The want of legislation on topics where legislation is needed breeds fewer evils than would follow in countries like England or France where Parliament is the only law-making body. The powers of Congress are limited to comparatively few subjects: its failures do not touch the general well-being of the people, nor the healthy administration of the ordinary law.

The faults of bills passed by the House are often cured by the Senate, where discussion is more leisurely and thorough. The committee system produces in that body also some of the same flabbiness and colourlessness in bills passed. But the blunders, whether in substance or of form, of the one chamber are frequently corrected by the other, and many bad bills fail owing to a division of opinion between the Houses.

He

The President's veto kills off some vicious measures. does not trouble himself about defects of form; but where a bill seems to him opposed to sound policy, it is his constitutional duty to disapprove it, and to throw on Congress the responsibility of passing it "over his veto" by a two-thirds vote. good President accepts this responsibility.

A

CHAPTER XVII

CONGRESSIONAL FINANCE

FINANCE is a sufficiently distinct and important department of legislation to need a chapter to itself; nor does any legislature devote a larger proportion of its time than does Congress to the consideration of financial bills. These are of two kinds: those which raise revenue by taxation, and those which direct the application of the public funds to the various expenses of the government. At present Congress raises all the revenue it requires by indirect taxation, and chiefly by duties of customs and excise; so taxing bills are practically tariff bills, the excise duties being comparatively little varied from year to year.

Once a

The method of passing both kinds of bills is unlike that of most European countries. In England, with which, of course, America can be most easily compared, although both the levying and the spending of money are absolutely under the control of the House of Commons, the House of Commons originates no proposal for either. It never either grants money or orders the raising of money except at the request of the Crown. year the Chancellor of the Exchequer lays before it, together with a full statement of the revenue and expenditure of the past twelve months, estimates of the expenditure for the coming twelve months, and suggestions for the means of meeting that expenditure by taxation or by borrowing. He embodies these suggestions in resolutions on which, when the House has accepted them, bills are grounded imposing certain taxes or authorizing the raising of a loan. The House may of course amend the bills in details, but no private member ever proposes a taxing bill, for it is no concern of any one's except the ministry to fill the public treasury.2 The estimates

1 During the Civil War, direct taxes were levied; and many other kinds of taxes besides those mentioned in the text have been imposed at different times.

2 Of course a private member may carry a resolution involving additional expenditure; but even this is at variance with the stricter constitutional doctrine

prepared by the several administrative departments (Army, Navy, Office of Works, Foreign Office, etc.), and revised by the Treasury, specify the items of proposed expenditure with much particularity, and fill three or more bulky volumes, which are delivered to every member of the House. These estimates are debated in committee of the whole House, explanations being required from the ministers who represent the Treasury and the several departments, and are passed in a long succession of separate votes.1 Members may propose to reduce any particular grants, but not to increase them; no money is ever voted for the public service except that which the Crown has asked for through its ministers. The Crown must never ask for more than it actually needs, and hence the ministerial proposals for taxation are carefully calculated to raise just so much money as will cover the estimated expenses for the coming year. It is reckoned almost as great a fault in the finance minister if he has needlessly overtaxed the people, as if he has so undertaxed them as to be left with a deficit. If at the end of a year a substantial surplus appears, the taxation for next year is reduced in proportion, supposing that the expenditure remains the same. Every credit granted by Parliament expires of itself at the end of the financial year.

In the United States the Secretary of the Treasury sends annually to Congress a report containing a statement of the national income and expenditure and of the condition of the public debt, together with remarks on the system of taxation and suggestions for its improvement. He also sends what is called his Annual Letter, enclosing the estimates, framed by the various departments, of the sums needed for the public services of the United States during the coming year. So far the Secretary is like a European finance minister, except that he communicates with the chamber on paper instead of making his statement and

and practice; a doctrine regarded by the statesmen of the last generation as extremely valuable, because it restrains the propensity of a legislature to yield to demands emanating from sections or classes, which may entail heavy and perhaps unprofitable charges on the country. See the observations of the First Lord of the Treasury in the House of Commons, March 22, 1886.

