spend money for any profitless or mischievous purposes, fireworks, illuminations, battles, driving about from place to place, or what not, — being itself penniless, it sets its money-collecting machine to borrow the sum needful for these amusements from the civilized capitalist. The civilized capitalist lends the money on condition that, through the moneycollecting machine, he may tax the civilized mob thenceforward forever. That is the nature of a National Debt." An overdrawn picture, gentle reader, if you will so have it; but, withal, one you will do well to recall when next you propose to decide a dispute by the aid of gunpowder bought with borrowed money which your children's children will hardly repay.

III

The experience of Europe teaches that national debts would hardly be known, and taxation might be so moderate as to surpass belief, if it were not for war and the burdens which it entails. Our own financial history leads to the same conclusion.

The facts may be determined with the greatest ease and certainty by an examination of federal expenditures from the establishment of our government down to the present day. We shall exclude from the accounts so much of the cost of operating the Post Office Department as is defrayed out of the postal revenues, since this is no burden upon taxpayers; and include only the postal deficit, which is made up by the federal treasury. We shall omit, also, payments upon the principal of the national debt, since these are made out of such surplus revenues as may remain after defraying the cost of maintaining the government, and are no part of the running expenses. From 1792, the first year for which the accounts are separately stated, down to 1904, the cost of supporting the national government is shown by the following table, in which all except the per capita expenditures are stated in millions of dollars:

From 1792 to 1810 it will be seen that the annual interest charge upon the debt, incurred chiefly in the War for Independence, accounted for thirty or forty per cent of the total outlay. The remainder was devoted in considerable part to the support of the army or navy and to military pensions; so that, for instance, in 1800, interest charges, pensions, and military or naval expenditures amounted to $9,470,000, while the entire outlay for civil purposes was but $1,330,000. On a per capita basis, the civil expenditures for that year were $0.25, and the outlay chargeable to war was $1.79; for 1810 the figures were, respectively, $0.18 and $0.99.

The War of 1812 increased the public debt from $45,200,000 to $127,300,000, so that, despite a considerable reduction effected between 1816 and 1820, the interest charge in the latter year was much higher than it had been in 1810. Moreover, the war raised the general scale of other expenditures; so that the ordinary outlay in 1820 was nearly 150 per cent larger than it had been a decade earlier, and the per capita cost of government advanced to $1.90. In every case in our history, the result has been the same; war always leads to a permanent increase of expenditures, because, for one reason or another, the finances never return to ante-bellum conditions.

The next two decades witnessed an unprecedented feat, the complete extinction of the national debt. This was made possible by abundant revenues, a dozen years of economical expenditure, and the decrease in the annual interest charges. In 1835 the last installment of the debt was paid off, and the treasury was confronted by the prospect of a large surplus. The result was a considerable increase of general expenditure, so that the total per capita outlay advanced from $1.18 in 1830 to $1.42 in the year 1840. At the latter date the per capita cost of civil government was $0.49, while the expense for the army, navy, and pensions was $0.93.

During the next decade, expenditures increased but slightly until the outbreak of the Mexican War in 1846. This event added some forty-eight millions to the small debt incurred in order to meet deficits after the panic of 1837, and committed the country to an increased permanent expenditure. The ordinary outlay had been $26,418,000 in the year before the war; in 1850 it stood at $37,165,000, and thereafter advanced instead of receding to the former level. From 1851 to 1857 overflowing revenues encouraged larger appropriations; and, even with the slight economies effected after the panic of the latter year, the total per capita outlay was $2.01 in 1860, an advance of some forty per cent in twenty years, of which about one half was due to the war. Even at that figure, however, the per capita cost of running the government was slightly less than it had been in 1800; so that for sixty years the total federal expenditures had not grown as rapidly as population. Upon the whole, affairs had been administered with general economy, even though the territory over which government was exercised had vastly increased. In 1860 the civil expenditure was approximately $1.03 per capita, while the outlay chargeable to war was $0.97.

The Civil War wrought in our finances a transformation as complete as that which it worked in the character of the

federal government, and by 1870 the American taxpayer was living in what was virtually a new world. The enormous debt incurred for the preservation of the Union now entailed an annual interest charge of $129,200,000, which was more than twice the entire national outlay in 1860. Prior to the war the expenditure for the army and navy had been $27,980,000, while in 1870 it stood at $79,430,000; and, in the meantime, the pension roll had grown from $1,100,000 to $28,340,000. As a result, the total expenses chargeable to war had risen from $30,670,000 to $237,000,000. This represented a per capita burden of $6.15; whereas all civil expenditures, which now amounted to $56,640,000, called for but $1.46 per capita. The country was now spending $7.61, whereas, a decade before, it had required but $2.01, for every person within its borders. In all financial history it is doubtful if another revolution of such magnitude was ever accomplished within the brief space of a four years' war. Prior to the struggle a moderate customs tariff had defrayed the entire charge of the national government in ordinary times; "thenceforward forever" the taxpayer must submit to higher duties on imports and to an extensive system of internal taxes.

