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PREPARED UNDER THE DIRECTION OF 
 
 FREDERICK A. CLEVELAND, Ph.D. 
 
»1 
 
 Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924032412839 
 
THE SYSTEM OF 
 
 FINANCIAL ADMINISTRATION 
 
 OF GREAT BRITAIN 
 
 A REPORT 
 
 BY 
 
 WILLIAM F. WILLOUGHBY 
 
 CONSTITUTIONAL ADVISER TO THE CHINESE REPUBLIC; PROCESSOR Or JURISPRUDENCE 
 AND POLITICS, PRINCETON UNIVERSITY 
 
 WESTEL W. WILLOUGHBY 
 
 PROFESSOR OP POLITICAL SCIENCE, JOHNS BOPEINS UNIVERSITY 
 
 SAMUEL McCUNE LINDSAY 
 
 PROFESSOR OP SOCIAL LEGISLATION, COLUMBIA UNIVERSITY 
 
 INTRODUCTION BY 
 A. LAWRENCE LOWELL 
 
 PRESIDENT, HARVARD UNIVERSITY 
 
 PUBLISHED BY 
 
 D. APPLETON AND COMPANY 
 NEW YORK LONDON 
 
 FOR 
 
 THE INSTITUTE FOR GOVERNMENT RESEARCH 
 
 1917 
 
"-% 
 
 A.3l»900l 
 
 Copyright, 1917, by 
 THE2INSTITUTE FOR GOVERNMENT RESEARCH 
 
 Printed in the United States of America 
 
EDITOR'S NOTE 
 
 Ten years ago a definite plan was formulated for the preparation 
 of a series of scientific handbooks through which exact information 
 might be made available to citizens and public officers alike, about 
 the methods and practices developed by various governmental agen- 
 cies in the conduct of public business. In the spring of 1913, this 
 plan was laid before the trustees of the Rockefeller Foundation. In 
 response to inquiry as to what studies would be taken up first if 
 funds were provided, the following were, suggested as of command- 
 ing importance: (i) Methods of budget-making and financial con- 
 trol; (2) standards and practices evolved for improvement of the 
 civil service; (3) provisions for pensions and retirement allowances; 
 and (4) methods of public accounting. 
 
 An appropriation was made for the purpose of prosecuting these 
 studies and placed in the hands of a special committee composed of 
 Messrs. Jerome D, Greene, Charles D. Norton, Charles P. Neill, Wil- 
 liam F. Willoughby and Raymond B. Fosdick. 
 
 Under these auspices three men of nation-wide reputation were 
 selected by the director in charge, each holding a chair of govern- 
 ment in a different university and two of whom had had consid- 
 erable experience in governmental administration, to make an initial 
 visit as an unofficial commission to England, France and Germany 
 for the purpose of collecting materials. This was to be done by estab- 
 lishing contact with officers of foreign Governments actively engaged 
 on budget-making and civil service matters, and with foreign students 
 familiar with these subjects. The method used for collecting the 
 data was first to prepare an outline with a list of the related sub- 
 jects concerning which concrete data were to be obtained; to follow 
 this with personal interviews; to reduce the results of personal in- 
 terviews to writing and submit them for correction and amendment; 
 also to collect such documents and data on the ground as could not 
 be readily secured in libraries or through correspondence. 
 
 The commission began its work in England early in July, 1914. 
 Tentative arrangements were also made to spend August and Sep- 
 tember chiefly in Paris and Berlin, with possibly some supplementary 
 inquiries into the same subjects in Belgium, Holland and Switzerland. 
 
EDITOR'S NOTE 
 
 Every facility was provided for personal contact through letters from 
 government officials and university authorities in this country, and 
 the commission received very cordial cooperation from the American 
 Embassy in London, through which, in addition to its recommenda- 
 tions from American sources, it had no difficulty in getting the atten- 
 tion of the responsible public officials who had to do with the subject 
 matters of the commission's inquiry. 
 
 The commission worked as a body, although a tentative arrange-- 
 ment for division of labor was agreed to whereby Mr. William F. 
 Willoughby was to give special attention to English budget materials 
 and English documents, Mr. Westel W. Willoughby to budget and 
 civil service practices in France and Mr. Samuel McCune Lindsay 
 to civil service in England and to budget materials and civil service 
 in Germany. The commission collectively, however, interviewed 
 most of the officials and persons with whom matters were first taken 
 up in detail in England, and the field notes of these interviews were 
 discussed by the members of the commission as a body — the thought 
 being that this would help to standardize individual inquiries later 
 after the members had separated. 
 
 The outbreak of the war in the beginning of August interrupted 
 these plans. Mr. Westel W. Willoughby had made appreciable 
 progress in Paris, and Mr. William F. Willoughby and Mr. Samuel 
 McCune Lindsay had gone as far as Holland when hostilities began. 
 Under the circumstances the only thing to be done was for the mem- 
 bers to reassemble in England, complete the collection of data which 
 had been undertaken there relating to the English system, and then 
 return to America. 
 
 While the war made it impossible to carry out on broad lines the 
 original plan and rendered more or less inoperative the tentative di- 
 vision of labor between the members of the commission, the com- 
 mission did succeed in getting full data regarding the system of 
 financial administration of Great Britain and much valuable material 
 relating to France, Germany, Belgium, Holland and Switzerland, 
 which latter material may be used in future studies of continental 
 budget procedure and of civil service and pension practice. 
 
 The results of the study of the British system of financial adminis- 
 tration are presented in the present report. The first draft of this 
 report was prepared by Mr. William F. Willoughby. This was com- 
 pleted by him during his absence in Peking as constitutional adviser 
 to the Chinese Government, a general conference having been held 
 with the other two members of the commission before he started, and 
 substantial agreement having been reached as to the general charac- 
 
 vi 
 
EDITOR'S NOTp 
 
 ter of the presentation, and as to the conclusions to be drawn. Later 
 this draft was carefully gone over by both the other members of the 
 commission, and after minor revisions was signed by all three mem- 
 bers of the commission. 
 
 This report finds its chief value in this: That it sets forth briefly 
 and clearly the impressions of three men, well trained and of excep- 
 tional experience, as to the scope and practical workings of the Eng- 
 lish budget system ; and more especially that it sets forth those par- 
 ticulars which will facilitate a better* understanding of the adaptations 
 of organization and technique worked out by legislators and adminis- 
 trators to make effective the accepted principles of finance. It is a 
 knowledge of the necessity of these adaptations which will be of 
 special value in this country where the commonly accepted precepts 
 of finance and government have been so openly and frequently 
 violated. 
 
 ,When the text was completed, it was decided to offer it for publi- 
 cation to the Institute for Government Research, a recently organized 
 agency for the study of national problems of which Mr. William F. 
 Willoughby had been made executive head. 
 
 Since the commission visited England, an interesting volume has 
 appeared covering some of the same ground, in which slightly dif- 
 ferent conclusions were reached. Reference is made to "The System 
 of National Finance," by E. Hilton Young, M. P., 1915, Smith, Elder 
 and Company, publishers. The point of view and popular treatment 
 by a member of the British Parliament only gives added value to the 
 more technical discussion of this report. 
 
 Frederick A. Cleveland. 
 
 January, 1917. 
 
FOREWORD 
 
 The Institute for Government Research was incorporated March lo, 
 1916, and began active operations October i of the same year with 
 headquarters at 818 Connecticut Avenue, Washington, D. C. To use 
 the words of the prospectus, issued immediately upon its incorporation, 
 it is "an institution of citizens for cooperating with public officials in 
 the scientific study of business methods with a view to promoting effi- 
 ciency in government and advancing the science of administration." 
 The program of action which the Institute has taken to itself is that 
 of seeking to bring into existence information and materials which 
 will prove of value, both in forming public opinion and in assisting 
 all officials, and particularly those of our national government, 
 charged with the administration of government affairs in their 
 efforts to put such administration upon a more efficient basisi% 
 
 The same motive actuated the appropriation by the Rockefeller 
 Foundation, described in the Editor's Note, of funds with which to 
 make scientific studies in the field of administration. The results of 
 the first of these studies are embodied in the present volume. After 
 its completion it was offered to the Institute for publication. In 
 view of the fact that it so thoroughly fitted in with the Institute's 
 program of work, and also because it had been prepared by a com- 
 mission, the chairman of which had been selected as director of 
 the Institute, this offer was willingly accepted. It now appears as 
 the first volume in the series of "Studies in Administration" which 
 constitutes one of the series of publications through which publicity 
 will be given to such of its work as is of a general educational char- 
 acter. 
 
 Frank J. Goodnow, 
 Chairman, Institute for Government Research. 
 
 Washington, D. C, 
 January, 1917. 
 
INTRODUCTION 
 
 Few subjects relating to our government have attracted more 
 attention in this country within the last few years than financial 
 administration ; few need to be more carefully overhauled ; and there 
 is no system better worth our study for this purpose than that of 
 England. To attempt to engraft any foreign institution in a new 
 land by direct imitation is usually disappointing, and sometimes 
 mischievous; but to study it with a view to getting suggestions for 
 improvement of one's own methods is wholly wise. We have every 
 reason to be grateful, therefore, to the authors of this small book 
 for their description of the British Financial Administration in terms 
 so clear as to be easily iinderstood by anyone without technical 
 knowledge, arid with a singularly well chosen proportion between 
 the different parts of the subject. 
 
 After discussing the general principles that must underlie sound 
 public finance everywhere, the writers follow the course of financial 
 action in England from the preparation of the estimates in the 
 different departments, through their consolidation into the measure 
 presented to Parliament, the procedure of the House of Commons 
 thereon, the subsequent orders drawn on the Bank of England, the 
 expenditure of the money, and the accounting therefor, showing the 
 significance of each step in the process and its bearing upon what 
 goes before and what follows. 
 
 The casual reader may be surprised at the small amount of space 
 devoted to the discussion of the appropriations in Parliament, but 
 this is right, because, in fact, those debates relate to the political 
 and not the financial aspects of the matter. One can say of the 
 relation of the House of Commons to the financial adniinistration 
 what Bagehot said about the relation of good ministers to depart- 
 ments, that it is not their business to manage the finances, but to see 
 that they aire properly managed. The unity of the financial manage- 
 ment, that which makes it rational, depends upon the fact that the 
 authority and responsibility for appropriation and expenditure is 
 lodged in one hand, that of the ministry in power. For we must 
 remember that, although the imposition of taxes and the raising of 
 revenue thereby is a legislative matter, the expenditure of the money 
 
 xi 
 
INTRODUCTION 
 
 is essentially an executive oi* administrative function, which ought 
 to be carried on under the careful supervision, but not under the 
 immediate direction, of the legislature. After the law-making power 
 has determined the objects for which money is to be spent, it is for 
 the executive to attain those objects with the greatest economy and 
 effectiveness, and this cannot be done unless the executive has a 
 free hand, unfettered by directions imposed for local, personal or 
 political motives. 
 
 But the executive cannot conduct the public finances properly 
 unless it has developed within itself an appropriate machinery as a 
 safeguard against extravagance or wastefulness. With this machin- 
 ery, and particularly the functions of the Treasury in framing the 
 estimates and controlling the expenditure, the book is chiefly con- 
 cerned. It can be recommended earnestly to all those who want to 
 understand the defects of our own financial organization^ and some 
 of the methods by which that organization may be improved. 
 
 A. Lawrence Lowell. 
 Cambridge, Massachusetts, 
 December zo, ipi6. 
 
CONTENTS 
 
 CHAFTEB PAGE 
 
 I. Analysis of the Problem of Financial Administration 
 
 OF A Government . . . ... . . i 
 
 Analysis of the Problem; Nature of a Budget; Recom- 
 mendations of President Taft's Commission; The Prob- 
 lem of Control. 
 
 II. Some Fundamental Features of the English System of 
 
 Financial Administration . . . . . -23 
 
 Fiscal Year; Theory of Public Accounts; Expenditures 
 Made Only in Pursuance of Appropriation by Parliament ; 
 Historical Development of the Present Appropriation Sys- 
 tem; Separation of the Personal Revenues and Expendi- 
 tures" of the Sovereign and Those of the State; The Civil 
 List ; The Consolidated Fund ; The Exchequer ; The Collec- 
 tion and Expenditure of Funds Authorized by Parliament 
 Only Upon the Request or Approval of the Crown; Dis- 
 tinction Between Permanent and Annual Appropriations ; 
 Consolidated Fund Services; Supply Services. 
 
 III. The Estimates: Preparation and Submission . . 47 
 
 Appropriations Made Only in Pursuance of Formal Esti- 
 mates ; Estimates the Act of the Ministry as a Whole ; The 
 Treasury the Authority for the Preparation and Submis- 
 sion of the Estimates ; Special Procedure for the Army and 
 Navy Estimates; Treasury Estimates Circular; Estimates 
 as Submitted by the Several Departments to the Treasury 
 in Large Part but a Summation of Provisions Already 
 Approved by the Treasury ; Comparative and Explanatory 
 Data Required; Estimates to be Justified Though No 
 Increase Is Requested; Preparation of Estimates Within 
 the Departments ; Examination of the Estimates by the 
 Treasury; Transmission of the Estimates to the House of 
 Commons; Supplementary Estimates. 
 
 xiii 
 
CONTENTS 
 
 CHAFIES PAGE 
 
 IV. The Estimates : Character and Form .... 72 
 
 Classification of Estimates ; Appropriation Heads ; "Votes" ; 
 Appropriation Subheads; Supporting Details; Order of 
 Presentation of Data; General Summaries and Analyses. 
 
 V. The Estimates : Appropriations in Aid .... 100 
 
 Theory of Appropriations in Aid; Statement of Argu- 
 ments in Favor of the System; Criticism of the System; 
 Contrast with American System of Reimbursable Appro- 
 priations. 
 
 VI. The Estimates: Action Upon in Parliament . .115 
 
 Financial Powers of Parliament Now Vested Wholly in 
 the House of Commons; Rules of Procedure Governing 
 the Consideration of Estimates in the House of Commons ; 
 Distinction Between the Authorization of Expenditures and 
 the Appropriation of Funds; Votes on Account; Excess 
 Votes; Votes of Credit; Appropriation Acts; Extent of 
 Control Over Appropriations Actually Exercised by the 
 House of Commons ;■ Establishment in 1912 of the Select 
 Committee on Estimates. 
 
 VII. Disbursement of Public Funds 144 
 
 Control of Exchequer Issues by the Comptroller and Au- 
 ditor General ; Grants of "Credits" to the Treasury ; Issues 
 of Money from the Exchequer to "Principal Account- 
 ants"; The Paymaster General; Departmental "Account- 
 ing Officers"; Personal Liability of Accounting Officers; 
 Accounting Officers Not Bonded. 
 
 VIII. Treasury Control Over Expenditures . . . 165 
 
 Expenditure of Appropriations Not Mandatory; The 
 Treasury the Authority for the Authorization of Expen- 
 ditures; Treasury Control Over Organization and Per- 
 sonnel; Treasury Control Over Expenditures for Quar- 
 ters, Equipment, Supplies, etc. ; Organization of the Treas- 
 ury for the Exercise of Its Powers of Control; Treasury 
 Use of Departmental and Interdepartmental Committees 
 of Investigation; The Treasury as a General Organ of 
 Administrative Control. 
 
 xiv 
 
CONTENTS 
 
 CHAPTER FAGE 
 
 IX. Office of Works and Public Buildings . . . 183 
 
 Distinction Between Public Works Proper and Govern- 
 ment Works ; Government Works ; Military and Naval Es- 
 tablishments ; Government Works; Civil Services; Of- 
 fice of Works and Public Buildings; The Estimating and 
 Voting of Funds for Public Buildings; Commitments; Dis- 
 tinction Betw^een Cost of Construction, Maintenance and 
 Repairs, Operation, etc. ; Office of Works and Public Build- 
 ings Submits Estimates for All Public Works Proper; 
 Transfer of Funds from One Item to Another in the 
 Works Program ; Construction of Public Buildings ; Rent- 
 ing of Buildings; Maintenance and Repair of Buildings; 
 Supply Work of the Office of Works and Public Build- 
 ings; Powers of Office of Works and Public Buildings 
 to Control Expenditures. 
 
 X. Stationery Office 198 
 
 The Estimating and Voting of Funds for Stationery and 
 Printing ; Allotment of Appropriations ; Procedure in Pur- 
 chase, Warehousing, and Issue of Supplies; Powers of 
 Stationery Office to Control Expenditures. 
 
 XI. The Audit of Public Accounts 209 
 
 History of Development of the Present Audit System; 
 Status of the Comptroller and Auditor General; The 
 Method of Keeping and Rendering of Accounts Prescribed 
 by the Treasury; Audit of Public Accounts; Powers of 
 Comptroller and Auditor General in Respect to Disallow- 
 ance of Items; Duty of Comptroller and Auditor General 
 in Respect to the Control of Unwise or Extravagant Ex- 
 penditures; Standing Committee of Public Accounts of 
 the House of Commons. 
 
 XII. The System of Financial Reports .... 235 
 
 Finance Accounts; Appropriation Accounts; The Esti- 
 mates; Lack of Any General Report of Audited Receipts 
 and Expenditures. 
 
 XIII. The Budget 255 
 
 Financial Statement, 1914-1915, Showing Revenues and Ex- 
 penditures as Laid Before the House of Commons by the 
 
CONTENTS 
 
 CHAPTDH , PASB 
 
 Chancellor of the Exchequer when Opening His Budget, 
 May 4, 1914; Financial Statement, 1914-1915, Explaining 
 the Proposals Made by the Chancellor of the Exchequer in 
 His Financial Statement on Monday, May 4, 1914 ; Budget 
 Speech of the Chancellor of the Exchequer; Lack of Any 
 General, Comprehensive Budgetary Statement. 
 
 XIV. Conclusion 269 
 
 Appendix I. Exchequer and Audit Departments Act, 
 
 1866, AND Treasury Minute Thereon . 283 
 
 Appendix II.' Consolidated Fund (No. i) Bill, 1912 . . 314 
 
 Appendix III. Consolidated Fund (Appropriation) Act, 
 
 1912 316 
 
 Appendix IV. Forms Authorizing and Granting Credits 
 
 and Exchequer Issues . . . . 348 
 
 Index . 357 
 
THE SYSTEM OF 
 
 FINANCIAL ADMINISTRATION 
 
 OF GREAT BRITAIN 
 
THE SYSTEM OF FINANCIAL ADMIN- 
 ISTRATION OF GREAT BRITAIN 
 
 CHAPTER I 
 
 ANALYSIS OF THE PROBLEM OE FINANCIAL 
 ADMINISTRATION OF A GOVERNMENT 
 
 Analysis of the Problem; Nature of a Budget; Recommendations of 
 President Taft's Commission; The Problem of Control. 
 
 In enterine upon an examination of the methods employed P°'"* °* 
 , , r .... . , , Departure 
 
 m meetmg a problem of any complexity it is essential to have, 
 
 at the beginning, a clear understanding of the character and 
 terms of the problem itself. Only as one has such an under- 
 standing is it possible for him to appreciate the significance 
 of the facts coming to his attention, to determine whether 
 particular practices are or are not of a character to commend 
 themselves — in a word, to comprehend and pass judgment 
 upon the features of the system under examination. It is to 
 be regretted that, so far as this commission is aware, no such 
 statement or analysis of the problem under consideration is 
 available.^ This commission has, therefore, thought it desir- 
 able, before proceeding to its report proper, to attempt at 
 least to outline its undertaking. By so doing it is thought 
 that the reader will be better able to follow the description 
 
 ^ The consideration of the problem of the administration of the 
 public finances given by Professor H. C. Adams in his "Science of 
 Finance: An Investigation of Public Expenditures and Public Rev- 
 enues" (Henry Holt & Co., New York, 1909), is in many respects 
 excellent. His analysis of the problem does not, however, precisely 
 meet the needs of the present report. 
 
 I 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Unity 
 of the 
 Problem 
 
 that is given in the pages that follow of the particular means 
 employed by Great Britain in administering its finances. 
 
 The desirability of making such an analysis is especially 
 great because of the fact, upon which great emphasis is placed 
 throughout this report, that there is an essential unity to be 
 observed in the problem of administering the finances of a 
 government. Though financial administration is an under- 
 taking capable of division into a number of clearly distinguish- 
 able operations, such as the preparation of estimates, the ap- 
 propriation of funds, accounting, reporting, auditing, etc., 
 all of these operations constitute but parts of one system, 
 which are, or should be, so integrated and adjusted as mu- 
 tually to support each other and together make up one har- 
 monious whole. Indeed, it may be said that the merits of a 
 particular system are almost wholly dependent upon the ex- 
 tent and accuracy with which this adjustment is effected. It 
 is in the skill with which this requirement has been met that 
 one finds the chief merit of the British system, and in its dis- 
 regard lies the chief defect of the American system. 
 
 Elements 
 to be 
 Considered 
 
 Analysis of the Problem. The operations involved in the 
 securing and spending by a nation of necessary funds, whether 
 derived from revenue or loans, embrace the following distinct, 
 but intimately related steps : 
 
 From the Revenue Side : 
 
 1. The determination by the law-enacting authority (the 
 legislature) of the sources from which and the con- 
 ditions under which the government revenues shall be 
 obtained and loans made. 
 
 2. The organization and operation by the executive, in 
 accordance with instructions, in part given by the 
 legislature and in part emanating from itself, of a 
 machinery and procedure for the collection of this 
 revenue and for the sale of credit obligations. 
 
 3. The keeping of accurate records and books of ac- 
 
ANALYSIS OF THE PROBLEM 
 
 count showing the revenues accruing, the credits sold, 
 the amounts actually collected, and the balances uncol- 
 lected. 
 
 4. The audit of these accounts, by an officer independent 
 of the executive, for the purpose of ensuring : 
 
 (a) That all revenues accruing and all credit sales 
 are in fact collected or that adequate reason 
 exists for their non-collection, and 
 
 (b) That all sums collected are duly accounted for. 
 
 5. The rendering of reports summarizing the data pro- 
 duced through these operations and making known the 
 results obtained from the revenue and loan system that 
 has been established. 
 
 From the Custody Side : 
 I. The organization and maintenance of a treasury sys- 
 tem for the receipt, custody and issue to paying officers 
 of the revenues and loans so collected. 
 
 From the Expenditure Side : 
 
 1. The preparation by the executive of estimates setting 
 forth the sums which, in its opinion, will be required 
 for the due conduct of public affairs during the period 
 to which such estimates relate. 
 
 2. The preparation by the executive of a corresponding 
 estimate of the probable income from revenue and 
 loans that will accrue to and be received by the gov- 
 ernment as the result of the operation of existing pro- 
 visions of law regarding public dues and credit opera- 
 tions during the same period. 
 
 3. The preparation by the executive of a statement show- 
 ing the condition of the public treasury; that is, a docu- 
 ment in the nature of a balance sheet showing the avail- 
 able assets and liabilities of the government at the be- 
 ginning of the period covered by the two foregoing 
 estimates or at the date as of which the statement is 
 prepared and the estimated condition as of the end of 
 the period to be financed. 
 
 3 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 4. The submission of these three documents to the reve- 
 nue-determining and fund-granting authority (the 
 legislature) in such a form that the relationship be- 
 tween the actual and estimated receipts, disbursements 
 and financial condition may be clearly seen, and espe- 
 cially whether, in case the estimated revenues and bor- 
 rowings on the one hand and the estimated expendi- 
 tures on the other are approved, a deficit or surplus 
 will result, and the manner in which, in the opinion of 
 the executive, this deficit should be met or surplus 
 utilized. 
 
 5. The consideration of these estimates, financial state- 
 ments, and recommendations by the legislature and, on 
 the basis of such consideration, the determination by 
 that body of : 
 
 (a) What modifications, if any, should be made in 
 the revenue and borrowing system as it exists; 
 and 
 
 (b) The sums that should be appropriated to meet 
 expenditures, authorized. 
 
 6. The organization and operation by the executive, in 
 accordance with instructions, in part given by the legis- 
 lature and in part emanating from itself, of an admin- 
 istrative machinery and the adoption of rules of pro- 
 cedure to govern the expenditure of the sums so placed 
 at its disposition, which machinery and procedure shall 
 provide for: 
 
 (a) The steps to be taken in directing or authorizing 
 the expenditure of money, that is, in incurring 
 liabilities ; 
 
 (b) The examination and adjudication of all claims 
 against the government and certification for 
 payment of those found to be valid ; 
 
 (c) The organization and operation of a system 
 through which the sums so found to be due will 
 be. actually disbursed ; and 
 
 4 
 
ANALYSIS OF THE PROBLEM 
 
 (d) The requirement and use of a system of requisi- 
 tions, orders, vouchers and other documents that 
 will constitute the original warrant for, and 
 evidence of, all these expenditure operations. 
 
 7. The keeping of books of account in which all these 
 transactions, as evidenced by these documents, will be 
 recorded, with a proper segregation of items to the 
 end that not only may a due accounting be had of all 
 expenditures authorized or actually made, but also that 
 at all times information will be promptly available 
 regarding the purposes for which expenditures are 
 authorized or made. 
 
 8. The organization of a system of financial reports to 
 the end that at regular intervals complete information 
 regarding current assets and liabilities, receipts and 
 expenditures, may be furnished to administrative offi- 
 cers, to the legislature, and to the general public, so 
 that they or any of the several parties in interest may 
 properly perform their duties in determining what en- 
 gagements shall be entered into, and in controlling 
 expenditures authorized. 
 
 9. The audit of these asset, liability and expenditure ac- 
 counts, by an officer independent of the executive, for 
 the purpose of verifying their accuracy and ensuring 
 that all legal requirements and conditions, as imposed 
 by the fund-granting authority, have been complied 
 with. 
 
 10. The rendering by such audit officer of a report to the 
 legislature setting forth the results of his examination 
 of the accounts, and, as an essential feature of such 
 report, giving to that body complete and detailed in- 
 formation regarding the manner in which the funds 
 granted by it have been expended. 
 
 The Nature of a Budget. In the foregoing analysis we Unity of 
 have sought to do two things: To distinguish carefully be- je^ 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tween the several factors involved in the problem of managing 
 the finances of a government; and to indicate the close rela- 
 tionship that exists between these several elements. A state- 
 ment such as this shows in a concrete way the interdependence 
 of the several processes upon which we have already laid so 
 much stress. It will be seen that, on the expenditure side at 
 least, the operations constitute links in an unbroken chain, 
 starting with the estimates and leading through the successive 
 links of: Consideration of these estimates, the granting of 
 funds based upon such consideration, the expenditure of the 
 funds so granted, the keeping of proper books recording these 
 expenditure operations, the rendering of proper accounts, the 
 audit of these accounts, and the making of reports giving the 
 results of these transactions, which last furnishes the basis for 
 a new estimate as the starting point for another chain of opera- 
 tions. 
 
