existence. It is, besides, the pattern after which the financial systems
of the chief governments of Europe have been modeled, and which we have
ourselves in a measure copied; so that by prefacing the study of other
systems by a careful examination of the British, in its present form,
one may start with the great advantage of knowing the characteristics of
what may fairly be called the parent stock. Parliament, then, in the
first place, simply controls, it does not originate, measures of
financial administration. It acts through the agency and under the
guidance of the ministers of the Crown. Early in each annual session
"the estimates" are submitted to the Commons, which, when hearing such
statements, sits in Committee of the Whole House, known as Committee of
Supply. The estimates come before the House in truly formidable shape.
Each department presents its estimates in a huge quarto volume, "crammed
with figures and minute entries of moneys wanted for the forthcoming
year."[26] But the House itself does not have to digest this various and
overwhelming mass of figures. The digesting is done in the first
instance by the official leaders of the House. "The ministers in charge
of the naval and military services lay before the Committee [of Supply]
their respective statements of the sums which will be required for the
maintenance of those services; and somewhat later in the session a
common estimate for the various civil services is submitted also." Those
statements are, as it were, condensed synopses of the details of the
quartos, and are made with the object of rendering quite clear to the
House, sitting under the informal rules of Committee, the policy of the
expenditures proposed and the correctness of the calculations upon which
they are based. Any member may ask what pertinent questions he pleases
of the minister who is making the statement, so that nothing needing
elucidation may be passed by without full explanation. After the
statement has been completed to the satisfaction of the Committee, a
vote is taken, at the motion of the minister, upon each item of
expenditure, and the duties of the Committee of Supply have been
performed.
The estimates are always submitted "on the collective responsibility of
the whole cabinet." "The army and navy estimates have, as a rule, been
considered and settled in cabinet council before being submitted to the
House; and the collective responsibility of the Ministry is in this
case, therefore, not technical merely, but substantial." If the
estimates are resisted and rejected by the Committee, the ministers, of
course, resign. They "cannot acquiesce in a refusal on the part of
parliament to sanction the expenditure which" they "have assumed the
responsibility of declaring necessary for the support of the civil
government, and the maintenance of the public credit at home and
abroad." The votes in Committee of Supply are, therefore, vital in the
history of every administration, being taken as sure indexes of the
amount of confidence placed by the House in the government.
But the votes in Committee of Supply are only the first steps in
parliament's annual supervision of the public finances. They are simply
the spending votes. In order to consider the means by which money is to
be raised to meet the outlays sanctioned by the Committee of Supply, the
House resolves itself into Committee of the Whole, under the name of the
Committee of Ways and Means. It is to this Committee that the
Chancellor of the Exchequer submits his budget every year, on or soon
before the fifth of April, the date at which the national accounts are
made up, the financial year closing on the thirty-first of March. In
order to prepare his budget, the Chancellor must of course have early
knowledge of the estimates made for the various services. Several
months, therefore, before the estimates are laid before the House in
Committee of Supply, the various departments are called upon by the
Treasury to send in statements of the sums required to defray the
expenses of the current year, and these estimates are carefully examined
by the Chancellor, with a view not only to exercising his duty of
keeping the expenditures within the limits of economy, but also to
ascertaining how much revenue he will have to secure in order to meet
the proper expenditure contemplated. He must balance estimated needs
over against estimated resources, and advise the House in Committee of
Ways and Means as to the measures by which taxation is to be made to
afford sufficient revenue. Accordingly he calls in the aid of the
permanent heads of the revenue departments who furnish him with "their
estimates of the public revenue for the ensuing year, upon the
hypothesis that taxation will remain unchanged."
Having with such aids made up his budget, the Chancellor goes before the
Committee of Ways and Means prepared to give a clear history of the
financial administration of the year just closed, and to submit definite
plans for adjusting the taxation and providing for the expected outlays
of the year just opening. The precedents of a wise policy of long
standing forbid his proposing to raise any greater revenue than is
absolutely necessary for the support of the government and the
maintenance of the public credit. He therefore never asks the Committee
to lay taxes which promise a considerable surplus. He seeks to obtain
only such an over-plus of income as will secure the government against
those slight errors of underestimation of probable expenses or of
overestimation of probable revenue as the most prudent of
administrations is liable to make. If the estimated revenue considerably
exceed the estimated expenses, he proposes such remissions of taxation
as will bring the balance as near equality as prudence will permit; if
the anticipated expenses run beyond the figure of the hoped-for revenue,
he asks that certain new taxes be laid, or that certain existing taxes
be increased; if the balance between the two sides of the forecast
account shows a pretty near approach to equilibrium, so the scale of
revenue be but a little the heavier of the two, he contents himself
with suggesting such a readjustment of existing taxes as will be likely
to distribute the burden of taxation more equitably amongst the
tax-paying classes, or facilitate hampered collections by simplifying
the complex methods of assessment and imposition.