For a time after 1870 the country was sated with the joys and glories of war. It was content to restore the finances to some semblance of order, place the currency once more upon a specie basis, reduce the national debt, and drive numbers of rascals out of public life. Within sixteen years the annual interest charge declined from $129,200,000 to $50,600,000, and the outlay upon the army and navy fell from $79,430,000 to $44,140,000. Pension expenditures, to be sure, increased meanwhile from $28,340,000 to $63,404,000; but the saving upon the other two items was enough to offset this and to reduce the aggregate expenditure

1 If the figures for 1870 are corrected in order to allow for the depreciation of the greenbacks, the per capita outlay becomes $6.80.

It is evident that the increased outlay between 1886 and 1897 was due to larger expenditures for pensions, the navy, and for civil purposes, the last item, however, showing a comparatively moderate rate of growth. The slight advance in the cost of the army was more than offset by the decline in interest charges. Then from 1897 to 1904 the pension outlay remained practically stationary, and a further decrease occurred in interest payments. But the cost of the army and navy advanced from $69,800,000 to $195,400,000, as the direct result of new national policies; while civil expenditures, swollen as they always have been after a war, rose from $117,100,000 to $219,800,000. It is evident that, while the outlay was growing with considerable rapidity prior to 1898,

1 In 1904 the figures are increased by the $50,000,000 paid on account of the Panama Canal; for 1905 they will probably be less. But the canal will involve us in heavy expenditures for many years to come.

the Spanish War has precipitated an avalanche of new expenditures which are very far from having reached their end.

At the present moment, when the per capita cost of government is $7.12, we are spending about $4.43 for interest, pensions, and armaments, while $2.69 covers all outlays for civil purposes. Less than thirty-eight per cent of the annual expenditure, therefore, is now needed for the charge of civil administration, and something more than sixty-two per cent is required for objects connected with war. With us, as with all other peoples, the national government is, upon its financial side, mainly a huge machine for collecting money to meet the direct and indirect results of settling disputes by the appeal to arms. Is it not worth our while, therefore, to encourage by all means at our command the practice of resorting to some less expensive tribunal ?

Until very recently it has been the boast of Americans that their country was free from the burden which militarism has imposed upon the people of less favored lands. As late as 1897, when Great Britain, Germany, and France were spending, respectively, $200,000,000, $191,000,000, and $185,000,000 upon their armies and fleets, the United States was content with an outlay of $69,800,000. But to-day we have little reason to congratulate ourselves upon the advantages of our situation. Great Britain, to be sure, is now spending $344,000,000 for the support of military armaments; while Germany expends $217,000,000, and France $200,000,000. But our own outlay for soldiers and fleets has risen to $195,000,000, and is more likely to increase than decrease for some time to come; we have almost overtaken France and Germany, and, by the time our navy is large enough to police two hemispheres, may be in a fair way to rival Great Britain. For all the purposes of the taxgatherer, at least, we seem to have become a militant power; and it is altogether proper that sober papers of state should now bristle with homilies upon grand strategy,

and with modest allusions to the "iron in our blood."

In the seven years ending June 30, 1904, the United States spent $1,307,000,000 for military purposes, an annual average of $186,785,000, as compared with an outlay of $69,800,000 in 1897. This ! period included, of course, "extraordinary" expenses for the operations of the Spanish War and innumerable "pacifications" of the Philippine Islands; but the annual outlay in 1904 was $195,400,000, nearly nine millions more than the average for the period, and the tendency of these expenditures is ever onward and upward. In 1899, when the money was flying most merrily, the army and navy cost $277,700,000. The following year the outlay fell to $172,010,000, and we were told that great reductions were to follow which would allow things to return to a "normal" condition; as a matter of fact, the cost increased by twenty-three millions during the next four years, so that an expenditure of about $200,000,000 has now become "normal." This result should surprise no one who is familiar with the history of military armaments; it follows from the very nature of the case.