 A moment's consideration will show that, though this is 
 the sequence of operations under almost any system, if these 
 A Plan operations are to dovetail into each other in such a way that 
 
 of Financing ^j^^ j-gcords of one support the others, all must be planned 
 and carried out with this end in view. Only as this is done 
 can a country be said to have an effective scheme of financial 
 administration. This means that each process must be treated 
 as a link in an unbroken chain and there must be an under- 
 lying system which has a uniform nomenclature, segregation 
 ^ of items and classification of data devised to attain the end 
 sought. Unless this is done the result will be a mass of data 
 that cannot be easily understood or brought into comparison, 
 and effective legislative and electoral control becomes im- 
 possible. 
 
 Not only should these several operations be conducted on 
 
 such a basis and the facts presented in such a form as to be 
 
 Should easily understood, but adequate steps should be taken by 
 
 UndeMtood means of which comparisons and adjustments may actually 
 
 be made. Though each financial year constitutes a distinct 
 
 period, no one year should be completely isolated and con- 
 
 6 
 
ANALYSIS OF THE PROBLEM 
 
 sidered apart. If estimates of future needs are to be any- ^ 
 thing more than mere guesses they must be based upon the 
 determined experience of past years. Not only should the 
 executive, which is charged with the preparation of the esti- 
 mates, be guided by such experience, but it should submit its 
 estimates to the legislature in such a form that that body can Estimates 
 see at a glance the extent, and the features in respect to which, B^sed on* 
 these estimates depart from previous authorizations and actual Experience 
 expenditures in accordance with such authorizations. 
 
 Furthermore, this statement of estimates of future needs 
 in comparison with prior authorizations and expenditures « 
 should also be brought into contrast with the resources of the 
 treasury, whether consisting of balances on hand or income 
 to accrue, from which these proposed expenditures will have Appropria- 
 to be met. Finally, it is imperative that this statement of prior ^ should be 
 
 experience and of estimated future needs should cover the Witliin 
 
 . ~ . , . ^ , . ,. Resources 
 
 entire financial operations of the government in one consoli- 
 dated presentation. Unless the legislature is given information 
 regarding the t6tal of past expenditures, and of liabilities that 
 it is asked to authorize for the future, and the total of the 
 resources that will be available from which to meet such liabili- 
 ties, it will have to work in the dark, not knowing whether 
 its action will result in a treasury deficit or surplus. Only 
 as the legislature thus has laid before it all of this informa- ■ 
 tion so arranged, with the items properly segregated, totaled, 
 compared and proved as to their accuracy, is it possible for it » 
 intelligently to perform its function of determining what re- 
 ceipts and expenditures sl;all be authorized for the coming 
 year. 
 
 The document through which all this information is brought ' . 
 together in one consolidated, coordinated and comparative 
 statement is technically known as "The Budget." "The 
 
 Budget" thus is not so much one of the distinct financial opera- 1 Budget 
 . r , 1 1 1 , • 1 1 Defined 
 
 tions of the government as the means through which the sev- 
 eral operations, actual and prospective, are brought together > 
 and clearly presented, to the end that they may all be con- 
 
 7 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 sidered at one time in their relations to each other. A budget 
 is a definite plan or proposal for financing the business of a 
 future period both with respect to revenues and expenditures. 
 It is usually prepared and submitted by the executive to the 
 legislative branch of the government for its approval, together 
 with such collateral and supporting information as is needed 
 to sustain the conclusions reached. Through a budget the 
 experience of the past is made available to the legislature and 
 to the people as a basis for consideration and arriving at de- 
 terminations for the future. 
 
 It is of the utmost importance that this fundamental char- 
 acter and purpose of the Budget should be clearly apprehended. 
 It is the one thing which binds detached operations into a logi- 
 cal and harmonious system and permits consideration of the 
 activities and the cost of the government as a whole. Without 
 it a country can scarcely be said to have a financial system, 
 certainly not a scientific system. 
 
 Recommendations of President Taffs Commission. The 
 best statement as to the character of data that should be in- 
 cluded in a comprehensive budgetary statement is that con- 
 tained in the summary of recommendations of the President's 
 Commission on Economy and Efficiency in its report to the 
 President on "The Need for a National Budget." ^ The more 
 important parts of these recommendations read : 
 
 "The commission recommends : 
 
 1. That the President, as the constitutional head of the 
 executive branch of the Government, shall each year 
 submit to the Congress, not later than the first Monday 
 after the beginning of the regular session, a budget. 
 
 2. That the budget so submitted shall contain: 
 
 (a) A budgetary message, setting forth in brief the 
 
 1 H. R. Document No. 854, 62d Congress, 2d Session ; see also Sen- 
 ate Document 11 13, 62d Congress, 3d Session, "A Budget." 
 
 8 
 
ANALYSIS OF THE PROBLEM 
 
 significance of the proposals to which attention 
 is invited. 
 
 (b) A summary financial statement, setting forth in 
 very summary form : ( i ) The financial condi- 
 tion; (2) a statement of the condition of ap- 
 propriations and other data pertaining to the 
 'general fund' as well as to the other funds 
 of the Government; (3) an account of revenues 
 and expenditures for the last completed fiscal 
 year; and (4) a statement showing the effect of 
 past financial policy as well as of budget pro- 
 posals on the general-fund surplus. 
 
 (c) A summary of expenditures, classified by ob- 
 jects, setting forth the contracting and purchas- 
 ing relations of the Government. 
 
 (d) Summaries of estimates, setting forth : 
 
 (i) The estimated revenues compared with 
 actual revenues for a period of years. 
 
 (2) Estimated expenditures compared with 
 actual expenditures for a period of 
 years. 
 
 (e) A summary of changes in law, setting forth 
 what legislation it is thought should be enacted 
 in order to enable the administration to transact 
 public business with greater economy and effi- 
 ciency, i. e., changes in organic law which, if 
 enacted, would affect appropriations as well as 
 the character of work to be done. 
 
 3. That the Secretary of the Treasury be required to sub- 
 mit to the Congress the following detailed reports 
 supporting the general summaries and Executive con- 
 clusions or recommendations contained in the budget, 
 as follows: 
 
 (a) A book of estimates, containing the supporting 
 details to the summaries of estimates of ex- 
 penditures contained in the budget. 
 9 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 (b) A consolidated financial report, containing a de- 
 tailed statement of revenues and a consolidated 
 statement of expenditures by departments and 
 establishments for the last five fiscal years, with 
 such explanatory matter as is necessary to give 
 information with respect to increases or de- 
 creases in revenue or expenditure or other re- 
 lations to which it is thought that the attention 
 of the executive and legislative branches is to 
 be given. 
 4. TTiat the head of each department and independent es- 
 tablishment should be required to submit to the Secre- 
 tary of the Treasury and to the Congress aimual re- 
 ports which, among other things, would contain 
 detailed accounts of expenditures so classified as to 
 show amounts expended by appropriations, as well as 
 by classes of work, together with the amounts of in- 
 crease or decrease in stores, equipment, property, etc., 
 including lands, buildings and other improvements, as 
 well as such other data or operative statistics and com- 
 ment in relation thereto as may be necessary to show 
 results obtained and the economy and efficiency of 
 doing government work as well as of contracting and 
 purchasing." 
 
 Principles 
 of Respon- 
 sibility and 
 Accounta- 
 bility 
 
 The Problem of Control. In the foregoing outline we have 
 dealt with what may be called the mechanics of the problem. 
 If this machinery, however, is to work smoothly, and give 
 good results, a vital principle must find expression through- 
 out the entire chain of operations. This is the principle of 
 responsibility, accountability and control. It goes without say- 
 ing that the great end to be sought in the administration of 
 the finances of a nation is the ensuring that the maximum of 
 economy and efficiency will obtain in the determination of 
 what the government shall do and in the execution of the 
 work determined upon. A study of the problem of financial 
 
 10 
 
ANALYSIS OF THE PROBLEM 
 
 administration in its practical aspects shows that opportunities 
 for misappHcation of funds, waste, and, in many cases, actual i 
 fraud, exist at almost every step. In estimating and in appro- 
 priating for future needs, expenditures may be included for 
 purposes having little or no real utility, or at least for pur- 
 poses where the utility is relatively little in comparison with 
 other needs for which no, or inadequate, provision is made. 
 A glaring example of waste in this way is the admittedly gross 
 misapplication of funds in the United States for public works, 
 public buildings, and Army, Navy, and other posts, for which 
 no real public need exists. 
 
 Again, in the expenditure of the funds appropriated, loss i P"°*:'p'" 
 may occur at every point. Receivers of public moneys, cus- and Effi- 
 todians of public funds, and those having money placed in •='^°'y 
 their hands with which to make payment of claims may 
 through fraud or carelessness fail to account for all money 
 coming into their possession. Executive officials intrusted 
 with the discretion of authorizing the incurring of obligations, 
 though guilty of no fraud, may exercise this discretion in a 
 careless or inefficient manner; excessive salaries may be paid; 
 the purchase of materials not needed or of a quality more 
 expensive than conditions call for may be authorized; ma- 
 terials and supplies in themselves proper may be used in a 
 wasteful manner; a large number of employees may be em- 
 ployed to do work which a smaller number, properly directed 
 and supervised, could readily perform; public property may 
 be converted to private use ; and in scores of ways the gov- } 
 ernment may fail to receive a due return for its financial sacri- 
 fices. 
 
 It is important to note that these opportunities for loss do T'^e Need 
 
 for Ferspec- 
 
 not arise solely from the fact that in all large bodies of men tive 
 there are sure to be persons who are dishonest or inefficient. '^ 
 The greatest difficulty that has to be met arises from the {-. 
 fact that often the interest of the individual parts of the 
 government are, or seem to be, in opposition to the interest 
 of the government as a whole. The officials in charge of 
 
 II 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 each branch of the government service and, in large part, of 
 each subdivision of a brjJnch, are concerned with the in- 
 terests of that branch or subdivision and feel a responsibility- 
 only to a limited extent for the government as a whole, or for 
 the service of which they are a part. Even if they have such 
 an appreciation it is but natural that they should feel that 
 the importance of their work is greater or more urgent than 
 that of many other government operations. It is inevitable 
 » that their attitude should be that of seeking to secure for the 
 work intrusted to them the largest appropriation of funds 
 that it is possible to obtain. They feel that there is a lump 
 t sum available for the support of the government, that all this 
 money will be spent in some way, that if they do not get it 
 some other service will, and that no real economy will result 
 by their moderating their demands. From the expenditure 
 side they are not only interested in having their employees 
 highly paid, in having the use of comfortable quarters, and 
 in making use of high class materials and supplies, but they 
 have the feeling that any savings resulting from their deny- 
 ing themselves in these respects will but mean that larger 
 opportunities for extravagance will be opened up to the other 
 services. It must be recognized that the actual expenditure 
 of moneys takes place in these subordinate, or working, units, 
 ' and it is precisely in these units that the interest in the public 
 treasury as a whole is the weakest. 
 Central These are the fundamental conditions that have to be faced 
 
 Essential to if real economy and efficiency are to be secured in the adminis- 
 ^"\d"t tration of the public finances. There is but one way through 
 which these difficulties can be overcome, namely, through pro- 
 viding means by which a rigid supervision, control, and ac- 
 counting may be exercised at every step from the first esti- 
 mating of the needs of the several services to the final expendi- 
 ture of the sums voted. It is impossible to overestimate the 
 importance of this consideration. The most perfect system 
 for performing the mechanical operations involved in admin- 
 istering the finances of a government will utterly fail to secure 
 
 12 
 
ANALYSIS OF THE PROBLEM 
 
 economy and efficiency unless this exceedingly difficult problem f 
 of supervision and control is properly met. 
 
 This supervision and control must, moreover, be a real andt. Control 
 not merely a nominal one as . is so often the case. It must Reaf ^^ 
 be exercised by an officer who himself has the knowledge per- 
 mitting him to perform this function intelligently, and is him- < 
 self subject to supervision and control in respect to the man- 
 ner in which he performs his duty. 
 
 The importance of this principle and some of the difficul- 1}he Prep- 
 ties presented in putting it into practice may be seen by run- Estimates a 
 
 ning through, from this point of view, the several operations Y'"^J^ Step 
 , J . , '^ , , . . m Control 
 
 mvolved m the management of the finances of a government 
 
 as enumerated above. The starting point in these operations, 
 as has been pointed out, is the preparation of the estimates. 
 In performing this operation the first step is the submission, 
 by each working unit of the government to the head of the 
 service of which it is a part, of a statement of the funds that 
 it will require in order to perform the work that it pur- 
 poses to put through. These units, as already indicated, are ) 
 not interested, except in the most incidental and itidirect 
 way, in the general financial problem of the service as a whole 
 or of the government as a whole. Their interest is in their ' 
 own work, and their natural and legitimate desire is to secure 
 funds for its extension. There is thus presented at the very 
 outset a necessity for supervision and revision of these esti- 
 mates as first submitted. If this is not done it is certain that 
 the total of the estimates as finally aggregated will far exceed 
 the amount with which it is advisable to charge the Treasury. 
 The first point at which control should be exercised is there- 
 fore found on the desks of the heads of the several branches 
 of the public service. Upon them should fall the duty of " 
 rigidly scrutinizing all requests for funds submitted to them 
 by their subordinates, of comparing them with current appro- 
 priations and past expenditures, and of taking such action 
 as will ensure that no funds are asked for beyond those neces- ' 
 sary for the economical administration of the affairs of their 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Review by 
 Department 
 Head 
 
 Central 
 
 Executive 
 
 Review 
 
 and 
 
 Revision 
 
 ^;^ 
 
 Legislative 
 Review 
 and Ap- 
 proval or 
 Disapproval 
 
 services, and such expansion in the scope of their work as gen- 
 eral financial and other conditions warrant. Control at this 
 point is vital since the heads of the several services alone are 
 in possession of that personal. and direct knowledge of con- 
 ditions and needs which will enable control to be exercised in 
 the most efficient manner. 
 
 The second point at which an opportunity for control ap- 
 pears is where the estimates, as revised by the heads of the 
 several services, are submitted to the heads of the great de- 
 partments or other main branches of the government service 
 of which they are the primary subdivisions. Here the con- 
 trol must be of a more general character. In many cases it 
 will rest upon considerations of general policy rather than 
 upon the question of whether the sums asked for to perform 
 a given amount of work are or are not excessive. Never- 
 theless, if proper financial and work records are maintained, 
 there exists at this point opportunity for a real scrutiny of 
 financial needs in relation to work to be done. 
 
 The third opportunity for control presents itself when the 
 requests for funds are aggregated into a consolidated esti- 
 mate of expenditures for submission to the fund-granting 
 authority. This work of aggregation and submission is, in 
 most systems, performed by the chief financial officer of 
 the government. A question of great importance thus arises 
 at this point, as to whether the duties of this officer in respect 
 to estimates are purely ministerial or whether they include the 
 authority to suggest, and if need be to enforce, the modifica- 
 tion of the estimates as reviewed by him with a view to the 
 reduction in the sums asked for, or their modification so as 
 to make them conform more nearly to his views in respect 
 to the financial needs of the services involved. 
 
 The next stage in the history of the budget is its examina- 
 tion by the legislature. It is hardly necessary to point out 
 that opportunity is here afforded for the exercise of a most 
 effective control on the part of the fund-granting over the 
 fund-expending authorities. The extent to which this oppor- 
 
 14 
 
ANALYSIS OF THE PROBLEM 
 
 tunity is availed of, and the means or procedure employed 
 in exercising this opportunity for control, constitute one of 
 the most significant and important features of the financial 
 system of a country. 
 
 There is still one other authority by whom at least a cer- 
 tain moral control may be exercised. Reference is had to *" 
 the general public. Provision can be and, in certain cases, 
 is made for the publication of the estimates as tentatively pre- 
 pared for submission to the legislature, and the granting to 
 interested parties of an opportunity to urge upon the govern- ' 
 ment such changes as the increase or decrease of funds for 
 particular purposes. This practice, it should be observed, is 
 one which is more applicable, and more usually employed in > 
 respect to, municipal or local budgets than those for national 
 governments. 
 
 The fundamental feature which distinguishes democratic Public 
 from autocratic government is this : That in a democracy the Controlling^ 
 government in last analysis is controlled by the will of the Force 
 people — the wishes of a majority of the governed; whereas 
 in an autocracy the government in last analysis is controlled 
 by the will of a ruler who is accepted as sovereign and who 
 considers that the people are his subjects. The one bases its 
 institutions on voluntary cooperation, taking the will of a 
 majority as the will of all; the other bases its institutions on 
 servitude. Democratic and autocratic, however, are relative 
 terms. Autocracies are never absolute, and democracies have 
 difficulty in finding the means of determining, expressing, and 
 making effective the will of a majority. One of the means 
 of doing this is through a representative body called a parlia- 
 ment or legislature — a meeting of chosen representatives of 
 the people to parley, to consider, to act on propositions which 
 are brought before them. But representatives must be chosen, 
 and even they may misrepresent what the people want. A 
 second and still more popular agency therefor, called the 
 "electorate," has been created, which sits in judgment on defi- 
 nitely formulated propositions and issues which may be 
 
 IS 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 brought before it. It is in their importance to this uhimate 
 authority — the electorate — that budget procedures, in the 
 course of their development, find their greatest constitutional 
 significance.^ 
 The Repre- The constitutional significance of an efifective budget pro- 
 Body as a cedure is that it provides a means for making both the execu- 
 Forum ^ ^jyg and the legislative bodies responsive and responsible to 
 the will of the people. This is done not alone by making the 
 estimates public property by having them printed. Such pub- 
 licity is of small importance; they have to do with highly 
 complex and technical subjects; and even if they were per- 
 fectly understood by each of ten, fifty, or one hundred million 
 people it would be necessary to provide some practical way 
 for having issues formulated, discussed and decided. An 
 efifective budget procedure utilizes the machinery of gov- 
 ernment for doing all these things. Responsibility is definitely 
 ' located with the executive for the preparation, submission, 
 explanation and defense of reports on the doings of the 
 past and of plans for the future. Definite responsibility is 
 V placed in the legislature (as the representatives of the people 
 The Defini- who have no responsibility for administration) for independ- 
 Issues ^^^ review, criticism, approval or disapproval. Since every 
 
 public undertaking is necessarily based on some concept or 
 theory of welfare, and with respect to these different men 
 may hold different opinions, procedures have been devised 
 which provide for first getting before all the representatives 
 of the people a full statement of facts, and then for giving 
 to those who oppose and those who favor the proposals be- 
 fore them an opportunity to formulate and discuss the issues 
 raised. During the last century a legislative procedure has 
 been developed which is adapted to doing three things: (i) 
 ' To define clearly the issues raised both on questions of gen- 
 eral policy and on details of proposals; (2) having done this, 
 
 * See discussion of Constitutional and Administrative Purpose of a 
 Budget in Municipal Research, Nos. 57, 58, 61, 62, 69, 70, 72 and 73) 
 published by the Bureau of Municipal Research, New York, 1915-16. 
 
 16 
 
ANALYSIS OF THE PROBLEM 
 
 to get an expression of the will of a majority of representa- The Elec- 
 tives of the people which is taken as the will of a majority f"** ^* 
 of the people — unless the legislature decides against the execu- Arbitrator 
 tive; (3) in the event that decision is against the executive, 
 to provide for an appeal directly to the "electorate." This 
 last step in the procedure is called "dissolution," and has been 
 adopted to take both the question under discussion and the 
 parties themselves before the voters to determine what pol- 
 icy and party advocate will be supported by a majority of 
 the "electorate." By use of such a procedure the budget p 
 becomes the most important constitutional method for making 
 the government responsible and responsive to the popular J 
 will. 
 
 In the foregoing we have considered only the general prob- 
 lem of control in the estimating and granting of funds for 
 government needs. With funds once granted the problem pre- 
 sents itself of organizing such a system of control as will '' 
 ensure that the moneys granted will be expended in an effi- 
 cient and economical manner. Reference is not here made to 
 that kind of control involved in ensuring that moneys voted " 
 shall be expended strictly in accordance with law; and that 
 no money shall be paid out except for services actually ren- 
 dered or goods received. This control is that performed 
 through a system of audit that will receive attention in an- 
 other part of this report. The control here considered is that > 
 involving the exercise of personal discretion. 
 
 Generally speaking, control involving personal discretion is 
 exercised at three points: (i) In the legislature; (2) in the \ 
 central financial department of the government; and (3) in 
 the several departments or where account of the expenditure 
 is made. 
 
 The estimates of financial needs should be, and in most Control 
 cases are, prepared and submitted in great detail to the end consistent 
 that the appropriating authority may have before it complete With the 
 information regarding the way in which prior grants have Discretion 
 been expended, and the items entering into the total sums 
 
 17 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Forms of 
 Acts of Ap- 
 propriation 
 
 Legislative 
 Encroach- 
 ment on 
 Executive 
 Discretion 
 
 requested for the ensuing year. This itemization constitutes 
 the justification on the part of the several services for their 
 requests. It by no means follows that because these detailed 
 
 . data are submitted the act of appropriation should enter into 
 the same itemization. Did it do so, and were no provision 
 made by which it might be departed from, the result would 
 be that little or no discretion would be left to the spending 
 departments and the latter would at times be seriously em- 
 barrassed in meeting contingencies as they arise. It is evi- 
 
 ' dent that a wide rjmge of choice is here presented to the legis- 
 lature as regards the policy to be pursued by it : ( i ) It may 
 have the appropriation act or acts in substantially the same 
 form and detail as the estimates; (2) it may have the ap- 
 propriation in substantially this form but provide that the 
 assignment of funds may be departed from under certain con- 
 ditions or within certain limitations; (3) it may make the 
 appropriations in substantially this form, but provide that the 
 assignment of funds may be departed from upon the approval 
 of some designated authority being first obtained; or (4) it 
 may pass the appropriations in such a form that the sums 
 voted are allocated to main heads only, thus leaving to the 
 spending departments large discretion in respect to the de- 
 tails of expenditure. 
 
 J The foregoing does not exhaust the possible diversities of 
 practice. The enumeration that has been made has had for 
 its purpose merely to bring out that here, at this initial stage 
 of the proceedings for rendering funds avEiilable for expendi- 
 ture, there is presented the important question as to where 
 
 V discretion in respect to the expenditure of funds voted shall 
 rest. If the legislature makes the appropriations in detail and 
 makes no adequate provision by which departure from this 
 assignment may be had, that body assumes the major responsi- 
 bility for controlling the expenditure of funds. The policy 
 of control here followed is that of attempting to control by 
 specification in advance, and the minimum of discretion is 
 left to 'the expending authorities. This is the policy which 
 
 18 
 
ANALYSIS OF THE PROBLEM 
 
 is generally followed by the Congress of the United States i 
 in providing for the expenditure of the Federal Government, 
 though there are important exceptions to the rule. As will 
 be seen hereafter, the appropriation system of the British Gov- u 
 ernment rests upon the contrary principle, that of having the 
 appropriation of funds binding only as regards certain large 
 heads and of permitting the exercise of a wide discretion on 
 the part of the executive in respect to the employment of the 
 funds under these general heads. 
 
 The adoption of this second policy means that provision Administra- 
 must be made for the exercise of control at some point over ^Through a 
 the departments actually expending the money. To leave to F'oance De- 
 the latter complete freedom to spend the money voted as they 
 see fit, except as controlled by the appropriation to the few 
 main heads, would manifestly be unwise. The first point at 
 which this additional or secondary control may be exercised >' 
 is in the finance department. A very important feature of 
 any financial system following this second principle of appro^ 
 priation by main heads only is thus the extent to which, if 
 at all, the legislature has delegated to the central financial 
 department of the government the authority to exercise a con- 
 trol or supervision over the several spending departments in 
 respect to the utilization of the funds that have been granted 
 to them, the machinery that has been provided through which 
 this control may be exerted, and the manner in which it is 
 in fact exercised. 
 
 A reading of this report will bring out the fact that in re- Fundamen- 
 spect to this matter the English Government has developed a g^^^ ' "' 
 system of remarkable efficiency. To understand the signifi-i Between 
 cance of this system one has to appreciate that the whole theory American 
 of the relationship that exists betw;een the legislative and the Systems 
 executive under' the English constitutional system is funda- 
 mentally different from the one that obtains in the govern- 
 ment of the United States. Our administrative system is ^ 
 based on the principle that, as regards both financial affairs 
 and the general conduct of work, the several departments are 
 
 19 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The English 
 Treasury 
 
 Control 
 over Ex- 
 penditures 
 
 completely independent and coordinate units, each working 
 under the direct authority of Congress. Little or no pro- 
 vision exists for the exercise by one department of any 
 authority over other departments, and little provision is 
 made for the exercise of central executive control over details 
 of administration. The only possible exception to this is the 
 power that the Comptroller of the Treasury has of prescrib- 
 ing the manner of keeping and rendering accounts. Even this 
 power has been interpreted as referring only to the keeping 
 and rendering of such accounts as are necessary in order that 
 the comptroller and auditors may properly perform their 
 duties. So firmly is this principle established that any at- 
 tempt on the part of one department to supervise or control 
 the affairs of another would be strenuously resented. It is 
 even doubted whether the President himself has power of gen- 
 eral direction and control over purely administrative matters 
 except as such powers have been expressly granted to him 
 by statute. 
 
 In England, on the other hand, the principle is definitely 
 recognized that the Treasury Department has large powers of 
 control over the financial transactions of all the other admin- 
 istrative services. In a way it may almost be said that this 
 department is an agent or organ of Parliament for controlling 
 the administrative services rather than a part of the adminis- 
 trative service proper. This power of the Treasury, the means 
 through and the manner in which it is exercised, will con- 
 stitute one of the most important points considered in this 
 report. 
 
 The next point at which control over expenditures may be 
 exercised is in the offices of the directing heads of the several 
 departments. In the same way that powers may be given to 
 such heads to revise the estimates submitted to them by the 
 heads of the services comprehended under their departments, 
 so authority may be given to them to control in whole or in 
 part the expenditure of the funds finally granted. This con- 
 trol may be exercised in the way of allotting to subheads the 
 
 20 
 
Analysis of the problem 
 
 moneys appropriated under' main heads, or authorizing trans- 
 fers from one subhead to another, etc.^ 
 
 In the foregoing we have considered the problem of con- Control over 
 trol from one standpoint only, that of the determination of and Work 
 the manner in which funds voted shall be allotted to specific 
 activities. There remains another feature in respect to which I 
 control may be exercised that is no less important. Reference 
 is had to the matter of control over purchases and the use 
 of things bought by the agencies created by the government 
 for doing work. The things bought fall in two main cate- 
 gories: (i) Personal service, and (2) non-personal service; ' 
 such things as transportation, quarters, equipment, supplies, 
 etc. Here we have directly to do with expenditures for 
 the things which are to be acquired for use. Control in 
 respect to what work shall be performed can of course bring a 
 about economy in ensuring that no work not of real necessity 
 or utility shall be undertaken. It can reduce or eliminate the 
 enormous waste of funds resulting from the performance of 
 work for which there is no real public need. Especially can 
 it prevent in whole or in part the misapplication of things 
 purchased in the operation of public works of no or of doubt- 
 ful utility. This control is at most only collateral, however, ,\, 
 in that a waste or misapplication of funds in making pur- *' 
 chases can take place in the carrying through of works con- 
 cerning the utility or necessity of which there is no question. 
 In performing such work an unnecessary number of persons 
 may be employed, excessive salaries may be paid, supplies may j 
 be purchased at excessive rates, and, generally, expenditures 
 may be made in a wasteful manner. If efficiency and econ- 
 omy are to be secured in respect to these_ factors some pro- 
 vision must be made for the exercise of due supervision and 
 control over specific expenditures of this character.^ 
 
 ' For a consideration of the problem of exerting control in this way 
 see W. F. Willoughby: "Allotment of Funds by Executive Officials, 
 an Essential Feature of any Correct Budgetary System." Proceed- 
 ings of the American Political Science Association (1912). 
 
