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When an appropriation bill is reported by a committee, it is placed on the union calendar. On the proper occasion the bill is called up by the member having it in charge, and the House, in going into the committee of the whole for its consideration, agrees that a certain time shall be allowed for debate. This time is equally divided between the two parties in the House, and it is devoted to a general discussion, during which speeches are usually made on almost any subject. After the general discussion, there is a debate under the five-minute rule; the bill is considered section by section, and any member is allowed to introduce an amendment and speak on it five minutes. When these general and detailed discussions are finished, the committee of the whole rises and reports the bill to the House, with the amendments made in the committee; and it is then passed in the House as a rule under the previous question; that is, without debate.
Appropriation bills, when passed by the House, are transmitted to the Senate, and with some exceptions are referred to the committee on appropriations in that body. Bureau chiefs 1 and other persons, who were unsuccessful in obtaining increased or new appropriations in the House, immediately begin to besiege the Senate committees. Appropriation bills are debated in the Senate with more freedom than obtains in the House, and this freedom enables any Senator who desires some particular appropriation for his state to threaten to "talk the bill to death" unless his terms are conceded. It is, accordingly, a general practice for the Senate to increase very materially the appropriations adopted by the House. For example, it added to the House bills for the year 1907-08 sums amounting to more than $70,000,000.
As in the case of tariff bills, differences between the Senate and the House are adjusted by a conference committee representing the two bodies. The result is always a compromise which is accepted, as a rule, without reopening the discussion. We find here the same lack of responsibility and coördination which occurs in the case of revenue measures, and a total failure of anything like a proper adjustment of revenues and expenditures.
In Great Britain, the budget, embracing the estimated expenditures and the revenue measures to meet them, is prepared under
'This is forbidden by recent executive order (except with the consent of the head of the department); but it remains to be seen how effective this order will be. Above, p. 213.
the direction of a responsible minister, the Chancellor of the Exchequer, and when it is adopted it is a finished project which has received the final scrutiny of both houses. Of course, the minister may be wrong as to the estimates or the revenues which may accrue from his proposed measures; but at all events there is an actual attempt to balance the outgo and the income.1 In the United States, however, several groups of men have charge of spending money, while the chief revenue measure, the tariff act, is designed by other groups for the protection of industries rather than for meeting the expenses of the government.
Furthermore, there is in the United States no adequate provision for the scrutiny of the actual expenditure of the money when it is appropriated by the legislative branch of the government. It is true, each house has committees on expenditures for the executive departments, whose duty it is to see that the money is used for the objects for which it was actually appropriated; but these committees do little or no real work. This absence of adequate scrutiny formerly encouraged the several departments to spend their respective appropriations in a reckless manner with
1 If the government were run as a thoroughgoing business concern, the revenues and expenditures ought to balance each other, at least with some degree of accuracy, but in fact there is usually a large surplus or deficit, as is indicated by this table:
$229,668,585 $142,606,706 $24.447.420 $403,080,983 $ 85,040,272
238,585,456 307,180,664 38,954,098 587,685.338
46,453,065 540,631,749 2 41,770,573 48,380,087 544,274.685 * 23,004,229 249,150,213 45,052,031 594,454,122 25,669,323 332,233.363 269,666,773 61,240,199 663,140,334 286,113,130 251,711,127 63,301,862
300,977,438 246,109,554 56,130,685 663,217,677 * 90,225,325
2 These are deficits. The post-office receipts are excluded from the reve nues listed above because the post-office account is a balanced account, the government meeting the deficiencies.
out apportioning them over the whole fiscal year, and then to rely upon the passage of a deficiency bill by Congress to make up for the shortage of money. A law has been recently passed, however, compelling the head of each department to distribute his expenditures over the fiscal year unless in case of an emergency he is compelled to waive the rule.1
The Collection of Revenues2
The collection of the revenue is intrusted to two branches of the Treasury Department - one having charge of the customs duties and the other the internal revenue. For the collection of import duties the country is divided into customs districts, each having a port of entry and a set of officials, including the collector, appraisers, special agents, inspectors, etc. The internal revenue and the revenue from the new corporation tax are under direct charge of the commissioner of internal revenue, appointed by the President and Senate. For purposes of administration the country is divided into a large number of districts, each of which is in charge of a collector appointed by the President and the Senate. The collector has under him a corps of officers and agents, some engaged in the routine work and others acting as detectives to prevent frauds.
