In this chapter we will consider expenditure of the first class ; that is, expenditure so clearly for the good of all that no specialcharge is made upon any of the individualsincidentally benefited. From one point of view expenditure of the second class, wholly for the benefit of certain persons, who are, however, exempt from any special payments, the expense being treated as involving only common benefit, is sufficiently like that of class one to come under the heading of this chapter. But it has been made a part of the next chapter in order not to lengthen this one unduly. Both of these expenditures might well be called net expenditures in distinction from those which, unlike them, result in some accompanying revenues.

The first item is that for general administration. Administrative expenditure is for the support of those officers of the government who have to do with civil affairs. For convenienceit is best to limit it to thoseofficers whose functions are absolutely indispensable to the execution of the laws. The officers who will be included vary, from country to country, with the frame of the government. It has been customary for financial writers, following the lead of the Cameralists, to limit their discussion of this expenditure to that for the crown and court. This is, in England, called the civil list. The peculiar character of such expenditure in monarchical countries makes it advisable to isolate it. But it must be borne in mind that in republican countries there is no corresponding expenditure. The salaries of the highest executive officials in republics are of the same character as those of the ministerial officials in monarchies. In England the civil list for Her Majesty's privy purse, household, charities, etc., amounts to 407,629, and if we add the annuities paid to members of the royal family amounting to 173,000, the crown may be said to cost Great Britain nearly ($3,000,000 per annum. In most monarchical countries, these expenses were originally met by the revenues from the crown estates. But these revenues from the domains, having been absorbed by the general treasury, it became necessary to make provision for the civil list from the general revenues. To the civil list should be added the salaries and other expenses of the ministries, their clerks, secretaries, etc. In federal governments the administrative departments of the component parts or commonwealths, as well as that of the central government, should be included. Finally there come the administrative departments of the local governments. It is very difficult to ascertain the number of such officials and almost impossible to ascertain all such expenses. According to the summary in the eleventh census the cost of all the executive departments of the United States was $16,770,801 in 1890. This does not, in all probability, cover more than half the cost of all that should be included.

In monarchical governments, and to a certain extent, also, in republican governments, traditional sentiment demands that the head of the government shall hold a social position of great prominence and perform certain merely ornamental functions, involving considerable expenditure. So that the expenditure for the services of the highest officials is generally larger than the sums which would be necessary to obtain merely efficient service. This lavish expenditure may be fully justified on political grounds, but as it involves great waste, both directly and indirectly, by example, it cannot be justified on economic or fiscal grounds.1 It is a general fiscal principle, applicable as well to this part of expenditure as to any other, that the expenditure should not be larger than is necessary to secure the most efficient service. The justification of this lavishness, therefore, must be found, if anywhere, in the creation of some equal utility recognised by Political Science. The exceptions made in practice to the general rule of economy do not extend beyond the heads of the administrative departments. In the subordinate positions the remuneration does not generally exceed that which must be paid for similar services in private life. Indeed, there is a certain saving,in that many of the positions, especially where the tenure of office is secure for a relatively long period, can be filled at a lower cost than the same services command elsewhere, on account of the honour attaching to them. In those countries where the expenditure for the higher positions is largest much is saved by the lower pay attaching to subordinate positions.

1 Rau, Finanzwissenschaft, sec. 48.

In this connection, mention may be made of the diplomatic and consular service, which, while partly conducive to the better performance of other functions, as, for example, defence and the regulation of commerce, is yet properly considered to be subordinate to the executive departments. Here again the traditional opinion that the dignity of the nation can only be properly sustained by a lavish expenditure on the part of the ambassador or minister, imposes on the treasury burdens far greater than the value of the services rendered, if measured by the ordinary business standards. As the means of communication improve and the general efficiency and reliability of the news agencies of the public press grow, it becomes harder and harder to justify this extravagance even on political grounds. The custom of lavish expenditure for diplomatic services has not been carried to such extremes by the United States as by other countries. As these positions are more or less of the nature of political prizes, in that country, this has probably been to the improvement of the service. Foreign intercourse cost the United States $81,583,118, in 1894, while Great Britain paid 531,392, or $12,656,960, for that service, not including colonial services of practically the same character, which would bring the amount up to over 900,000. Generally speaking, the executive department costs comparatively little outside of the actual salaries. There are some election and similar incidental expenses, but not many.

To the administrative department belongs the expenditure for the collection of the revenues. Although this is a part of the gross expenditures only, it is properly included in the general accounts so as to render control possible. England spends on the collection of the customs duties 871,915, on that of the inland revenues 1,814,039, on the post-office gains 7,037,785 ; the cost of collecting the total revenues of 100,660,881 is 13,249,293, or about thirteen per cent. This seems an extraordinarily large deduction, but the amount is large because of the large amount of expenses connected with the relatively small returns of the post office and the deficits of the telegraph and some other services. The cost of collecting customs is only about four per cent, of collecting the inland revenues about three per cent.

In the United States the cost of collecting the customs duties was about three per cent in 1893, and five per cent in 1894. The receipts fell off in that period from $200,000,000 to $130,000,000, but the expenses did not fall off correspondingly. The cost of collecting the internal revenues in 1893 was about two and one half per cent, in 1894 it was about three per cent.