The Pamphlet Collection of Sir Robert Stout: Volume 40

Taxation in the United States.—Concluded. — From The "Contemporary Review."

Taxation in the United States.— Concluded.

From The "Contemporary Review."

Another important expenditure is for the highways. I have not the statistics for the State, but in the town to which I have referred 20 per cent, of the taxes of the town were expended on the roads in 1879. At this rate about 5,000,000dols. would be expended in the State annually for this purpose. Much of it is practically thrown away. I know of no civilised country where the roads are so bad. There are roads everywhere, but they are very much what nature has made them.

The other expenses of the towns and the State are very much larger than they were twenty years ago, and some of these are open to severe criticism, but on the whole they cannot be considered as very extravagant. The most important is the interest on the debt, which must amount to more than 5,000,000dols. a year. The administrative, legislative, and judicial expenses did not amount in 1879 to more than 640,000dols. for the State Government. The country towns expend about 7 per cent, of their revenue for these expenses; the cities considerably more. We may roughly estimate the expenses of the State as follows:—
Dols.
Interest 5,000,000
Education 5,000,000
Charitable Institutions, Pensions, and the Poor 3,000,000
Highways 5,000,000
Administrative, Legislative and Judicial 3,000,000
All other expenses including payments on Debt 4,000,000
Total 25,000,000
The national expenditure is to be added to this. For the year ending June 30, 1880, it was as follows, not including any payment to reduce the National Debt:—
Dols.
Civil and Miscellaneous 54,713,529
War Department 38,116,916
Navy 13,536,984
Indians 5,945,457
Pensions 56,777,174
Interest on Public Debt 95,757,575
Premium on Bonds bought 2,795,322
Total 267,642,957

The National Debt, nearly all of which was caused by the war, is now about 1,900,000,000dols., or about £400,000,000 sterling.

The expenditure of the National Government in the year 1860 was only 63,180,598dols. The increase is due chiefly to the war, and the expenses of the Government have been steadily decreasing since 1865. The present expenditure is perhaps open to criticism in some particulars, but it cannot be denied that on the whole the Government is administered with great economy. The expenditure in the War and Navy departments is undoubtedly much less than it ought to be. In our desire to avoid the error which is eating up the wealth of Europe, in our horror of great standing armies, we have gone to the other extreme, and deprived ourselves of the necessary means of self-defence.

There has been some question in Europe as to the expenditure for the payment of the National Debt, which has been reduced by about 840,000,000dols. in fifteen years, but in America the wisdom of reducing our debt as rapidly as possible is not questioned. The advantage of what has been done is seen in the fact that the annual interest charge has been reduced from 150,977,697dols. in 1865 to 79,633,981 dols., which is the present rate. This reduction is due in part to the reduction of the principal and in part to the reduction of the rate of interest which has been made possible by the manifest intention of the Government to pay its debts. In 1865 the annual interest, divided per capita, was 4.29dols. for each individual; in 1880 it was 1.56dols. In 1860 the Government could not borrow ten millions on its own credit at any price; now its 4 per cent, bonds are selling at 12 per cent, premium. We have made no mistake in paying our debts.

The expenditure on account of the Indians is really much greater than appears in the above statement, for the army is chiefly employed in fighting or watching the Indians. The whole Indian policy of the Government is not only very costly but an utter failure. It has sometimes been attacked as unchristian and even inhuman, but for many years it has been good in intention if not in its results. The problem is a very difficult one, and it is now receiving more attention than ever before. It may be said to be now practically in the hands of philanthropists, and this large item of expenditure will probably in a few years be much reduced, and finally disappear. The amount paid for pensions is unreasonably large, and is in danger of growing larger. There is always a strong temptation for any party to purchase votes by appropriating the public money to pension soldiers and their families, and the opportunities for fraudulent claims are without number.

There are many points in regard to our taxation and expenditure which I have touched but lightly, which merit a full discussion; many others I have not mentioned at all; but my purpose has been simply to state facts, with such explanations as seemed necessary to make them understood. I was talking of this subject the other day with a Massachusetts Judge, and he remarked that the people were not interested in the subject of taxation because their taxes were so light. I think this is a very general impression here, but I doubt whether an average per capita tax of more than six pounds sterling a year will seem small in England, even for a wealthy and prosperous State. The great advantage which we have over the European States is in the fact that we do not have a large standing army, we do not take our producers from their work during the best years of their lives to make soldiers of them, and we do not expend our taxes on gunpowder. We are careless and often extravagant, but we intend to spend our public money in such a way as to make it productive for the general good. There are difficult questions to be studied and answered; there are dangers, serious dangers perhaps, in the future, in directions which I have pointed out; but there is nothing which may not be settled or avoided by wise statesmanship and the goodwill of the people. The difficulties and dangers are not more, nor essentially different in their essence, from those which beset European Governments in regard to the relations of labor and capital and the distribution of taxation. It is, in the nature of the case, far easier to settle such questions in a new country, abounding in wealth and with a population which is generally prosperous, contented, and free. There is more elasticity in the frame-work of this nation than is possible in an old country. Whatever may be the dangers of universal suffrage, the principles of civil and religious liberty, which we hold in common with England, are the surest safeguards against popular discontent. With full independent liberty and food enough to eat, men are generally willing to wait, to excuse mistakes, and to learn wisdom from experience. This has been the history of the United States in the past, and we hope that it will be so in the future.