1 Complaints are sometimes made that these votes are not discussed with sufficient fulness and minuteness, and it has been proposed to create several special standing committees to examine each class of them more closely. This might be a desirable addition. Three such committees have recently been appointed. But even under the present system there are many useful financial debates, by which some abuses are checked and in which valuable suggestions are made.

proposals orally. But here the resemblance stops. Everything that remains in the way of financial legislation is done solely by Congress and its committees, the executive having no further hand in the matter.

The business of raising money belongs to one committee only, the standing committee of Ways and Means, consisting of eleven members. Its chairman is always a leading man in the party which commands a majority in the House. This committee prepares and reports to the House the bills needed for imposing or continuing the various customs duties, excise duties, etc. The report of the Secretary has been referred by the House to this committee, but the latter does not necessarily base its bills upon or in any way regard that report. Neither does it in preparing them start from an estimate of the sums needed to support the public service. It does not, because it cannot for it does not know what grants for the public service will be proposed by the spending committees, since the estimates submitted in the Secretary's letter furnish no trustworthy basis for a guess. It does not, for the further reason that the primary object of customs duties has for many years past been not the raising of revenue, but the protection of American industries by subjecting foreign products to a very high tariff. At present there are enormous duties on many classes of raw materials, and on nearly all classes of manufactured goods, including even books and works of art. This tariff brings in an income far exceeding the current needs of the government. Nearly two-thirds of the war debt having been paid off, the fixed charges have shrunk to onethird of what they were when the present tariff was imposed, yet this tariff remains with few modifications, and surpluses accumulate year after year in the national treasury. The committee of Ways and Means has therefore no motive for adapting taxation to expenditure. The former will be always in excess so long as the protective tariff stands, and the protective tariff stands for commercial or political reasons unconnected with national finance.1

1 Hitherto there has always been a means of getting rid of surpluses by paying off debt; but as financiers are now beginning to hold that a certain portion of the debt ought to be kept on foot for banking and currency purposes, much discussion has arisen as to how the accumulating balance shall be disposed of. Hence the issues of commercial policy, issues affecting the great manufacturing industries, dwarf questions of revenue proper. The committee considers not which is the best and cheapest means of raising a given sum, but how the tariff will affect protected industries. Since there is no fear of a deficit, it drafts

When the revenue bills come to be debated in committee of the whole House similar causes prevent them from being scrutinized from the purely financial point of view. Debate turns on those items of the tariff which involve gain or loss to influential groups. Little inquiry is made as to the amount needed and the adaptation of the bills to produce that amount and no more. It is the same with ways and means bills in the Senate. Communications need not pass between the committees of either House and the Treasury. The person most responsible, the person who most nearly corresponds to an English Chancellor of the Exchequer, or a French Minister of Finance, is the chairman of the House committee of Ways and Means. But he stands in no official relation to the Treasury, and is not required to exchange a word or a letter with its staff. Neither, of course, can he count on a majority in the House. Though he is a leading man he is not a leader, i.e. he has no claim on the votes of his own party, many of whom may (as happened to Mr. Morrison in 1886) disapprove of and cause the defeat of his proposals. That gentleman was chairman of the committee of Ways and Means, and perhaps, after the Speaker, the most considerable person in the Democratic majority. But he was beaten in his attempted reform of the tariff.

The business of spending money belongs primarily to two standing committees, the old committee on Appropriations and the new committee on Rivers and Harbours, created in 1883. The committee on appropriations starts from, but does not adopt, the estimates sent in by the Secretary of the Treasury, for the appropriation bills it prepares usually make large and often reckless reductions in these estimates. The Rivers and Harbours committee proposes grants of money for what are called "internal improvements," nominally in aid of navigation, but practically in order to turn a stream of public money into the State or States where each "improvement" is to be executed. More money is wasted in this way than what the parsimony of the appropriations committee can save. There are several committees on the departments, such as those on the navy, the army, the judiciary. There is the committee on pensions, a source of infinite waste. Each of these proposes grants of

its bills with no view to the raising of a particular sum, and does not care to calculate the exact income the taxes will produce.

1 The expenditure on pensions was in 1887 $75,000,000 (£15,000,000).