Although national expenditures advanced so rapidly after 1897, the prosperous condition of business made the revenues large, even when the "war taxes" were repealed, and enabled the treasury to meet its growing obligations without difficulty until last year. In 1903 there was a handsome surplus of $54,297,000, but in 1904 a slight decrease of revenue and a large increase of outlay produced a deficit of $42,000,000. During the fiscal year 1905 the deficit continues, and it is now tolerably clear that our existing revenue system is inadequate for the support of the national household in its present imperial state. Congress, of course, is now thinking of economizing in the appropriations for 1906, but finds itself committed to so many splendid undertakings that it is hard to decide where the pruningknife shall be applied. There has been

extravagance in so many directions that it may be possible, for a time, to reduce expenditures somewhat below the level of 1904 and 1905; but, so long as existing policies are unchanged, we shall be saving at the spigot and wasting at the bung.

The main facts with which we must reckon are the growth of military expenditures and the certainty of further increase. The army is now too small for the work of policing North and South America, together with Asia and the islands of the sea. The navy is large enough for its former duty of protecting our own shores, but is wholly inadequate for the task it is now expected to perform. We must have fleets to defend our Atlantic and Pacific coasts, must guard the Panama Canal, and must maintain upon the Asiatic station as many vessels as any other power keeps there. Then we must have large numbers of cruisers moving hither, thither, and yon, in order to be present at every explosion, revolutionary or volcanic. These things may be expensive, but they are a part of the burden of empire; then, too, they amuse the children, of all ages and sizes.

In fact, the talk of economy which now comes from Washington is merely a sign of inexperience in our new tasks. No imperial power can economize, or should think of doing so. When the budget of the German Empire shows a deficit, as it usually does in these days, the only remedies suggested are more loans or new taxes; when the British estimates disclose a balance on the wrong side, the only question which "imperially minded" men consider is how to increase the revenue; and in France they do things in the same large and liberal way. We must learn to play the war game as others play it; and must not be guilty of such gaucherie as talking about economy, which is a homely luxury in which only unheroic republics can afford to indulge. Since 1897 we have changed our mode of living, and must now be ready to defray the bills as they come in. This is the one lesson taught

by the history of militarism ever since the invention of gunpowder and public debts.

The situation was admirably reviewed by Mr. McCall a few months ago in the columns of the Atlantic, and it is impossible to gainsay his conclusion that "our revenue is insufficient to support us with our colonial appendages." We shall soon be compelled, as he pointed out, "to change our relations with the Philippines or readjust our system of taxation;" and there is much merit in his suggestion that the first resource should be the reimposition of stamp taxes, such as were levied in 1862 and 1898. There could be no better way of educating our people in the duties and responsibilities of empire than to require them to affix sizable stamps to every document which they use, provided that care is taken in selecting the design. As I have elsewhere ventured to suggest, on a field of gold the new revenue

stamps should bear a battleship rampant sable above a taxpayer couchant azure; beneath, a Filipino's head caboshed gules; over all, a baton (Big Stick) sinister vert. If this should not be elaborate enough, a border might be provided, charged with a syndicate of capitalists sanguine gorged with wreaths of dollars argent. This, it is believed, would complete a chaste and appropriate design. It would tell each taxpayer where we are spending our money, and what it is expended for, while conveying some idea of the prosperity which our rule has brought to the Philippines. Its advantages over such outworn symbols as the Goddess of Liberty or the head of George Washington should be obvious. Moreover, it is not impossible that such a method of supporting military armaments would lead us gradually to a better appreciation of the costs which warfare entails.

COME, dear friend, sit down here by the open fire. It was cold and penetrating out there at the burial; - come, warm your hands, and let us talk of the companion we have lost. How often he sat with me here through the long winter evenings, and brightened my dusky library with his genial humor and good cheer! We shall not hear his voice again. I cannot express how deeply I am stricken by this loss, — I know only that I shall never again sit here without grieving that our friend's life, with all its sweetness and inner beauty, was so short. Do you remember that summer morning when you met him here for the first time? Who thought that the November day of final parting would come so soon? Will you not sit down and talk with me? Why do you hesitate?

Ah, I understand,-I see it all in your

clouded eyes and brow. Your eyes say that though we are in perfect accord on every practical question, yet our ways part here. You do hope to see our friend again in the time to come. When the minister beside the open grave promised a happy meeting yonder, I saw you bend your head as if the preacher spoke the language of your heart. I thought I had mistaken you; now I see that I was right and that my words must have wounded you. I know you must recoil as if from an atheist who, without creed or belief of his own, seeks to destroy your faith in immortality. You look on me as a man of science who cares for naught that he cannot see and touch and weigh and measure to whom eternal life is an empty tale. Is it not strange what close friends two men can be who yet are strangers in their deepest thoughts?