Public finance

“ Every government, considered as a corporate body, has needs of its own apart from those of the people whom it governs. Whether it be a city, a state, or a smaller governing unit, it must solve the problems of revenue and expenditure just as a private household. Later writers applied the term economics mainly to this group of problems to which we now apply the name public finance, rather than to that group which in the diagram above are included under Private Economics. ”

“ Writers on the theory of Public Finance seem to conceive the subject as though it were primarily a matter of equity in taxation and economy in expenditure. But to a Chancellor of the Exchequer finance is eminently practical with a problem to solve, namely, how to bring about an equilibrium in the Budget. ”

“ Running through the different national systems there are some common elements the result not of inheritance merely but still more of necessity, or at the lowest of similarity in environment. Over and above the details of financial development there is a thread of connexion which requires treatment under Finance taken as a whole. As the great aim of this side of public activity is to secure funds for the maintenance of the state’s life and working, the administration which operates for this end is the true nucleus of all national finance. ”

“ The rules of private finance, it such there be, have not yet been formulated, and it is indeed only in recent years that economic writers have sought to coördinate the rules and principles of public finance into a science of finance. ”

“ In the mediæval and early modern period, the chief interest in economics had shifted from the private to the public aspects of the science, but was still centered mainly in problems of public revenue and expenditure, or, as we should now say, public finance. The chief students in this field were the finance ministers, who were charged with the office of raising revenue for the royal household and the enterprises both constructive and military of the king. It was soon apparent that the amount of royal revenue was strictly limited by the wealth of the people. ”

“ The public expenditures, from the dearness of every thing, necessarily became immense; greater in proportion than in other countries; and much beyond any revenues which the best concerted scheme of finance could have extracted from the natural funds of the State. No taxes, which the people were capable of bearing, on that quantity of money which is deemed a proper medium for this country (had it been gold instead of paper) , would have been sufficient for the current exigencies of Government. ”

“ FINANCE.—We demand a national currency, safe, sound, and flexible, issued by the general government only, a full legal tender for all debts, public and private, and that without the use of banking corporations, a just, equitable, and efficient means of distribution direct to the people, at a tax not to exceed 2 per cent. ”

“ The budget should, among other things, show budgeted revenues, expenses, profits
or loss, capital expenditure, cash flows, borrowings, grants, transfers, contingent liabilities
including guarantees, and balance sheet. Any amendments to the budget shall also be
submitted to the Minister for Finance for review and approval. The Minister of Finance shall
respect the operational independence of public corporations. ”

“ Among other advantages derived from the labours of the Committees of Finance, the public is accurately informed of the burthens upon it, and bow every part of its income is dispofed of. Hence we are enabled to state, with precision, the charge incurred by pensions and sinecure employments, and to compare that with the whole of the revenue, which it appears to be desirable should be done, as many well-intentioned persons have taken an impression, that if all those were put an end to, the public might be relieved from a considerable proportion of its burthens. ”

“ Of almost equal importance is the rule that the utmost return is to be obtained for the given outlay. The canon of economy is as fundamental in regard to public expenditure as it will appear, later, to be in respect to revenue. Just application of the outlay of the state, so that no class receives undue advantage, and the use of public funds for “reproductive,” in preference to “unproductive” objects, are evident general principles whose difficulty lies in their application to the circumstances of each particular case. ”

“ It is particularly your province to consider the state of the public finances; and to adopt such measures respecting them as exigencies shall be found to require. The preservation of public credit, the regular extinguishment of the public debt, and a provision of funds to defray any extraordinary expenses, will of course call for your serious attention. Although the imposition of new burdens cannot be in itself agreeable, yet there is no ground to doubt that the American people will expect from you such measures as their actual engagements, their present security, and future interests demand. ”

“ CHAPTER VIII. DETECTION OF WHAT IS EMBEZZLED BY GOVERNMENT SERVANTS OUT OF STATE REVENUE.
ALL undertakings depend upon finance. Hence foremost attention shall be paid to the treasury.
Public prosperity (prachárasamriddhih) , rewards for good conduct (charitránugrahah) , capture of thieves, dispensing with (the service of too many) government servants, abundance of harvest, prosperity of commerce, absence of troubles and calamities (upasargapramokshah) , diminution of remission of taxes, and income in gold (hiranyópáyanam) are all conducive to financial prosperity. ”

“ Resolved, That it is the duty of every branch of the government to enforce and practice the most rigid economy in conducting our public affairs, and that no more revenue ought to be raised than is required to defray the necessary expenses of the government. ”

“ In selecting your institution as one of the fiscal agents of the government, I not only rely on its solidity and established character, as affording a sufficient guarantee for the safety of the public money intrusted to its keeping, but I confide also in its disposition to adopt the most liberal course which circumstances will admit toward other moneyed institutions generally, and particularly those in your vicinity. ”

“ The soundest maxims of public policy and the principals upon which our republican institutions are founded recommend a proper adaptation of the revenue to the expenditure, and they also require that the expenditure shall be limited to what, by an economical administration, shall be consistent with the simplicity of the Government and necessary to an efficient public service. ”

“ It goes little farther than to collect and arrange some elements upon the most interesting branches of modern policy, such as population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxes. ”

