Federal Expenditures Under Modern Conditions

THE aggregate expenditures of the United States Government have increased almost continuously since the adoption of the Constitution. Political parties intrusted with the responsibility of government, although pledged by their platforms to retrenchment and economy, have speedily learned that the appropriation of larger and larger sums from year to year for the maintenance of the federal establishment cannot be avoided. This increase apparently bears a certain definite relation to national development.

If the entire life of the Republic be divided into four-year periods corresponding to presidential administrations, all but seven show increase of expenditures over those of the previous period. Moreover, the seven exceptions are not significant, since they merely reflect the reduction of military and naval establishments following active warfare.

During the half century which elapsed between 1860 and 1910 the rate of increase in the cost of maintaining the federal government was about the same as the rate of increase in national wealth. Population, however, creates wealth, and great wealth encourages a generous scale of public expenditure. Hence our rapid growth in population is responsible for the continuous increase in the cost of the federal establishment. It is to be expected, therefore, that so long as the population of the United States increases, whether from excess of births over deaths, or from immigration, federal expenditures will tend to increase also.

So vast has the total annual expenditure now become, and so immense and complicated is the federal machine of this period, that the economical administration of the government, from being a small and almost negligible matter half a century ago, has at length assumed great importance.

It is clear that government expenditures consist of two unequal parts: the amount which is justly required to meet authorized obligations without extravagance, and an unknown but doubtless comparatively small amount which results from poor or lax administration, wastefulness, or fraud. The proportion thus lost no doubt has varied greatly at. different periods, but even a small percentage of waste now means many millions of dollars in absolute figures.

What should be done to reduce this waste to a minimum and to bring the administrative departments of the federal government into line with the most efficient modern organization?

There are two reforms in the administration of federal affairs which should be speedily effected. Upon these, all others should be based; without them, it is unlikely that permanent improvement can be effected, — whatever the extent to which present efforts at ‘systematizing’ may be carried.

1, The establishment in the federal departments of expert and complete administrative supervision, of a nonpolitical and reasonably permanent character.

2. The introduction of some standard as a substitute for the money standard which prevails in the commercial world.

To secure the most economical and efficient administration of corporate enterprises in this period of expanding operations is no easy task. It is accomplished only by untiring search for the ablest administrators. Such men are paid high salaries and given complete authority.

In the federal departments grown to 1911 proportions, the problems of administration are fully as perplexing as those of the greatest corporations, yet the government generally employs in executive positions small men at small salaries, and changes them frequently. In large corporate enterprises, positions of great responsibility generally seek the men. Large numbers of persons clamor for the highest federal positions, often without the remotest qualification other than political influence.

All great corporate enterprises, which in the number of persons employed and in some other respects rather closely resemble the federal departments, maintain efficiency by the closest organization, and by strict attention to detail. This is accomplished by employing a general manager, who is selected for demonstrated and peculiar qualifications, and who is held responsible for efficient and economical operation.

In the federal government, however, the control of each of the executive departments is lodged with a cabinet officer. Obviously such an official is not, and cannot be, selected primarily as an organizer and an administrator, since the reasons which lead to appointment are far removed from mere efficiency as a business manager. Moreover, matters of policy and of politics necessarily absorb much attention. It is becoming more and more evident that cabinet officers should not be concerned with the details of administration. Even if such an official should prove an unusually gifted executive, the average term of a cabinet officer is less than three years; hence the influence of any one individual upon the great department over which he temporarily presides, cannot, at best, be great.

The assistant secretaries are, in general, political appointees. Their average term of service is very brief, and, moreover, they are usually even less qualified than their chiefs to be suddenly thrust by accident into supreme authority, and to become effective administrators of huge and complex business organizations. There is no recent instance where an assistant secretary has been retained for a considerable term of years because of peculiar efficiency as an administrator.

The chiefs of bureaus, where such branches of the government are scientific, for obvious reasons are rarely qualified as good administrators, and in other cases they are so frequently political or temporary appointees that they are seldom efficient executive officers.