 ' See Municipal Research, Nos. 57 and 58. 
 
 21 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Administra- 
 tive Means 
 of Control 
 over 
 Purchases 
 
 A Study of 
 Methods 
 of Control 
 
 Consideration of the problem of efificiency and economy in 
 the purchase of personal service and supplies brings up the 
 need for well-organized civil service and supply departments 
 — divisions for administering the two categories into which all 
 ordinary expenditures for current operation and maintenance 
 can be made to fall. If the study of the financial system of 
 a government is to be complete, due attention must conse- 
 quently be given to: (i) The system provided for the de- 
 termination of the number of employees that may be engaged, 
 the manner of their recruitment, their classification, compen- 
 sation, condition of service, etc.; and (2) the system pro- 
 vided for the purchase, inspection, warehousing, requisition, 
 issue and consumption of stores. Here, or elsewhere, economy 
 and efficiency can be secured only by the provision of means 
 that will ensure a rigid supervision and control over the spend- 
 ing units. In the present report not a little attention will be 
 given to this matter. 
 
 We have considered this problem of control at some length, 
 since there is no feature of financial administration that is 
 of greater importance. It is moreover the feature to which 
 the commission devoted its chief attention in the study of 
 the English financial system. Especially did it seek, through 
 personal interviews with officials concerned with all the opera- 
 tions involved, to determine not only the extent to which pro- 
 vision for control existed, but the effectiveness with which 
 this control was in fact exerted. The results of its inquiries 
 showed that this problem had been worked out with excep- 
 tional thoroughness. In no other respect is the English sys- 
 tem more worthy of careful study. Should this report serve 
 no other purpose than that of making known the means by 
 which England has successfully met this primary requisite of 
 a sound financial system, it will, it is believed, far more than 
 justify the expense and labor involved in its preparation. 
 
CHAPTER II 
 
 SOME FUNDAMENTAL FEATURES OF THE 
 ENGLISH SYSTEM OF FINANCIAL 
 ADMINISTRATION 
 
 Fiscal Year; Theory of Public Accounts; Expenditures Made Only in 
 Pursuance of Appropriation by Parliament; Historical Develop- 
 ment of the Present Appropriation System; Sejlaration of the 
 Personal Revenues and Expenditures of the Sovereign and Those 
 of the State; The Civil List; The Consolidated Fund; The Ex- 
 chequer; The Collection and Expenditure of Funds Authorized by 
 Parliament Only Upon the Request or Approval of the Crown; 
 Distinction between Permanent and Annual Appropriations; Con- 
 solidated Fund Services; Supply Services. 
 
 In our analysis of the problem of the financial administra- 
 tion of a government the several operations involved were 
 grouped under the three heads of receipt, custody, and dis- 
 bursement of public funds. Although, for purposes of com- 
 pleteness, mention was then made of the problems having to 
 do with the raising of revenue, no attempt is made in this 
 report to give an account of the manner in which these prob- 
 lems are met by the Government of Great Britain. The in- 
 vestigation was undertaken for the purpose of determining 
 the principles and methods employed by that country in the 
 voting and spending of treasury resources. 0\ir report there- 
 fore will cover only the operations having to do with the 
 custody, voting, and disbursement of public moneys. 
 
 In general our account will follow closely the order of 
 operations outlined in our analysis. Therefore a description 
 will first be given of the system made use of by the English 
 Government for the custody of its funds. In order that this 
 system, as well as the subsequent operations having to do 
 with the voting and expending of moneys, may be understood, 
 
 22> 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 it is necessary that some account should be given of certain 
 fundamental features that lie at the very basis of the whole 
 English financial system. 
 
 The Fiscal Year. An essential feature of any financial 
 system is that some definite period shall be adopted to which 
 estimates, accounts and reports shall relate; otherwise no 
 methodical provision can be made for future financial needs, 
 and for rendering accounts of past operations. The period 
 selected by practically all modern nations has been a year. This 
 year, however, does not necessarily correspond with the calen- 
 dar year. In the United States the financial year, or "fiscal 
 year" as it is technically called, runs from July i to June 30. 
 Strange as it may appear, it was not until 1854 that England 
 adopted a fiscal year to which all of her financial transactions 
 should relate. Prior to that date she had three different finan- 
 cial years, one for estimates, one for appropriations, and one 
 for accounts.^ By act of that year the period April i to March 
 31 was made the fiscal year for all purposes.^ 
 
 Theory of Public Accounts. Another important feature 
 affecting the whole problem of public financing is that of the 
 system employed in keeping the government's books of account. 
 In general a government has to choose betwen two systems: 
 ( I ) That in which the accounts of a year are based upon the 
 principle of showing all the resources accruing to the govern- 
 ment, and setting up against these resources all obligations 
 incurred — treating cash received simply as collections of ac- 
 Two counts or revenues receivable, and cash disbursed as the pay- 
 
 Pubn""* °* ment of expenses or accounts payable; and (2) that in which 
 Accounting the accounts of a year show only the money actually paid 
 into or out of the treasury during the year, whether such pay- 
 ments did or did not pertain to that year. To illustrate : The 
 first system would set up the revenues of each year sepa- 
 
 ' See Henry Higgs : Financial System of the United Kingdom, p. i. 
 'Act 17 and 18 Vict., c. 94, s. 2. 
 
 24 
 
SOME FUNDAMENTAL FEATURES 
 
 rately, and money received on account of taxes levied for 
 the year 1914, but actually received in 191 5, would be con- 
 sidered as collections for the fiscal year 1914; the second sys- 
 tem would consider all cash collected during 191 5 as belong- 
 ing to that year. In like manner money paid out of the 
 treasury in 1915 to settle obhgations incurred in 1914 would, 
 under the first system, be considered as the payment of the 
 liabilities of the year 1914; under the second system all pay- 
 ments during 191 5 would be considered as belonging to that 
 year. The first of these two systems thus rests upon the theory 
 of showing all revenues accrued and expenses incurred for 
 each year and the transactions pertaining to that year — ^thereby 
 setting up assets and liabilities and an operation account; the 
 second system rests upon the theory that no information is 
 needed except transactions of cash, with the balance at the 
 beginning and the end of the year. The first thus rests upon 
 an accrual basis and the second upon a cash basis. The first 
 is adapted to giving all the information needed for the man- 
 agement of the whole estate, including the cash; the second 
 is adapted only to treasury management. 
 
 Each of these systems has its advantages and disadvantages. Advantages 
 The first is more complex, but furnishes all the information vantao-eTof 
 needed for central control over the entire management; the Each 
 second is simple, but lays no basis for accurate comparisons 
 of cost. Cash systems may be so operated as to give approxi- 
 mately accurate comparisons of cost by keeping the collections 
 and payments belonging to each year's accruals separate. This 
 means that the accounts of each year are kept open until all 
 the collections of revenues accrued and all the payments of 
 liabilities incurred during that year have been made. This 
 is the system employed by France; ultimately it gives a close 
 approximation of revenues and cost, but the result is long 
 delayed. Other nations, such as the United States and Eng- 
 land, are less exact in determination of the years to which the 
 cash transactions are to be assigned to get at comparisons 
 of cost. It would take us too far astray to attempt anything 
 
 25 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 like a thorough discussion of this question at this place. We 
 shall have to content ourselves with the general statement 
 that, while each gives the same result in showing treasury- 
 movements and conditions, the French system gives more scien- 
 tific information about the results of management. It has 
 the great disadvantage, however, that under it the accounts 
 for a year must be kept open for several years after the year 
 to which they relate has closed, and thus the results are not 
 promptly available. By not attempting, through central ac- 
 counts, to obtain this information, the English and American 
 systems have the technical advantage of permitting the books 
 to be closed immediately upon the termination of the year, 
 and of making final reports, such as they are, to the public 
 without delay. ^ In the United States an attempt is made 
 to obtain the added information on the expenditure side by 
 keeping the appropriation accounts open till a later date — 
 thereby enabling the central accounting officers to make supple- 
 mentary statements later, from time to time when called for. 
 
 A Funda- Expenditures Made Only in Purstiance of Appropriations 
 
 Principle of by Parliament. It is a fundamental principle of the British 
 Conftitution ' Constitutional system, as it is of the American system and of 
 most systems of nations having what is termed "constitu- 
 tional" government, that no expenditure of public funds shall 
 be made except in pursuance of express authorization there- 
 for by an elected representative body possessing the legis- 
 lative power. It follows, therefore, in England that parlia- 
 mentary authority must be found for all expenditures. This 
 authority is usually found in annual or other, formal appropria- 
 tion acts, though it may be contained in permanent statutes. 
 
 It is a remarkable fact that, though the idea of supreme 
 control over the public purse by the House of Commons was 
 
 'For an excellent discussion of this subject see H. C. Adams: 
 Science of Finance, pp. 201-21 1. See also Rene Stourm: Le Budget, 
 pp. 11-136. Prof. Adams believes that, though difficult, it would be 
 possible to employ a system that would combine the advantages of 
 both systems. 
 
 26 
 
SOME FUNDAMENTAL FEATURES 
 
 early established as one of the fundamental principles of the 
 British constitutional system, no means for making this con- 
 trol really effective were put into execution until well into the 
 nineteenth century. The fact is that it was not until this 
 late date that the expression, "control of the public purse," 
 came to have the meaning that it now has. During all the 
 earlier period when Parliament was seeking to exert its power 
 over the Crown in respect to financial matters, it had in view 
 not the direction of how piiblic moneys should be spent, but 
 the limitation of the total amount that the Crown might de- 
 mand of the people in the way of taxation for governmental 
 purposes. Control at this time meant a control over revenues 
 and receipts rather than the expenditure side of government 
 operations. The chief solicitude of Parliament was the pro- 
 tection of the taxpayers. It hardly had the conception of 
 taking to itself the determination of the manner in which' 
 funds, the raising of which was once authorized, should be 
 expended. Discretion in respect to the expenditure of funds 
 was recognized as a prerogative of the Crown. It was the 
 duty of the Crown to administer the affairs of the country. 
 Anything approaching the modern practice of stating in de- 
 tail how money granted for the support of the Government 
 should be spent would have been looked upon, at that time, 
 as an unwarranted intrusion of the legislative branch into the 
 •executive branch of the Government. 
 
 Onlv srradually, step by step, has this p'rinciple been modified Evolution of 
 
 , , ■ ,;• 1 , A 1- 1 • -r. 1- Parliamen- 
 
 and the present practice established. According to this Parlia- tary Control 
 ment determines not only what and how public revenues Complete 
 shall be obtained but how this revenue shall be expended. 
 Even now, as will later appear, the most characteristic feature 
 of the appropriation system of Great Britain is the extent to 
 -which discretion is still left to the Executive in respect to^ 
 the expenditure of the funds granted. Though Parliament 
 still refrains from giving instructions in detail regarding ex- 
 ;penditures, it must nevertheless be recognized that the evo- 
 lution from the old to the modern principle of control is com- 
 
 27 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 plete. The old theory that the function of Parliament ceased 
 with the determination of the total amount of funds that 
 should be placed in the hands of the Crown for the conduct 
 of public business has been wholly abandoned. It is now 
 universally recognized that the power of Parliament in re- 
 spect to expenditures extends to the determination in the 
 greatest possible detail of the purposes for and manner in 
 which the public money shall be spent. The fact that it does 
 not exert this power to the full is due simply to the belief 
 that to do so would be a mistake. It stops short of this be- 
 cause it believes that the Crown is in a better position to de- 
 termine these details than itself, and that a too minute specifi- 
 cation would unduly tie the hands of the Executive and lead 
 to inefficiency. 
 
 The _ Historical Development of the Present Appropriation Sys- 
 
 Polnt "^ ^^w. To understand present conditions it is desirable to trace, 
 at least briefly, the steps by which this evolution of the func- 
 tion and power of Parliament in respect to expenditures has 
 been accomplished. The starting point in tracing this evo- 
 lution is the recognition of two things : ( i ) That at the out- 
 set there was absolutely no distinction between the revenues 
 of the Crown and those of the State; and (2) that at this 
 time these revenues were only in small part obtained from 
 taxation imposed upon the people. For the most part the 
 public income was derived from Crown lands, feudal dues, 
 and the like. "The first point that we have to seize," writes 
 F. W. Maitland, "in dealing with this subject historically is 
 that in old times the national revenue was very really the king's 
 revenue, or, to put it in another way, there was no national 
 revenue; whatever money came to the king's hand was his 
 to deal with as he pleased, whether it consisted of the rents 
 of his demesne lands, or the profit of the feudal tenures, or 
 the outcome of the aids or subsidies granted to him by the 
 great council of the nation."^ 
 
 'F. W. Maitland: Constitutional History of England, p. 430. 
 
 28 
 
SOME FUNDAMENTAL FEATURES 
 
 In normal times this feudal income was sufficient to meet 
 the personal expenses of the king and his court and the gen- 
 eral expenses of the Government. It was only as wars broke 
 out that need arose to resort to taxation. When levied, taxes 
 were deemed to be special levies for the occasion only and 
 to meet the special emergency then existing. "Another point 
 of importance is this, that during the Middle Ages permanent 
 taxes are very seldom imposed. In general a tax is granted 
 just for this occasion only: The king is granted a tenth of 
 movables, or a customs duty, or it may be a poll tax just to 
 meet the present demands upon his resources. Sometimes 
 taxes are granted for two or three years to come, but this is 
 rare." ^ 
 
 These two points are significant from the standpoint of 
 parliamentary control since, with the development of the two 
 principles that taxes were in general levied not as a general 
 source of income but as a means of securing funds for a par- 
 ticular purpose, and that no such levy could be made except 
 with the approval of Parliament, there naturally arose the 
 corollary that Parliament should specify the use to which 
 the income derived from a tax authorized by it should be put. 
 The first form of appropriation was therefore that of appro- 
 priating an indeterminate sum, the proceeds of a certain tax, 
 to a certain purpose. Maitland mentions as the earliest cases 
 where this was done the taxes authorized in 1348 for defense 
 against the Scots and in 1353 for the prosecution of the war 
 then in progress. 
 
 This specification of purpose was not always made, and, Limitation 
 when made, no adequate means existed for ensuring the stipu- "urfj'^^"'''" 
 lations so made being carried out. Not until the Revo- 
 lution in 1688 may this principle of granting funds for par- 
 Jiicular purposes be said to have been firmly fixed. Its estab- 
 lishment grew out of the contest between Parliament and the 
 Stuarts. "In 1665 Charles II asked a very large sum of money 
 for the Dutch war, and consented that a clause should be 
 
 * Maitland: Constitutional History of England, p. 182. 
 
 29 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The Present 
 Appropria- 
 tion System 
 
 Its Gradual 
 Evolution 
 
 inserted in the act declaring that the money raised under that 
 act should be appHcable only to the purposes of the war. This 
 was an important concession, and similar appropriations were 
 afterwards made during his reign. Since the Revolution the 
 practice has, I believe, never varied; in granting money to 
 the crown, parliament has appropriated the supply to particular 
 purposes more or less narrowly defined." ^ 
 
 In considering this statement of Prof. Maitland we must, 
 however, bear in mind that what was here established was 
 something which did not approach the modern appropriation 
 system. In the first place the king had, and continued to have 
 for many years, a large income which did not come to him 
 as the result of a grant from Parliament, and over the ex- 
 penditure of which he consulted no will but his own. In the 
 second place, the appropriation grants went no farther than 
 to designate that they were to be devoted to certain large pur- 
 poses, such as the prosecution of a certain war, the main- 
 tenance of an army, the construction of a fleet, etc. "The 
 great financial change made at the Revolution," writes Lord 
 Welby,^ "related to the charge of the Navy and the Army. 
 The Revolution introduced annual Sessions of Parliament, the 
 French war led to annual Votes in Supply for Navy and Ord- 
 nance services, and these Votes were formally sanctioned by 
 Lord Somers' Appropriation clauses. It should be added, for 
 the sake of accuracy, that even in the time of William III. a 
 few Votes were taken annually for services of a civil charac- 
 ter. These gradually increased in number, but they were 
 comparatively insignificant in amount until the latter part of 
 the reign of George III. It will be seen, then, that the control 
 of Parliament over public expenditure began with the Revo- 
 lution, but that that control extended only to expenditure on 
 Army, Navy, and Ordnance. The reality of the control was 
 
 ' Maitland : Constitutional History of England, p. 433. 
 
 "Memorandum on "The Control of the House of Commons over 
 the Public Expenditure." Report of the Select Committee on Na- 
 tional Expenditure (1902), Appendix No. 13, p. 228. 
 
 30 
 
SOME FUNDAMENTAL FEATURES 
 
 proved by the reduction of the Army enforced after the Peace 
 of Ryswick by the House of Commons against the wishes of 
 the King. The control, however, was limited in its character. 
 Estimates for the military services were laid before the House 
 of Commons, and upon these estimates the House of Com- 
 mons voted an amount for each service. There was only one 
 vote for the whole of the Navy service until 1798. In Anne's 
 reign the Army grant was divided into two or three Votes, but 
 in both services there grew up a practice of expending large 
 sums without the previous sanction of Parliament on 'ex- 
 traordinaries,' and a vote for these extraordinaries was sub- 
 mitted for the sanction of the House of Commons in a sub- 
 sequent Session. The control exercised through the Votes 
 in supply was therefore imperfect, and. left a great latitude 
 to the executive Government, of which J:he Government did 
 not fail to avail itself." 
 
 Before anything like a general appropriation system, that Successive 
 is, one under which Parliament should specify with reasonable oevelop- 
 particularity how the public revenues should be spent, two ™^"' 
 reforms had to be accomplished. The first of these was that 
 a clear separation should be made between the personal reve- 
 nues and expenditures of the sovereign and those of the 
 State; the second, tha.t the revenues of the State should con- 
 stitute a general fund from which allotment should be made 
 to specific purposes. The first of these was accomplished 
 through the creation of what is known as a "Civil List," the 
 second through the establishment of the so-called "Consoli- 
 dated Fund." Before proceeding further with our historical 
 sketch of the development of the present appropriation system 
 it is necessary therefore to say a few words regarding the 
 circumstances under which these two reforms were accom- 
 plished. 
 
 Separation of the Personal Revenues and Expenditures of jy^ Civil 
 the Sovereign and Those of the State: The Civil List. As 
 has been pointed out, until comparatively modern times the 
 
 31 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Grant of 
 
 Hereditary 
 
 Excise 
 
 Fixed 
 
 Amount for 
 Support of 
 Crown 
 
 king was in possession of important revenues not produced 
 through taxation and not, therefore, coming to him as a grant 
 from Parliament. Even after the principle was established 
 that, as regards the grants by it, Par^ament could determine 
 the manner in which fiinds should be expended, this income 
 remained at the absolute disposition of the sovereign to do 
 with as he pleased. From this income, however, he had to 
 defray not only his own expenses and those of his court but 
 all of the ordinary expenses of government. 
 
 At the Restoration the amount of this income was greatly 
 reduced through the abolition of many of the heaviest feudal 
 burdens. To compensate the king for this loss of revenue 
 there was granted to him the proceeds of what was known as 
 the hereditary excise, a special permanent tax upon beer, cider, 
 spirits, and certain other articles. Apart from other features 
 this act is of interest as being the first example of the im- 
 position of a permanent tax. 
 
 This arrangement was continued when William III came 
 to the throne and, in addition, a new tax, a tonnage and pound- 
 age tax, was granted to him for life. To this grant there 
 was, however, imposed an important condition. The act sets 
 forth that it is the intention of Parliament that the king should 
 have an income of £700,000 per annum and that, should his 
 income exceed that amount, no use should be made by him 
 of the excess without the authority of Parliament. This, says 
 Maitland,^ was the first time that the notion of a Civil List 
 appears on the statute book. 
 
 The next step in the evolution of the Civil List was taken 
 when George III came to the throne. On his accession he 
 consented to give the greater part of the hereditary revenues 
 of the Crown in return for the grant to him of a yearly sum 
 of £800,000. In this act a long step was taken towards the 
 principle of the revenues of the Crown being treated as na- 
 tional income and the expenses of the Crown as expenses 
 which should be met through grants from Parliament. A 
 
 ' Maitland : Constitutional History of England, p. 435. 
 
 32 
 
SOME FUNDAMENTAL FEATURES 
 
 further step was taken when George IV became king. The 
 arrangement made with his predecessor was continued, with 
 the minor difference that the amount of the grant was in- 
 creased to £850,000 per annum, and the fundamental differ- 
 ence that, for the first time, a distinction was made between 
 the amount that should be deemed the king's for his personal 
 use and that which should be devoted to the support of the 
 Government. The former amount was fixed at £60,000 per 
 annum. 
 
 Slightly different arrangements were made with William 
 IV and Victoria when they came to the throne, these differ- 
 ences all being in the direction of drawing more clearly the 
 lines between the personal expenses of the' sovereign and Gov- 
 ernment expenses proper, and in establishing the principle that 
 all expenditures, including those personal to the sovereign, 
 should find their authority in a grant of Parliament. The 
 result is that at the present time, and one may say since the 
 accession of William IV, the sovereign receives a salary out A Royal 
 of which he must pay all his personal expenses and those of Budget" 
 his family and court. The total amount of the Civil List at 
 the present time, as set forth in the "Finance Accounts" for 
 1913-1914, is £470,000, and is made up of the following items : 
 
 Their Majesties' Privy Purse. ... ... . .£110,000 
 
 Salaries of His Majesty's Household 
 
 and Retired Allowances... 125,800 
 
 Expenses of His Majesty's Household 193,000 
 
 Works . 20,000 
 
 Royal Bounty, Alms, and Special 
 
 Services 13,200 
 
 Unappropriated ■ 8,000 
 
 Total £470,000 
 
 This amount is carried as a permanent continuing charge 
 upon the Consolidated Fund, the same as the items for the 
 
 33 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 payment of the interest on the public debt, the salaries of 
 judges, etc.^ 
 
 An Essential 
 to the 
 British 
 System of 
 Control 
 
 The Consolidated Fund. In making a clear distinction be- 
 tween the possessions of the sovereign and those of the na- 
 tion, Parliament laid one of the foundation stones upon which 
 to rest the structure of real legislative control over national 
 income and expenditure. A second stone was laid in 1787 
 by the establishment of the principle that there should be one 
 general fund into which all the revenues of the crown should 
 be paid and from which all public disbursement should be 
 issued. 
 
 "In 1785 [writes Mr. Henry Higgs] ^ the Commis- 
 sioners of Public Accounts called attention to the in- 
 tricacy of the system under which various public charges 
 were earmarked against particular sources of revenue. 
 Thus, for example, no fewer than seventy-four charges 
 involving seventy-four separate accounts were imposed 
 upon the Customs revenue, the Militia charges were de- 
 frayed from the Land tax, and certain hereditary annui- 
 ties were met out of the Post Office revenue. To sweep 
 away such complications the Commissioners recom- 
 mended that there should be formed 'one Fund into 
 which shall flow every stream of the public revenue and 
 
 * Higgs in his "Financial System of the United Kingdom," p. 54, 
 quotes the following interesting passage from Macaulay's "History of 
 England," Chap, xv, regarding the use of the term "Civil List" : "The 
 expenses of the Royal Household are now entirely separated from 
 the expenses of civil government; but, by a whimsical perversion, the 
 name of Civil List has remained attached to that portion of the revenue 
 which is appropriated to the expenses of the Royal Household. It is 
 still more strange that several neighbouring nations should have 
 thought this most unmeaning of all names worth borrowing." The 
 historical justification for the English use of the term is, as we have 
 seen, that in early days civil expenses were a charge upon the rev- 
 enues of the Crown, military being largely met from grants by Parlia- 
 ment. 
 
 "Henry Higgs: Op. cit., p. 18. 
 
 ^4 
 
Fund 
 
 SOME FUNDAMENTAL FEATURES 
 from whence shall issue the supply for every public 
 
 This recommendation of the Commissioners of Public Ac- 
 counts was approved by Parliament. By the so-called Con- 
 solidated Fund Act of 1787/ provision was made that there 
 should be established a single fund, to be known as the Con- 
 solidated Fund, into which all public revenues should be paid, 
 and out of which all public expenditures should be met. A 
 similar measure in reference to the revenues and expenditures 
 of Ireland was enacted in 1816 and the two Consolidated 
 Funds were further consolidated into one Consolidated Fund 
 of Great Britain and Ireland.^ 
 
 It is difficult to overvalue the importance of this action. It importance 
 constitutes one of the greatest measures of financial reform Consolidated 
 accomplished by Parliament up to that time. As long as the 
 systerti of assigning particular receipts to particular purposes 
 prevailed, it was manifestly impossible for Parliament to ex- 
 ercise any close control over the administration of the pub- 
 lic finances. Certainly it was impossible to secure that annual 
 consolidated statement of public revenue and expenditure, in 
 connection with an estimate of future needs, which is the 
 foundation upon which any proper budgetary system must 
 rest. 
 
 In view of the manifest advantages of this system it is diffi- 
 cult to understand why England, having once adopted it, 
 should afterwards depart from it. As will hereafter be pointed 
 out. Parliament has directed that certain receipts of the Gov- 
 ernment sh,all not be carried into the Consolidated Fund, but 
 shall be used directly by the services collecting them in the way 
 of "appropriations in aid" for meeting their expfenses. This 
 is a matter which will be considered at some length when the 
 subject of estimates and appropriations is taken up for special 
 consideration. We only mention it here as a procedure which 
 
 ^27 Geo. Ill, chap. 13. 
 
 "Maitland: Constitutional History of England, p. 441. 
 
 35 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 seems to be an unfortunate departure from a sound principle 
 of public finance. 
 
 The Exchequer. The term "Consolidated Fund" is em- 
 ployed to describe the general fund into which, with the ex- 
 ception that has been noted, all public revenues are paid and 
 out of which all public expenditures are met. This fund 
 stands to the credit of the "Exchequer," the latter being the 
 term employed to designate the public treasury. The cus- 
 todians of this account are now the Bank of England and 
 the Bank of Ireland. The origin of the term "Exchequer" 
 and the early system employed for the custody and control 
 of public funds is interestingly told by Mr. Thomas Gibson 
 Bowles, a member of Parliament and a high authority upon 
 matters of public finances, in his testimony before the Select 
 Committee on National Expenditure (1902).^ 
 
 Origin "As to the origin of the present system, of course an 
 
 Exchequer Exchequer — that is to say, a place for keeping the King's 
 
 cash — has always existed in this country from the very 
 earliest times. But the Exchequer properly so called had 
 its name brought over for it from Normandy with the 
 Conquest, and I believe the name is derived from the 
 checkered cloth upon the table of the place where the 
 cash was kept which was used in order to facilitate cal- 
 culations. The Exchequer, then, is the place where the 
 King's Revenue was received, where it was kept, super- 
 vised and controlled, and from whence it was issued. It 
 was kept there and managed there. It was at first the 
 actual coin that was received there by tale and weight. 
 There were three officers of Exchequer, each of whom 
 had a control over the issue of the money, for the money 
 was kept in chests, each chest having three locks and each 
 of those officers having his key to one of the locks. One 
 of those officers was called the Teller, who was the cash- 
 ' Report (1902), p. 63. 
 
