Summary. Public and private finance differ in three important particulars: (1) Public revenue is designed to equal public expenses; (2) a surplus is not desirable for a state; (3) public finance rests upon the power of compulsion. Public expenses are growing. Taxes may not be expected to fall, but we should see that the government gets full values for the money it spends. The cost of war has been very great. This can, and should, be lessened through international agreements.

The greatest regular source of public revenue is taxation. Adam Smith's four canons of taxation are generally accepted as describing rules to which taxation should conform. Direct taxes are taxes which are finally paid by the person upon whom they are originally levied. Indirect taxes are shifted. Direct taxation is superior to indirect taxation in most respects, but indirect taxation has the advantage of being paid in small instalments by the persons upon whom the burden finally falls. Taxes on imports may be specific, ad valorem, or a combination of the two. Excise taxes are taxes laid upon articles produced within the country. Taxes on incomes have become the most important tax in the United States. These taxes are the fairest of all taxes. Inheritance taxes are employed by both state and national governments. The income from inheritance tax differs from year to year, but the average for a term of years remains the same. Taxes on real estate should be for local purposes. The personalproperty tax should be abolished because it cannot be properly collected.

Exemptions from taxation is proper when the public welfare demands it. Public debts may properly be con

tracted for extraordinary expenses. Regular expenses should be met out of regular sources of income.

TOPICS FOR DISCUSSION, DEBATE, AND SPECIAL REPORTS I. Get a copy of the budget of your city for the last year. What are the principal items of expense? What changes would you suggest?

2.

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Should a new park be purchased by a tax on the entire city? By a tax on adjoining property? By a combination of the above? By the sale of city bonds?

What direct taxes do you pay? What indirect taxes? What direct taxes does a day-laborer pay? What indirect taxes? Should a man who has no children be taxed to support the public schools? Why? Why should churches be exempt from taxation? What schools pay taxes? Why?

5. Why are Liberty and Victory Bonds the best securities in the world? Why did some of them fall below par? Find the present price of each issue of Liberty and Victory Bonds and explain the difference in their market values.

CHAPTER XXXII

SOCIAL AND ECONOMIC BETTERMENT

The word "Utopia" was introduced into the English language in 1516, when Thomas More published his book bearing that title. Utopia means the land of nowhere. It describes an ideal commonwealth very different from the England of the sixteenth century. England seemed to exist only for the benefit of the rich and powerful. Good food and decent clothing were too expensive for the poor. Tillage had decreased and pastures for the sheep of the rich abbots had supplanted arable land. Disabled soldiers crippled in useless wars were everywhere to be seen. The courts of the rich were thronged with retainers who rendered no useful service, but gratified their lord's love of ostentation. If a man chose to steal rather than starve, he paid the penalty with his life. Frequently a score of victims might be seen hanging from one gallows.

In contrast to the England of his day More pictured the land of nowhere, a country where everything was perfect. In Utopia the people elected their own king and parliament. The Utopians hated war and never engaged in a war of conquest. Education was not confined to one class, but every one was taught to read and write. In Utopia every family had a vote and voting was by ballot. All property belonged to the nation.

This was Sir Thomas More's idea of a perfect commonwealth and it seemed unattainable in any particular. Yet we have arrived at Utopia with the exception of communism. The dream has come true.

RECENT SOCIAL AND ECONOMIC PROGRESS

Most of the progress since the days of Sir Thomas has been made in the last one hundred and twenty-five years. In England one hundred years ago, the hours of labor were from twelve to sixteen a day. Wages were so low that every member of a family had to work and the combined wages were scarcely enough to afford a decent living. Women were employed in the mines, frequently harnessed to coal carts like beasts of burden. These carts were dragged through low and narrow passages, where the women had to stoop and crawl on their knees. Child labor was the rule. Pauper children were apprenticed to masters, who put them to work in factories. If a child attempted to escape he was chained to the machine which he operated. Labor organizations were illegal and the working men had no votes. The criminal law showed the cruelty of the time. Two hundred and fifty crimes were punishable by death. Even the stealing of goods to the value of five shillings was a capital offense. There was no popular education.

In America conditions were better, but hours of labor were long and slavery degraded labor. Had any one in the days of George Washington attempted to predict economic and social conditions as they exist in the twentieth century he would have been thought a dreamer.

Were men content with the standard of living which

prevailed a hundred years ago, a few hours' labor each day would produce all the goods needed. The rich had many servants and many costly ornaments, but they lacked the comforts of a modern working man. Joseph Priestley wrote that his mother, some time in the year 1740, required him to return a pin which he found at his uncle's house. She did this to give him "a clear idea of the distinction of property." Pins were not so abundant that one was regarded with indifference. Even so late as 1840 thorns were sometimes used for pins in parts of the United States.

METHODS OF ECONOMIC PROGRESS

There is no reason to doubt that economic progress will be as great in the future as it has been in the past. A larger production of wealth will give more comforts to the people and more time for education and recreation. A larger production of wealth may be secured:

1. By increasing the supply of available land. Drainage of swamps, irrigation of arid lands, and opening means of communication with lands now unavailable because of distance are among the means of increasing available land. Much of the land of North America is now unavailable and much more than half of the land of South America is at present unavailable.

2. By utilizing more fully the forces of nature. The power of the winds, the water-power afforded by rivers, the force of the tides are as yet almost neglected.

3. By increasing capital. This may be done by encouraging savings, by economy in the use of materials, by new inventions, and by making investments safe and therefore more attractive.