NATIONAL APPROPRIATIONS

AND MISAPPROPRIATIONS.

PAPER CONTRIBUTED TO THE NORTH AMERICAN REVIEW, JUNE, 1879.

N eminent French statesman has said: "A nation embodies its spirit, and much of its history, in its financial laws. Let one of our budgets alone survive the next deluge, and in it will plainly appear all that we are."

If our republic were blotted from the earth, and from the memory of mankind, and if no record of its history survived, except a copy of our revenue laws and our appropriation bills for a single year, the political philosopher would be able from these materials alone to reconstruct a large part of our history, and sketch with considerable accuracy the character and spirit of our institutions.

Revenue is not, as some one has said, the friction of a government, but rather its motive power. As in the human body every motion is produced by an expenditure of vital force, so in government the exercise of the smallest function is accompanied, or rather is produced, by an expenditure of money.

To collect from the property and labor of a nation a revenue sufficient to carry on the various departments of its government, and so to distribute that revenue as to supply every part of the complicated machinery with adequate motive power, neither, on the one hand, crippling the resources of the people or the functions of the government, nor, on the other, producing overgrowth and waste by lavish expenditure, is one of the most difficult and delicate problems of modern statesmanship. And this problem presents itself every year under new conditions. An adjustment which is wise and equitable for one year may be wholly inadequate for the next.

[The next two and a half pages of this paper were in substance, and almost in form, a reproduction of the first pages of the Speech entitled "Public Expenditures, their Increase and Diminution," made January 23, 1872, and are here omitted.']

From the foregoing [the omitted pages] it will be seen that two forces have been in constant action in determining the tendency of appropriations while the nation was passing from war to peace: first, the normal increase of ordinary expenses, dependent upon increase of population and extension of settled territory; and, second, the decrease caused by the payment of war obligations. The decrease due to the latter cause is greater immediately after a war than the increase due to the former; but the normal increase, being a constant element, will finally overcome the decrease caused by the payment of war debts, and a point will be reached from which the annual expenditures will again increase.

In a speech delivered in the House of Representatives, January 23, 1872, I undertook to estimate the reduction that could be made in our expenditures, and to forecast the date at which a farther reduction of the annual amount would cease. I venture to quote a few paragraphs from that speech, both as an illustration of the operations of the law of expenditure, and of the risks one takes who ventures a prediction on such a subject.

"Throughout our history there may be seen a curious uniformity in the movement of the annual expenditures for the years immediately following a war. We have not the data to determine how long it was after the War of Independence before the expenditures ceased to decrease, that is, before they reached the point where their natural growth more than balanced the tendency to reduction of war expenditure; but in the years immediately following all our subsequent wars, the decrease has continued for a period almost exactly twice the length of the war itself. After the war of 1812 to 1815 the expenditures continued to decline for eight years, reaching the lowest point in 1823. After the Seminole war, which ran through three years, 1836, 1837, and 1838, the new level was not reached until 1844, six years after its close. After the Mexican war, which lasted two years, it took four years, until 1852, to reach the level of peace.

"It is perhaps unsafe to base our calculations for the future on these analogies; but the wars already referred to have been of such varied

1 See ante, page 1.

character, and their financial effects have been so uniform, as to make it not unreasonable to expect that a similar result will follow our late war. If so, the decrease of our ordinary expenditures, exclusive of the principal and interest of the public debt, will continue until 1875 or 1876.

"It will be seen by an analysis of our current expenditures that, exclusive of charges on the public debt, nearly fifty million dollars are expenditures directly for the late war. Many of these expenditures will not appear again, such as the bounty and back pay of volunteer soldiers, and payment for illegal captures of British vessels and cargoes. We may reasonably expect that the expenditures for pensions will hereafter steadily decrease, unless our legislation should be unwarrantably extravagant. We may also expect a large decrease in expenditures for the internal revenue department. Possibly, we may ultimately be able to abolish the department altogether. In the accounting and disbursing bureaus of the Treasury Department, we may also expect a further reduction of the force now employed in settling war claims.

"We cannot expect so rapid a reduction of the public debt and its burden of interest as we have witnessed for the last three years; but the reduction will doubtless continue, and the burden of interest will constantly decrease. I know it is not safe to attempt to forecast the future; but I venture to express the belief that, if peace continues, the year 1876 will witness our ordinary expenditures reduced to $135,000,000, and the interest on our public debt to $95,000,000; making our total expenditures, exclusive of payment on the principal of the public debt, $230,000,000. Judging from our own experience, and from that of other nations, we may not hope thereafter to reach a lower figure."

