Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-05-22
MUNICIPAL! FUNDS
How Unusual Demands
Should Be Met.
81
LOANS ARE THE RULE
GROWTH OF CITIES BRINGS
HEAVY DAMAGES.
The Burden Should BE Borne in Part
by Taxpayers of the
Future.

recently prepared statement regarding the
personal tax propositions now pending be-
fore the Senate to explain the bill drawn
at it's instance and introduced recently by
Senator Allison. AS an appendix to that
statement the association has published
also a pamphlet discussing the subject of
the best method of meeting extraordinary
demands upon the municipal purse, to show
that the practice generally is to raise spe-
cial funds by borrowing rather than by I'M
usual taxation. The appendix presents
this proposition in the following manner:
1t is desired, at the outset, to direct the
attention of Congress to the propriety of
distinguishing the objects of municipal tax
alton There would seem to be two very
obvious divisions, to wit, into general and
special objects, which is a complete division
from one point of view, and ordinary or
extraordinary, which Is also complete
division from another. 1t is only necessary
to say of this first division that it must be
borne in mind that property is liable to
special assessments when we are consider
ing the proper burden to impose upon it in
connection with general assessments.
There are certain classes of public i'm
p-oyements imperatively needed by cities
and towns which, from their very nature,
are pointed out as extraordinary objects
for which the taxing. power is exercised.
Such, for example, is any large engineering
work, whether it be system of sewers, the
Inauguration of a water supply, the build
ing or aiding to build a railroad, the pur-
chase and Improvement of public park,
the construction of expensive municipal
buildings, such court houses, school
houses, fire department buildings; in sea-
port-towns the construction of docks, and
other improvements of the kind which are
well known. In this District there should
at this time be added the extension into
the surrounding county of Washington of
the streets and avenues of the city proper
Permanent Works.
An obvious thought with respect to all
improvements of this nature is that they
are of permanent value and will serve the
purposes Of many generations of men.
Their cost is, in a rough way, proportional
to their permanency and to their benefit,
and is much beyond. the reasonable burden
which could economically be laid upon the
years of their const rasctioh. 1t would seem
unreasonable that thisepeTmanent and diff
fused benefit should be entirely paid for by
the taxpayers who are such at the time of
the construction of Sach improvements. 1t
seems only equitableR that the burden
should be extended in proportion to the
benefit, and that nasrHsFeh as they are to
serve not only the Present but the future,
the future also shotlld2Bad in paying for
what it will enjoy. q ,isft s--
In the compare tiveIyg recent work of
Prof Henry VI Adams of the University
of Michigan and of CsfReil University and
also statistician of tbe.i interstate. COM
merce commission hponi the subject of
Public Debts it is said at page 50:
Prof. Adams Views.
ct remains yet to consider another plea
for the employment Of public credit. The
necessity of loans arises4Fin the third place,
from a determination on the part of the
government to enter upon some great work
of public improvement.
The crowding of cities
brings ever more prominently into view
the necessity of adequate provision for
sanitary regulations, for education. for
street transportation, and the like.
This means that cities may properly con-
slider the advisability of entering upon
schemes of internal improvement.
Suppose a government, Of any grade
whatever, becomes convinced that an ex-
tensive system of public improvement is a
necessity, does it thereby decide in favor
of creating a public debt? This question
cannot be answered until we have learned
what other methods Of securing the re-
quired capital are open to the administra-
ton. The real point of inquiry Is this:
Whether the enterprises determined upon
can be economically carried through by
any other means as by the placement of
improvement bonds.
The necessity Of a debt might be OBJ
Waited We're 1t possible to proceed slowly
with the work, expending as much each
year as the ordinary revenue allows. and
that amount being exhausted, to stop all
work until additional, funds accumulate.
There, indeed are some sort of improve
ments to which this method Of procedure
would not be detrimental, but no engineer
could for moment defend it a general
rule Most undertakings will not bear de-
lay without damage to that part of the
work already done. Thus, a house half
built, and left to stand the exposure of a
hard winter, will require a months work
in the spring to repair weather damages.
The Is truP only in marked
degree, of dock building. dredging. the
making of levees, canals or railroads. In
deed there are few exceptions to the state
ment that continued application of new
capital is needed to save the capital al
ready applied; from which it follows that
small annual appropriations, for the pur-
pose of carrying through a great under
taking. come under the severe condemna-
ton Of engineering rules. 1t is essential
that sufficient control over capital should
be secured at the beginning to insure the
completion Of the work without interrupt
ton.
Objections to Extraordinary Taxes.
again, the government might levy and
collect an extraordinary tax, equal to the
estimated cost Of the entire enterprise;
this would satisfy the demand Of the engi-
neer, and at the same time obviate the
necessity Of an appeal to public credit. The
chief objection to this plan lies in the fact
that it disregards certain well-established
principles Of taxation. It contravenes the
fundamental rule of finance that a reve-
nue. system should be stable. Taxes are
a most important element in what may be
termed the Industrial environment. and for
that reason should 'hotHbe subjected to
sudden and arbittaryiD changes. Such
changes Introduce unheceysary disturbances
into business relatioHs.t and prove BEN
eft to Spectators only, whose gains are
always dishonest. tIhnakes no difference
whether rates go up br down. in either case
the modification OF diisIIAI relation intro
duces unreliable factors into business cal
culations. For this treason a loan which
may be repaid duringia series of years is
much more economicar than single tax
to the entire amount deIKanded The JUS
LITIGATION of loan. disc. sunder the condi-
tions assumed. is theasanae for a state as
for an individual. II Is more convenient
to pay by installmentss than to make head
way against large expenditures by single
tax; for great expenditure met within
the year entails uponi the community not
only the burden of tae payment. but the
unnecessary burden Of disturbances and in
convenience. The same principle that leads
men Of ordinary means to approve of loan
and building associations commends the
borrowing system to the best interests Of