“ The payments which have been made into the Treasury show the very productive state of the public revenue. ”

“ It will be the duty of Congress wisely to forecast and estimate these extraordinary demands, and, having added them to our ordinary expenditures, to so adjust our revenue laws that no considerable annual surplus will remain. We will fortunately be able to apply to the redemption of the public debt any small and unforeseen excess of revenue. This is better than to reduce our income below our necessary expenditures, with the resulting choice between another change of our revenue laws and an increase of the public debt. ”

“ The great advantage of the new budget system is that it enables Congress to make a comprehensive plan of expenditure for the year and thus to hold the expenses within the estimated revenues.
Is it necessary for governments to borrow? Public Debts: Why Governments Borrow Money.—Nearly all nations, states, counties, cities, and even villages have debts. Why do they find it necessary to borrow money? Why should they not, like wise individuals, adopt a pay-as-you-go policy? ”

“ You will do well to explain this whole system to men of discernment in your legislature. My object in this branch of administration is to enable each individual man to trace the money he pays, from his own pocket into the public treasury. To this I shall add accounts of equal notoriety, by which every man who can read (being previously informed as above of the sum total of receipts) may perceive the manner in which the public treasure is expended and appropriated. A similar line of conduct will be pursued with respect to all funds which may be granted for liquidation of the national debt. ”

“ Besides the general construction (if the phrase may be allowed) of our government, adapted at all times to the purpose of checking excess as well as abuse in its expenditure, there should be an occasional adoption of enquiry to suit particular cases and particular departments. This mode is rendered indispensible from the complication, as well as the novelty, of many articles of public expence to which important and critical periods give rise ”

“ I have heard a very experienced financier say, "If you want to raise a certain cheer in the House of Commons make a general panegyric on economy; if you want to invite a sure defeat, propose a particular saving". The process is simple. Every expenditure of public money has some apparent public object ”

“ They represent the transfer of present wealth for the future income which the government, by virtue of its public domain, or, more commonly, its taxing power, may expect to receive. With a strong government, this future income may be a very substantial part of the total income of the people. Public loans may often be for commercial purposes, as when municipalities borrow to build or extend municipal enterprises. In cases of this sort, the market frequently will consider the prospects of commercial success of the enterprises in fixing the value of the municipal bonds. ”

“ Three hundred thousand landed proprietors enjoy an income of three thousand five hundred francs and represent all territorial wealth.
Two hundred thousand payees, at the rate of fifteen hundred francs each, represent the distribution of public funds by the state budget, by the budgets of the cities and departments, less the national debt, church funds and soldier’s pay, (i.e. five sous a day with allowances for washing, weapons, victuals, clothes, etc.) ”

“ The principle of comprehensiveness requires that the budget cover all government agencies and
institutions undertaking government operations, so that the budget presents a consolidated and
complete view of these operations and is voted on, as a whole, by the body vested with national
legislative authority.
The principle of unity requires that all government resources be directed to a common pool to be
allocated and used for public expenditure according to the priorities of the government. ”

“ The principal causes which have operated at this time to produce this great difference are shown in the reports and documents and in the detailed estimates. Some of these causes are accidental and temporary, while others are permanent, and, aided by a just course of administration, may continue to operate beneficially upon the public expenditures.
A just economy, expending where the public service requires and withholding where it does not, is among the indispensable duties of the Government. ”

“ With taxes mounting in all the subdivisions of government, the time has come for a veritable searching of heart with regard to the cost of the public service, and new demands should be most carefully scrutinised in the light of this problem of dollars and cents. ”

“ The public revenue, then, should be regulated and adapted to the proper service of the general government. It should be ample; for a deficit in the public income, always to be deprecated, is sometimes attended, as we know well from history and from what has happened in our own time, with fatal consequences. In a country so rapidly growing as this is, with such diversified interests, new wants and unexpected calls upon the public treasury must frequently occur. Take some examples from this session. ”

“ The only considerable branch of the public revenue which yet remains unmortgaged, is thus regularly spent before it comes in. Like an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and of paying interest for the use of its own money. ”

“ The statistics relating to Education and the Public Schools, to Agriculture, to Railways, to Immigration, to the Army, to Shipping, to the Coal and Iron Product, to National and State Banks, to the Circulation of Paper Money, to the price of Gold, and to the Public Debt, will be found full of interest. ”

“ Under the system of funding, the frugality and industry of private people can more easily repair the breaches which the waste and extravagance of government may occasionally make in the general capital of the society. ”

“ If they can raise the interest of the public debt, it is sufficient. They will not be called upon for more than the interest, till such time as the country be rich and populous. The principal can then be paid with great facility. ”

“ Are our government revenues increasing at a rate which gives hope that within a reasonably short period we shall be able to finance all our ordinary expenditures with current revenues and thereby balance our budget? ”

“ But unless a plan of finance is of the nature of a commercial undertaking, it cannot give government more than it takes away, either from individuals, or from government itself, under some other form. ”

“ All agree that it is a matter legitimately, if not exclusively, within the scope of separate State jurisdiction, and all are equally agreed that great and valuable improvements could be made within our State at a comparatively moderate expenditure of the public funds. ”