Many factors have contributed to the rapid and continual growth in public expenditures. States are not only undertaking new activities, but are entering into former activities more extensively, or are attempting to conduct these activities more effectively. The mere fact that population is becoming more dense has caused a number of expenditures to increase. On the whole, governments are institutions of increasing cost - a large part of the services cost more per capita as population increases. Reference to some of the preceding tables, especially the one for cities, will indicate this tendency.
Army and Navy. - Military and naval activities have been one of the chief causes for increase in Federal expenditures. The increase has been general, in democratic as well as in autocratic governments. Wars are, of course, much less frequent than formerly, but the daily cost of a war, such as the Great War, would more than finance an entire conflict in earlier times. A modern twelve-inch gun or battleship would entail, perhaps, as much expenditure as an early army or navy. Another important factor is the maintenance of the large, modern navy and standing army in times of peace. This means that peace-time equipment represents a far greater expenditure than did early wars. A review of the table on Federal expenditures will show the importance of these items in the expenditures of the United States.
Public Utilities, Highways, and Education. - Among the important services which modern governments supply, and which were formerly supplied by individuals, are the various classes of public service enterprises, highways, and education. Many countries have gone further than the United States in supplying the services of public utilities. In some countries the railroad, telephone, and telegraph are operated by the government, while these are still privately operated in the United States. Yet the events of the era when the state and Federal governments were active in internal improvements are familiar to every student of American history. The demand for public ownership seems to be increasing, and the number of public enterprises is rapidly growing larger. This is especially true in cities. The recent emphasis placed upon education, and the supplying of this utility by the public to such a large extent, has had an important influence in causing expenditures to increase. The same has been true with highway expenditures, since highways are no longer supplied by individuals. The growth and relative importance of these items can be seen by reviewing the preceding tables on pages 32 and 34.
1 Bullock, Readings in Public Finance, p. 50.
Regulative Activities. - In recent years the public has continually been demanding the extension of state enterprises. Catering to these demands has meant increased costs. The most noticeable of these demands, perhaps, has been for the various forms of regulation, and for the development of health and sanitation. The old laissez-faire policy of government is becoming more and more antiquated, while the public is placing greater reliance on the activities of the government to secure its desires. This tendency is clearly shown by the rapid development of functions under the police power.1 In the matter of health and sanitation governments have undertaken many preventive measures in recent years, while formerly, if they were concerned at all, it was with repressing epidemics which might arise.
1 The police power is the authority of the American commonwealths to legislate for the physical, moral, and economic welfare of their citizens.
Extension of Credit. - One other item which might be mentioned as having influenced the increase in public expenditures is the ease of public borrowing. Reasons for this growth of credit have already been noted, and a detailed study of public debts will be reserved for a later chapter. The ease of borrowing has given a supply of revenue which could not, perhaps, have been obtained had the other methods of taxes and receipts from lands and industries alone been available. So general has public indebtedness become that nearly every governmental unit practices the policy of deficit financiering. Citizens are willing to lend to the government because its credit is good, and the burden is not so apparent as when revenues are secured through taxes. Except where political units have reached the legal amount of indebtedness, a tendency toward an increased use of this source of revenue is easily recognized.