sidered in connection with revenues. Even the idea of balancing the budget does not exist. Though the Secretary of the Treasury is required to lay before Congress each year the estimates of expenditures for the year to come, these estimates far from represent a consistent financial program. The essential basis for the elaboration of such a program exists neither in law nor in practice. Though the law requires all the estimates to be submitted by the Secretary of the Treasury, that officer acts as a mere compiling authority; he has no power to modify the proposals submitted to him by the heads of the administrative departments. The estimates thus represent little more than the individual desires of the departmental heads. The President, to be sure, might exercise his general powers to secure a co-ordination of the estimates and their conformity to a general policy. He, however, has no service through which he can effectively exercise such authority. There is absolutely lacking any organ at all corresponding in character or powers to the Treasury under the British system. The accounting and reporting system of the government is not such as to develop the information needed in order to construct a proper budget. No standard classifications of units of organization, functions, or activities, and of expenditures according to their character and object or service purchased have been officially adopted. No uniform scheme of expenditure documents calling for the recording of expenditure data in accordance with any general informational plan has been put into practice. The idea that a system of accounts should have for its purpose to produce information needed for the proper conduct of affairs, as well as to establish the fidelity with which legal provisions are carried out, scarcely exists. The estimates, such as they are, are not compiled in accordance with any one principle, nor in such a way that their significance can be clearly seen. There is no budgetary message, no proper scheme of summary, analytical and comparative tables. Nothing in the nature of a balance sheet is provided. The administrative reports are prepared without any reference to their service as supporting documents to the estimates, nor are they used to any extent for such purpose.1 After a careful survey the conclusion is reached that the national government has not taken any step toward the adoption of a real budget system.2

Budgetary Procedure in England.-By way of contrast with the financial methods of Congress an analysis of the budgetary procedure of the English government will be

W. F. Willoughby, The Problem of a National Budget, pp. 55-57. For steps in the direction of the adoption of a partial budget system in the Federal government, see infra, p. 431.

suggestive. The fundamental principle of the English system of financial administration is that expenditures may be made only in pursuance of appropriations by act of Parliament. For more than a century this control has been exercised exclusively by the House of Commons. Although the ultimate authority to vote expenditures resides in the Commons, the most significant principle is that the House has conceived its function as inhering in the authority to pass upon proposals emanating from the Crown, now presented by his agents, members of the Cabinet, whose duty it is to formulate the financial program of the government. By a standing order it was provided that

This house will receive no petition for any sum relating to public service, or proceed upon any motion for a grant or charge upon the public revenue, whether payable out of the consolidated fund or out of money to be provided by Parliament, unless recommended from the Crown.

Parliament, then, has adopted the practice of considering no proposals for the expenditure of funds except such as are presented by the Cabinet, and no motion is entertained to increase the amounts recommended by the Cabinet. Owing to the fact that the Cabinet assumes responsibility for financial measures, reductions cannot be made without involving a change in the Cabinet. Although motions for reductions are sometimes made in Parliament for the purpose of discussion, such motions are withdrawn when the discussion is ended.2

The Ministry has adopted the policy of presenting, as far as is feasible, all of its financial proposals in one consolidated document, known as the budget. This procedure is merely a matter of administrative practice. When the budget is presented to Parliament it is considered in its entirety by the House acting as a committee of the whole.

1 W. F. Willoughby, W. W. Willoughby, and S. M. Lindsay, Financial Administration of Great Britain (D. Appleton & Co., 1917), p. 38.

W. F. Willoughby, The Problem of a National Budget, pp. 59–60,

To make the provisions for a budget effective the Treasury Department is charged with the duty not only of preparing the budget, but also of supervising the execution of appropriation acts when passed by Parliament. In the exercise of its functions of supervision and control the Treasury Department has power to modify estimates submitted for inclusion in the budget, and its approval must be secured for any transfer of funds from one department to another. All changes in personnel or salaries must also receive the approval of the Treasury.