Such is the budget statement to which the House of Commons listens in
Committee of Ways and Means. This Committee may deal with the proposals
of the Chancellor of the Exchequer with somewhat freer hand than the
Committee of Supply may use in passing upon the estimates. The Ministry
is not so stiffly insistent upon having its budget sanctioned as it is
upon having its proposed expenditures approved. It is understood to
pledge itself to ask for no more money than it honestly needs; but it
simply advises with the House as to the best way of raising that money.
It is punctiliously particular about being supplied with the funds it
asks for, but not quite so exacting as to the ways and means of supply.
Still, no Ministry can stand if the budget be rejected out of hand, or
if its demands for the means of meeting a deficiency be met with a flat
refusal, no alternative means being suggested by the Opposition. Such
votes would be distinct declarations of a want of confidence in the
Ministry, and would of course force them to resign.
The Committee of Ways and Means, then, carries out, under the guidance
of the Chancellor of the Exchequer, the resolutions of the Committee of
Supply. The votes of the latter Committee, authorizing the expenditures
mapped out in the estimates, are embodied in "a resolution proposed in
Committee of Ways and Means for a general grant out of the Consolidated
Fund 'towards making good the supply granted to Her Majesty;'" and that
resolution, in order that it may be prepared for the consideration of
the House of Lords and the Crown, is afterwards cast by the House into
the form of a Bill, which passes through the regular stages and in due
course becomes law. The proposals of the Chancellor of the Exchequer
with reference to changes in taxation are in like manner embodied in
resolutions in Committee of Ways and Means, and subsequently, upon the
report of the Committee, passed by the House in the shape of Bills,
"Ways and Means Bills" generally pass the Lords without trouble. The
absolute control of the Commons over the subjects of revenue and supply
has been so long established that the upper House would not now dream of
disputing it; and as the power of the Lords is simply a privilege to
accept or reject a money bill as a whole, including no right to amend,
the peers are wont to let such bills go through without much scrutiny.
But so far I have spoken only of that part of parliament's control of
the finances which concerns the future. The "Ways and Means Bills"
provide for coming expenses and a prospective revenue. Past expenses are
supervised in a different way. There is a double process of audit by
means of a special Audit Department of the Civil Service, which is, of
course, a part of the permanent organization of the administration,
having it in charge "to examine the accounts and vouchers of the entire
expenditure," and a special committee nominated each year by the House
"to audit the Audit Department." This committee is usually made up of
the most experienced business men in the Commons, and before it "all the
accounts of the completed financial year are passed in review." "Minute
inquiries are occasionally made by it into the reasons why certain items
of expenditure have occurred; it discusses claims for compensation,
grants, and special disbursements, in addition to the ordinary outgoings
of the department, mainly, to be sure, upon the information and advice
of the departments themselves, but still with a certain independence of
view and judgment which must be valuable."
The strictness and explicitness with which the public accounts are kept
of course greatly facilitate the process of audit. The balance which is
struck on the thirty-first of every March is of the most definite sort.
It deals only with the actual receipts and disbursements of the
completed fiscal year. At that date all unexpended credits lapse. If the
expenditure of certain sums has been sanctioned by parliamentary vote,
but some of the granted moneys remain undrawn when April comes in, they
can be used only after a regrant by the Commons. There are, therefore,
no unclosed accounts to obscure the view of the auditing authorities.
Taxes and credits have the same definite period, and there are no
arrears or unexpended balances to confuse the book-keeping. The great
advantages of such a system in the way of checking extravagances which
would otherwise be possible, may be seen by comparing it with the system
in vogue in France, in whose national balance-sheet "arrears of taxes in
one year overlap with those of other years," and "credits old jostle
credits new," so that it is said to be "always three or four years
before the nation can know what the definitive expenditure of a given
year is."