Apparently to meet the difficulties of administration which thus exist, and always have existed, there is an official in each executive department and in each bureau, known as chief clerk. The authority of chief clerks to exercise real supervision is almost always lacking, and the salary allowed by Congress is inadequate as compensation for responsible duties. As now constituted and administered, there is no more useless or unjustifiable position in the government service than that of chief clerk, because it fails to accomplish the purpose for which it was created. With half a dozen exceptions, the men now holding federal chief clerkships would be rejected if they were applicants for positions of responsibility in corporate or other business enterprises.

Political pressure and personal favoritism are also responsible for the practice, very common in the federal service, of “ kicking upstairs.” This means that an official who proves incompetent or intolerable is shuffled out of the position in which he has become undesirable, or even perhaps a nuisance, to fail in some other position of responsibility. Any one familiar with the service can cite numbers of such cases. There is no branch of the government, even though it be actually charged with effecting reforms in administration, which is free from this pernicious possibility,

Here, then, are the positions of responsibility in departments and bureaus, upon which, in each, the business structure depends. Obviously, reforms in the methods of transacting public business, even though sweeping, will not long endure if no better organization exists at the top than that which at present prevails. If this be admitted, what change in the management of executive departments should be made to secure the most effective operation?

There should be in each department an important official who can best be described as a permanent under-secretary. This man should be selected with as much care as would be exercised in selecting the manager of the United States Steel Corporation. He should receive liberal compensation, commensurate with the responsibilities of supervising the expenditure of many million dollars annually for clerical labor and supplies. He should be charged solely with administration, and be capable of inspiring confidence and enthusiasm. He should have submitted to him from each bureau a careful system of cost-accounting, by which he may determine the cost of operations and of each class of labor. He should be in constant conference with subordinate officials in the different bureaus and offices, concerning the character of clerical help. He should commend personally those employees who are making a satisfactory record; and should reprimand, directly or indirectly, those who are not earning their salaries. He should be prepared to discharge at any moment, without the slightest regard to political conditions, those persons who are clearly inefficient. This official should prepare a businesslike annual report, showing the financial operations in the conduct of the department, which report should be incorporated in the secretary’s report to the President; and should be the subject of special consideration, either by the President or by some appropriate committee of Congress.

Such a position should be as permanent as anything in the government service can be. Having been selected for peculiar efficiency, this official should be regarded by those under him as so permanent that they may depend upon his approval or disapproval, and can dismiss all thought that they are not to be responsible to him next week or next month, as now occurs in connection with all high officials. Thus they will come to accept the judgment and the decision of such a man as final. There will be no covert efforts to defeat his orders, no latent opposition arising from the thought that the chief clerk is more permanent than the official. Such an officer, if he makes full use of his opportunity, could develop human interest by watchful commendation, promotion, reprimand, and dismissal, and secure a degree of efficiency and economy which would approximate that secured in great private enterprises.

Whatever the cause, it is a fact known to all who have any familiarity with the affairs of the federal departments and bureaus, that, as at present conducted, every operation, however simple, is more costly than similar operations conducted under private or corporate direction. The impersonal character of the government, its vast resources, the abundance of labor, clerical and manual, the restrictions, some wise and some unwise, and the lack of undisputed permanent authority, all tend to create exceptional conditions, which result in greater expenditure as compared with the operation of private enterprises.

The radical change of organization here proposed is in reality merely an effort to place the executive departments somewhat in line with great business enterprises. Each department is now, in truth, a huge corporation. Economy and efficiency are regarded in the business world as exotics which require untiring cultivation. Can the government assume that they will flourish in the several departments without similar attention? Is it not clear that there must be some central, permanent officer of high rank, from whom orders, instructions, approval, and reprimand shall emanate? The time has arrived when a cabinet officer should practically cease all detailed administration of his department, and should concern himself almost exclusively with policies and product, holding a permanent administrative subordinate responsible for economy and efficiency.

