Some form of the pension system is found in nearly every country. The granting of pensions is generally undertaken on the grounds that a service has been given which has not been properly rewarded, or for the reason that disability has resulted because of services rendered to the government which handicaps the present capacity of the individual for production. Under the first case a pension should be regarded as a payment for value received, rather than as a gratuity. England, in a large measure, has regarded her pension system in this light, and has allocated the costs to the various governmental departments under which the recipients have given services. In the United States the idea of reward for disability has been the chief ground for granting pensions. If this were legitimately followed, no objections could be offered to our pension system. The surplus of funds in the United States in the 'eighties led to such fraud in the granting of pensions, however, as to bring the system into disrepute. While it has been purged of its grosser evils, the chance for politics to play too dominant a role still remains. The rather large item for pensions in state expenditures is accounted for by the pensioning of Confederate soldiers by the Southern states.
In late years the pension system has been extended to include others than those who have rendered some special service to the government. The old-age pensions which have been inaugurated in England are an example of this situation. Every person over seventy years old, who is a British subject, who has resided in the country a certain number of years, and who does not have an income exceeding a certain amount, is entitled to a pension. The size of the pension varies according to the income of the individual. A number of commonwealths of the United States have provided for mothers' pensions. These are given on the ground that a better citizen will be produced if a child grows up under a mother's care than if it is reared in a public institution.
Bounties and Tariffs. - Government bounties may take various forms. Industries which a government may think desirable may not be able to exist because of foreign competition or for other reasons. The most common form of the use of a bounty is for the government to pay to the managers of such industries a sum sufficient to enable them to exist. Some of the bounties given by European states to stimulate the production of sugar are good examples. Minor political units have often given bounties to stimulate the eradication of undesirable factors, such as destructive animals.
In the United States the promotion of industry has taken another form than the straight bounty, though in the end the results are much the same. These ends have been secured through the use of the protective tariff. Students of economics are familiar with the arguments advanced for protection and with the method of its working. If it is used to enable industry to live, it must reimburse the manager in some way. It does this by keeping out competitors and allowing the price of products to rise. In this case the consumer pays directly to the producer, while if the payment were made by government bounty the collection would be made from individuals by the government. In the latter case the burden would be more widely diffused, since the collection by the government would not likely be confined to the users of the product.