 36 
 
SOME FUNDAMENTAL FEATURES 
 
 ier who received and issued the money; then there was 
 the Clerk of the Pells, who recorded on a pell or parch- 
 ment all receipts and issues ; and then there was the audi- 
 tor, who examined the records, and whose duty it was to 
 see that no money was issued except in accordance with 
 law, and with the sanction of Parliament." 
 
 This was the system that existed until well into the nine- 
 teenth century, though certain changes were of course made 
 in respect to the actual custody of the cash. In 1834 the 
 whole system for the administration of the public finances Changes 
 was thoroughly overhauled. One of the reforms thus accom- -1834^ 
 plished was the provision that thereafter all public revenues 
 should be paid into the Banks of England and Ireland to 
 the credit of the Exchequer account, that is, to the Consoli- 
 dated Fund. As there is no separate Exchequer account in 
 Scotland, the duty of receiving public moneys and paying, 
 them over to the Bank of England is performed by the six 
 Scotch banks in rotation of a year each. The term "Ex- 
 chequer" as one to designate the national treasury is retained, 
 the Bank of England and the Bank of Ireland being merely 
 substituted as the stroiig box for the keeping of the public 
 treasure. The Bank of England and the Bank of Ireland, it 
 should be noted, are mere bankers of the Government. Their 
 duty is confined to that of receiving the public revenue and 
 paying it out to officers who are charged with the actual re- 
 sponsibility of settling and paying public obligations. They ■ 
 take the place of the Teller under the old cashbox sys- 
 tem. 
 
 The Collection and Expenditure of Funds Authorized 
 by Parliament only upon the Request or Approval of 
 the Crown. We have seen that the principle is now firmly 
 established that no burden in the way of taxation or other- 
 wise shall be imposed upon the people and no expendi- 
 ture of public funds shall be made until Parliament has given 
 
 37 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Location of 
 Executive 
 Responsi- 
 bility 
 
 The Rule 
 Rigidly- 
 Enforced 
 
 its express sanction therefor. No feature in the whole con- 
 stitutional history of England is more noteworthy than the 
 fact that the House of Commons, while steadily insisting 
 upon the establishment and maintenance of this principle, has 
 at no time sought to make of itself the organ through which 
 the financial program of the Government, either as regards 
 receipts or expenditures, should be formulated. From the 
 beginning it has interpreted its function as that of passing 
 upon proposals emanating from the Crown. It was the duty 
 of the Crown to declare what were the financial needs of the 
 nation and how these needs should be met; the duty of the 
 House of Commons lay in the approval or disapproval of the 
 plans as laid before it. 
 
 This rule is rigidly enforced. It applies not only to the 
 annual finance and appropriation acts by which the collection 
 of taxes is authorized and the grant of funds made, but to 
 all cases where money is required for any purpose. It pro- 
 hibits the introduction, or at least consideration, of any bill 
 or resolution the provisions of which, if enacted, will impose 
 a charge upon the public treasury, until the approval of the 
 Crown, expressed through one of the ministers, has first been 
 received. Furthermore, it rules out any amendment to a 
 proposal submitted by the Crown having for its purpose the 
 increase of the sums asked for by the latter.* 
 
 The rules governing this matter are now found in Standing 
 Orders Nos. 66 and 68 of the House of Commons, both of 
 which date from the beginning of the eighteenth century, 
 
 *To this statement that the initiation for all expenditures must 
 come from the Crown there is one exception. Occasionallv a case 
 presents itself where it is desired to make a special appropriation for 
 a particular object, such as the erection of a monument to a dis- 
 tinguished person, or the grant of a sum of money to one who has 
 rendered some great service to the nation, and it is deemed more 
 appropriate that the proposal to make such an expenditure should 
 come from the House. In these cases the House passes what is 
 known as an Address to the Crown asking that the grant be made 
 and stating that "this House will make good the same." All such 
 sums must, however, be formally voted in committee as all other 
 appropriations. 
 
 38 
 
SOME FUNDAMENTAL FEATURES 
 
 though their wording may have undergone some slight altera- 
 tion. Their present wording is as follows : 
 
 "66. This house will receive no petition for any sum Standing 
 relating to public service, or proceed upon any motion 
 for a grant or charge upon the public revenue, whether 
 payable out of the consolidated fund or out of money to 
 be provided by parliament, unless recommended from 
 the Crown." 
 
 "68. This house will not receive any petition for 
 compounding any sum of money owing to the Crown, 
 upon any branch of the revenue, without a certificate 
 from the proper officer or officers annexed to the said 
 petition, stating the debt, what prosecutions have been 
 made for the recovery of such debt, and setting forth 
 how much the petitioner and his security are able to sat- 
 isfy thereof." 
 
 It is hardly necessary for us to point out the overwhelming 
 importance of the principles embodied in these rules as a 
 means of preventing ill-advised and wasteful expenditure of 
 public funds. At one stroke it renders impossible the enor- 
 mous abuses which prevail in the United States arising from 
 the right possessed by individual members of Congress to 
 propose and secure the consideration of measures calling for ' 
 
 an appropriation of public funds. The exercise of that right, 
 in conjunction with the device of "log-rolling," has not only 
 given rise to the recurrent scandals of the "pork-barrel" pub- 
 lic buildings and river and harbor bills, but has destroyed all 
 possibility of framing and adopting a consistent and effective 
 scheme or program of public expenditures. Under the British 
 system each demand for funds originates with the head of 
 the service for which the funds are requested, and thus repre- 
 sents the judgment of the person most competent to deter- 
 mine the real needs of the service. Under the American sys- 
 tem demands for funds may, and often do, originate with 
 
 39 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Contrast 
 with 
 
 American 
 Practice 
 
 individual members of Congress having little, and, at best, 
 inadequate, knowledge of the needs of the services for which 
 they are intended. What is worse, they have no direct interest 
 in the efficient and economical administration of such services. 
 Their interest is in the localities to be served, which interest 
 may be diametrically opposed to the interest of the services 
 and of the public as a whole. In many cases money is ap- 
 propriated in pursuance of proposals thus initiated, not- 
 withstanding the fact that the heads of the services affected 
 protest vigorously that they have no need for such money or 
 for the services to be furnished by such funds. 
 
 Under the British system responsibility is definitely located 
 with an officer who can be, and is, held to a rigid account of 
 the manner in which the funds asked for are expended. Un- 
 der the American system the enforcement of any effective 
 system of securing responsibility and accotmtability is im- 
 possible. This is an old story and the commission will not 
 dwell upon it further. It would not have been proper, how- 
 ever, to have omitted making at least this brief mention of 
 the great advantages, both theoretical and practical, which 
 the British system has over the American system. 
 
 Distinction Between Permanent and Annual Appropriaiions. 
 To every government there is presented the problem of deter- 
 mining the extent to which it is desirable that the revenue 
 to be raised and the expenditures to be authorized shall be 
 determined by general statutes continuing in force until modi- 
 fied or repealed, or shall be a matter to be annually consid- 
 ered and acted upon by the fund-raising and granting autlior- 
 ity. Theoretically the principle of parliamentary control ren- 
 Reviews and ders it desirable that each year Parliament should make a gen- 
 eral examination of all the financial resources and needs of the 
 Government and decide upon a revenue and expenditure pro- 
 gram for the year to ensue. To the theoretical advantages 
 of this principle there are, however, certain practical objec- 
 tions. From the revenue side there are obvious disadvantages 
 
 40 
 
 Executive 
 Requests; 
 Parliament 
 
SOME FUNDAMENTAL FEATURES 
 
 in constantly modifying the taxation system or even in rais- 
 ing the question of its modification. From the expenditure 
 side there are certain obligations of the Government which, 
 for reasons that will be stated, it is undesirable to submit 
 to the hazards of an annual determination. The most im- 
 portant of. these obligations are those in respect to the meet- 
 ing of which the public faith has been pledged. Of this char- 
 acter are the interest on the public debt and payments on ac- 
 count of annuities, pensions, etc. Another class of obligations 
 falling in this category is that represented by judicial salaries. 
 Here the motive for making the authorization of the pay- 
 ment a permanent and continuing one is that of giving the 
 judges greater independence of legislative and executive in- 
 fluence than they would have if their salaries had to be voted 
 each year. Finally, there is something to be said in favor 
 of adopting, as regards certain expenditures, a program 
 that will extend over a considerable period of time, and 
 also of relieving the legislature from the consideration 
 of matters regarding which there is little or no oppor- 
 tunity for difference of opinion in respect to the action 
 to be taken. 
 
 In the United States this difference between appropria- 
 tions which should be voted specially or annually and those 
 which should be provided for by general statute is clearly 
 recognized by the distinction which is made between perma- 
 nent or continuing appropriations and annual appropriations. 
 In England the same distinction is made, but the terms em- Distinction 
 ployed to designate the two are different. Appropriations Continuing 
 falling under the first head are termed "Consolidated Fund a°d Annual 
 
 =" Appropna- 
 
 Services," and those falling under the second head "Supply tions 
 Services." This distinction is of prime importance, for it 
 must be remembered that in all the discussion that follows as 
 to the manner in which estimates are prepared, submitted, 
 and acted upon, reference is had solely to the supply serv- 
 ices. This means that the documents relating to these trans- 
 actions, the estimates themselves, the memoranda and com- 
 
 41 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 parative tables accompanying them, and the "appropriation 
 accounts" submitted to the House by the Comptroller and 
 Auditor General giving audited expenditures, do not make 
 a complete presentation of estimates or expenditures for all 
 the expenses of government, but only for those covered by 
 the Supply Services. This being so, it is important to de- 
 termine the principles upon which this classification is based 
 and the character of the items that are assigned to each class. 
 
 Consolidated Fund Services. ^ It has been pointed out that 
 the principle of parliamentary control over expenditures de- 
 mands that the general rule be that provision shall be made 
 annually for the needs of the ensuing year and that all de- 
 partures from this rule shall be in the nature of exceptions 
 for which an adequate justification shall exist. It is a mat- 
 What Ap- ter of importance, therefore, to determine the manner in 
 Are^lncluckd which this rule has, in practice, been carried out in the Brit- 
 ish system. The following table, taken from the "Finance 
 Accounts" for the year 1913-1914, gives a recapitulation of 
 the items covered by the Consolidated Fund Services : 
 
 Receipts 
 
 £ s. d. 
 
 £ s. d. 
 
 
 14,787,108-16-2 
 3,202,026-12-5 
 
 1,115,849-18-7 
 
 166,529-19-9 
 
 5,228,484-13-1 
 
 470,000 
 
 316,575-13-6 
 
 56,547- 2-1 
 
 533-042- 7-3 
 317,725- 4-0 
 
 24,500,000 
 
 Funded Debt: 
 
 Interest . 
 
 
 
 Unfunded Debt: 
 
 Interest 
 
 
 Management of the Debt 
 
 New Sinkine' Fund 
 
 
 
 1. 394.95 1 
 
 9,734.127-10-6 
 1. 693. 890-6-10 
 
 Payments to Local Taxation Ac- 
 counts etc 
 
 Other Consolidated Fund Services . . 
 Civil List 
 
 Annuities and Pensions . ..... 
 
 
 
 I 
 
 Courts of Justice 
 
 
 
 
 
 
 Total £ 
 
 
 37.322,968-17-4 
 
 42 
 
SOME FUNDAMENTAL FEATURES 
 
 The total issues from the Exchequer during the year were Continuing 
 ^239,752,763-5-10. It will thus be seen that the Consoli- pHa^ons 
 dated Fund Services represented approximately one-sixth of 
 the total issues, the remaining five-sixths being accounted for 
 by the Supply Services. 
 
 The foregoing table is supported by other tables in the 
 report in which are given the details of the items entering 
 into these tables. If consultation of these tables is had it 
 will appear that no consistent principle has been followed by 
 England in determining what items of expense shall be treated 
 as Consolidated Fund Services and what as Supply Services. 
 To bring out the inconsistencies that are here presented we inconsisten- 
 
 C16S or 
 
 cannot do better than quote the comments of Mr. Harold Cox practice 
 as contained in an article entitled "The Magnificent Muddle 
 of Department Finance," published in 1908 and republished , 
 in 19 1 3 as a chapter in a book dealing with the general prob- 
 lem of the financial administration of Great Britain.^ 
 
 After giving a table showing in some detail the items con- Criticism by 
 
 ■ • 1/-^ ,-, fT-.<r-. • 1 • Englishman 
 
 stitutmg the Consolidated r und Services, he writes : 
 
 "This somewhat lengthy table which has been sum- 
 marised from the fuller details given in the Finance Ac- 
 counts, will help to show the reader how needlessly com- 
 plicated are the national accounts. Take, for example, 
 the item of £16,244 for Public Offices. This is an an- 
 nuity created under an Act of 1882 to pay for the sites 
 of certain public offices. It is charged upon the Consol- 
 idated Fund, and buried out of sight under the head of 
 'Miscellaneous Services' ; but exactly similar annuities 
 created by other acts are charged upon the Estimates of 
 the Office of Works, where their presence helps to show 
 what is the actual cost to the country of its public offices. 
 
 "Equally unsatisfactory, from the point of view of 
 
 intelligible account-keeping, is the item of £21,000 for 
 
 * Official Finance in Government Departments: A Series of Crit- 
 ical Comments upon the Business and Financial Methods of Govern- 
 ment Departments. Financial Rev. of Reviews, p. 43.. London (1913). 
 
 43 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Queen's Colleges, Ireland. These same colleges also ap- 
 pear in the Civil Service Estimates under the vote for 
 education in Ireland, and receive a further grant which 
 in the present year will be £4,700. To pass to larger 
 items, we find two sums, namely, £40,000 and £728,000, 
 granted to Ireland under the authority of Acts of Parlia- 
 ment passed in 1891 and 1898. As regards both these 
 grants, if we turn to the Civil Service Estimates we find 
 other sums for identical or similar services. Thus, in 
 addition to the £40,000 in the above table permanently 
 granted to Ireland for Land Purchase, the taxpayer has 
 to provide under Class III of the Civil Service Estimates 
 £271,000 in the current year for the cost of the Irish 
 Land Commission, which administers the Land Purchase 
 Act. A further charge of £12,000 appears in the Con- 
 solidated Fund accounts, as the above table shows, for 
 the salaries of the Land Commission Judges. It is an 
 elementary principle of sound account-keeping that the 
 expenses of each service should be brought together, so 
 that those who have a right to be interested in the ex- 
 penditure may see what the full cost of the service is. 
 Yet the cost of the system of land purchase in Ireland 
 appears under three separate heads, which are in no way 
 connected with one another. 
 
 "A similar criticism applies to the agricultural grant of 
 £728,000 a year to Ireland. In addition to this grant 
 permanently charged upon the Consolidated Fund, the 
 annual Estimates show a charge in the current year of 
 £216,000 for the Department of Agriculture and Tech- 
 nical Instruction. 
 
 "As a last example take the payment of £215,000 to 
 the Indian Army Pension Deficiency Fund. This is 
 really an army charge. It represents part of the cost of 
 maintaining the military machine, and ought therefore 
 to appear, not on the Consolidated Fund Accounts, but 
 on the army estimates. 
 
 44 
 
Parliament 
 
 SOME FUNDAMENTAL FEATURES 
 
 "These examples are sufficient to show that the Esti- 
 mates alone give an inadequate representation of the pub- 
 lic expenditure. Yet, as already explained, they contain 
 the only figures which require the annual sanction of the 
 House of Commons. The charges upon the Consolidated 
 Fund annually falling due are not even published until 
 after they are paid." 
 
 To the commission it would seem impossible to deny the ^Ji^o^'nYn 
 justice of the criticism here made. It is not merely that there the Way of 
 is a failure to adopt and rigidly adhere to some consistent 
 principle, but that great difficulties are thrown in the way 
 of Parliament and the public determining the total expendi- 
 tures entailed in the conduct of certain operations or of cer- 
 tain services of the Government. Consideration of the ex- 
 penditures of the Government takes place upon the estimates 
 submitted for the Supply Services. One naturally expects that 
 if in such estimates items for particular purposes appear, that 
 such items cover all the expenditures in connection with such 
 purposes. That they do not do this and that certain expendi- 
 tures of precisely the same character are provided for under 
 the Consolidated Fund Services means that to that extent dis- 
 cussion takes place upon incorrect data. The evil is so ob- 
 vious and the remedy so easy that it is difficult to understand 
 why, in a system which in other respects is so excellent, a 
 defect of this character should be allowed to continue. 
 
 Supply Services. As has been pointed out in our considera- 
 tion of Consolidated Fund Services, this term is used to cover 
 all expenditures not provided for as a permanent continuing 
 charge upon the Consolidated Fund. Their distinctive char- 
 acteristic, as regards the procedure employed in providing 
 for them, is that they must be voted annually in pursuance of 
 estimates laid before Parliament. It should be noted, how- 
 ever, that, when voted, they are paid out of the Consolidated 
 Fund no less than those constituting a permanent charge upon 
 
 45 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Distinguish- that fund. It is with this class of expenditures that the 
 tefistics^'^^'^" student of methods of financial administration is chiefly con- 
 cerned. In the chapters that follow it will therefore be our 
 aim to describe in detail the procedure employed in handling 
 them. 
 
CHAPTER III 
 
 THE ESTIMATES: PREPARATION AND 
 SUBMISSION 
 
 Appropriations Made Only in Pursuance of Formal Estimates; Esti- 
 mates the Act of the Ministry As a Whole; The Treasury the 
 Authority for the Preparation and Submission of the Estimates ; 
 Special Procedure for the Army and Navy Estimates; Treasury 
 Estimates Circular ; Estimates as Submitted by the Several Depart- 
 ments to the Treasury in Large Part but a Summation of Provi- 
 sions Already Approved by the Treasury; Comparative and Ex- 
 planatory Data Required ; Estimates to Be Justified Though No In- 
 crease Is Requested; Preparation of Estimates Within the Depart- 
 ments; Examination of the Estimates by the Treasury; Transmis- 
 sion of the Estimates tO' the House of Commons; Supplementary 
 Estimates. 
 
 As set forth in our analysis of the problem of financial 
 administration, the point from v\?hich a consideration of the 
 several links in the continuous chain of operations can best 
 be inaugurated is that of the preparation by the Executive of 
 its estimates of the financial needs of the government for the 
 year to ensue. It is with this operation, therefore, that we 
 will begin our study of the details of the British financial 
 procedure. 
 
 Appropriations Made Only in Pursuance of Formal Esti- 
 mates. The requirement that no proposal for the expenditure 
 of money shall be considered that does not have the sanction 
 of the Crown is the statement of a general principle. It is 
 not sufficient, however, for a government to adopt a princi- 
 ple: Appropriate means must be provided for carrying this 'Means 
 principle into eflfect. In the present case this means is found Cam* *° 
 in the rule which requires that all requests for funds emanat- Principle 
 ing from the Executive must take the form of a formal "esti-uEffect 
 
 47 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 mate" submitted by it to the House of Commons. It thus 
 follows that every appropriation must have back of it, and 
 must rest upon, an "estimate." This applies not merely to 
 the annual demand for funds for the operation of the Gov- 
 ernment during the fiscal year to which it relates, but to all 
 
 • requests for funds, no matter how casual they may be. If, 
 therefore, need for money for a certain purpose suddenly 
 arises, the only method by which the money may be obtained 
 is by the Ministry, acting through the appropriate minister, 
 laying before the House of Commons an estimate for the 
 funds needed. In considering this subject of estimates it 
 is thus important to keep in mind that this term connotes 
 two things: (i) A careful calculation of the amount of 
 
 I money needed for a designated purpose; and (2) a formal 
 document emanating from the Executive and constituting a 
 formulated demand upon Parliament that the sum estimated 
 for be granted to the Crown for the purpose specified.^ 
 
 Estimates the Act of the Ministry as a Whole. A further 
 
 cardinal principle of the English financial system is that these 
 
 estimates are not submitted by the individual departments 
 
 for whose use the money is intended, but must pass through, 
 
 and receive the approval of, and, with the exception of the 
 
 estimates for the Army and Navy, be actually submitted by 
 
 the Treasury.^ The result of this procedure is that, both 
 
 in theory and in fact, the request for funds is one emanating 
 
 from the Executive as a whole. This is not a mere formal re- 
 
 Sohdarity quirement. It means that all requests for funds will be care- 
 
 of Executive ^ . ^ 
 
 Responsi- fully scrutinized by an authority other than the one for whose 
 
 ' ^^ use the funds are intended, before any formal demand for 
 
 this grant will be made. When made, it becomes the act of 
 
 a ministry which is responsible for the whole financial plan. 
 
 ' The request for funds, under English practice, for historic reasons, 
 takes the form of a demand. 
 
 * For all estimates, except the Army and Navy, the Treasury is the 
 agent of the Ministry. The Army and Navy estimates are handled 
 direct. 
 
 48 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 This is a feature regarding which we shall have much to say 
 in another place, where the function of the Treasury as an 
 agent for controlling expenditure is more directly considered. 
 
 The Treasury the Authority for the Preparation and Sub- The 
 mission to Parliament of the Estimates. We have just pointed Agent"oiE *' 
 out that requests for grants of funds represent the act of Ae Ministry 
 the Ministry as a whole. This is secured by the rule that 
 no request for funds shall be made upon Parliament until 
 such request has received the approval of the Treasury. Fur- 
 thermore, all these requests, i. e., the estimates, with the ex- 
 ception of those for the Army and Navy, are presented to Par- 
 liament by the Treasury. This exception in the case of the •' 
 Army and Navy is merely one of form, since these estimates 
 must be passed upon and the presentation authorized by the 
 Treasury. In performing this function the Treasury by no 
 means acts merely as a ministerial agent of Parliament for >' 
 the assembling of the estimates and their presentation to the 
 representative body. It is the authority which upon informa- 
 tion obtained from administrative departments actually frames '' 
 the estimates and determines what funds shall be asked for. 
 The "Estimates," in a word, is the estimates of the Treasury, \\ \ 
 and not those of the several departments. Upon it rests the 
 entire responsibility, subject only to the general responsibility ' 
 of the Ministry for which it acts, of stating what are the 
 financial demands of the Executive. The fact that this state- 
 ment is based in large part upon requests for funds filed with 
 it does not lessen this responsibility. 
 
 In case of differences of opinion between the petitioning 
 department and the Treasury regarding the amount of funds 
 to be asked for, or whether any demand at all shall be made, 
 the final decision rests with the Treasury, subject only to the m 
 right of the department concerned to carry the matter to the 
 Cabinet as a whole for decision. Appeals in this way are, 
 in practice, only made when the matter in dispute is one of ' 
 great importance and concerns some large matter of public 
 
 49 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 How 
 Cabinet 
 Disputes 
 Are Settled 
 
 Not a 
 Variation 
 in Principle 
 
 Procedure 
 Followed 
 
 policy such as the extension of a program of social reform, 
 the increase of the Army or Navy, etc. Even here occasion 
 
 [ for an appeal rarely arises, since all matters of general policy, 
 with rare exceptions, are determined by the Cabinet before the 
 work of preparing the Estimates is entered upon. The ex- 
 planation of the infrequency with which appeal is made from 
 the decision of the Treasury is found in the strong tradition 
 
 //that has developed that the spending departments should ac- 
 cept the decision of the Treasury, and the still stronger feel- 
 
 / ing on the part of the Cabinet that in all appeals brought be- 
 fore it the Treasury, if possible, should be supported. This 
 is a matter of great importance. Were the practice otherwise 
 the whole theory of the responsibility of the Treasury for 
 estimates might easily be broken down. 
 
 Special Procedure for the Army and Navy Estimates. The 
 exception that has been noted in respect to the submission to 
 Parliament of estimates for the War Office and the Admiralty 
 by these departments instead of by the Chancellor of the Ex- 
 chequer does not represent any real departure from the gen- 
 eral principle of Treasury control. The fact that the pro- 
 cedure followed is that of having these estimates presented 
 'by the heads of the two departments is without any lessen- 
 ing of the prestige of the Treasury, since no estimate can 
 be submitted until it has been presented to, and has received 
 the approval of, the Treasury. The procedure followed in 
 securing this approval is, however, somewhat different from 
 that followed in the case of the civil services. 
 
 The foregoing is clearly brought out by the following quo- 
 tation from the official memorandum describing the control 
 of the Treasury over the War Office and Admiralty, filed 
 with the Select Committee on National Expenditures (1902).^ 
 
 "Control over Estimates : This in its initial and larger 
 stage is the control of the Chancellor of the Exchequer, 
 
 'Report of Select Committee on National Expenditure (1902), 
 Appendix No. 3, p. 197. 
 
 SO 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 who settles first with the Secretary of State for War and 
 the First Lord of the Admiralty, and subsequently with 
 the Cabinet, what is approximately to be the total sum 
 submitted to Parliament on account of Army and Navy 
 services in any given year. If the proposed total shows 
 any appreciable increase, the Minister will explain to 
 what cause the demand is due, as, e. g., a general scheme 
 of reorganisation in the regular or reserve forces, an 
 increase in the armed strength, an improvement in the 
 soldier's or sailor's pay, a large J>roposal for the rearma- 
 ment of the troops or of forts, the necessity for increased 
 accommodation at particular stations, some general 
 change in clothing, etc. ■ In the case of the Navy, policy 
 turns chiefly on the programme of new construction. 
 
 "A general total having been arrived at between Min- 
 isters, the Department proceeds to draw up the Estimates 
 in detail, and to submit each vote separately to the Treas- 
 ury, with a covering letter, explaining more or less fully, 
 as the circumstances may require, the reasons for any 
 increase or decrease in the various items as compared 
 with the sums taken in the previous year. The Estimate 
 cannot be submitted to Parliament until Treasury sanc- 
 tion has been obtained, though such sanction may be given 
 subject to the results of further consideration with regard 
 to specific items (all of which are scrutinised by the 
 Treasury as carefully as time permits). 
 
 "New charges of any importance are not to be inserted 
 in the Estimates unless they have been previously sanc- 
 tioned by the Treasury. It is very frequently the case 
 that the Treasury is represented on Committees with 
 which such new proposals commonly originate ; and this 
 Committee work is an important element in forming 
 Treasury knowledge and control. The form of the Esti- 
 mates is laid down by the Treasury, and no alteration 
 of arrangement or classification can be made without 
 Treasury sanction." 
 
