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It is evident from the tables that the financial operations of the state and local Governments were affected by the events of the war. That the expansion of their activities would be checked, was to be expected; but that the state and local Governments in the face of the heavy Federal war taxes should seize the occasion to adopt or approach the policy of “pay as you go” was, perhaps, not to be expected. Nevertheless this has taken place. City expenditures per capita were not only less in 1919 than in 1915, but the tax revenue which was seriously deficient in the earlier year had in the later year increased almost to the point of meeting governmental costs. And beginning with 1917, the receipts of the state Governments as a whole have exceeded their expenses. In 1919, for instance, 31 states “realized enough from revenue to meet all their payments for expenses, interest and outlays and to have a balance of $50,192,314 for paying debt” (U.S. Census Bureau, Financial Statistics of States 1919, p. 30). In 17 states there was a deficit aggregating $15,378,246. Much of the economy has been achieved by discontinuing public works or improvements or refraining from those contemplated, and the cost of those public works which have been undertaken has in increasing degree been met from tax revenue rather than the proceeds of loans. In 146 of the principal cities, for instance, the per-capita payment for capital outlays in 1918 was only $7.51 as contrasted with $10.18 in 1909. Despite opinion to the contrary, Government ownership by states and cities has not expanded during recent years. Public-utility enterprises have developed less rapidly than other branches of the Government and far less rapidly than private business. According to official statistics, these public enterprises yield a substantial profit over the costs incurred, more than three-fourths of the net earnings from these sources being credited to the water departments owned by municipal Governments.

Looking to the revenues of the state and local Governments, the general property tax was still preëminent in 1921. Nearly one-half of the total tax receipts of the states and nearly nine-tenths of those of the cities, were derived from this source. Among the states, the relative importance of the property tax was slowly declining; but among the cities, in recent years it had slightly increased. Among the state Governments, taxes on business had been rapidly increasing and yielded more than half as much as the property tax itself. With the repression of public improvements, due to the war, both the absolute and relative yield of special assessments had fallen off. In general, the drain upon the national income created by Federal taxes and loans had forced upon the state and local Governments measures not only of economy but of parsimony, and it is probable that their efficiency had correspondingly suffered.

Budget Procedure.—Methods of financial administration made substantial progress during the decade under review. The old and generally inefficient “state boards of equalization”

had in many states given way to central tax commissions charged with the power and duty not only of securing greater equality in the distribution of the tax burden but of supervising the work of local assessors, administering the more important corporation taxes and usually also the state inheritance taxes. The work of the property assessors had noticeably improved in recent years, particularly in the cities. In a majority of the states, some more or less effective budgetary system had been introduced; and in an increasing number of commonwealths the county and local divisions were being required to follow a prescribed budgetary procedure. Tax limit laws, designed to check local expenditures, had in several states been adopted or revived in improved form; and their effectiveness was being studied with great interest by those interested in governmental economy and efficiency. In the state Governments administrative progress had temporarily taken the path of centralization, and the events of the war had greatly centralized the fiscal machinery of the Federal Government. So far as the tax machinery of the Federal Government is concerned, it is apparent that despite heroic efforts the burden of the war taxes had been too heavy to permit its work to be kept current; and here, at least, it was generally conceded that the path of improvement lay in decentralization. The crowning administrative events of recent years had been the self-denying ordinance adopted by the House of Representatives, by which in the future the old appropriation committees would be combined in a single committee on appropriations, and the introduction of a national budget system, by the passage of the Budget and Accounting Act of 1921.

.—Annual Reports of the Secretary of the Treasury on the State of the Finances, particularly those for 1919 and 1920; Taxation and Public Expenditures, The Annals of the American Academy of Political and Social Science, vol. xcv. (particularly noteworthy as containing E. B. Rosa's Expenditures and Revenues of the Federal Government); Financial Statistics of Cities and Financial Statistics of States, published annually by the Bureau of the Census, Department of Commerce; R. C. Leffingwell, The Treasury's War Problem (Senate Document No. 301, 66th Congress 2nd Session); E. L. Bogart, Direct and Indirect Costs of the Great World War (Pub. of the Carnegie Endowment for International Peace); E. R. A. Seligman, “The Cost of the War and How It Was Met” (Amer. Econ. Review, vol. ix., No. 4).
 * (T. S. A.)

The movement by which taxation has supplied, with the passage of time, an increasing share of the public revenue of the United States, was accelerated by the events of the decade 1910-20. At its beginning, according to the general financial survey of the national, state and local governments made by the Bureau of the Census for the year 1912-3, public expenditures were met to the extent of approximately 5% from loans, 70% from taxes, 4% from special assessments, and 21% from interest, rentals, departmental or commercial earnings, and miscellaneous sources. During the World War, borrowing took first place, and probably not more than one-half of the aggregate public expenditure was met by taxes. But in the fiscal year 1920, the Federal Government began actively to reduce its short-dated debt; and in that year Federal, state and local revenues were larger than expenditures. Of these revenues (despite the large amounts realized by the Federal Government from salvage and other non-tax sources) taxes supplied over 80% of the total. From the financial standpoint—as a source of revenue compared with