If the enormous increases in public expenditure in all our governmental bodies had to be borne, with no change in the ability of individuals to
Per Capita Expenditure op Cities, 1917
Over 500,000 popula-
300,000 to 500,000....
100,000 to 300,000....
50,000 to 100,000....
30,000 to 50,000....
bear the increasing burdens, there would be cause for grave alarm. Had it been true, however, that this ability were stationary, expenditures would not have reached their present magnitude, for the tree would have been cut to get the fruit long ago. But the facts that population is increasing, and that wealth - the source of revenue - has also been increasing, must be taken into account. In Europe, it was seen, population was increasing less rapidly than expenditure, which, of course, causes an increase in the individual burden.
Expenditures in the United States. - In the United States the increase in population has more nearly kept pace with the increase in expenditures, while the increase in wealth has surpassed the growth of expenditures. This means that, in spite of the great increase in state activity, the individual burden has decreased. A lower percentage of the national wealth was spent by governmental units in 1916 than in 1870. In 1850 our national wealth was estimated at about $7,000,000,000, while in 1912 it had increased to more than $175,000,000,000. In 1870 the Federal government spent about $13.2 per $1,000 of national wealth; in 1912 the expenditure per $1,000 of wealth was $5.3. The per capita change in expenditure from 1903 to 1913 was from $7.90 to $10.15. All other governmental units spent $15.2 per $1,000 of the wealth in 1890, while in 1912 the expenditure was but $13.3. The state governments spent, in 1903, $2.30 per capita, and $3.95 in 1913. The rise in the per capita expenditure for 146 cities for the same period was from $24.64 to $32.46.
In the United States as a whole, because of the increase in population and wealth, public burdens have not been increasing faster than the ability to bear them. This has not been true, perhaps, of some of the political divisions, especially the cities, where the enormous increase in expenditure has outdistanced the increase in wealth. This burden may be particularly heavy upon certain classes of citizens, for it is a matter of common knowledge that all property owners do not share the public burden in proportion to their wealth. Since the wealth of individuals in general is increasing at a greater rate than government expenditures, there is no cause for the fear that increasing government activity is crushing the individual. It would further indicate that there is no pressing need for new sources of revenue so far as securing funds is concerned, no matter how imperative they may be to secure a more just distribution of the fiscal burden.
The Value of Money. - When attempts are made to compare the increased services which come from increased expenditure, it must always be kept in mind that the value of money is not constant. For a number of years following 1873 increased services might have been given with decreased expenditures, because prices were falling and an expenditure in dollars would give more services than before. Since the late 'nineties, however, the other aspect has been true, especially since the advent of the Great War. In so far as a state is a purchaser of materials in the open market, it is affected by rising prices as much as an individual. On the whole, however, the effect is less marked in the case of the state, because a larger proportion of its expenditures is for salaries and wages, which rise much slower than other prices. Because of rising prices, then, expenditures may noticeably increase, while the services rendered may remain the same or decrease.
Expenditures for War. - The proportion of public expenditure which is due directly or indirectly to war is an item of importance. Everyone is aware that during the Great War all other expenditures were overshadowed by those for war. In a few years, however, it may be forgotten that indirectly war expenditures still form a large part of the total public outlay. Professor Bullock has calculated the percentage of Federal expenditure due to war for a number of years between 1870 and 1902, the results of which are almost startling. The costs due to war, he considered, were for the army, the navy, pensions, and for interest on the debt arising from war. On this basis 80.7 per cent of the Federal expenditure in 1870 was due to war; 74 per cent in 1880; 66.4 per cent in 1890; 68 per cent in 1897; 72.4 per cent in 1900; and 70.6 per cent in 1902.1 A somewhat detailed study of the cost of war will be presented in a later chapter.