For the completion of this sketch of financial administration under the
Commons it is of course necessary to add a very distinct statement of
what I may call the _accessibility_ of the financial officers of the
government. They are always present to be questioned. The Treasury
department is, as becomes its importance, exceptionally well
represented in the House. The Chancellor of the Exchequer, the working
chief of the department, is invariably a member of the Commons, "and can
be called to account by interrogation or motion with respect to all
matters of Treasury concern"--with respect, that is, to well-nigh "the
whole sphere of the discipline and economy of the Executive Government;"
for the Treasury has wide powers of supervision over the other
departments in all matters which may in any way involve an outlay of
public money. "And not only does the invariable presence of the
Chancellor of the Exchequer in the House of Commons make the
representation of that department peculiarly direct, but, through the
Secretary of the Treasury, and, with respect to certain departmental
matters, through the Junior Lords, the House possesses peculiar
facilities for ascertaining and expressing its opinion upon the details
of Treasury administration." It has its responsible servants always
before it, and can obtain what glimpses it pleases into the inner
workings of the departments which it wishes to control.
It is just at this point that our own system of financial administration
differs most essentially from the systems of England, of the Continent,
and of the British colonial possessions. Congress does not come into
direct contact with the financial officers of the government. Executive
and legislature are separated by a hard and fast line, which sets them
apart in what was meant to be independence, but has come to amount to
isolation. Correspondence between them is carried on by means of written
communications, which, like all formal writings, are vague, or by means
of private examinations of officials in committee-rooms to which the
whole House cannot be audience. No one who has read official documents
needs to be told how easy it is to conceal the essential truth under the
apparently candid and all-disclosing phrases of a voluminous and
particularizing report; how different those answers are which are given
with the pen from a private office from those which are given with the
tongue when the speaker is looking an assembly in the face. It is
sufficiently plain, too, that resolutions which call upon officials to
give testimony before a committee are a much clumsier and less efficient
means of eliciting information than is a running fire of questions
addressed to ministers who are always in their places in the House to
reply publicly to all interrogations. It is reasonable to conclude,
therefore, that the House of Representatives is much less intimately
acquainted with the details of federal Treasury airs than is such a body
as the House of Commons, with the particulars of management in the
Treasury which it oversees by direct and constant communication with the
chief Treasury officials.
This is the greater drawback in our system, because, as a further result
of its complete separation from the executive, Congress has to originate
and perfect the budget for itself. It does not hear the estimates
translated and expounded in condensed statements by skilled officials
who have made it their business, because it is to their interest, to
know thoroughly what they are talking about; nor does it have the
benefit of the guidance of a trained, practical financier when it has to
determine questions of revenue. The Treasury is not consulted with
reference to problems of taxation, and motions of supply are disposed of
with no suggestions from the departments beyond an itemized statement of
the amounts needed to meet the regular expenses of an opening fiscal
year.
In federal book-keeping the fiscal year closes on the thirtieth of June.
Several months before that year expires, however, the estimates for the
twelve months which are to succeed are made ready for the use of
Congress. In the autumn each department and bureau of the public service
reckons its pecuniary needs for the fiscal year which is to begin on the
following first of July (making explanatory notes, and here and there
an interjected prayer for some unwonted expenditure, amongst the columns
of figures), and sends the resulting document to the Secretary of the
Treasury. These reports, including of course the estimates of the
various bureaux of his own department, the Secretary has printed in a
thin quarto volume of some three hundred and twenty-five pages, which
for some reason or other, not quite apparent, is called a "Letter from
the Secretary of the Treasury transmitting estimates of appropriations
required for the fiscal year ending June 30," ... and which boasts a
very distinct arrangement under the heads Civil Establishment, Military
Establishment, Naval Establishment, Indian Affairs, Pensions, Public
Works, Postal Service, etc., a convenient summary of the chief items,
and a complete index.
In December this "Letter" is sent, as a part of the Secretary of the
Treasury's annual report to Congress, to the Speaker of the House of
Representatives, immediately after the convening of that body, and is
referred to the Standing Committee on Appropriations. The House itself
does not hear the estimates read; it simply passes the thin quartos over
to the Committee; though, of course, copies of it may be procured and
studied by any member who chooses to scrutinize the staring pages of
columned figures with the dutiful purpose of keeping an eye upon the
uses made of the public revenue. Taking these estimates into
consideration, the Committee on Appropriations found upon them the
"general appropriation bills," which the rules require them to report to
the House "within thirty days after their appointment, at every session
of Congress, commencing on the first Monday in December," unless they
can give satisfactory reasons in writing for not doing so. The "general
appropriation bills" provide separately for legislative, executive, and
judicial expenses; for sundry civil expenses; for consular and
diplomatic expenses; for the Army; for the Navy; for the expenses of the
Indian department; for the payment of invalid and other pensions; for
the support of the Military Academy; for fortifications; for the service
of the Post-Office department, and for mail transportation by ocean
steamers.