 SI 
 
Instruction 
 
 BRITISH FINANCIAL ADMINISTRATION 
 
 Treasury Estimates Circular. The first step in the prepara- 
 tion of the Estimates consists in the issue by the Treasury, 
 about October i of each year, of a circular letter addressed 
 to the accounting officers of the several civil services, direct- 
 ing them to prepare and transmit to the Treasury the esti- 
 mates for their services for the fiscal year beginning April i 
 following. As these letters give in very compact and at the 
 same time comprehensive form the conditions that must be 
 observed in preparing these estimates, and the nature of the 
 information that must be furnished, it has been deemed de- 
 sirable to reproduce one of them in full. For this purpose 
 A Specific a selection has been made of the "Estimates Circular" for 
 1912-1913, which appears as Appendix No. i of the report 
 of the Select Committee on Estimates (1912).'^ The wording 
 of this letter may vary slightly from year to year, but its 
 general character and the nature of the instructions contained 
 in it have now become practically standardized. 
 
 ESTIMATES CIRCULAR 1912-1913 
 
 Treasury Chambers, 
 2d October, 191 1. 
 Sir: — 
 
 The Lords Commissioners of His Majesty's Treasury 
 command me to transmit to you the enclosed forms of 
 estimates for the services to be administered by your De- 
 partment during the year ending 31st March 1913. 
 
 One copy of each form, after insertion of the proper 
 particulars, and with such changes as may be necessary, 
 should be returned to the Treasury in due course. The 
 figures of the past year should be carefully checked, and 
 corrected where necessary. As much inconvenience is 
 caused if the forms are not used, additional copies of 
 
 'Report of the Select Committee on Estimates (1912), Appendix 
 No. I, pp. I34-I36- 
 
 52 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 them, as well as of this covering letter, will be furnished 
 to you if needful. 
 
 Date of Rendering Estimates. Such of the estimates 
 for 1912-1913 as require no special delay in their prep- 
 aration should be sent to the Treasury on or before the 
 1st December 191 1. Those estimates which, from pe- 
 culiar circumstances, cannot be made up so soon, should 
 be sent in as speedily after that date as possible. The 
 latest date at which any estimate, or alteration of an esti- 
 mate, can be received will be the 13th January 1912. 
 
 To enable the Estimates to be promptly issued, it is 
 important that all questions which affect the details 
 should, unless in exceptional cases, be settled before the 
 Estimates themselves are sent in. Proposals for which 
 treasury sanction is required should therefore be sub- 
 mitted well in advance of the time for sending in the 
 Estimates. If in any case questions are still unavoidably 
 outstanding, the Estimates should not on that account be 
 delayed, but should be submitted to the Treasury in as 
 complete a state as possible, upon the basis of existing 
 rates and authorities, with the understanding that the 
 items still under consideration are liable to alteration. 
 
 N. B. — iln order that the Chancellor of the Exchequer 
 may be in a position to ascertain the probable total of the 
 Estimates at an early date, it is requested that in all cases 
 where the delivery of the detailed estimate is likely to be 
 delayed beyond 15th December 1911, the approximate 
 total amount, so far as can be foreseen, may be com- 
 municated to the Treasury on or before that date. 
 
 Date of Statements of Expenditure, etc. All state- 
 ments of actual expenditure on new buildings should be 
 made up to the 30th November 191 1. The Estimates 
 should not, however, be kept back on this account, but 
 should be rendered, if nepessary, with such statements 
 in blank, leaving the omitted figures to follow later. 
 
 A like rule will govern any other statements of actual 
 S3 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 expenditure, or of actual receipts, or of time actually 
 spent in particular services, etc., that may be admitted in 
 the notes to the estimates. 
 
 The statements of Pensions granted and ceased should 
 be made up to the 30th November 191 1. 
 
 'Necessity for Economy. My Lords direct me to re- 
 mind you that, while it is essential, in order to avoid 
 Supplementary Estimates, that no expense likely to be 
 found necessary should be omitted in the first instance, 
 yet the state of the public revenue makes it imperative to 
 restrict the provision to such services and sums as are 
 urgently required. 
 
 Explanation of Estimates. My Lords desire to im- 
 press upon Departments the fact that a sufficient explan- 
 ation is necessary of the amount estimated for a duly 
 authorised service even when it does not exceed the esti- 
 mate of the preceding year. The habit of regarding each 
 year's estimate as the starting point for the next is one 
 against which special vigilance is needed in the case of 
 services upon which the expenditure is in some degree 
 discretionary, and My Lords think it necessary to warn 
 Departments, especially those whose expenditure is of 
 this character, that they must be prepared to subordinate 
 such expenditure to the financial exigencies of each 
 year. 
 
 Notification of Vacancies. My Lords request that 
 Their attention may be drawn by a note upon the estimate 
 to any office provided for in it which is vacant at the 
 date of forwarding the estimate, and as to the future of 
 which any question may be pending. 
 
 Form for Explanations. It is particularly requested 
 that the explanations of the details of the estimate may 
 in all cases be written upon the forms referred to in Reg- 
 ulation 3. The explanations should not be confined to 
 mere statements that a larger or smaller amount is re- 
 quired, but should afford a justification of the whole 
 
 54 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 amount inserted. Additional copies of the forms can be 
 supplied if required. 
 
 Progress Reports. In any case where the estimate con- 
 tains provisions for a special service which, though not 
 permanent in character, extends over more than one year. 
 My Lords request that the estimate may be accompanied 
 by a report on such services showing — (a) the expendi- 
 ture upon it to date as compared with the estimated total 
 cost, (b) the progress made towards the completion of 
 it; and stating whether the service is likely to be com- 
 pleted within the period previously anticipated, and at 
 a cost not exceeding the amount sanctioned. 
 
 Estimate of Receipts in Stamps. I am to request that 
 special attention may be given to the preparation of the 
 estimate of receipts in stamps called for by Regula- 
 tion 13. 
 
 Expenditure During the Current Year. I am to re- 
 quest that, in addition to the information required by 
 Regulation 3, the figures of actual expenditure under 
 each subhead may be given for the half-year to 30th Sep- 
 tember 191 1, with any comments upon them regarded 
 as an indication of the probable expenditure in the cur- 
 rent year. 
 
 Vote on Account. Before the commencement of the 
 next financial year Parliament will be asked to grant a 
 Vote on Account sufficient to provide for the require- 
 ments of each service for the normal period of the Ses- 
 sion. In ordinary course the Treasury will fix the 
 amount to be included for a particular service on the 
 basis of the amounts which have been found sufficient in 
 previous years. If there are any special circumstances 
 which should be regarded in fixing the amount of your 
 Vote on Account for next year, I am to request that you 
 will draw attention to them in the letter submitting the 
 estimate, indicating the amount which is likely to be re- 
 quired. 
 
 55 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The annexed regulations should be strictly observed in 
 filling up the forms of estimates. 
 
 I am, etc., 
 (Signed) C. Hobhouse. 
 
 To THE Accounting Officer. 
 
 Regulations to be Observed in Preparing the Civil Service 
 and Revenue Departments Estimates. 
 
 1. Quotation of Statutes. In preparing the estimates 
 the references to the chapters and sections of the statutes 
 relating to the service provided for should be carefully 
 revised and corrected according to the latest legislation, 
 special care being taken to remove references to statutes 
 which have been repealed or which are no longer ap- 
 plicable. Statutes governing* the vote generally should be 
 recited in the heading of it, and those relating to partic- 
 ular subheads should appear in the detail of those sub- 
 heads. 
 
 2. Unsanctioned charges to be excluded. No charge 
 for which due sanction has not been already obtained is 
 to be inserted in an estimate. Any contemplated altera- 
 tion, addition, or new provision, requiring Treasury ap- 
 proval, should be brought to Their Lordships' notice, if 
 possible, in time for decision before the estimate is sent 
 in. Where such a proposal cannot be submitted in ad- 
 vance of the estimate it should be dealt with in a separate 
 explanatory letter. 
 
 3. Separate explanatory statements to be enclosed. 
 The letter transmitting each estimate should also enclose 
 statements written upon the sheets of which copies are 
 sent herewith, and in the form of which a specimen is 
 annexed, explaining and justifying seri-atim the amounts 
 provided in the estimate under each subhead of expendi- 
 ture. The estimated amounts of receipts in cash or 
 stamps should be similarly explained. 
 
 56 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 4. Insertion does not convey sanction. Authority for 
 a new or increased expense is not to be inferred from the 
 fact of its having been, from any cause, printed in the 
 estimates before the proper official sanction has been 
 given. 
 
 5. Reference to Treasury Letters. If Treasury ap- 
 proval has been signified to any deviation from the pro- 
 vision made in the estimate for the preceding year, care 
 should be taken to insert an accurate reference to the 
 number and date of the Treasury letter conveying such 
 approval. 
 
 6. Transfer of charges — (a) between subheads; (&) 
 between votes. Whenever a transfer of charge from 
 one subhead to another becomes necessary, the amount 
 provided for the previous year for the service in question 
 should be also transferred, so as to exhibit a proper com- 
 parison. 
 
 A like course should be followed if a charge be trans- 
 ferred, with previous Treasury consent, from one vote to 
 another. 
 
 7. Gross charges to be provided for. Each estimate 
 should provide for the gross amount of charges which 
 will probably come in course of payment during the year 
 under each subhead ; and also for the gross receipt antici- 
 pated under the credit subhead, in cases where the system 
 of appropriation in aid of the vote has been introduced. 
 
 8. Mode of providing for personal remunerations. All 
 charges for the personal remuneration of the permanent 
 or temporary staflf of a department, including the pay of 
 professional men engaged for special services, should be 
 provided for in the subhead for "Salaries, etc.," unless 
 some other arrangement has been specially sanctioned by 
 the Treasury. 
 
 9. Extra remuneration of officers to be voted. In 
 cases where remuneration, exceeding the sum of £25 for 
 the financial year, is received by any officer from public 
 
 57 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 funds in addition to the ordinary emoluments of his office 
 as provided in the estimate, a note must be appended, 
 stating the amount of such remuneration, the service for 
 which it is received, and the source from which it is pro- 
 vided. This rule is intended to apply to all extra re- 
 muneration, however casual or variable, and to any pen- 
 sion or compensation allowance in respect of Public 
 Service, that an officer may receive, its object being to 
 bring into one view the whole of his official emoluments 
 from whatever source. Every officer is bound to report 
 annually to the accounting officer of his department all 
 the extra remuneration that he may have received in the 
 year from any external source. The fact of an officer 
 being provided with an official residence, fuel, or light, 
 at the public expense, should also be recorded. 
 
 The mode of applying the foregoing regulation is more 
 fully explained in Treasury Circular of 28th August 
 1897. 
 
 ID. Personal salaries. The estimate should be accom- 
 panied by a separate statement explaining with reference 
 to treasury letters of approval, every "personal" salary 
 or allowance included in the estimate. 
 
 11. Incidental expenses. The subhead for incidental 
 expenses should, as a general rule, be confined to petty 
 and casual charges, too insignificant to be provided for 
 separately. Details of it should be furnished to the 
 Treasury, although not necessarily for publication. 
 
 12. Rates J taxes, insurance. Special attention should 
 be called to any provision included in an estimate for 
 rates, taxes, or insurance, with an explanation of the cir- 
 cumstances which are considered to make such provision 
 necessary. 
 
 13. Receipts in cash and stamps to be estimated. Spe- 
 cial care should be talcen in calculating the Receipts ap- 
 pertaining to each estimate; and their nature should be 
 stated, so as to show the probable yield of each principal 
 
 S8 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 source. The amounts that are likely to be collected in 
 cash and in stamps should be stated separately. If any 
 material increase or decrease be expected in either cash' 
 or stamp receipts the cause thereof should be explained 
 to the Treasury, as prescribed by Regulation 3. 
 
 14. Responsibility of superior Departments. Depart- 
 ments charged with the duty of accounting for Parlia- 
 mentary grants for Subordinate Departments or Services 
 will be responsible for the observance of these regula- 
 tions in the preparation and transmission of the several 
 estimates of such Subordinate Departments and Services. 
 
 ESTIMATES FORM: EXPLANATION OP INCREASES OR 
 DECREASES 
 Title of Vote 
 
 Subhead 
 
 Explanation of Increase or De- 
 crease in the Estimate for 
 1912-13 
 
 A. Salaries 
 
 Estimate 1912-1913 
 
 " 1911-1912 
 
 Expenditure 1911-1912 
 
 (Six months to 30th 
 September 191 1.) 
 
 " 1910-1911 
 
 " 1909-1910 
 
 " 1908-1909 
 
 B. Travelling 
 Estimate 1912-1913 
 
 " 1911-1912 
 
 Expenditure 1911-1912 
 
 (Six months to "30th 
 September 191 1.) 
 
 " 1910-1911 
 
 " 1909-1910 
 
 " 1908-1909 
 
 Etc., etc. 
 Receipts, or Credit Subhead. 
 
 Estimates 1912-1913 
 
 " 1911-1912 
 
 Heceipts 1911-1912 
 
 (Six ftionths to 30th Sep- 
 tember 191 1.) 
 
 " 1910-1911 
 
 " 1909-1910 
 
 " 1908-1909 
 
 59 
 
w 
 o 
 
 CO 
 
 Pi 
 
 Pi 
 O 
 
 w 
 
 BRITISH FINANCIAL ADMINISTRATION 
 
 5 
 
 
 2 
 
 6o 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 Estimates as Submitted by the Several Departments to the 
 Treasury in Large Part but a Summation of Provisions Al- 
 ready Approved by the Treasury. There are certain features 
 of this request for estimates that are of great interest, but Method of 
 which would probably escape notice unless attention were Preventing 
 specially directed to them. The first and much the most estimates 
 important of these is that expressed in Regulation No. 2, that 
 "no charge for which due sanction has not been already ob- • 
 tained is to be inserted in an estimate. Any contemplated 
 alteration, addition, or new provision requiring Treasury ap- 
 proval, should be brought to their Lordships' notice, if pos- 
 sible, in time for decision before the estimate is sent in. 
 When such a proposal cannot be submitted in advance of the 
 estimate it should be dealt with in a separate explanatory 
 letter.'' 
 
 This rule bears upon an aspect of the budgetary practice Central 
 of Great Britain which, so far as the commission is aware, oyel^° 
 has received little attention on this side of the water, yet it Changes 
 constitutes a most vital feature of the whole system of Treas- 
 ury control of the procedure in preparing and submitting the 
 annual estimates. This feature is that the powers of the -' 
 Treasury to control are exerted before, not after, the esti- 
 mates for the several services are received by it. It is the ) 
 duty of each service, as points arise which, in its opinion, will 
 make desirable changes in existing financial provisions, to 
 bring these points to the attention of the Treasury by letters 
 and to secure Treasury sanction for such changes. Under this 
 arrangement each change desired is taken up and considered ^^ 
 upon its merits under circumstances which give ample time 
 and opportunity for due consideration of the proposed 
 change. This in fact is what actually takes place in the case • 
 of almost all changes of importance that the departments de- 
 sire to have made. The result is that the estimates, when 
 finally submitted by the departments, represent little more \\ 
 than the statement of proposals that have already been agreed 
 upon between the various submitting departments and the 
 
 61 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Depart- 
 nental 
 Estimates a 
 iummation 
 )f Prior 
 decisions 
 
 Treasury. Excepting in emergency, it should never be neces- 
 sary to include items not approved in advance. 
 
 Sir Robert Chalmers, Permanent Secretary of the Treas- 
 ury, has brought out this fundamental feature of the English 
 estimate system in a very clear manner in his testimony be- 
 fore the Select Committee on Estimates (1912). After quot- 
 ing the regulation he said : ^ 
 
 "The important thing which I want the Committee to 
 realise from the two paragraphs of the Circular which I 
 have read is that really the sending in of an Estimate is 
 rather a summation of previous decisions on details than 
 \\ a sudden and initial demand for money. In all Estimates 
 as they come in there are references to Treasury Author- 
 ities which have been given on nearly all specific 
 cases. . . . What I want to make clear is that right 
 through the year beginning with April, the preparation 
 of the Estimate is going on in detail and the Estimate 
 itself is more a summary than anything else so far as the 
 ordinary Departments are concerned, whose work is not 
 enlarged by sudden legislation at the end." 
 
 i'ullness of 
 iupplemen- 
 ary Data 
 
 Comparison 
 if Expendi- 
 ureB 
 
 Comparative and Explanatory Data Required. A second 
 point of importance is the fullness of the. data that are re- 
 quired for comparative and explanatory purposes. As is else- 
 where described, appropriations are made under certain gen- 
 eral heads known technically as "votes." The total of each 
 vote is subdivided under what are known as "subheads," which 
 represent the heads under which all accounting of the money 
 carried by each is to be rendered. Reference to the form 
 entitled Explanation of Increase or Decrease shows that for 
 each subhead there must be given, in addition to the amount 
 estimated for the ensuing fiscal year: (i) The estimate for 
 the current year; (2) actual expenditures for the first six 
 months of the current year; and (3) expenditures for each 
 
 'Report of the Select Committee on Estimates (1912), p. 2. 
 
 62 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 of the three years preceding. If the service is one .which 
 receives any income from any source, corresponding data I 
 must be given regarding such income. 
 
 In respect to changes of personnel a detailed statement must List of 
 be submitted, on a special form provided for the purpose, giv- i ""°"^^ 
 ing under the heading "Establishment" a list of all positions 
 to be provided for, and showing for each position : ( i ) The 
 number of employees for the current year; (2) the number 
 desired for the ensuing year; (3) the scale of salary to be 
 paid, showing the minimum salary carried by the position, the 
 annual increment provided for length of service and the maxi- 
 mum salary that can be paid; (4) the total provision made 
 for the payment of salaries of persons in each position; and 
 ( 5 ) the total sum that will be required for making such pay- 
 ment in the ensuing year. 
 
 In accordance with other regulations, details must be given Details of 
 regarding the items of incidental expenses and other subheads. Expenses 
 We have already noted that for the mdst part all changes in 
 proposed estimates over current provision have previously 
 been brought to the attention and received the approval of 
 the Treasury. The regulations require that reference shall " 
 be made to all letters of the Treasury in which such changes 
 have been authorized. 
 
 In connection with the securing of data for comparative Comparative 
 purposes it is of interest to note that these data are as far pa^r^d by^the 
 as possible inserted by the Treasury in the forms before they Treasury 
 are sent to the departments. Thus, for example, in the form 
 upon which the details regarding personnel are to be given, 
 all of the eight columns except the two calling for the esti- 
 mates proper for the year to which the estimates relate are 
 filled in by the Treasury before the form is sent out. All that 
 the departments have to do is to verify these figures and fill 
 in the two columns remaining. This procedure insures that '* 
 the Treasury will get the information in precisely the form 
 and detail desired by it. What is of equal importance, it 1 
 expedites enormously the subsequent work of scrutinizing the 
 
 63 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 returns and getting them into shape for transmission to Par- 
 liament. At best the Treasury has thrown upon it a great 
 volume of work that has to be done with the greatest expedi- 
 tion possible. It is evident that this procedure, taken in con- 
 nection with the fact that almost all changes of importance 
 have .already been considered and passed upon, facilitates this 
 work greatly. 
 
 The figures filled in for the current year represent the aggre- 
 gation of the original estimates and any supplemental esti- 
 Estimates mates that may have been granted. It should be noted, how- 
 
 Filled In by ,...,,, °. , , , , , 
 
 Department ever, that it IS possible for further grants to be made for the 
 
 current year, since the final supplementary votes of one finan- 
 cial year are not generally taken until after the estimates for 
 the following year have been presented. This is unfortunate, 
 but apparently unavoidable. 
 
 Finally, it may be noted that it is the custom for each serv- 
 ice to send in the estimates with a general covering letter in 
 which attention is directed to any matter of especial im- 
 portance and particularly to those changes which for any rea- 
 son have not already received the Treasury sanction. 
 
 Estimates to Be Justified, Though No Increase Is Requested. 
 A minor point, and yet one of no little importance, is that 
 covered by the section of the "Estimates Circular" which pro- 
 vides that "My Lords desire to impress upon Departments 
 the fact that a sufficient explanation is necessary of the 
 amount estimated for a duly authorized service even when 
 it does not exceed the estimate of the preceding year. The 
 habit of regarding each year's estimate as the starting point 
 for the next is one against which special vigilance is needed 
 in the case of services upon which the expenditure is in some 
 degree discretionary." It is one thing to keep down addi- 
 Responsi- tional expense and quite another to effect reductions in au- 
 on Exec^'' thorized expenditures in the past which are in excess of pres- 
 utive ent real needs. The requirement quoted, in addition to being 
 
 a general appeal for economy, has for its purpose the laying 
 
 64 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 of the basis for the Treasury questioning any item, whether 
 or not it exceeds the provision for the current year. It is 
 the duty of the Treasury to familiarize itself as far as pos- 
 sible with the needs of the several departments and to effect ^ 
 reductions as well as to check increases. It goes without ' 
 saying, however, that the effectiveness of its action in respect 
 to the first is much less than it is as regards the second require- 
 ment. 
 
 Preparation of Estimates Within the Departments. Only 
 a few words need be said regarding the methods followed 
 by the departments in preparing their estimates. Their task 
 has been much simplified by the Treasury having filled in much ' 
 of the comparative data before the forms are sent to them, 
 and still more so by the fact that almost all the contemplated 'Methods 
 changes over existing provisions have already been raised ^* 
 
 with the Treasury and received a settlement. The nature of 
 the work to be done by them is described in the "Memoran- 
 dum on the Annual Estimates" which is appended to the re- 
 port of the Select • Committee on National Expenditures 
 (1902), in the following terms: ^ 
 
 "The work of preparation of the Estimate within the 
 Department itself varies in its character according to the 
 scope of the Department and of its Vote. In the case of 
 small Departments, where the whole establishment is Varies in 
 congregated under one roof, the accounting- officer, as- Departments 
 sisted by the officer in charge of the accounts, has usually 
 all the materials at hand. The establishment books of 
 the department show the salary of every officer and the 
 date at which his next increment accrues, and records are 
 kept of any decisions involving changes of the establish- 
 ment. It is thus possible to calculate with exactitude the 
 amount which will be required for personal remunera- 
 tion, subject of course to any changes which may arise 
 
 * Report of Select Committee on National Expenditure (1902), p. 
 192. 
 
 65 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 ubsidiary 
 stimates 
 
 through death or other unexpected causes. For the other 
 Subheads of the Vote, comprising the charges incidental 
 to the work of the Department, the accounting officer is 
 guided by past expenditure, as well as by his knowledge 
 of any changes which have been effected or may be im- 
 pending in the Department's business, and any doubtful 
 points are settled in consultation with the officers whose 
 work they specially concern. 
 
 "In the large Departments many of the Subheads of 
 the Vote can be estimated in the same way by the account- 
 ing officer from his general knowledge and experience. 
 But where there are larger branches of the Department 
 carrying on their work away from its headquarters, it 
 may be necessary to obtain subsidiary estimates from the 
 heads of those branches of their portion of the expendi- 
 ture. In the Inland Revenue Department, for instance, 
 reference is made to the Controller of Stamps and Stores, 
 the Chief Inspector of Taxes, the Government Chemist 
 and the local Collectors, before fixing the provision for 
 the Subheads with which they are concerned. When the 
 necessary particulars have been obtained they are collated 
 by the accounting officer and the estimate as a whole is 
 reviewed by him under the direction of the head of the 
 department ; and the demands of individual branches may 
 have to be reduced before the Estimate is forwarded to 
 the Treasury, either on their own merits, or on a con- 
 sideration of the total of the Estimate and the compara- 
 tive strength of other claims." 
 
 :;omparison 
 vith 
 'ractice 
 iere 
 
 The process of preparing the estimates in the departments 
 is thus not dissimilar from that obtaining in the United States, 
 with this important exception : In Great Britain there is one 
 important officer of high rank, and with real authority and 
 responsibility, whose duty it is not only to prepare the esti- 
 mates, but to use his utmost eflforts to see that they do not 
 call for expenditures not justified by the real needs of the 
 
 66 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 service. In the Ubited States the responsibility falls upon ^^ 
 the head of the service. As this official is one who usually ' 
 changes with each administration, who thus has not grown 
 up with the service and who has no intimate and detailed 
 knowledge of the requirements, his responsibility is of the 
 most general character. Certainly he is not in a position 
 to exercise as intelligent direction and control over the de- ■ 
 tails of the estimate as is the permanent acounting officer under 
 the British system. 
 
 Examination of the Estimates by the Treasury. Having 
 reached the Treasury, the next step in getting the estimates | 
 into shape is their critical examination and revision by that Procedure 
 
 or Review 
 
 authority. The manner in which this work is performed is and Revision 
 excellently described in the memorandum from which we have 
 Just quoted.^ 
 
 "When the Estimates for the Civil Services and Rev- 
 enue Departments reach the Treasury they are examined 
 by the Estimate Clerk, assisted by one of the junior 
 clerks. The first business of the juniors is to go through Examipation 
 all the figures of the Estimate, noting in the margin the clerk 
 increase or decrease on every item which shows a differ- 
 ence from the previous year, either as regards number of 
 staff or amount of provision. Any alteration which the 
 Department proposes to make in the body of its Estimate, 
 in the particulars represented by Columns 3 to 6 (Estab- 
 lishment and scale of salary) of the form already de- 
 scribed, is at once apparent because the existing state of 
 things is, represented by the printed matter of the form. 
 All variations of this kind, as well as all changes in the 
 amount of the monetary provision which are not the 
 result of the automatic operation of progressive scales of 
 pay, are then compared with the record of Treasury sanc- 
 
 ' Report of the Select Committee on National Expenditure, 1902, 
 p. 192. 
 
 67 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tions relating to the Estimate which has been given since 
 the previous year's Estimate was framed. For the pur- 
 pose of this record, the several divisions of the Treasury 
 have from time to time referred to the Estimate Clerk 
 lany decisions of the Board of Treasury which would 
 entail alterations in any estimate. Every change which 
 the estimate shows should be either covered by a sanction 
 thus recorded or be otherwise satisfactorily accounted for 
 in the Department's explanations. 
 
 "The Estimate Clerk examines the estimate as regards 
 any discrepancy on the above points, and also considers 
 the necessity for the monetary provision in the light of 
 past expenditure and of the explanations. Each separate 
 subhead is regarded, and also the estimate as a whole. It 
 it not sufficient merely to examine the subheads piecemeal 
 for this reason: — 'The ideal of a scrupulous accounting 
 officer is apt to be to provide on each individual subhead 
 enough money for its probable requirements with a small 
 margin for contingencies. In an estimate which has a 
 large number of subheads the effect of providing for 
 each one thus fully may be to take an excessive amount 
 for the vote as a whole, even though no particular sub- 
 head could be regarded as extravagant. In order to 
 guard against this tendency, the Treasury has to pay 
 regard to the total vote, so as to ensure that proper allow- 
 ance is made for the compensating effect of surpluses and 
 deficiencies in the various subheads. If the Elstimate 
 Clerk is in doubt as to the effect proposed to be given to 
 any Treasury sanction he refers the estimate to the Prin- 
 cipal Clerk in charge of the Treasury Division which 
 deals with the Department concerned. That officer is 
 also consulted as to any new proposal referred to in the 
 estimate, and even in the absence of such special reason, 
 he has. usually the opportunity to advise upon any impor- 
 tant estimate relating to the departments with which he 
 deals. 
 
