutional disease. Meanwhile the steady increase of national wealth shows that the ability of the people to bear the burdens laid upon them is not seriously impaired. Great as those burdens may be, they are still far from being so great as to check the productive energies of the nation.

It is significant that this problem of budget control has become acute with the disappearance of our old state of national isolation. Contrasting our situation with that of his own nation, Mr. James Bryce, in "The American Commonwealth," says of England:

"She, like the Powers of the European Continent, must maintain her system of government in full efficiency for war as well as for peace, and cannot afford to let her armaments decline, her finances become disordered, the vigor of her executive authority be impaired, and sources of internal discord continue to prey upon her vitals. But America lives in a world of her own. Safe from attack, safe even from menace, she hears from afar the warring cries on European races and faiths, as the gods of Epicurus listened to the murmurs of the unhappy earth spread out beneath their golden dwellings." 1

That was published in 1888. Only twenty-one years ago, and yet what worlds away is that idyllic age! Now American banking capital is taking nations in pawn. American commercial enterprise is invading every part of the world. A boycott in China sends 1" American Commonwealth,” Vol. I, Chap. 26.

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