The American people are extremely generous employers when the compensation of an expert organizer, or administrator of a great money-earning enterprise, is to be decided; but they are exceedingly niggardly employers when the matter of conducting the affairs of their own government offices is involved. A salary of fifty thousand dollars is promptly voted by the directors and stockholders of an important bank or railroad, and so long as the man who receives it organizes, extends, and administers the property successfully and meets dividend and surplus requirements, there is no breath of complaint or criticism. It is, in short, only necessary to ‘make good.’ In the government service, on the contrary, except a few men in the customs service, but three administrative officials below the rank of cabinet, officer receive a salary as high as eight thousand dollars. Including the customs service, there are less than two hundred permanent administrative positions under the government which carry a salary of over eighty dollars per week. Of course it cannot be expected that the great administrators of banks and manufacturing and public-service corporations will give favorable consideration to federal positions of uncertain tenure, carrying as compensation an amount scarcely greater than that required for family pin-money.

This difference in the popular attitude toward official as compared with private employment, arises from a number of causes: the general conviction (especially in those parts of the country where the scale of compensation is low) that a modest salary is enough for any government employee; the lingering impression that all official positions are more or less political, and do not need the services of the masters of organization and administration; and, finally, the great pressure for office, regardless of salary.

The logic of employing a fifty-thousand-dollar man to save half a million dollars or more, appeals only to the most experienced and broad-minded. The majority are ready to believe that the saving can and should be effected by small men. The Panama Canal forms a conspicuous and most creditable exception.

Until recently we have all been wont to regard official positions of responsibility as due to ‘patronage,’a belief which still continues in many quarters. This at once creates a sharp distinction between the policy to be pursued in filling a government office and in filling one of similar responsibility in a money-earning enterprise. In attempting any real reform, short or uncertain tenure of office, lack of real authority, and political intrigue, must be dealt with first. Mere uncertainty of tenure would make it beyond the power of the ablest men to accomplish anything of consequence.

Within the past thirty years all business methods in the United States have been revolutionized. The American people, in their industrial and commercial ventures, and indeed in every calling, have developed and broadened immeasurably. Should not the administration of government change also? Is not the time appropriate for the federal government, now grown to vast proportions, to change its organization so as to utilize the best methods and the best men to be found in private life?

Of scarcely less importance is the establishment of a standard. In a large corporation the basis of employment, or of the retention of individuals when employed, is efficiency in contributing toward the profit of the concern. By this exacting standard, if the employee does not prove efficient within the sphere of his or her duties, whatever they may be, such employee is promptly dropped without argument or apology. It is sufficient that the concern cannot pay the compensation allotted if it is not earned, and another and more capable wage-earner is substituted. Furthermore, the money standard, — the exaction of a dollar’s value for a dollar expended, — applied in order to show at the end of the business year low operating expenses coupled with the largest profit consistent with good administration, reaches out into all the other operations of the concern.

The money-earning standard is, in general, the compass of the commercial world, but the executive departments of the federal government have no such guide. Since the making, and hence the saving, of money is not the objective of operation, no government employee is taught to consider the value of government money. It is, therefore, not remarkable that waste, ill-advised methods, over-employment, disproportionate wages, employment of persons not earning the compensation paid to them, and costly printing and miscellaneous expenses, creep into the daily routine of the departments from this cause alone.

What substitute, if any, is there for the commercial, money-earning standard, which will prove effective in the federal departments?

Apparently there is but one: the introduction of a large degree of human interest. By this term is meant the increase in importance of the personal equation, and the decrease in importance of the official or strictly formal and impersonal attitude which now prevails. This term, human interest, includes the cultivation of zeal in work (whatever the motive from which it springs), and recognition of faithful service.

In the government service at the present time, adequate appreciation and compensation are seldom accorded to those conscientious employees who labor faithfully because of genuine love of or interest in their duties; there is no strict supervision of those who are mercenary; and no adequate discipline for those (and there are many) who shirk their tasks.

These are the basic requirements in every commercial enterprise.