 68 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 "The estimate then goes before the Financial Secre- Review by 
 tary, who directs the action to be taken upon any of the Secretary 
 points submitted to him by his subordinates. He also 
 considers the estimate in its general bearings, by his 
 knowledge of the affairs of the Department, of Parlia- ! 
 mentary opinion upon the services for which this Esti- 
 mate provides, and of the financial circumstances of the 
 time. He decides whether the estimate shall be approved 
 as submitted, or what criticisms and suggestions for its 
 amendment shall be offered to the Department. In the 
 latter event, subsequent correspondence may elicit explan- 
 ations from the Department which will justify the Treas- 
 ury in passing the Estimate, or alterations may be agreed 
 between the Departments. Should agreement not be » 
 reached, it would be open to the Treasury, in the last 
 resort, in the exercise of its responsibility, to present the 
 Estimate to Parliament in the shape approved by the 
 Treasury." 
 
 Transmission of the Estimates to the Hoiise of Commons. 
 The fiscal year, it will be remembered, begins April I. The 
 "Estimates Circular," calling for estimates from the several 
 civil departments, is issued about October i of the year pre- 
 ceding. It directs that when possible the departments should "'^^'^ .°*. 
 make their returns by December i. Inasmuch as there are 
 certain estimates which cannot be framed so far in advance 
 of the financial year to which they relate, a further date is 
 mentioned upon which these estimates should be in hand. 
 This latter date varies from year to year, according to the 
 period at which Parliament is expected to assemble, but usu- 
 ally is some date early in January. In practice the bulk of 
 the estimates reach the Treasury between December i and the 
 date so fixed. The middle of January may therefore be taken 
 as the date upon which all estimates must be in the hands \ 
 of the Treasury. As has been pointed out, the Treasury has 
 already done the bulk of its work in passing upon applica- 
 
 69 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tions for changes presented to it one by one by the several 
 departments. The work of further studying the estimates, 
 deciding points still open, and assembling the material, thus 
 proceeds rapidly. Parliament usually convenes some time in 
 February. Shortly after it assembles, the estimates are in 
 form and are laid before it. The estimates for 1914-1915 
 bear the date of March 2, 1914. 
 
 Supplementary Estimates. As it is impossible for the de- 
 partments in preparing their estimates to foresee all contin- 
 Conditions gencies, and as conditions may easily arise calling for the 
 Whfch They expenditure of funds not provided for in the regular esti- 
 Are Made mates, the departments from time to time send supplementary 
 estimates to the Treasury, which, if approved by that author- 
 ity, are laid before Parliament. These supplementary esti- 
 , mates are apt to represent new demands rather than additions 
 to demands already contained in the regular estimates, for 
 I all minor deficiencies under one head can be met by transfers 
 of money from other heads under a system that will be pres- 
 ently described. Thus supplementary estimates are resorted 
 I to only when the amount asked for is important and exceeds 
 the total resources of the department. 
 
 Though supplementary estimates may be submitted at any 
 time, it is usual for the Treasury to submit them to the House 
 of Commons in two batches: One in July prior to the ad- 
 journment of Parliament for the summer and prior to the 
 passage of the annual appropriation act, and the other in 
 February just prior to the close of the fiscal year. These are 
 known as the summer and the February supplementaries. 
 Both, it will be noted, are submitted during the fiscal year 
 to which they relate. If the regular estimates have not been 
 considered prior to the submission of the summer supple- 
 mentaries, the two are considered together. It should be ob- 
 served that in the annual estimates, when grants for the cur- 
 rent year are given, for comparative purposes, they include 
 the sums granted in pursuance of the summer supplementaries, 
 
 70 
 
 Usually 
 Submitted 
 in Two 
 Batches 
 
ESTIMATES: PREPARATION AND SUBMISSION 
 
 but not those called for by the February supplementaries. 
 Every effort, however, is made to have the regular or sum- 
 mer supplementaries cover all expenditures, with the result 
 that the February supplementaries are usually small in amount 
 and relate to but a few votes. 
 
CHAPTER IV 
 
 THE ESTIMATES : CHARACTER AND FORM 
 
 Classification of Estimates; Appropriation Heads: "Votes"; Appro- 
 priation Subheads; Supporting Details; Order of Presentation of 
 Data; General Summaries and Analyses. 
 
 We have now reached the position where the estimates 
 
 have been received, compiled, and laid before Parliament by 
 
 the Chancellor of the Exchequer and the heads of the War 
 
 and Navy departments. In our analysis of the problem of 
 
 "The Esti- administering the public finances of a nation we have pointed 
 
 mates" only , . ^ . , ,. , 
 
 a Part of a out that the Summaries of estimated expenditures commonly 
 Budget I called "The Estimates" proper constitute, or should be made 
 to constitute, but one part of a financial plan presented in 
 a document known as "The Budget" — the function of "The 
 ) Budget" being to bring such estimates into comparison with 
 past expenditures, current appropriations, and the resources 
 available with which to meet the expenditures proposed. If 
 the estimates are to be of a character such that their purport 
 can be readily seen, it is imperative that they be classified, 
 summarized, and compared with past expenditures and ap- 
 propriations in such a way that the appropriating authority 
 II and the general public can readily determine the extent to 
 which these estimates represent a change in policy in respect 
 to the expenditure of funds, the objects for which increased 
 expenditure is proposed, and those for which a reduction of 
 expenditures is called for. 
 
 This subject of the form in which the estimates should be 
 
 submitted and the summaries and comparative tables that 
 
 ( should accompany them, in order that their significance may 
 
 be seen, is one of great importance. The commission has, 
 
 72 
 
ESTIMATES: CHARACTER AND FORM 
 
 therefore, in the pages that immediately follow, sought to 
 give as full a description of the character of the English esti- 
 mates as they come before Parliament as it is possible to do 
 without actually reproducing the estimates themselves in full. 
 
 Classification of Estimates. The whole character of the Expendi- 
 estimates depends on the manner in which the suras asked for Services 
 are classified and totaled. The first classification is that be- 
 tween the four groups of services, which are designated : 
 
 1 
 
 1. Army 
 
 2. Navy 
 
 3. Civil Services 
 
 4. Revenue Departments 
 
 The Army and Navy estimates embrace the estimates not 
 only for the military and naval establishments, but for the 
 War Office and the Admiralty, by which these establishments Army and 
 are administered. The result of this primary classification is services 
 to distinguish clearly between estimates and expenditures for 
 military and naval purposes and those for civil purposes. The 
 distinction between the civil services and the revenue depart- 
 ments is also one of great value. In this connection it should 
 be noted that the Treasury quite properly is not treated as 
 one of the revenue departments, but as one of the civil 
 services. 
 
 As the Army and Navy represent unifunctional services, no ^ 
 further classification of estimates and expenditures is made 
 in respect to them except that represented by the individual Civil and 
 ■"vote," to which attention will shortly be directed. The civil services 
 services and revenue departments are, however, further classi- - 
 iied, the former into seven and the latter into three groups, as 
 follows : 
 
 Civil Services : 
 
 1. Public Works and Buildings 
 
 2. Salaries and Expenses of Civil Departments 
 
 73 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 3. Law and Justice 
 
 4. Education, Science and Art 
 
 5. Foreign and Colonial Services 
 
 6. Non-effective and Miscellaneous Services 
 
 7. Old-age Pensions, Labor Exchanges, Insurance, etc. 
 
 Revenue Departments : 
 
 1. Customs and Excise 
 
 2. Inland Revenue 
 
 3. Post Office 
 
 Groupings These groupinsrs are historical rather than logical. Whether 
 
 Historical, ' , , .° . , ... ,. , . 
 
 not Logical or not the classification may be considered as one which in 
 the main is satisfactory, it clearly distinguishes between such 
 important groups of expenditure as those for the adminis- 
 trative services proper (Class 2), those for judicial purposes 
 (Class 3), those for public works (Qass i), etc. Class 2 
 includes expenditures for Parliament as well as those for 
 the executive departments proper, but the two are clearly dis- 
 tinguished by separate votes within the class. In all cases 
 the departments handling the kind of business to which a class 
 relates are included in that class, and not in the class of sala- 
 ries and expenses of civil departments. This is as it should 
 ' be, since it brings together all expenditures relative to a par- 
 ticular category of work. 
 
 Appropriation Heads: "Votes." The next subdivision 
 within these classes consists of the heads under which appro- 
 Character priations are actually made, or, as they are 'technically called, 
 of° "Votes"*' "votes" — or a subdivision on which a separate vote will be 
 asked when the estimates are being considered in committee 
 of the whole on supply. Of such votes there are 15 in the 
 Army estimates, 15 in the Navy estimates, 120 in the Civil 
 Service estimates and 3 in the Revenue Department estimates, 
 ' a total of 153 heads under which appropriations are made. As 
 few matters in connection with the grant of funds for the 
 
 74 
 
ESTIMATES: CHARACTER AND FORM 
 
 conduct of Government operations are of greater importance 
 than the particularity with which appropriations are made, 
 it has been thought desirable to reproduce these 153 appropria- . 
 tions heads in full in the order in which they appear in the 
 estimates. They are as follows : 
 
 I. ARMY 
 
 1. Pay, etc., of the Army 
 
 2. Medical Establishments: Pay, etc. 
 
 3. Special Reserve 
 
 4. Territorial Forces 
 
 5. Establishments for Military Education 
 
 6. .Quartering, Transport and Remount 
 
 7. Supplies and Clothing. 
 
 8. Ordnance Department Establishments and General 
 Stores 
 
 9. Armament, Engineer and Aviation Stores 
 
 10. Works and Buildings ' 
 
 11. Miscellaneous Effective Services 
 
 12. War Office 
 
 Non-effective Services 
 
 13. Non-effective Charges for Officers, etc. 
 
 14. Non-effective Charges for Men, etc. 
 
 15. Civil Superannuation, Compensation and Gratuities 
 
 II. NAVY 
 
 1. Wages of Officers, Seamen and Boys, Coast Guards 
 and Royal Marines 
 
 2. Victualing and Clothing for the Navy 
 
 3. Medical Establishments and Services 
 
 4. Civilians Employed on Fleet Services 
 
 5. Educational Services 
 
 6. Scientific Services 
 
 75 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 7. Royal Naval Reserves 
 
 8. Shipbuilding, Repairs, Maintenance, etc. 
 
 9. Naval Armament 
 
 10. Works, Buildings, and Repairs at Home and 
 Abroad 
 
 11. Miscellaneous Effective Services 
 
 12. Admiralty Office 
 
 13. Half Pay and Retired Pay 
 
 Non-effective Services 
 
 114. Naval and Marine Pensions, Gratuities, and Com- 
 pensation Allo-jvances 
 
 15. Civil Superannuation, Compensation Allowances 
 and Gratuities 
 
 III. CIVIL SERVICES 
 Class I. Public Works and Buildings 
 
 1. Royal Palaces 
 
 2. Osborne 
 
 3. Royal Parks and Pleasure Grounds 
 
 4. House of Parliament Buildings 
 
 5. Miscellaneous Legal Buildings, Great Britain 
 
 6. Art and Science Buildings, Great Britain 
 
 7. Diplomatic and Consular Buildings 
 
 8. Revenue Buildings 
 
 9. Labor Exchange Buildings, Great Britain 
 
 10. Public Buildings, Great Britain 
 
 11. Surveys of the United Kingdom 
 
 12. Harbors under the Board of Trade 
 
 13. Peterhead Harbor 
 
 14. Rates on Government Property 
 
 15. Public Works and Buildings, Ireland 
 
 16. Railways, Ireland 
 
 17. The Palace of Peace, The Hague 
 
 76 
 
ESTIMATES: CHARACTER AND FORM 
 
 Class II. Salaries and Expenses of Civil Departments 
 United Kingdom and England 
 
 1. House of Lords Offices 
 
 2. House of Commons 
 
 3. Treasury and Subordinate Departments 
 , 4. Home Office 
 
 5. Foreign Office 
 
 6. Colonial Office 
 
 7. Privy Council Office 
 
 8. Board of Trade ' 
 
 9. Mercantile Marine Services 
 
 ID. Bankruptcy Department of the Board of Trade 
 
 11. Board of Agriculture and Fisheries 
 
 12. Charity Commission 
 
 13. Chemist, Government 
 
 14. Civil Service Commission 
 
 15. Exchequer and Audit Department 
 
 16. Friendly Societies Registry 
 
 17. Local Government Board 
 
 18. Lunacy Commission 
 
 19. Mint, including Coinage 
 
 20. National Debt Office 
 
 21. Public Record Office 
 
 22. Public Works Loan Commission 
 
 23. Registrar General's Office 
 
 24. Stationery and Printing, Stationery Office 
 
 25. Wood, Forest, etc., Office of 
 
 26. Works and Public Buildings, Office of 
 
 27. Secret Service 
 
 Scotland 
 
 28. Secretary for Scotland, Office of 
 
 29. Board of Agriculture 
 
 ■ 77 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 30. Fishery Board 
 
 31. Lunacy Commission and General Board of Con- 
 trol 
 
 32. Registrar General's Office 
 
 33. Local Government Board 
 
 Ireland 
 
 34. Lord Lieutenant's Household 
 
 35. Chief Secretary's Offices and Subordinate Depart- 
 ments 
 
 36. Department of Agriculture and Technical Instruc- 
 tion 
 
 ;iy. Charitable Donations and Bequests Office 
 
 38. Congested Districts Board 
 
 39. Local Government Board 
 
 40. Public Record Office 
 
 41. Public Works Office 
 
 42. Registrar General's Office 
 
 43. Valuation and Boundary Survey 
 
 Class III. Law and Justice 
 United Kingdom and England 
 
 1. Law Charges 
 
 2. Miscellaneous Legal Expenses 
 
 3. Supreme Court of Judicature and Court of Crim- 
 inal Appeal 
 
 4. Land Registry 
 
 5. Public Trustee 
 
 6. County Courts 
 
 7. Police, England and Wales 
 
 8. Prisons, England and the Colonies 
 
 9. Reformatory and Industrial Schools, Great Britain 
 10. Criminal Lunatic Asylums, England 
 
 78 
 
ESTIMATES : CHARACTER AND FORM 
 
 Scotland 
 
 11. Law Charges and Courts of Law 
 
 12. Scottish Land Court 
 
 13. Register House, Edinburgh 
 
 14. Prisons 
 
 Ireland 
 
 15. Law Charges and Criminal Prosecutions 
 
 16. Supreme Court of Judicature and other Legal De- 
 partments 
 
 17. Land Commission • 
 
 18. County Court, Offices, etc. 
 
 19. Dublin Metropolitan Police 
 
 20. Royal Irish Constabulary 
 
 21. Prisons 
 
 22. Reformatory and Industrial Schools 
 
 23. Dundrem Criminal Lunatic Asylum 
 
 Class IV. Education, Science and Art 
 
 United Kingdom and England 
 
 1. Board of Education 
 
 2. British Museum 
 
 3. National Gallery 
 
 4. National Portrait Gallery 
 
 5. Wallace Collection 
 
 6. Stafford House 
 
 7. Scientific Investigation, etc. 
 
 8. Universities and Colleges, Great Britain, and Inter- 
 mediate Education, Wales 
 
 Scotland 
 
 9. Public Education 
 10. National Galleries 
 
 79 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Ireland 
 
 11. Public Education 
 
 12. Endowed Schools Commissioners 
 
 13. National Gallery 
 
 14. Science and Art 
 
 15. Universities and Colleges, Ireland 
 
 Class V. Foreign and Colonial Services 
 
 1. Diplomatic and Consular Services 
 
 2. Colonial Services 
 
 3. Telegraph Subsiaies and Pacific Cable 
 
 4. Persian Loan 
 
 Class VI. Non-effective and Miscellaneous Services 
 
 1. Superannuation and Retired Allovi?ances 
 
 2. Miscellaneous Expenses 
 
 3. Hospitals and Charities, Ireland 
 
 4. Temporary Commissions 
 
 5. Repayment to the Local Loan Funds 
 
 6. Ireland Development Grant 
 
 7. International Exhibitions 
 
 8. Repayment to the Civil Contingencies Fund 
 
 Class VII. Old-Age Pensions, Labor EbtCHANGES, Insur- 
 ance, etc. 
 
 1. Old-Age Pensions 
 
 2. National Health Insurance, Joint Committees 
 
 '3. National Health Insurance Commission, England 
 
 4. National Health Insurance Commission, Wales 
 
 5. National Health Insurance Commission, Scotland 
 
 6. National Health Insurance Commission, Ireland 
 
 7. Labor Exchanges and Unemployment Insurance 
 
 8. National Insurance Audit Department 
 
 9. Treatment of Tuberculosis (Special Grants) 
 
 80 
 
ESTIMATES: CHARACTER AND FORM 
 
 10. Highland and Inland (Medical Service) 
 
 11. Friendly Societies' Deficiency 
 
 12. Expenses under the Unemployed Workmen's Act 
 (1905)- 
 
 An examination of this list of appropriation heads brings Facts of 
 out a number of facts of importance. It shows, in the first ''™P'"^'*°<=« 
 place, that the principle of classification employed is that of ^ 
 services or organization units, the result being that the esti- 
 mates and appropriations show at a glance the amount of 
 money required for operating each distinct branch of the 
 government service. In the second place it shows that the 
 policy is pursued of having a single appropriation for each - 
 distinct branch of the government service. Another feature 
 of interest is the policy of distinguishing, as far as is prac- < 
 ticable, between appropriations for the support of services 
 for the United Kingdom and England and those for Scotland 
 and Ireland. Finally, a very interesting distinction is made 
 between appropriations for effective and so-called "non-effec- « 
 tive" services, the latter including such items as pensions, 
 gratuities, retired pay, etc. 
 
 In making use of the estimates in order to determine the Central- 
 
 - . 1 .... - I ization of 
 
 cost of particular services it is important to note that the works and 
 amounts appropriated for such services do not include expendi- 9*"^^.. 
 tures for quarters and building supplies, nor for stationery, , 
 printing, and other office supplies, these being provided for 
 in the appropriations for the Office of Works and Public 
 Buildings and the Stationery Office. It is, however, an easy 
 matter to get at the expenditures of each service for these 
 purposes, since the accounts of these two offices show the •" 
 cost of the services or materials supplied to each service. More- 
 over, in the report of the Comptroller and Auditor General 
 on appropriation accounts is a table giving the cost of each ^ 
 service that is borne by other services, so that the total cost 
 of each service can be seen.^ 
 ^ See p. 251. 
 
 81 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Appropriation Subheads. The next step in the separation 
 of items going to make up the total of expenditures, the au- 
 thorization which is requested, is that of allocating to cer- 
 tain specified subheads the total amount asked for under each 
 appropriation head. The amounts so assigned to subheads 
 differ from the total assigned to appropriation heads in this 
 \\ important respect : The sums carried by the appropriation 
 B 'tw"*^""" heads are true appropriations in that, with the exception of the 
 a "Vote" Army and Navy votes, they cannot be exceeded unless special 
 "Subhead" authority therefor is secured from Parliament ; the sums allo- 
 \\ cated to subheads, on the other hand, are in the nature of 
 a provisional allotment of the sums voted, since amounts car- 
 ried under one head may be transferred to another head if 
 the sanction of the Treasury to such action is obtained. How- 
 ever, in granting this freedom to the Executive to use sur- 
 pluses under one subhead for the purpose of meeting deficits 
 H under another. Parliament requires a rigid accounting of the 
 manner in which this discretion is used. Technically these 
 ■^ subheads are denominated as "Subheads under which votes 
 must be accounted for to Parliament." This means that, 
 though there is a single appropriation for a service, the ac- 
 '' counts must be kept by subheads, in which of course will ap- 
 pear all transfers effected. It is furthermore the duty of 
 the Comptroller and Auditor General, in rendering his re- 
 port on appropriation accounts, to frame it so as to show 
 a audited expenditures according to these subheads, and spe- 
 ■0 cially to call attention to all cases where in his opinion im- 
 proper use has been made of this power of znreincnt, as the 
 expression is. 
 'ower of By way of exception, this power to make transfers from 
 
 (, one subhead to another is, in the case of the Army and Navy 
 votes, extended to the votes themselves. The latter thus in 
 effect have practically the same appropriation status as sub- 
 heads. This exception has been made in order to give to 
 these two great departments a greater facility to meet emer- 
 gencies as they arise. 
 
 82 
 
ESTIMATES: CHARACTER AND FORM 
 
 It is hardly necessary for us to point out the importance Administra- 
 of this distinction between appropriation heads, or votes, cance'of* " 
 and subheads. It introduces an elasticity in the utilization of Practice 
 the funds granted that would be lacking were the sums as- 'l 
 signed to the subheads treated as definite appropriations. Not- 
 withstanding these manifest advantages from an adminis- 
 trative standpoint, the system is one which has not passed 
 unchallenged. In a paper submitted to the Select Committee 
 on National Expenditure of 1902,^ Mr. T. Gibson Bowles 
 vigorously attacked the system of allowing transfers between 
 Army and Navy votes. Though his criticism is directed spe- 
 cially to this practice, much of his reasoning applies equally 
 to the practice of permitting transfers between subheads. The 
 importance of the principle here involved warrants our repro- 
 duction of the more important passages of Mr. Bowles' paper. 
 He says: 
 
 "Under a usual clause in the Appropriation Acts since 
 1862, the Treasury is empowered, in the case of the 
 Army and Navy Votes, to authorise the departments to 
 apply any savings that may be made on one Vote towards 
 any other Vote of the same department in which an 
 excess of expenditure, has occurred. This system of 
 applying the surplus of one Vote to meet the deficiency '^ 
 of another palpably amounts to a defeat of the appropria- 
 tion made by the Act, inasmuch as it diverts to one Vote 
 the money appropriated by the Act to another. It as 
 palpably tends to the presentation of incorrect estimates. " 
 It is also calculated to prevent the due surrender of unex- ' 
 pended balances, by allowing of their application to other 
 purposes; and it tends to the allowance of delay in ren- 
 dering the year's accounts and the postponement of bring- 
 ing into account all such excesses as are not capable of 
 being met out of surpluses on the other Votes, as well as 
 
 1 Report of Select Committee on National Expenditure (1902), Ap- 
 pendix No. 8, p. 213. 
 
 83 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Overlooks 
 the Principle 
 of the Exec- 
 utive Ac- 
 countability 
 
 to the postponement of actual payments properly charge- 
 able to the year. And it must encourage the department 
 to regard the total sum voted in respect of its services as 
 one huge pooled fund into which it may dip at its own 
 discretion, and irrespective of the specific appropriation, 
 for any extra expenditure whatever, provided the total 
 fund be not exceeded. It would seem that the Treasury 
 has forgotten that an excess is a financial offence, and 
 has come to a practice of authorising this diversion from 
 one Vote to another of the sums granted, almost as a 
 matter of course; and although the subsequent sanction 
 of Parliament to the excess of expenditure over the au- 
 thorised expenditure has to be obtained in such cases that 
 will seem a very insufficient safeguard to those who know 
 how ready Parliament is to sanction the accomplished 
 fact. . . . The tendency bred by the easy diversion of 
 savings to excesses must be to encourage incorrect esti- 
 mates, and to suggest a general overestimate in order 
 that there may be in the general pooled fund of the de- 
 partment as large a balance as may be to move about 
 from one Vote to another. The diversions of appropria- 
 tion thus affected by Treasury allowance are, it is true, 
 submitted to the House of Commons for its sanction, but 
 this is done usually at the very close of the next year's 
 session, the sanction is treated as a mere matter of for- 
 mality, is hurriedly and summarily debated, and is asked 
 for in one resolution for each of the two services, cover- 
 ing in each instance all the diversions made, a method 
 which affords no adequate opportunity of putting any 
 sufficient check upon a growing and dangerous diversion 
 of public funds from their allotted purposes. The sys- 
 tem of diversion of the moneys voted for, and appro- 
 priated solely to one purpose, to other and diflferent pur- 
 poses is one which seems for the reasons above cited to 
 demand jealous watch by the Treasury of Departments, 
 and by the Public Accounts Committee of the Treasury." 
 
 84 
 
ESTIMATES: CHARACTER AND FORM 
 
 To the commission it would appear that, though all the 
 dangers mentioned by the author of the criticism above re- 
 produced are undoubtedly present, indeed are inherent in the 
 system, much can be said on the other side. In the first place, 
 if a department has not the faculty of making use of any Another 
 savings that it may make out of the funds allotted to a par- 
 ticular purpose, but must surrender all such surpluses to the 
 General Treasury, all, or at least a very strong, incentive to - 
 economy is removed. Two of the authors of the present re- 
 port were at one time heads of departments in the govern- 
 ment of Porto Rico, where this faculty of making transfers 
 from one appropriation subhead to another existed. They 
 can both testify that this possibility of making use of realized 
 surpluses caused them to make every possible effort to squeeze " 
 out savings on this and that subhead in order to secure funds 
 to supplement appropriations which were inadequate for the 
 purposes for which they were granted. One of the authors 
 has also been intimately connected with the executive de- 
 partment of the Federal Government at Washington, where 
 this power of utilizing surpluses did not obtain. He can testify American 
 no less emphatically that there the whole spirit was directly cited in 
 the contrary to that which prevailed in Portp Rico. Adminis- ^I^T^f '° 
 trators felt that it was a calamity if any unexpended balance 
 of an appropriation remained at the end of the year for sur- 
 render to the Treasury. As the end of the year approached 
 the condition of appropriation balances was carefully studied 
 with the deliberate purpose of seeing how all the money avail- 
 able could be used. This was but human nature. Any money \ 
 that had to be returned to the Treasury was a loss to the 
 service for which it was originally appropriated. It is thus 
 a mistake to assume that if the power of making transfers is 
 withheld the Treasury will profit to any appreciable extent i 
 by repayment to it of unexpended balances of appropriations. 
 
 Against the argument that the power to make transfers 
 leads the departments to estimate under certain heads for » 
 larger sums than will be required in order that a surplus may 
 
 85 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Sir Edward 
 
 Hamilton's 
 
 View 
 
 Elasticity- 
 Does not 
 Produce 
 Control 
 
 be obtained that will be available for transfer to other heads 
 may be placed the argument that if such transfers are not 
 -permitted the departments will be forced to estimate on the 
 safe side for aU items of appropriation. Thus Sir Edward 
 Hamilton, in a paper filed with the Select Committee on Na- 
 tional Expenditure (1902), said: ^ 
 
 "In the second place, the absence of the power of vire- 
 ment would not conduce to good Administration. To 
 guard against the risk of an underestimate on each sep- 
 arate Vote and of the consequent necessity for making a 
 supplementary application to Parliament, the Naval and 
 Military Departments would naturally feel bound to 
 estimate each Vote more liberally than they do now, with 
 the result that their aggregate spending power would be 
 augmented. It not infrequently happens that, in the 
 1 course of the year, an item of expenditure is sanctioned 
 by the Treasury conditionally, that is, on condition that, 
 if an excess is caused on the Vote, it shall be met out of 
 savings on other Votes ; and the result is that savings are 
 effected which might not otherwise be effected. I sub- 
 mit, therefore, that the present system decidedly makes 
 for economy and prevents wasteful expenditure." 
 
