been made by labor and is earned. The single tax would abolish desirable taxes. It would also be inelastic.

Anarchism is a radical theory based upon the belief that all exercise of authority by one person over another is evil. It is a philosophy of extreme individualism. Compulsion is necessary in order to preserve order and to protect the weak from the strong and the honest from the dishonest. Anarchism would produce a reign of terror, unless all men were perfect.

The communists advocate the common ownership of most goods and equal distribution of the proceeds of industry. The fatal defect of communism is that it gives no incentive to the more capable and the more industrious members of society. It also fails to recognize that men like to have property which is their own.

Socialists desire the common ownership and operation of factories, railroads, stores, and other means of producing wealth. The socialists would permit private property in most goods for personal use. The claim of socialists that "the rich are growing richer and the poor are growing poorer" is proved false by the income-tax returns. The socialists claim that the present industrial system is evil, but they fail to see that there is much good in it. The evil may be eliminated to a great extent. The socialists do not agree upon what is distributive justice. Some industries might be socialized, but not farming. The socialists are too pessimistic in regard to the possibilities of the present order and too optimistic in regard to socialism.

TOPICS FOR DISCUSSION, DEBATE, AND SPECIAL REPORTS

I. What land in your city has risen in value during the last ten years? What land has fallen in value? What caused the changes in value?

2.

Give the history of some communistic experiment in America.

3. Compare socialism and anarchy.

4.

What do you consider the strongest point in favor of socialism?
Why? What do you consider its weakest point? Why?

5. Is our industrial system chiefly good with a few bad spots or chiefly bad with a few good spots? Name some of the bad and some of the good features.

6. What unearned increments, other than land values, exist in the United States?

CHAPTER XXXI

PUBLIC FINANCE

Public and Private Finance Compared.-Public finance is that branch of economics which deals with the income and expenses of government. Public finance differs from private finance in three important particulars: (1) The income of a government should be so arranged as to meet its necessary expenses. Individuals should arrange their expenses to fall within their income; (2) a surplus for a government is not desirable-it indicates that more has been taken from the pockets of the people than was necessary for the needs of the government and invites legislative bodies to make reckless expenditures; (3) public finance rests upon the power of compulsion. A state may compel the people to contribute to its support.

The Budget. A budget is a statement of probable revenue and expenditure and of financial proposals for the coming year. It is usual to speak of a budget submitted to a legislative body as a tentative budget; when it has been adopted it becomes the budget. The advantages of a budget for a government are similar to those for a family. Expenditures are fixed in relation to one another and a limitation is placed upon them.

Growth in Public Expenses.-Expenses of local, state, and national governments have increased vastly in the last quarter of a century. This increase is due both to in

creased wealth and the additional duties which governments have assumed. The growth of expenditures for schools is an illustration. At first the people were content with primary education at public expense. Then were added the upper grades and the high schools. Now there are municipal colleges and universities, and most states support great public universities. Free text-books, better school buildings, and higher salaries for teachers have increased expenses, but the results have justified the expense. Similar increases in the expense for the preservation of order, protection against fire, guarding the public health, providing for the poor, and other necessary duties of government might be cited.

The expense of state governments has not increased so rapidly as that of local governments, but the increase has been considerable. The growth of state expenses has been in part due to the supervision which states have undertaken, usually by means of commissions, in looking after the interest of the people in banking, insurance, railroads, and other public utilities. State penal and charitable institutions have become increasingly efficient and increasingly expensive. With the coming of automobiles roadbuilding has become a state function. The expenses of the national government have increased, both through doing its former work better and assuming new duties. The largest item in the budgets of all the great nations is in paying the expenses of past wars and providing for possible future wars. Unless the nations of the world can agree to settle their differences by some other method than war, expense for national defense will continue to increase. The following table shows the expense of the United

States for the army and navy during the years immediately

The cost of and preparation for wars constitute the greatest expense of all national governments, because included in the expense for wars must be included interest on the war debt, pensions for soldiers, and provision for paying the debt. The net cost of the World War to the United States was fixed by Secretary Houston at $24,010,000,000.

Public Revenue.-Public income is obtained from a variety of sources. In his Science of Finance, Professor Henry C. Adams gives the following classification of public

Public domains were once an important source of revenue and many foreign governments now derive revenue from forests, mines, and agricultural lands. The United States