The revenues of the United States in taxes, fees, postal charges, etc., are stored in Washington and in nine subtreasuries located at Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and San Francisco. The Secretary of the Treasury is, furthermore, authorized to put portions of the public funds into certain national banks (designated as depositories), on the basis of United States bonds or other satisfactory security.
This power in the hands of the Secretary of the Treasury, is an enormous one, for it allows him to give or withhold the aid of
the government in time of stringency. It was the regular policy of Secretary Shaw to come to the aid of the money market whenever a crisis was threatened, by distributing government funds among the banks whose surplus reserves had run low. In February of 1906, $10,000,000 was transferred to national bank depositories of seven principal cities. This action failing to bring relief, the Secretary offered to make additional deposits, on the basis of satisfactory security, equivalent to the amount of gold which the specified banks had engaged for importation, and as a result brought about $50,000,000 of foreign gold into the United States. Thus a large amount of government money was placed in circulation through the banks, foreign gold was secured, and the money stringency relaxed. In the panic of 1907, Secretary Cortelyou likewise came to the aid of the money market with federal funds. The advantage of this policy not only to the banks but to the borrowers of money is evident even to the superficial observer; but the intimate connection which it establishes between the government and private interests is obviously full of grave dangers.
The Monetary System
Under the Constitution, Congress has power to coin money and regulate its value and also to borrow money. It will be noted that Congress is not expressly authorized to issue paper money in any form. The Articles of Confederation gave the confederate congress the power to borrow money and emit bills on the credit of the United States; and in a draft of a constitution submitted to the convention of 1787 by Mr. Pinckney, it was proposed to continue this provision. However, on the motion of Gouverneur Morris, the phrase "emit bills on the credit of the United States" was struck out, after a considerable debate, in which the opinion was expressed that it would have a most salutary influence on the credit of the United States to remove even the possibility of paper money. Nevertheless, it is not absolutely certain that it was the intention of the framers of the Constitution to prevent the issue of paper money in any form, for Mr. Madison believed that the omission of the phrase relative to bills of credit did not deprive the government of the use of public notes "so far as they could be safe and proper."
At all events, Congress, under the special financial stress of the
Civil War, did authorize the issue of paper and declared it to be lawful money and legal tender for the payment of all debts, public and private, except duties on imports, demands against the United States, and interest payable in coin. The constitutionality of this law was speedily tested, and the Supreme Court of the United States held that an act making mere paper promises to pay legal tender in the discharge of debts previously contracted was not a means appropriate and necessary and really calculated to carry into effect any express power vested in Congress, and was inconsistent with the spirit of the Constitution and prohibited by that instrument. After a reorganization of the Supreme Court, the case was again submitted to that tribunal, and it was then held that the legal tender acts were constitutional as to contracts made before and after their passage by Congress a strong argument, being based on the necessities of war time. Even this argument was cast aside later, when, in 1878, Congress passed an act that the Treasury should not retire or cancel legal tender notes on their redemption, but reissue them and keep them in circulation; and the measure was upheld by the Court." As a result, it may be said that Congress may create legal tender notes whenever it may be deemed necessary.
The power over the monetary system is virtually exclusive in Congress, for according to the express provision of the Constitution no state can coin money, make anything but gold and silver coin of the United States a tender in the payment of debts, or emit bills of credit. A bill of credit has been defined by the Supreme Court as a paper medium issued by a state on its own authority, designed to circulate between individuals and between the government and individuals for the ordinary purposes of society. This limitation, however, was later interpreted in such a way as to authorize the issue of paper money through a public corporation in which the state was the sole or principal stockholder, for the Court maintained that to constitute a bill of credit within the meaning of the federal Constitution it must be issued by the state, "on the credit of the state," and designed to circulate as money.
Under this states' rights interpretation, the provision of the
1 Hepburn v. Griswold, 8 Wallace, 603.