 Finally it should be repeated that in the provisions that the 
 ^ transfers can take place only upon the authority of the Treas- 
 ury; that the accounts must be so kept and rendered as to 
 show clearly all transfers; that these transfers must be re- 
 ported to the House of Commons and that those transfers 
 which do not appear to have been properly justified must be 
 specially commented upon by the Comptroller and Auditor 
 General in his report and, if need be, be further examined by 
 the Public Accounts Committee, all possible safeguards would 
 seem to have been thrown around the abuse of the power thus 
 conferred upon the expending authorities. 
 
 'Report of the Select Committee on National Expenditure (1902), 
 p. 225. 
 
 86 
 
ESTIMATES : CHARACTER AND FORM 
 
 Turning now to the character of the subheads thus provided 
 for, it will be found that the principle followed is that of 
 distinguishing : ( i ) Between the subordinate services included ^ 
 under the more comprehensive organization unit for which ?,"}^''^.g''j 
 the appropriation is made; and (2) between the objects of by Objects 
 expenditure. As regards the second of these divisions, namely, 
 that concerning the objects of expenditure, the important dis- 
 tinctions are those between expenditures for salaries and 
 wages, for traveling and incidental expenses, and for other 
 special categories of expenses. The specific subheads under 
 which an accounting must be made, however, vary with the 
 different services according to their character. The extent to 
 which the character of the service renders it feasible to specify 
 expenditures in detail seems to have an important bearing on 
 the number and variety of subheads which are given under 
 the different votes. There is no distinction, however, in prin- 
 ciple, and an examination of any one of the important votes 
 will show the general character of subhead classification. The 
 following statement of the manner in which the vote for 
 the Home Office is assigned to subheads, reproduced textually 
 from the estimates for 1914-1915, furnishes a typical illus- 
 tration of the manner in which this problem of subheads is 
 handled : 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Home Office 
 
 I. Estimate of the Amount required in the year ending 
 31st March, 191 5, to pay the salaries and expenses of 
 the office of His Majesty's Secretary of State for the 
 Home Department and subordinate offices. 
 
 Two Hundred and Sixty-eight Thousand and Six Hundred 
 
 Pounds 
 
 II. Sub-heads under which this vote will be accounted for 
 by the Home Office. 
 
 1914-S 
 
 Increase 
 
 Decrease 
 
 Home Office 
 
 --A. Salaries, Wages and Allowances 
 
 B. Traveling and Incidental Ex- 
 
 penses 
 
 C. Special Services 
 
 Inspection of Factories and Workshops 
 (l Edw. 7, c. 22) 
 
 D. Salaries and Allowances 
 
 E. Traveling and Incidental Ex- 
 
 penses 
 
 P. Fees to Surgeons, etc 
 
 G. Costs of Prosecutions, Inquiries 
 
 and Arbitrations 
 
 Inspection of Explosives 
 (38 Vict., c. 17 and 46*47 Vict., c. 
 clxxxiv) 
 
 H. Salaries and Allowances 
 
 I. Traveling and Incidental Ex- 
 penses 
 
 K. Fees and Expenses of Chemical 
 
 Referees 
 
 L. Cost of Inquiries and Arbitra- 
 tions 
 
 Inspection of Mines and Quarries 
 (35 &36 Vict., c. 77; 50 & SI Vict., c. 
 46; 57 & 58 Vict., c. 42; and I & 2 
 Geo. 5, c. 50) 
 
 M. Salaries and Allowances 
 
 N. Traveling and Incidental Ex- 
 penses 
 
 O. Costs of Inquiries, Arbitrations, 
 etc 
 
 £ 
 53-024 
 
 700 
 3.000 
 
 77,197 
 
 17.500 
 13.500 
 
 3.000 
 
 3,l8o 
 
 1,000 
 
 1,100 
 
 5 
 
 34.076 
 18,650 
 
 7.475 
 
 £ 
 51,221 
 
 700 
 3.500 
 
 75.180 
 
 16,500 
 12,500 
 
 3.500 
 
 2,981 
 
 1,000 
 
 1,100 
 
 5 
 
 33,673 
 18,650 
 
 11,055 
 
 £ 
 1,803 
 
 £ 
 
 
 500 
 
 2,017 
 
 
 1,000 
 1,000 
 
 
 
 500 
 
 199 
 
 
 403 
 
 
 
 3,580 
 
 88 
 
ESTIMATES: CHARACTER AND FORM 
 
 1914-S 
 
 1913-4 
 
 Increase 
 
 Decrease 
 
 Board for Mining Examinations 
 (i & 2 Geo. 5, c. 50) 
 
 P. Salaries 
 
 Q. Traveling and Incidental Ex- 
 penses 
 
 Inspection under Cruelty to Animals 
 
 Act 
 (39&4oVict., c. 77) 
 
 R. Salaries 
 
 S. Traveling and Incidental Ex- 
 penses 
 
 Inebriates Acts, iS^g to i8g8 
 (42 & 43 Vict., c. 19:51 &52 Vict.,c, 
 19; 61 & 62 Vict.', c. 60) 
 
 T. Salaries 
 
 U. Traveling and Incidental Ex- 
 penses. 
 
 V. Contributions to Certified In- 
 ebriate Reformatories ...... 
 
 W. Maintenance of Criminal Luna- 
 tics transferred from Certi- 
 fied Inebriate Reformatories 
 to Local Asylums 
 
 Workmen's Compensation Act, igo6 
 
 (6 Edw. 7, c. 58) 
 
 X. Pees and Expenses for Medical 
 
 Referees, etc 
 
 Aliens Act, 1905 
 (5 Edw. 7, c. 13) 
 ■Y. Salaries, Fees and Allowances 
 
 to Officers 
 
 Z. Traveling and Incidental Ex- 
 penses 
 
 AA. Irmnigration Boards: Fees of 
 
 ' Members and Clerks 
 
 BB. Expenses of Expulsion Orders, 
 
 Horns Office Industrial Museum 
 CC. Expenses 
 
 Role of the Baronetage 
 DD. Expenses 
 
 Gross Total. £ 
 
 Deduct 
 EE. Appropriations in Aid 
 
 Net Total £ 
 
 Net Increase £987 
 
 £ 
 
 £ 
 
 880 
 
 700 
 
 690 
 
 1.075 
 
 2,568 
 
 1.978 
 
 550 
 
 550 
 
 700 
 
 700 
 
 150 
 
 150 
 
 19.500 
 
 20,500 
 
 600 
 
 7,000 
 
 10,490 
 355 
 
 850 
 1.750 
 
 1,000 
 
 280,600 
 
 12,000 
 
 268,600 
 
 600 
 
 8,000 
 
 10,240 
 295 
 
 750 
 1,750 
 
 1,000 
 
 279.963 
 12,350 
 
 267,613 
 
 180 
 
 385 
 
 590 
 
 250 
 
 60 
 
 100 
 
 1,000 
 
 1,000 
 
 7,602 
 350 
 
 7,952 
 
 6,965 
 
 6,965 
 
 89 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Provision is also made as follows in other estimates for 
 expenditure in connection with this service. 
 
 Office Accommodations (Buildings, Furniture, Fuel and Light, etc. 
 
 (Class I, lo) 
 
 Surveys (Class I, 1 1) 
 
 Rates (Class I, 14) 
 
 Chemist, Government (Class II, 13) 
 
 Stationery and Printing (Class II, 24) 
 
 Law Charges, Ireland (Class III, 15) 
 
 Non-effective (Class VI, l) 
 
 Customs and Excise, Revenue Departments, No. i 
 
 Post OflBce Revenue Departments, No. 3 
 
 Consolidated Fund: Inspectors of Anatomy 
 
 £ 
 
 8,580 
 
 2 
 
 3.500 
 
 550 
 
 6,000 
 
 150 
 
 13.736 
 
 50 
 
 7.795 
 
 600 
 
 40.963 
 
 A Further -^ 
 Analysis of 
 Subheads 
 
 The Value 
 of These 
 Details 
 
 \ 
 
 Supporting Details. The subheads, which in the tables 
 given are indicated by the letters of the alphabet, represent 
 the furthest that the principle of either appropriation or allot- 
 ment to particular heads is carried. They do not, however, 
 represent the greatest itemization of data contained in the 
 estimates. For each subhead there is. a supporting table giv- 
 ing the details making up the totals shown. These support- 
 ing tables are, however, purely for purposes of information. 
 The importance of this supporting detail may be understood 
 when it is remembered that the estimates are not referred to 
 and taken up in a standing committee, but are taken up* one 
 vote after another, subhead after subhead, in committee of 
 the whole house, usually beginning in February and contin- 
 uing till every item has been covered. And it must also be 
 remembered that every member of the House of Commons 
 must go on record before his constituency, when each vote 
 is taken in committee of the whole. The details, therefore, 
 are matters of great interest, especially to the Opposition, 
 who have the cabinet officers before them and can ask them 
 any question concerning which information is desired. In 
 a table supporting the subhead "Salaries and Wages" are 
 
 90 
 
ESTIMATES : CHARACTER AND FORM 
 
 listed the titles, number, and salaries of all employees to be 
 provided for. Thus for the subhead "M" in the vote for the 
 Home Office, reproduced above, there is given the following 
 table. 
 
 Inspection of Coal and Metalliferous Mines and of 
 
 Quarries 
 
 (35 & 36 Vict, c. 77; so & 51 Vict, c. 46; 57 & 5^ Vict, c. 42 ; 
 I & 2 Geo. V, c. 50) 
 
 M. Salaries and Allowances 
 
 Numbers 
 
 1913-4 
 
 1914-S 
 
 I 
 
 I 
 
 4 
 
 St 
 
 IS 
 
 14 
 
 I 
 
 I 
 
 34 
 
 33 
 
 I 
 
 I 
 
 30 
 
 30 
 
 6 
 
 6 
 
 I 
 
 I 
 
 Salary of Office 
 
 Min- 
 imtun 
 
 Annual 
 Incre- 
 ment 
 
 Max- 
 imum 
 
 19 13-4 
 
 Chief Inspector 
 
 Divisional Inspectors 
 
 Senior Inspectors t 
 
 Electrical Inspectors 
 
 Junior Inspectors 
 
 Labor Advisers 
 
 Sub-Inspectors 
 
 Allowances to Inspectors for cler- 
 ical assistance 
 
 Allowance to Divisional Inspec- 
 tors for offices 
 
 Inspectors of Horses 
 
 Mechanic at the Station for testing 
 mining explosives 
 
 Allowance to Ditto for acting as 
 caretaker 
 
 £. 
 
 1,200 
 
 7SO 
 
 500 
 
 500 
 300 
 300 
 150 
 
 I2S 
 
 80 
 
 £. s. 
 
 100 — 
 SO — 
 20 — 
 20 — 
 IS — 
 IS 
 
 s — 
 
 s — 
 
 2 10 
 
 £. 
 1,500* 
 1,000 
 700 
 700 
 450 
 400 
 200 
 
 175 
 120 
 Ss. a wk. 
 
 £. 
 
 1,500 
 4.509 
 8,646 
 
 607 
 11,846 
 
 300 
 4.704 
 
 840 
 
 210 
 784 
 
 13 
 
 £. 
 
 1. 500 
 3.568 
 9.367 
 
 587 
 11,909 
 
 300 
 4.596 
 
 820 
 
 140 
 758 
 
 IIS 
 
 13 
 
 92 II 
 
 Total for Salaries £ 
 
 34.076 
 
 33.673 
 
 * Salary to be reconsidered on a vacancy. 
 
 tOn the organization of the Lancashire and North Wales Division the ntmibers of these 
 posts will be 6 divisional inspectors and 13 senior inspectors. 
 
 1 Two of these inspectors retain the old scale of salary, viz. , 600 £. — 20 £, — ■ 800 £. 
 
 fj The inspectors have been appointed as inspectors of factories (without additional salary) 
 to enable them to enforce certaia provisions of the Factory and Workshop Acts in the Pit Banks, 
 Metalliferous Mines and Quarries. 
 
 The itemization of other subheads naturally varies with Classifica- 
 the subheads and the services to which they relate. The tables with Each 
 given below, showing the supporting tables for the two sub- Service 
 beads under the caption of Inspector of Coal and Metalliferous 
 Mines and of Quarries, indicate the extent to which items of 
 this character are detailed. 
 
 91 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 N. Traveling and Incidental Expenses. 
 
 1913-4 
 
 Traveling expenses of the 91 inspectors, sub-inspectors, 
 
 inspectors of horses and the labor advisers 
 
 Newpapers and advertisements 
 
 Scientific instruments and repairs to same 
 
 Postage 
 
 Repayment to mine owners and coroners of cost of 
 
 telegrams 
 
 Carriage of parcels, cost of photographs and sundries . . . 
 
 Total for Traveling and Incidental Expenses £ 
 
 O. Costs of Inquiries, Arbitrations, etc. * 
 
 Total for Costs of Inquiries and Arbitrations . 
 
 1,000 
 
 1. Legal and other expenses in connection with inquests, 
 
 inquiries, and arbitrations, including the cost of 
 shorthand notes, and court fees, etc., in prosecutions 
 conducted by inspectors without legal aid 
 
 2. Testing of explosivesf; renewal of apparatus and pro- 
 
 vision of material (45o£) ; fees of chemical referees 
 (5o£) and incidental expenses (25£) 
 
 3. Testing of safety lamps: cost of tests 
 
 4. Expenses of committee appointed by the Secretary of 
 
 State to carry out coal dust experiments 
 
 5. Analyses of samples of mine air ; . . . 
 
 6. Fees, etc., to Veterinary Surgeons 
 
 375 
 380 
 
 11.055 
 
 * The costs of prosecutions and appeals conducted by the Director of Public Prosecutions 
 or the Solicitor to the Treasury are defrayed out of the Vote for Law Charges , Class III. i 
 
 t The fees chargeable for testing explosives are appropriated in aid of tbs vote. The 
 amount received during the year ended September 30, 1913, was 2,47S.£. 
 
 The fines under the Coal Mines and Metalliferous Mines Acts are payable to the Ex- 
 chequer, and by direction of the Treasury under the Act i & 2 Geo. V. c. so, s. los, those in- 
 flicted in England and Wales are appropriated in aid of the Home Office vote. The total 
 amount received in Great Britain during the year ended 30th September, 1913, was £x,oo6 6&. 
 I id. 
 
 From 
 
 Summary to 
 Details 
 
 Order of Presentation of Data. The foregoing tables show 
 the great care taken by the Treasury to place before Parlia- 
 ment the details of proposed expenditures in comparison with 
 the figures for the current year. Equally noteworthy is the 
 form or order in which these tables are given. Each of the 
 one hundred and fifty-three votes constitutes a chapter in the 
 book of estimates. At the head of the chapter is given the 
 total amount of the vote. Next follows the table which we 
 have reproduced giving the subheads under which all account- 
 
 92 
 
ESTIMATES: CHARACTER AND FORM 
 
 ing for the vote must be rendered and between which, as has 
 been pointed out, transfers may, with the approval of the 
 Treasury, be effected. Then follows the series of supporting 
 tables. The principle of presentation is thus the correct one I 
 of proceeding from the general to the particular. By this 
 scheme of presentation significant tables are brought into im- 
 mediate juxtaposition and attention is not distracted by de- 
 tails. If information regarding the latter is desired it can, 
 however, be easily obtained by consulting the supporting tables \ 
 
 that follow. Especially to be commended is the series of ' 
 footnotes having the purpose of explaining any change of im- 
 portance or of presenting other data explanatory of the figures 
 given. Members of the House are not yet at the end of 
 their resources in these details : They may still ask questions 
 of administration officers on the floor and have them promptly 
 answered. 
 
 General Summaries and Analysis. In the foregoing we 
 have been considering the manner in which the details of the 
 estimates are presented. We have now to consider the steps 
 that have been taken to bring these details together into gen- 
 eral statements and to compare the showings then made with 
 past experience to the end that the purport of the estimates 
 as a whole may be seen by the legislator. 
 
 We have seen that the book of Estimates proper consists in Four 
 of 153 chapters, each devoted to giving the subheads and''Q„a^to 
 supporting data regarding a single vote. These chapters are Volumes 
 assembled in four volumes embracing respectively the esti- -^ 
 mates for (i) the Army, (2) the Navy, (3) the Civil Services, 
 and (4) the Revenue Departments. The chapters relating to 
 the civil services are first issued as separate pamphlets, but 
 are afterwards bound up in a single volume with a general 
 index. Each of these four volumes is provided with intro- . 
 ductory matter, consisting of : ( i ) A memorandum explana- Subdivisions 
 tory of the estimates; (2) an aCbstract of the estimates; and Volume 
 (3) a comparison of the estimates with actual expenditure 
 
 93 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 during the preceding eight years and grants for the current 
 year. We will consider each of these in turn. 
 
 Curiously enough, the memoranda explanatory of the esti- 
 mates do not in all cases appear as a part of the books of 
 Memoranda estimates to which they relate. The memoranda for the Army 
 
 Explanatory , i., . , , , r 
 
 of Estimates and Navy estimates appear as separate pamphlets, those for 
 the year 1914-1915 bearing the titles: Army: — Memoran- 
 dum of the Secretary of State for War Relating to the Army 
 Estimates for 1914-5, and Navy Estimates ipi^-^: State- 
 ment of the First Lord of the Admiralty Explanatory of the 
 Navy Estimates 1^14-5. The memoranda for the civil serv- 
 ices and the revenue departments are prepared by the Finan- 
 cial Secretary of the Treasury and appear, in connection with 
 the abstract of estimates and comparison of estimates with ex- 
 penditures during the last eight years, as an introductory chap- 
 ter to the volume of estimates for the. civil services. The result 
 < of this illogical practice is that persons desiring to consider 
 the Army and Navy in connection with the estimates them- 
 selves must provide themselves with these additional pam- 
 phlets, and those desiring to consider the memorandum rela- 
 tive to the estimates for the revenue departments must seek 
 it not in the book of estimates for those departments, but 
 in the book of estimates for the civil services. 
 
 These memoranda are exceedingly brief; those for the 19 14- 
 ' 191 5 estimates comprising, for the Army 6 pages, for the 
 Navy 15 pages, for the Civil Services 9 pages, and for the 
 Revenue Departments one page. They contain little more 
 than a statement of changes made in respect to the grouping of 
 the estimates under votes and subheads. These changes are 
 relatively few; still at times votes are consolidated or one 
 vote broken into two votes. New subheads are provided for, 
 etc. Only in an exceedingly general and summary way do 
 they call attention to and comment upon features in respect 
 to which the estimates depart from current appropriations as 
 regards the amount of money provided for. 
 
 Following the memorandum for the book of estimates for 
 
 94 
 
ESTIMATES : CHARACTER AND FORM 
 
 the civil services/ appear two tables in the nature of a general ' 
 summary of the estimates in comparison with appropriations 
 for the current year. These are designated as abstracts of Abstracts of 
 estimates. The first of these tables, which is a summary of 
 the second, gives the figures according to the seven classes v 
 into which the civil services are divided. The second gives v 
 the same data according to the 120 votes, and in addition indi- 
 cates for each vote the department that must account for the 
 vote and the net expenditure for the completed year. In 
 order that the character of these important summaries may 
 be clearly seen the first of these tables,-- which is a short one, 
 is reproduced in full on page 96, and enough of the second 
 table is given on page 97 to show its character. 
 
 Following the two tables comparing estimates with appro- Comparison 
 
 . , ,,,..,,. of Estimates 
 
 pnations for the current year are two tables brmgmg the esti- vvith Ex- 
 mates into comparison with actual expenditures during the pre- vPenditures 
 ceding eight years and grants for the current year. The first 
 of these tables gives the data according to votes. The sec- 
 ond is in the nature of a summary of the first, giving the fig- 
 ures by classes only. As the two tables have precisely the 
 •same box headings, the reproduction of the second table on 
 page 98 will show the nature of both. 
 
 Little comment is required regarding these tables in which 
 the estimates are recapitulated and brought into comparison 
 with past expenditures and current grants. As far as they 
 go it is difficult to see how the form of presentation could be Summaries 
 improved upon. It is important to note, however, that the"* ^^^. ^°"^' 
 statements do not carry the figures beyond the vote ; that is, by "Votes" 
 the 180 main heads under which appropriations are made. If 
 one desires a comparative statement by subheads reference 
 must be had to the estimates themselves, and the comparative 
 statement must be compiled. In view of the fact that many 
 
 ^In what follows attention is concentrated upon the estimates for 
 the Civil Services. It was thought that no useful purpose would be 
 served in attempting to describe in detail the Army and Navy esti- 
 mates. 
 
 95 
 
 \ 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 
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 96 
 
ESTIMATES: CHARACTER AND FORM 
 
 I 
 
 
 > 
 
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 ^. 
 
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 Net ExpendL- 
 ture i9ia-3 
 (as per Appro- 
 priation Ac- 
 counts, subject 
 to transfers). 
 
 
 
 
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 M 
 
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 .■s„- 
 
 
 
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 Estimates 
 ■Si compan 
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 1913-4 
 
 
 
 
 
 
 
 
 
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BRITISH FINANCIAL ADMINISTRATION 
 
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 98 
 
ESTIMATES: CHARACTER AND FORM 
 
 of these subheads are in themselves distinct services of im- 
 portance, as, for example, Inspection of Mines and Quarries, 
 etc., as shown in the table giving the subheads covered by 
 the appropriation for the Home Office which we have repro- 
 duced,^ it would seem that the presentation might with advan- 
 tage be carried far enough to show the figures for these dis- 
 tinct services. 
 
 It is also to be remarked that no attempt is made to analyze 
 the estimates from other than the vote standpoint, which, as 
 has been pointed out, corresponds closely to the principle of 
 classification by units of organization. Neither here nor else- 
 where is any attempt made consistently to analyze estimates 
 or expenditures according to "objects of expenditure," that 
 is, the things purchased, services, materials, etc.; or accord- 
 ing to "character of expenditures," that is, capital outlay, 
 fixed charges, maintenance, operation, etc. ; or according to 
 function, that is, the nature of the service except on very broad 
 lines. Each of these distinctions is made; there is a con- 
 sciousness of their importance, but no basis of analysis or 
 classification is consistently followed in the summaries or 
 details. 
 
 1 P. 91. 
 
CHAPTER V 
 THE ESTIMATES : APPROPRIATIONS IN AID 
 
 Theory of Appropriations in Aid; Statement of Arguments in Favor 
 of the System; Criticism of the System; Contrast with American 
 System of Reimbursable Appropriations. 
 
 In the tables which have been given, reference is made to 
 what are called "appropriations in aid" ; and through them to a 
 distinction that is made between what are termed "gross 
 appropriations" and "net appropriations." This feature of 
 the estimate and appropriation system is characteristic of 
 the budgetary system of Great Britain. It is one which af- 
 fects not only the question of appropriations, but the whole 
 scheme of public accounting. It is one, moreover, regarding 
 the advisability of which opinion is widely divided. For these 
 reasons the commission has taken especial pains to inquire 
 into the principles upon which it rests and the results that 
 flow from it in practice. 
 
 A Continu- 
 ing Appro- 
 priation of 
 "Extra 
 Receipts" 
 
 Theory of Appropriations in Aid. By "appropriations in 
 aid" is meant the appropriation to the services producing them 
 of the miscellaneous revenues or "extra receipts," as they 
 are technically called, as an aid or addition to the funds appro- 
 priated by way of formal grant from the Consolidated Fund. 
 It results from this practice that the several services or groups 
 of services, covered by a vote, receive money with which to 
 meet their expenditures in two ways : ( i ) By authorization 
 to use certain of their extra receipts, for, as will be seen, by 
 no means all extra receipts are treated as appropriations in 
 aid; and (2) by grant from the Consolidated Fund. The lat- 
 ter constitutes the net appropriation, and the two together con- 
 
 100 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 stitute the gross appropriation. From the accounting stand- 
 point the significant feature of this system is that the extra 
 receipts treated as appropriations in aid do not pass through 'i 
 the General Treasury and thus do not figure on either the 
 receipt or the issue side of the exchequer accounts. This 
 does not mean that receipts of this character do not have 
 to be rigidly accounted for. It signifies only that they are '■ 
 not accounted for as treasury receipts and payments, but have 
 a special accounting. 
 
 According to this system, each service covered by a vote 
 in submitting its estimates is required to estimate, not only Amount of 
 the total sum of which it will have need during the ensuing Receipts" 
 year, but the income that it expects to secure in the way of Available 
 "extra receipts" which can be used by it to meet such needs. 
 Parliament, in acting upon these estimates, then proceeds to 
 appropriate these receipts as an aid to the vote or appropria- 
 tion proper, and to make a grant of funds from the Consoli- • 
 dated Fund to meet the balance of the estimated requirements 
 of the service. The amount of, the receipts so estimated con- 
 stitutes the maximum sum that may be used in this way. " 
 Should the extra receipts exceed the amount estimated the 
 excess is not available for expenditure, but must be surren- 
 dered to the Exchequer as a miscellaneous receipt of the Con- 
 solidated Fund. 
 
 For the most part moneys assigned to the services in this 
 way represent only incidental receipts, as, for instance, those 
 derived from fees, fines, sale of property, etc. In some cases, ) Character 
 however, they are of importance and indeed exceed in amount ceipts" Ap- 
 the total requirements of the service. This, for example, is propriated 
 the case in respect to the Mint, where estimated receipts 
 greatly exceed estimated expenditures. In these cases the 
 practice is to appropriate in aid only so much of the receipts 
 as is necessary to meet estimated expenditures, the balance be- 
 ing surrendered to the Exchequer as miscellaneous income. In 
 order that the income may figure in the estimates calling for 
 a grant, or appropriation proper, the practice is followed of 
 
 lOI 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 making a nominal grant, say, of £io or £ioo for the service. 
 This is in order that the estimate for the service may tech- 
 A "Token" nically come before Parliament for consideration and dis- 
 inal" Vote cussion. A grant of this character is termed a "token" or 
 "nominal" vote. Logically it would seem that this principle 
 of a service relying primarily upon its receipts for the meet- 
 ing of its expenditures and only requesting a grant from the 
 Consolidated Fund sufficient in amount to meet any deficiency 
 in its receipts to cover expenditures would apply specially 
 ■ to the great revenue departments. In point of fact, however, 
 .Hthe principle is not extended to these services. Though, as 
 will be pointed out hereafter,^ the revenue departments use 
 the money received by them in payirjg their expenses, this 
 money from an appropriation and accounting standpoint is 
 treated as having passed through the Exchequer. It is due 
 to this exception that the term "extra receipts" gets its special 
 signification'. 
 