It was only through the efforts of a later-day spirit of vigilant
economy that this practice of making the appropriations for each of the
several branches of the public service in a separate bill was
established. During the early years of the Constitution very loose
methods of appropriation prevailed. All the moneys for the year were
granted in a single bill, entitled "An Act making Appropriations for the
support of the Government;" and there was no attempt to specify the
objects for which they were to be spent. The gross sum given could be
applied at the discretion of the heads of the executive departments, and
was always large enough to allow much freedom in the undertaking of new
schemes of administration, and in the making of such additions to the
clerical force of the different offices as might seem convenient to
those in control. It was not until 1862 that the present practice of
somewhat minutely specifying the uses to be made of the funds
appropriated was reached, though Congress had for many years been by
slow stages approaching such a policy. The history of appropriations
shows that "there has been an increasing tendency to limit the
discretion of the executive departments, and bring the details of
expenditure more immediately under the annual supervision of Congress;"
a tendency which has specially manifested itself since the close of the
recent war between the States.[27] In this, as in other things, the
appetite for government on the part of Congress has grown with that
perfection of organization which has rendered the gratification of its
desire for power easily attainable. In this matter of appropriations,
however, increased care has unquestionably resulted in a very decided
curtailment of extravagance in departmental expenditure, though Congress
has often shown a blind ardor for retrenchment which has fallen little
short of parsimony, and which could not have found place in its
legislation had it had such adequate means of confidential communication
with the executive departments as would have enabled it to understand
their real needs, and to discriminate between true economy and those
scant allowances which only give birth to deficiencies, and which, even
under the luckiest conditions, serve only for a very brief season to
create the impression which they are usually meant to beget,--that the
party in power is the party of thrift and honesty, seeing in former
appropriations too much that was corrupt and spendthrift, and desiring
to turn to the good ways of wisdom and frugality.
There are some portions of the public expenditure which do not depend
upon the annual gifts of Congress, but which are provided for by
statutes which run without limit of date. These are what are known as
the "permanent appropriations." They cover, on the one hand, such
indeterminate charges as the interest on the public debt, the amounts
annually paid into the sinking fund, the outlays of refunding, the
interest on the bonds issued to the Pacific Railways; and, on the other
hand, such specific charges as the maintenance of the militia service,
the costs of the collection of the customs revenue, and the interest on
the bequest to the Smithsonian Institution. Their aggregate sum
constitutes no insignificant part of the entire public expense. In 1880,
in a total appropriation of about $307,000,000, the permanent
appropriations fell short of the annual grant by only about sixteen and
a half millions. In later years, however, the proportion has been
smaller, one of the principal items, the interest on the public debt,
becoming, of course, continually less as the debt is paid off, and other
items reaching less amounts, at the same time that the figures of the
annual grants have risen rather than fallen.
With these permanent grants the Committee on Appropriations has, of
course, nothing to do, except that estimates of the moneys to be drawn
under authority of such grants are submitted to its examination in the
Secretary of the Treasury's "Letter," along with the estimates for which
special appropriations are asked. Upon these latter estimates the
general appropriations are based. The Committee may report its bills at
any stage of the House's business, provided only that it does not
interrupt a member who is speaking; and these bills when reported may at
any time, by a majority vote, be made a special order of the day. Of
course their consideration is the most imperative business of the
session. They must be passed before the end of June, else the
departments will be left altogether without means of support. The
chairman of the Committee on Appropriations is, consequently, a very
masterful authority in the House. He can force it to a consideration of
the business of his Committee at almost any time; and by withholding his
reports until the session is well advanced can crowd all other topics
from the docket. For much time is spent over each of the "general
appropriation bills." The spending of money is one of the two things
that Congress invariably stops to talk about; the other being the
raising of money. The talk is made always in Committee of the Whole,
into which the House at once resolves itself whenever appropriations are
to be considered. While members of this, which may be called the House's
Committee of Supply, representatives have the freest opportunity of the
session for activity, for usefulness, or for meddling, outside the
sphere of their own committee work. It is true that the "five-minutes'
rule" gives each speaker in Committee of the Whole scant time for the
expression of his views, and that the House can refuse to accord full
freedom of debate to its other self, the Committee of the Whole, by
limiting the time which it is to devote to the discussion of matters
referred to it, or by providing for its discharge from the further
consideration of any bill committed to it, after it shall have acted
without debate on all amendments pending or that may be offered; but as
a rule every member has a chance to offer what suggestions he pleases
upon questions of appropriation, and many hours are spent in
business-like debate and amendment of such bills, clause by clause and
item by item. The House learns pretty thoroughly what is in each of its
appropriation bills before it sends it to the Senate.