The rapid growth of democracies and constitutionalism has been indicated in the preceding topic. With this growth some well-defined characteristics of fiscal policy have also developed. These have been outlined by Prof. W. M. Daniels in a way which cannot be improved upon, and they are repeated here to portray the close relationship which exists between the fiscal activities of governments and individuals.1

The first characteristic of modern fiscal policy is that there is a normal and calculable field of government activity. During the Great War government expenditures mounted to unprecedented and almost unbelievable heights, which seems to disprove the characteristic just mentioned. This, however, is the exception which helps to prove the truth of the statement. In the modern era wars, with their large and incalculable expenditures, have represented an abnormal state of society. In the earlier stages of its development, however, the peaceful pursuit of industry was the abnormal course. Under normal modern conditions, then, the citizen can pursue his occupation with the feeling that the state will require nothing unusual of him. Modern fiscal science has become so exact, in fact, that officials are able to predict the revenues and expenditures for a coming year to within a fraction of one per cent.

1W. M. Daniels, Elements of Public Finance, p. 7.

A second characteristic is the periodic exaction of money from citizens for the support of the state. Such a statement appears axiomatic in the extreme to the citizens of a modern political unit. In a following chapter the development of taxation will be discussed, and it will be found that the exaction of revenue from citizens is a comparatively recent phenomenon. Early revenues came from other sources than from exactions from the citizens. These were called upon only in case of extraordinary need.

The third characteristic, the necessity for which has already been suggested, is the popular control over income and expenditure. The growth of constitutionalism has been more marked, perhaps, by the control of the property owners over state expenditures than by any other single feature. Many constitutional changes have been inaugurated in order to secure this control, and when once secured the principle has always been closely guarded. Some modern proposals for tax reform, which will be discussed later, give little consideration to this principle, yet it still stands at the top of the requirements for safe constitutional government.

The fourth characteristic given by Professor Daniels is the universality of public credit. This could reach a growth of any appreciable size only with the development of constitutional government. The probability of the repudiation of public debts decreased in proportion to the amount of control which the public gained over fiscal policies. As long as rulers could repudiate the debts of the state at will - and this was frequently one of the first acts of a new ruler - public credit could have very little stability. With a condition of popular government the individual is lending where he has some control over payment, and he will take every possible precaution to prevent officials from refusing to meet the state's obligations.