Periods of extraordinary expenditure were 1862 to 1865, when the amount rose from about 470 millions to 1,295 millions, and 1916 to 1920, when expenditures were made as follows: 1916-17. $1,147,898,000 8,966,532,000 17,855,609,000 2 The complex features of the financial problems of the Federal government may be better understood by analyses prepared by Dr. E. B. Rosa, Chief Physicist in the Bureau of Standards, Washington, D. C. An analysis of the appropriations for all branches of the government service for the fiscal year 1920 shows that 3 per cent of the total budget was appropriated for general governmental purposes (legislative, executive, and judicial), 3 per cent for public works, I per cent for research, education, and development, and 93 per cent for the army and navy, railroad deficit, shipping board, pensions, warrisk insurance, and interest on the public debt, all of which are either obligations arising from the war or for preparation for possible future wars.3 But since the appropriations for 1920 were greatly affected by the results of war and postwar conditions, and since it is impossible to gauge expenditures by means of appropri 1 Amount appropriated by Congress for the current year. Expenditures have not yet been announced. These figures are based largely upon the tables presented by D. R. Dewey in Financial History of the United States (Longmans, Green & Co.). See also "The Growth of Federal Expenditures in the United States," by C. J. Bullock, in Selected Readings in Public Finance (Second Edition), (Ginn & Co., 1920), p. 47. 2 Based on tables prepared by E. L. Bogart, in "Direct and Indirect Costs of the Great World War," Preliminary Economic Studies of the War, No. 24, Carnegie Endowment for International Peace (Oxford University Press, 1919). 3 "Scientific and Engineering Work of the Government," Mechanical Engineering, February, 1921; for details of above analysis cf. by the same writer "The Economic Importance of the Scientific Work of the Government," Journal of the Washington Academy of Sciences, vol. x, no. xii, pp. 341-382. ations bills, Doctor Rosa made a study of Federal expenditures for the ten-year period from 1910 to 1919. From this study four charts were prepared which show the relative FIG. 1 AVERAGE NET EXPENDITURE OF FEDERAL GOVERNMENT, 1910 TO 1919, EXCLUSIVE OF WAR COST proportions of money expended for various purposes by the Federal government.1 The present situation, then, may be briefly summarized: The Federal government, as a result of participation in the Great War, has a very large debt, with other heavy annual charges caused by the war. The interest on this debt com These charts from Mechanical Engineering, February, 1921, are used by permission of author and publishers. bined with the current cost of the army and navy require for the present more than 90 per cent of the total ex penditures. Though this high percentage will be reduced somewhat as the war charges and the debt are decreased, the cost of past and prospective wars along with the security and protection involved, will, in all probability, seldom run as low as 75 per cent. In the 1920 finance bill public works and the necessary administrative cost of conducting the Federal government were allotted slightly more than 6 per cent and 1 per cent remained for research, ducation, and general developmental functions. The Hroblem obviously involved in this analysis is whether in the interest of peace, progress, and national development these proportions ought not to be changed. Is it reasonable FIG 3 AVERAGE ANNUAL EXPENDITURES AND EARNINGS FROM 1910 TO to have so small a proportion of the national income go toward the constructive work such as is involved in scientific research, in the promotion of education and in the development of commerce, agriculture, and industry?1 1E. B. Rosa, The Economic Importance of the Scientific Work of the Government, op. cit., pp. 375 ff. for the arguments in favor of an increase for research and developmental purposes. At best the legitimate cost of running the government of the United States is bound to be very large. But, unfortunately, practices have developed in the appropriation and the spending of the nation's money which are occasion Fro. 4 AGGREGATE EXPENDITURES AND EARNINGS FROM 1910 TO 1919 FOR GROUP III-PUBLIC WORKS Total area of each sector represents gross disbursement; black area represents ing a widespread impression that the revenues of the government are often extravagantly and unwisely spent. Before considering the methods involved in the preparation of the Federal appropriation bills it is necessary to deal briefly with a few of the practices which have tended to cast discredit upon the national system of finance. |