I. Public Finance Has Distinguishing Characteristics. - Man is by nature a social being, and consequently seeks the association of his fellow creatures. As this association develops and becomes more complex, the need for establishing and enforcing certain regulations appears, and governments are inaugurated to safeguard property and insure the orderly conduct of the community. The extent of governmental activities depends largely upon the degree of advancement in civilization. Among the primitive and backward peoples, the functions of governments are few and ill defined; whereas in highly civilized states they are numerous and, although often very complex, they are, nevertheless, well defined. The march of progress in the development of government is from the simple to the complex, and the more complex the organization the more numerous and difficult are the problems which present themselves.
The members of an advanced social group frequently fail to comprehend the extent to which they are indebted to their government for the services which it renders them. The Constitution of the United States, for example, guarantees to the citizen the protection of life, liberty, property, and the pursuit of happiness; yet he often forgets that this guarantee entails the maintenance of armies and navies, of legislatures and judicial systems.
The postman makes his semi-daily delivery of mail without a consideration by the ordinary citizen as to why or how. The modern progress in science, literature, agriculture, industry, and commerce is a matter of pride to every citizen, although the contribution of the various governmental units toward such progress is often forgotten. Government aid has fostered the development of educational institutions, the result of which has been that the development of science and literature has been hastened; experiment stations and schools have transformed agricultural methods; active health campaigns have wiped out the cause of diseases and pestilence; patent laws have stimulated inventions for the development of industry, and copyright laws have enhanced the quantity and quality of literature; while sound currency and banking systems have made possible modern commercial life.
A government has no superhuman power in exercising the important function of supplying materials and services to a social group. It cannot create the materials and services, but must either secure them from some already existing source, or cause them to be produced, either by its own activities or by the activities of some other agency. The methods used by governmental units in securing materials and services differ widely, and after they have been secured the uses to which they may be put also differ widely. None the less, it is a part of the business of governments to secure the means of supplying the various demands made upon it by its citizens. The subject matter of Public Finance has to do with that group of governmental functions which have to do with the getting and using of materials and services.