The contrast between the English and American systems of financial administration is tersely stated in the report to the Institute of Government Research:

It is hardly necessary for us to point out the overwhelming importance of the principles embodied in these rules as a means of preventing illadvised and wasteful expenditure of public funds. At one stroke it renders impossible the enormous abuses which prevail in the United States arising from the right possessed by individual members of Congress to propose and secure the consideration of measures calling for an appropriation of public funds. The exercise of that right, in conjunction with the device of "log-rolling," has not only given rise to the recurrent scandals of the "pork-barrel " public buildings and river and harbor bills, but has destroyed all possibility of framing and adopting a consistent and effective scheme or program of public expenditures. Under the British system each demand for funds originates with the head of the service for which the funds are requested, and thus represents the judgment of the person most competent to determine the real needs of the service. Under the American system demands for funds may, and often do, originate with individual members of Congress having little and, at best, inadequate, knowledge of the needs of the services for which they are intended. What is worse, they have no direct interest in the efficient and economical administration of such services. Their interest is in the localities to be served, which interest may be diametrically opposed to the interest of the services and of the public as a whole. In many cases money is appropriated in pursuance of proposals thus initiated, notwithstanding the fact that the heads of the services affected protest vigorously that they have no need for such money or for the services to be furnished by such funds.

Under the British system responsibility is definitely located with an officer who can be, and is, held to a rigid account of the manner in which the funds asked for are expended. Under the American system the

enforcement of any effective system of securing responsibility and accountability is impossible.'

The Budget and Governmental Efficiency.-The budget is the determining element of the problem of securing governmental efficiency. A budget has been defined as “a collection of documents through which information regarding the condition of the Treasury and financial operations, past and prospective, are brought together, co-ordinated and compared in such a way that intelligent action can be had in the way of adopting a financial and work program for the future." A satisfactory budget requires a uniform system of accounting and expenditure documents, and additional information regarding the financial operations of the government.

For the formulation of general policies, information regarding total expenditures according to a few grand divisions is required. On the other hand, to insure that money voted will be applied in an effective manner, and to maintain a proper supervision and control over actual expenditures, information regarding the details of expenditures by particular units, or for particular activities or objects, is needed. A budget, which is essentially an information document, should present both classes of information in the clearest manner possible.3

There are three main types of budgets, namely, an executive-made budget, a legislative-made budget, and a budget made by the two departments combined. Those who defend an executive-made budget contend that the legislature should not be permitted to initiate, or should refrain from initiating, measures for the expenditure of money.

The prime essentials in the preparation of a budget are unity and co-ordination, which, it is claimed, can be secured only through a single executive authority. Defects of the legislative-made budget, such as those of the United States and France, are pointed out by Doctor Willoughby,

1 W. F. Willoughby, W. W. Willoughby, and S. M. Lindsay, Financial Administration of Great Britain (D. Appleton & Co., 1917), pp. 39-40. 2 W. F. Willoughby, The Problem of a National Budget, pp. 9-10. 3 Ibid., pp. 25-26.

Extravagance, waste, and misapplication of public funds [he concludes] have invariably resulted where the legislative branch has been given the determining voice in the enactment of budgetary proposals. Of this, the United States and France furnish the leading illustrations. In both countries the extent to which appropriations are made for purposes not corresponding to national needs, and representing gross waste of the public funds, amounts to a national scandal. In this country millions of dollars are annually wasted in maintaining useless army posts, navy yards, and other local stations. Other millions are similarly wasted in the erection of public buildings and the execution of public works which are useless, or at least have no utility commensurate with the expenditures involved in their construction and subsequent maintenance. The direct money loss thus resulting is, moreover, but a part of the damage done. The location of the stations and plants at unsuitable points makes it impossible to secure an efficient administration of the services to which they belong. The result is to discourage economy on the part of those intrusted with the administration of these services to lower the whole tone of public administration. In France, conditions in normal times are scarcely, if any, better.1

In America the legislative-made budget has been the rule until quite recently, when a few states instituted the executive-made budget. When the legislature makes the budget, one of the difficult problems involved is the question whether the legislature should grant funds in lump sums or itemize its appropriations.

These difficulties are largely obviated in England and other European countries by making the executive responsible for the budget and by limiting the right of members of the legislature to initiate measures involving expenditures. "The secret of the whole matter thus lies in definitely locating power and responsibility over appropriations in that organ which represents the whole country and is directly responsible for the conduct of public affairs.”

For a long time it was thought that an honest and capable administrative official could secure better results if he was given a free hand in the expenditure of public funds. But instances of dishonesty and misappropriation of funds proved so frequent that legislatures began to turn 1W. F. Willoughby, The Problem of a National Budget, pp. 40-41.