2. That inaccuracy in deduction and confusion of matter are the rule.

3. That violations of the regulations in force are chronic.

4. That a great number of sales made in the name of the department are irregular or fictitious.

5. That waste abounds, and that, whereas many employees are paid too little, others benefit by unjustifiable generosity.

Now the department of Foreign Affairs has nothing to produce, nothing to sell. It does not need any special equipment for the carrying on of its work. It does not have to watch the market price of supplies and to buy them under the best possible conditions. In a word, it does not have to do any of the things required of a trading enterprise, in seeking openings, etc. Its staff is easy to manage, and has the reputation of being devoted. What would happen, then, if the department were called upon to manage a commercial undertaking?

9. All extravagant departments try to negotiate appropriations in a more or less round-about manner.

We have worked out a grand naval program, which is to extend over a period from 1912 to January 1, 1920. Its object is to add units to our fleet and to increase the facilities of the ports which are to receive them.

The outline of the plan includes a certain Article 9 which authorizes the government to construct ships enumerated in a certain schedule "A" in such manner as will insure the completion of sixteen men-of

war on January 1, 1920. The two paragraphs read as follows:

"The expenses of carrying on the new construction will be provided for by entering the annual appropriations mentioned in schedule 'B' upon the budget for the fiscal years 1912-1919.

"In case the expenditures of one fiscal year should be greater than the provisions of the said schedule warrant, the excess shall be carried over by anticipation to the appropriations for the following year within a maximum limit fixed each year by the Finance Law."

The construction work to be carried out between January 1, 1912, and January 1, 1920, will involve, according to the original plan of 1910, an expenditure of 1,326,000 francs. The recent loss of the Liberté has increased the amount in round figures to 1,400,000,000 francs ($266,000,000).

The government was anxious, and rightly so, to charge these loans to ordinary expenditures. Yet it resorted to eating its corn before it was ripe, like Panurge. And this roundabout method was finally adopted by the Chamber of Deputies.

Two estimates were made, one indicating the actual amount to be expended per year for new construction; the other showing the distribution of the annual appropriations over the entire period.

The appropriations for 1912, 1913, and 1914 were the smallest for the period, while the proposed expenses were at their maximum in 1913 and 1914. The two estimates in detail were as follows:

Up to 1916 the expenditures exceed the appropriations by 139,295,000 francs ($26,466,050), but the Navy is empowered to carry over the excess by anticipation upon the appropriations of the following years. The sole check to such mortgaging of the future is a provision permitting Parliament to fix a maximum each year in the Finance Law.

Thus the custom of advances from the Treasury, which are to grow from year to year, has been firmly established. The Chamber of Deputies has specified, in the hope of decreasing the figure, "that the excess shall be regulated with the help of supplemental credits" a practical application of the method of balancing budgets by means of supplementary appropriations.

Senator Gauthier, for the Finance Committee, brought forward strong objections to this system, which he justly described as a "disguised loan, or a loan by annual installments." He pointed out all the frauds which would result.

"The system of anticipations and that of supplementary credits superimposed upon it, has the advantage of au

thorizing and legalizing expenditures not covered by the original appropriations; but it does not create any new revenue. The deficit still exists."

Each man-of-war had been estimated at a uniform cost of 62,525,000 francs, when made in the arsenals, and 64,000,000 francs in private shipyards. As a matter of fact, they have all cost exactly the same, except the new Liberté, constructed by the government, which cost 72,000,000 francs. England and Germany are providing battleships of 26,000 tons. Will we be long content with only thirteen battleships in the dockyards?

The minister of Finance “agreed to insert into the Finance Law of 1913 clauses purporting to cover by corresponding available resources the entire amount of expenditures incurred, which expenses will thus appear, at the end of the period of construction, as arranged for by the law providing for the naval program." In so doing he acknowledged the soundness. of the criticisms of Article 9, made by the finance committee of the Senate. But he had already accepted for himself, and he has made the Chamber of Deputies accept his system.

I cite this case to show by what processes a department may attempt to secure resources by the help of disguised loans. It tries to escape from a unified budget by all sorts of devious methods.

We can judge to what plundering the general budget would be handed over if each department had its own autonomous industrial budget.

CHAPTER XXII

THE PURCHASE PRICE

Telephones.-The Southern Canal.-Swiss Railways.-The Western Railroad.—The "Opération Blanche."

When there is some undertaking to be purchased the partisans of nationalization and municipalization always start the ball rolling by saying: "Oh, it will cost practically nothing," and then they proceed to reveal their economic limitations by making estimates which are invariably lower than the facts warrant.

When the French government decided to take over the telephone, it estimated the cost at 5,000,000 francs. The company demanded 18,800,000 francs. The state was finally forced to compromise at 9,313,000 francs, a figure which, with interest and costs added, ultimately increased to 11,334,000 francs, or 126 per cent. more than the first estimate.

Again, when the government determined to purchase the Southern canal, an outlay generally regarded as wholly unnecessary, advocates of the enterprise were unanimous in their enthusiasm over the manifest bargain. "It will cost the state nothing." But the arbitration commission ordered the state to pay to the Southern company an annual indemnity of 750,000 francs, based on a capital of 25,000,000 francs.