Reviewing the subject in the light of subsequent experience, it will be seen that the progress of reduction of expenditures from the war level has been very nearly in accordance with these expectations of seven years ago. The actual expenditures since the war, including interest on the public debt, as shown by the official record, were as follows:

Omitting the first of these years, in which the enormous payments to the army swelled the aggregate of expenses to $1,297,000,000, and beginning with the first full year after the

termination of the war, it will be seen that the expenditures have been reduced, at first very rapidly, and then more slowly, from $520,000,000, in 1866, to about $237,000,000, in 1878. The estimate quoted above was, that in 1876 expenditures would be reduced to $230,000,000, including $95,000,000 for interest on the public debt. In 1877, one year later than the estimated date, the expenditures were $238,000,000, including $97,000,000 for interest on the public debt. It is evident that in 1877 we had very nearly reached the limit of possible reduction, for the aggregate expenditures of 1878 show a reduction below that of the preceding year of less than $2,000,000; and the expenditures, actual and estimated, for the current year ending June 30, 1879, are $240,000,000. It thus appears that 1878 was the turning-point from which, under the influence of the elements of normal growth, we may expect a constant, though it ought to be a small, annual increase of expenditures. But if the appropriations for 1880, most of which have already been made, are to be taken as an index of the future policy to be pursued by Congress, we are to see a sudden, capricious, and dangerously large increase.

It has been a slow and difficult work to force down the scale of expenditures made necessary by the war. Even as late as 1874, more than fifty per cent of all the payments over the national counter were made to meet war debts. Besides these payments, a large increase of ordinary expenses was made necessary by the war. From 1860 to 1865, the harbors, lighthouses, and other public works in the States that went into rebellion, were of course wholly neglected by the national government. To restore, preserve, and place them again in a state of efficiency, has required unusually large expenditures since Several new bureaus, such as that for assessing and collecting internal revenue, and that for engraving and printing the public securities, have been created; and a large increase of force in the several executive departments has been made necessary, to enable the government to audit the accounts and disburse the vast payments made necessary by the war.

In its relation to good government, the amount of expenditure authorized by law is not so important as the methods adopted by Congress for regulating the appropriation and disbursement of revenues. In the early history of the government, all appropriations for the year were made in one bill,

and in gross sums, to be expended by the several executive departments. Though the number of leading officers in each department was fixed by general statute, yet large discretion was given to the heads of departments, both in reference to the number of subordinates to be employed and to the special items of expenditure.

In his annual message of December 8, 1801, Mr. Jefferson called attention to the careless methods of appropriation which had been adopted by Congress, mentioning the fact that many clerks were employed, and their salaries fixed, at the discretion of the executive departments; and he urged upon Congress "the expediency of regulating that power by law, so as to subject its exercise to legislative inspection and sanction." In the following paragraph of that message, the necessity of Congressional control and limitation of appropriations, both as to amount and object, is admirably stated:

"It would be prudent to multiply barriers against their dissipation, by appropriating specific sums to every specific purpose susceptible of definition; by disallowing all applications of money varying from the appropriation in object, or transcending it in amount; by reducing the undefined field of contingencies, and thereby circumscribing discretionary powers over money; and by bringing back to a single department all accountabilities for money, where the examination may be prompt, efficacious, and uniform."1

These wise suggestions were not adopted by Congress at that time, and the loose method of appropriating in bulk was continued for many years.

Until a recent date, Congress frequently empowered the President to order transfers of appropriations from one branch of the service to another. But this power was usually conferred for a limited time only. Occasionally a special bill was passed, making appropriations for a particular branch of the service; but in the main, during the first forty years of our history, the appropriations were made in one act, entitled "An Act making Appropriations for the support of the Government."

In 1823 the appropriations for fortifications were placed in a separate bill. In 1826 the appropriations for pensions were made in a separate bill. The first separate act for rivers and harbors appeared in 1828, and in 1844 the Post-Office and Deficiency Bills were first passed as separate acts.

1 Jefferson's Works, Vol. VIII. pp. 10, 11.