While it is, of course, true, that selfrespecting men and women do not require to be constantly patted on the back, it is a fact that the occasional hearty approval of really good work, uttered by an official who stands for something, means genuine inspiration, just as a rebuke and a warning mean necessary improvement. This statement applies with greater force to the employees of the federal government than to any other group of wage-earners in the country. They have all secured appointment through the civil service because they are educated and intelligent men and women. Hence, at the outset, at least, they are alert, sensitive, and peculiarly susceptible to praise or censure; they are men and women in whom the element of human interest is highly developed, and whose efficiency may be destroyed easily by neglect or injustice. In the past, and even at the present time, the daily conduct of many of the divisions in the Executive Departments might justly be called ‘The Tyranny of Small Men.’

It will be observed that the suggestions here offered tend toward closer organization, and more careful and systematic supervision, with decided increase in personal interest and personal responsibility. There is, in truth, no other way by which the expenditures of the federal government can be reduced and kept permanently at the lowest point consistent with effective operation. It is very easy ruthlessly to cut off this and that expenditure, to introduce this and that radical reform, or to‘systematize ’ a department or bureau; but unless the incentive to real reform has been created, and can be maintained by a better organization and a better spirit, all reforms, however sweeping, will be short-lived and vanish with a department official or an administration.

One more step can be taken with profit in the effort to secure the most thorough and permanent economy of modern administration. The subject of unexpended balances should receive serious consideration. Congress seldom pays any attention to an appropriation after it has become law. Once made, the subject is forgotten, and there is a decided tendency on the part of government officials who have fought long and earnestly to secure an appropriation, to use it all. They believe, indeed, that if they do not use all the funds allowed them, they cannot obtain as much the following year. If some of the appropriation should be expended unwisely, in all probability this fact will never appear. On the other hand, if an official labors early and late to secure the maximum of result with the minimum of expenditure, to what purpose is it ? There is no one who is really concerned with such matters, and the official is justified in asking the cynical question, ‘ Who cares?’ He will receive no credit other than self-approbation for the most economical expenditure resulting in a considerable unexpended balance, as compared with comparatively careless, and what may be termed routine expenditure, by which all the appropriation is exhausted.

There could be created profitably, in each House of Congress, a standing committee organized to inquire concerning unexpended balances, to tabulate them, and report at intervals, commending economical officials and criticising those who are not. Unquestionably, such a policy would at once change the attitude of department officials toward the expenditure of appropriations intrusted to their care. Incited by the increasing seriousness of waste in the administration of the government, Congress must deal with this problem in broad-minded and intelligent fashion. No partial reforms can possibly avail to secure permanent improvement, so great is the power within the federal service of precedent and prejudice.

It should not be overlooked that reforms in government procedure have been attempted from time to time in the past. The exhaustive Dockery investigation and report, made during the first administration of Mr. Cleveland, was an admirable piece of work, and should easily have led to far-reaching changes. Covert opposition, however, both political and individual, and official inertia, prevented any lasting improvements. More recently the Keep Commission labored earnestly and efficiently to effect desirable changes, and later, James R. Garfield, while Secretary of the Interior (the most progressive Secretary who has presided over the Department for many years), expended twelve thousand dollars — paid to a firm of systematizers — to improve the business methods of the Department. It is doubtful if the economies now in operation, traceable directly to these attempts at reform, are numerous and valuable enough to justify the time thus consumed and the expenditures made. In fact, after the lapse of but two years, many of the responsible officers who served under Mr. Garfield have disappeared from the service. Furthermore, the President’s Secretary, who less than a year ago undertook to lead the reform of business methods in the government, has already retired to private life. The succession of officials in the federal service might with greater propriety be called a procession. Meantime, with a steady increase in aggregate expenditure, the necessity for economy in administration continually grows more pressing.

Of late the American people have shown a decided tendency to conduct public affairs to their own liking. It remains to be seen whether they will insist upon a complete overhauling of government procedure to conform to modern conditions. The alternative is to accept waste and inertia without complaint.