 The principle upon which this system rests is apparently 
 that each service shall, as far as possible, be treated as a finan- 
 The Prin- \' cial entity — that is, that each service be given a financial 
 Financial personality; that the income derived by a service belongs 
 Entity , primarily to it and should be devoted to meeting its expenses ; 
 and that only to the extent to which it is unable to meet its 
 expenses in this way should it come to Parliament with a 
 request for a grant of funds from the General Treasury. 
 Combined with this feeing is also the desire to distinguish 
 between expenditures which are met by -service receipts and 
 those which have to be met from taxes imposed upon the 
 people. Tacitly, and at times avowedly, the position is taken 
 that the interest of Parliament and the people is in expendi- 
 tures which have to be met through taxation, and that 
 only these constitute the subject matter of appropriations 
 proper. 
 
 In its present form this system was established in 1881 as- 
 the result of certain observations contained in a report of the 
 
 ' P. I53- 
 
 102 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 Public Accounts Committee in that year. It is now regulated 
 by a statute passed in 1891.^ 
 
 Statement of Arguments in Favor of the System,. The mat- 
 ter is one of so great importance that the commission has 
 felt justified in attempting to set forth as fully as possible the Reasons for 
 arguments that can be brought forward in favor of this sys- the°Sys°tem 
 tern. For this purpose the commission cannot do better than 
 reproduce the statement of the reasons leading up to the adop- ,, 
 tion of the system and the arguments that can be adduced in 
 its favor as presented by the Public Accounts Committee in 
 a special report that it made on this subject in 1894, and ap- 
 proved by a treasury minute attached to it.^ Under the title 
 "Application of Extra Receipts in Aid of Gross Estimated 
 Expenditure," the report reads: 
 
 A question has been raised in the Committee as to the 
 expediency of reconsidering the practice under which the 
 Extra Receipts of the Departments are appropriated in 
 aid of the Grants of Parliament for the respective Serv- 
 ices; and the present system has been objected to on the 
 ground that it tends to mislead Parliament as regards the 
 total expenditure for which provision is made. 
 
 The question of the mode of dealing with Extra Re- Conditions 
 
 f , , • • , . , . to Be 
 
 ceipts was under departmental mquiry and consideration Corrected 
 for many years, and had been repeatedly under the notice 
 of diflferent Committees of Public Accounts until, finally, 
 it formed the subject of an exhaustive inquiry by the 
 Public Accounts Committee in 1881, in connection with 
 a scheme placed before the Committee by the Treasury in 
 their Minute of 27th June, 1881. In this Minute, the 
 Treasury summarized the objections to the then existing 
 practice as follows: 
 
 ^ Public Accounts and Charges Act, 54 and 55 Vict., c. 24, s. 2. 
 ''Epitome of the Reports from the Committee of Public Accounts 
 1857 to 1910 and of the Treasury Minutes Thereon, with an Index, 
 
 pp. 354-355- 
 
 103 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 ( 1 ) The paying of a large proportion of these receipts 
 into the Exchequer, and the consequent voting or 
 revoting of the expenditure which they represent, 
 
 , have the effect of overstating both the public rev- 
 enue and expenditure, or, as the public understand 
 
 ' it, the taxation of the country and the cost of 
 Government, by a sum which may be roughly 
 stated at the present time as more than £4,000,000 
 annually. 
 
 (2) The departments do not get credit for their re- 
 ' ceipts and have not therefore inducement to real- 
 ize them, and thus reduce to the utmost the net 
 charge of Government upon the taxpayers. 
 
 (3) Apart from these objections of principle, there is 
 - also the objection that, under present practice, 
 
 there is no uniformity or consistency among the 
 different departments in their method of treating 
 extra receipts. 
 
 First The Committee of Public Accounts made a separate 
 
 Army^and report on the subject, in which, with the concurrence of 
 
 Navy the then Comptroller and Auditor General, they approved 
 
 the adoption of the Treasury proposal to apply the new 
 scheme in the first instance to the extra receipts of the 
 Army and Navy, which they remarked, "though making 
 an important advance in the right direction, must be con- 
 sidered as tentative, and not as a final settlement" (see 
 paragraph 4 of Third Report 1881). The Appendix to 
 the Report of the Committee gives the fullest informa- 
 tion of the various stages of the discussion upon this 
 question of the inquiries upon which this scheme was 
 based and of the grounds upon which the expediency of 
 the change was advocated. 
 
 The extension of the system to the Votes for Civil 
 Services has only been effected in recent years by a grad- 
 ual process covering first one vote and then another, as, 
 
 104 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 for instance, the Exchequer and Audit Office in 1883-84, Gradual 
 
 the Diplomatic and Consular Services in 1885-86. In for°the°civil 
 
 1892-93 there was a large extension covering 39 votes Services 
 
 (see paragraph 5, ComjftroUer and Auditor General's 
 
 Report). But there remains some to which it has not yet 
 
 been extended (see paragraph 5 above cited). In 1883 
 
 the Committee stated that one uniform principle should 
 
 be observed throughout the services, and recommended 
 
 a gradual extension of the system to those Civil Service 
 
 Votes which most readily admit of it (see Second Report 
 
 1883, paragraph 2). 
 
 The change of practice, which originally rested upon 
 directions in Treasury Minutes, has received the stat- 
 utory authority contained in section 2 (3) of the Public 
 Accounts and Charges Act of 1891. 
 
 It is clear, therefore, to your Committee that the con- Frequently 
 elusions arrived at, after full and complete inquiry, by and 
 the Public Accounts Committee of 1881, have been re- Confirmed 
 peatedly affirmed or practically sustained by subsequent 
 committees, and formally approved' by Parliament itself 
 in the recent statute above quoted. 
 
 It is further to be observed that the system in question 
 does not appear to your Committee essentially to weaken > 
 the control of Parliament over the total expenditure, or 
 afifect the functions of the Comptroller and Auditor Gen- 
 eral in his examination and criticism of that expenditure. 
 The gross expenditure and the appropriations in aid are 
 both shown in the Estimates and can be criticized in 
 detail before the vote is taken. If the expected receipts ^°^^, °°' 
 
 ^ . Weaken 
 
 should exceed the estimated expenditure when the esti- Parliamen- 
 mate is framed, then only so much of them is proposed Control 
 for appropriation as may leave a nominal balance of ex- 1 
 penditure to be voted, in order that the estimate may 
 come under parliamentary review. In that case the over- 
 appropriation remainder would be paid into the Ex- 
 chequer. 
 
 105 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Committee 
 Recommends 
 ContinuatioD 
 of Practice 
 
 Analysis 
 Reasons 
 Favoring 
 
 of 
 
 In these circumstances your Committee are not of 
 opinion that any reconsideration of the practice is at 
 present called for, more especially in view of the pro- 
 posed changes in the appropriation acts dealt with in 
 paragraph 8 of the Third Report of your Committee, 
 which have been recommended for the purpose of 
 strengthening the control of Parliament in regard to the 
 appropriation of the moneys in question. 
 
 The Treasury Minute, attached to this report of the Com- 
 mittee on Public Accounts, reads : 
 
 T. M. 15/12/94. — My Lords are glad to note that the 
 Committee do not recommend, as a result of their con- 
 sideration of the subject, any modification of the existing 
 system, as regards the mode of appropriating receipts in 
 aid of voted expenditure. They would strongly depre- 
 cate the reopening of a question which formed the subr 
 ject of exhaustive inquiry and consideration some few 
 years ago, or the revising of a system with the working 
 of which my Lords have every reason to be satisfied. 
 
 Criticism of the System. Notwithstanding the fact that this 
 system was adopted after special investigation by the Com- 
 mittee of Public Accounts and with the full approval of the 
 Treasury and Comptroller and Auditor General ; received the 
 sanction of Parliament itself through the passage in 1891 
 of an act authorizing this procedure; was reaffirmed by the 
 Committee of Public Accounts and the Treasury in 1894, and 
 has been tacitly approved by the Select Committee on Na- 
 tional Expenditure in 1902 and by the Select Committee on 
 Estimates in 191 2, the commission nevertheless is not con- 
 vinced that it is based on a sound principle of accounting or 
 appropriation of funds. 
 
 In its favor the main argument brought forward is that 
 it avoids an overstatement of revenue and expenditures and 
 consequently prevents the public from being misled in respect 
 
 106 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 to what are the real income and cost of conducting the gov- 
 ernment. Thus, to take an example given by Mr. Higgs : ^ 
 
 The War Office receives over two and a half millions 
 sterling annually from the Indian, Colonial, and Egyp- 
 tian Governments for expenditures incurred for their 
 benefit. If this sum were paid into the Exchequer, and 
 a corresponding amount voted as expenditure, both the 
 taxation and the cost of government would appear to be' ■ 
 larger than they really are. 
 
 This is an extreme and very special case and is hardly in 
 the category of extra receipts, properly speaking. But even 
 here question is raised as to the force of the argument. It 
 is true that this sum represents services for which the War 
 Department receives remuneration or reimbursement and that 
 the expenditure represented by it does not have to be met 
 out of general taxation. The money none the less represents 1 1 
 an activity of the department — a fact which is lost sight of 
 in the net figures of the accounts and estimates. 
 
 Is the position to be accepted as sound, that appropriations Raises 
 should cover only grants of money to be met out of the pro- as^to*'"" 
 ceeds of taxation or burdens imposed upon the taxpayers in Budgetary 
 some other form ? Is this to be accepted as correct budgetary 
 practice? Should not estimates, appropriation and treasury 
 accounts cover all the operations of the Government? Is there 
 not apparent confusion of ideas in the British system in re- ■a 
 spect to the cost of operating the Government and the net 
 cost to the taxpayers? The latter fact is one that it is very 
 important to have clearly shown, but this can readily be done i 
 by a proper classification of government income and expendi- 
 ture. It is certainly desirable that the income received by 
 a service should be considered at the same time that the mat- 
 ter of making provision for its expenditures is under consid- 
 
 ^ Henry Higgs : The Financial System of the United Kingdom, 
 p. II. 
 
 107 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Not the 
 Way to 
 Promote 
 Efficiency 
 
 A Funda- 
 mental 
 Objection 
 
 eration. This could, however, be easily secured by requiring 
 the services to submit statements of their income in connection 
 with their estimates for expenditures in much the same way 
 that they are now required to do. This being done, would it 
 not be better to treat these statements of income purely as 
 explanatory data on the expenditure side than have the 
 amounts also appear on the revenue side, and bring out the 
 same net requirements to be met by taxation as at present? 
 Would not this give a more accurate and complete picture of 
 the finances? These are questions that are fairly raised 
 against the present practice. 
 
 The further contention is made that this system tends to 
 stimulate the departments in their efforts to secure the maxi- 
 mum revenue possible and to develop increased efficiency. 
 The one contention is based on the assumption that it will de- 
 crease the tax rate by increased returns for service ; the other 
 is that it may prevent waste. The commission questions the 
 force of this argument also. There is no added elasticity 
 given, no added inducement. The expenditures of the serv- 
 ices are as absolutely limited under this system as under that 
 of gross appropriations. If any excess of receipts over esti- 
 mates as presented in the estimates is received, such surplus 
 cannot be used, but must* be surrendered to the Exchequer. 
 If the estimated amount is not realized the services have a 
 ground for submitting a supplementary estimate, and this in 
 fact is the reason often alleged in applying to the Treasury 
 to sanction a transfer or in calling upon Parliament for a fur- 
 ther grant of funds. 
 
 The really fundamental objection urged against the system, 
 however, is that it complicates enormously the problem of 
 making a consolidated statement of the income and expendi- 
 tures of the Government. The moment one departs from the 
 policy of rigidly requiring all receipts to be covered into the 
 Treasury and of having all expenditures met by formal ap- 
 propriations to be paid from such general treasury fund, 
 trouble is encountered in making such a statement. In the 
 
 1 08 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 case of Great Britain the evil resulting from its departure 
 from this principle is a real one. As the figures regarding 
 audited receipts and expenditures are not available until some 
 time after a fiscal year is qlosed, the Chancellor of the Ex- 
 chequer makes use of exchequer receipts and issues for his 
 budgetary statements. These, moreover, are the figures con- 
 tained in the "Finance Accounts" or the annual report of 
 Government receipts and expenditures, the document which 
 is most used by Parliament and by the general public in their 
 discussion of matters of national finance. But, as has been 
 pointed out, not all moneys voted as appropriations in aid 
 pass through the Exchequer. The result is that the vital dis- 
 cussion of problems of national finance takes place upon fig- ^^^^^ 
 ures which do not include all receipts and expenditures. In Difficult to 
 fact, so far as the commission is able to discover, no com- v ° erstand 
 plete statement of all Government receipts and expenditures 
 is anywhere made, and, due chiefly to this system of appropria- i 
 tions in aid, it is doubtful whether such a statement could be 
 prepared without great difficulty, if at all. 
 
 What has so far been said in criticism of this system applies 
 to the principles upon which it is based. Were these princi- ' 
 pies rigidly and consistently adhered to something might be 
 said in its favor. Unfortunately this is not the case. By ' 
 no means all incidental receipts of the spending departments 
 are applied to meeting their expenditures in the way of appro- 
 priations in aid. There are many classes of receipts, which, The System 
 on account of their amount, their casual character, or for some Departed 
 other reason, are not so appropriated. All receipts of the de- 
 partments that are paid through the affixing and canceling of 
 stamps are automatically carried into the Exchequer and thus 
 are not available for appropriation in aid. Finally, there are 
 the cases where receipts exceed estimates. In these cases 
 we have the added complication of part of the receipts from 
 a given source being treated as an appropriation in aid and part 
 as a Treasury receipt. 
 
 These theoretical objections do not seem to be overcome in 
 
 109 
 
 From 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Inconsistent, practice ; in fact, study of the system in operation confirms the 
 
 ^^ogica ^ conclusion that it is inconsistent, illogical and misleading. 
 
 Misleading Many of the seeming inconsistencies have been pointed out. 
 
 Among those who have attacked the system is Mr. Harold 
 
 Cox,^ from whose criticism the following is taken : 
 
 In the annual estimates presented to Parliament ab- 
 solutely no attempt at consistency is made. The same 
 department will treat some receipts as Appropriations in 
 Aid of expenditure; others, identical in character, are 
 treated as additions to revenue. A few examples will 
 enable the reader to better appreciate the hopeless con- 
 fusion which exists in the only accounts formally pre- 
 sented to the House of Commons. 
 
 Take this striking fact that the sum to be voted by the 
 House of Commons for the salaries and expenses of the 
 Statement Supreme Court of Judicature in the current year is 
 
 J £339,867; whereas the sum to be voted for the salaries 
 and expenses of the County Courts is only £5. The ex- 
 planation is that the fees paid into the High Court are 
 treated as revenue, whereas exactly similar fees paid into 
 the County Courts are treated as an Appropriation in 
 Aid. Absolutely no reason exists for this difference of 
 treating two sets of Court fees. The real cost of the 
 County Courts is not £5, but £496,547 plus the sum 
 charged upon the Consolidated Fund for the salaries and 
 pensions of County Court Judges, plus various payments 
 charged to other departments. Nor is the treatment of 
 the County Court fees consistent even with itself, for a 
 footnote to the estimates explains that, in addition to the 
 sum of £496,547 treated as an Appropriation in Aid, a 
 sum of £4,458 is estimated to be received in cash and to 
 be paid into the National Revenue, and that further 
 
 1 Official Finance in Government Departments : Firtancial Review 
 of Reviews, London (1913), pp. 47-49- 
 
 IIO 
 
 of Mr. Cox 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 amounts estimated at £36,829 in stamps and £450 in cash 
 will also be received through the County Courts and 
 added to the revenue. 
 
 These grotesque inconsistencies are not confined to 
 large sums which can easily be spotted. They run 
 through the whole system. Here are a few examples, 
 obtained by comparing the figures given in the "Finance 
 Accounts" for 1906-7 with the figures published in the 
 Volume of Estimates applying to that year. The Crim- 
 inal Lunatic Asylum at Broadmoor receives £50 a year 
 as rent from the Berkshire County Council for certain 
 school buildings; it also receives rents for various cot- 
 tages and other stmdry receipts amotmting to £165. The 
 first of these items is treated as part of the National 
 Revenue and is so entered in the Ejtchequer Accounts; 
 the second is treated as an offset against expenditure, and 
 is entered as an Appropriation in Aid. The British Mu- 
 seum receives £2,300 from the sale of publications. This 
 is treated as an Appropriation in Aid. On the other 
 hand, the National Portrait Gallery receives £16 lis. 5d. 
 commission on the sale of photographs. This is treated 
 as an item of National Revenue. Fees for admission to ^ 
 the Tower of London are treated as an Appropriation in 
 Aid. Fees for Admission to the National Portrait Gal- 
 lery and to the National Gallery of Ireland are treated 
 as National Revenue. . . . 
 
 The Post Office Estimates, as presented to Parliament, 
 show an item of £1,189,000 for the cost of conveying 
 "mails" by railway in the year 1906-7. The "Finance 
 Accounts" for the same year, which are not published 
 until after the year has closed, show that in addition to 
 this sum the Post Office paid to the railways no less than 
 £1,032,000 for the conveyance of "parcels." This second 
 item is treated as a deduction from the receipts of the 
 Post Office, and no mention whatever i.s made of it in the 
 Estimates submitted to Parliament. 
 
 Ill 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Mr. Cox points to what he considers many other equally 
 glaring examples of inconsistency in the operation of the sys- 
 tem of appropriations in aid. We have given sufficient, how- 
 ever, to show how defective this system is held to be by its 
 critics, and how greatly it is held to complicate the problem of 
 determining the true revenues and expenditures of the Grov- 
 ernment. Certain of these objections could easily be over- 
 come; others, if accepted as such, are inherent in the system 
 itself — as, for example, where receipts treated as appropria- 
 tions in aid exceed in amount the cost of the services and the 
 surplus has to be turned intO' the Treasury, and when the extra 
 receipts are paid in through the affixing and canceling of 
 stamps. 
 
 Contrast with American System of Reimbursable Appro- 
 priations. To the commission there would seem to be but 
 
 ^ two classes of receipts and expenditures to which this system 
 of appropriations in aid properly applies, and as regards them 
 a much better system of handling them is followed in Amer- 
 ica. The first case consists of the receipts and expenditures 
 
 - that are entailed in operating a commissariat, supply or other 
 analogous enterprises for the use of employees or the public. 
 Reflection will show that receipts and expenditures produced 
 through services of this character are not, properly speaking, 
 either a government revenue or an expense, but only a change 
 in the form of the resource which may still be held as a fund. 
 It would entail a large amount of unnecessary trouble and 
 accounting if all moneys received in this way were carried 
 into the Treasury and all expenditures for such a purpose were 
 met through formal appropriations. The continuing exchange 
 of cash for goods, the goods for cash without profit or loss 
 adds nothing to income or expense. To treat these exchanges 
 as income and expense would be quite misleading; it is quite 
 as useless to go through a different funding operation every 
 time a stock which is intended for such use is turned over. 
 The first practice would result in unduly swelling both the 
 
 112 
 
ESTIMATES: APPROPRIATIONS IN AID 
 
 income and expenses. The second would put an unnecessary 
 limitation on the service with no added control. The prac- 
 tice which is best adapted to such a purpose is to treat the 
 appropriation as an impounded fund, to be operated on the 
 theory that there will be no surplus or deficit. Or if there is 
 a small balance of gain or loss on one side or the other, this 
 is the only sum that really affects the Government income and 
 expenses. To this class .may be assimilated all industrial or 
 productive enterprises such as the operation of a postal, tele- 
 graphic or telephonic system, though here the operations are 
 of such a varied character and the nature of the administrative 
 machinery that has to be provided for their performance is so 
 complex that there are strong reasons for making other special 
 provision for the management of their financial affairs. 
 
 The second class is represented by the receipts derived from 
 the sale of materials, supplies and equipment no longer needed 
 by the administrative departments. It is evident that if the 
 receipts from sales of this character are carried into the Treas- Proceeds 
 ury as a miscellaneous receipt and an additional appropriation 
 is made for the purchase of new materials, supplies and equip- 
 ment, the total cost of such articles will appear to be much 
 greater than it really is. Furthermore, and what is a matter ' 
 of greater importance, the treatment of receipts of this char- 
 acter in this way destroys in large part any incentive upon the 
 services to secure the maximum return possible for such 
 articles. Cases have frequently come tO' light where services, 
 knowing that they would not profit by any j-eceipts obtained in 
 this way, have preferred to destroy them rather than go to 
 the trouble of effecting their sale and accounting for the pro- 
 ceeds. 
 
 In the United States cases like the above are frequently, 
 though by no means invariably, met by the employment of 
 what are known as "reimbursable" appropriations. Under 
 this system provision is made that all receipts of this charac- 
 ter shall be credited to the original appropriation from which 
 payments were made for the purchase of the articles sold or 
 
 "3 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 for the performance of the service rendered. It is unneces- 
 sary to say that all such receipts and expenditures must be 
 duly accounted for in the same way as are other receipts and 
 expenditures. 
 
 In the opinion of the commission this system serves the 
 English end sought for and in a better way than the British system 
 tions^m'^Aid of appropriations in aid. Furthermore it is applied only in 
 2? ^.°*. those cases where, as has been pointed out, there is special 
 
 Discriminate . ._ . . . , *^ , rr^, -n, . . , 
 
 justification for an exceptional procedure. The British sys- 
 tem makes no such distinction, but applies its system to extra 
 or miscellaneous receipts generally.^ 
 
 * This question of appropriations in aid and of "interceptions" gen- 
 erally — ^that is, of permitting certain receipts to be disbursed without 
 passing through the Exchequer — is handled, but not in a very satis- 
 factory way, in two papers filed with the Select Committee on Na- 
 tional Expenditure (1902) and presented by it as appendices to its 
 report. The first, by Mr. T. Gibson Bowles, is an attack on the sys- 
 tem, and the second, by Sir Edward Hamilton, a defense. The latter 
 was written as a reply to the former. See Report of the Select Com- 
 mittee on National Expenditure (1902), pp. 212-214 and 223-227. 
 
CHAPTER VI 
 
 THE ESTIMATES : ACTION UPON THEM IN PAR- 
 LIAMENT 
 
 Financial Powers of Parliament Now Vested Wholly in the House 
 of Commons; Rules of Procedure Governing the Consideration of 
 Estimates in the House of Commons; Distinction between the 
 Authorization of Expenditures and the Appropriation of Funds; 
 Votes on Account; Excess Votes; Votes of Credit; Appropriation 
 Acts; Extent of Control Over Appropriations Actually Exercised 
 by the House of Commons; Establishment in 1912 of the Select 
 Committee on Estimates. 
 
 With the Estimates and their supporting data formulated 
 and laid before Parliament, the next step in the chain of opera- 
 tions for financing the Government is the action had upon 
 them by that body. Here we are interested in two things: 
 ( I ) The procedure employed by Parliament in performing this 
 part of its duties; and (2) the determination of the extent 
 to which the Parliament exercises the power which it legally 
 possesses of modifying the proposals so brought before it for 
 consideration. 
 
 Financial Powers of Parliament Now Vested Wholly in 
 the House of Commons. In considering this matter the first 
 point to be noted is that the powers of the two houses of Par- Contest 
 liament are not coordinate as regards this branch of their du- Lords^and 
 ties. This has been true almost from the time when the grand Commons 
 council of the king assumed its present form of a Parliament 
 of two houses. From the beginning the constitutional rule 
 has been that to the liouse of Commons belonged the pre- ■ 
 dominant role of initiating all finance proposals, the House 
 of Lords being relegated to the subordinate position of a 
 mere approving body. 
 
 IIS 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Settlement 
 of 1911 
 
 Though there was no question but that all money bills — that 
 I is, bills providing for the imposition of taxes or the appropria- 
 . tion of funds — should originate in the Lower House, great 
 uncertainty existed in respect to the powers of the Lords to 
 amend bills of that character coming to it from the Commons. 
 It is not our intention to trace the long struggle between the 
 two houses growing out of this uncertainty regarding their 
 powers in respect to matters financial. The contest, as is well 
 known, culminated in the great constitutional crisis brought 
 about by the rejection by the House of Lords of the Lloyd- 
 George Budget of 1909, a crisis which was solved by an ap- 
 peal to the country through the dissolution of Parliament and 
 a general election. Vindicated in its contention that the 
 House of Lords should not have the power to modify or reject 
 finance proposals sent to it by the House of Commons, the 
 Ministry introduced and finally secured the passage of the 
 famous Parliament Act of 191 1 ^ by which practically all 
 - power over money bills was definitely taken away from the 
 Upper House. 
 
 This act also seriously curtailed the powers of the Lords in 
 respect to matters of general legislation. With this aspect 
 of the act, however, we are not here interested. The more 
 important section of the act defining the powers of the Lords 
 over money bills reads as follows : 
 
 Lords a 
 Consenting 
 Body Only 
 
 Powers of the House of Lords as to Money Bills. 
 
 Section i. — ^(i)» If a Money Bill, having been passed by 
 the House of Commons, and sent up to the House of 
 Lords at least one month before the end of the session, 
 is not passed by the House of Lords without amendment 
 within one month after it is so sent up to that House, 
 the Bill shall, unless the House of Commons directs to 
 the contrary, be presented to His Majesty and become an 
 Act of Parliament, on the Royal Assent being signified, 
 
 ' I & 2 Geo. V, c. 13. 
 
 116 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 notwithstanding that the House of Lords have not con- 
 sented to the Bill. 
 
 (2) A Money Bill means a Public Bill which in the 
 opinion of the Speaker of the House of Commons con- 
 tains only provisions dealing with all or any of the fol- 
 lowing subjects, namely, the imposition, repeal, remis- 
 sion, alteration, or regulation of taxation; the imposition 
 for the payment of debt or other financial purposes of 
 charges on the Consolidated Fund, or on money provided 
 by Parliament, or the variation or repeal of any such 
 charges ; supply ; the appropriation, receipt, custody, issue 
 or audit of accounts of public money; the raising or 
 guarantee of any loan or the repayment thereof ; or sub- 
 ordinate matters incidental to those subjects or any of 
 them. In this sub-section the expressions "taxation," 
 "public money," and "loan" respectively do not include 
 any taxation, money, or loan raised by local authorities 
 or bodies for local purposes. 
 
 (3) There shall be indorsed on every Money Bill when 
 it is sent up to the House of Lords and when it is pre- 
 sented to His Majesty for assent the certificate of the 
 Speaker of the House of Commons signed by him that 
 it is a Money Bill. Before giving his certificate, the 
 Speaker shall consult, if practicable, two members to be 
 appointed from the Chairmen's Panel at the beginning of 
 each Session by the Committee of Selection. 
 
 Certificate of Speaker 
 
 Section 3. — Any certificate ,of the Speaker of the 
 House of Commons given under this Act shall be con- 
 clusive for all purposes, and shall not be questioned in 
 any court of law. 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Enacting Words 
 
 Section 4. — (i) In every Bill presented to His 
 Majesty under the preceding provisions of this Act, the 
 words of enactment shall be as follows, that is to say: 
 "Be it enacted by the King's Most Excellent Majesty, by 
 and with the advice and consent of the Commons in this 
 present Parliament assembled, in accordance with the 
 provisions of the Parliament Act, 191 1, and by authority 
 of the same, as follows" '^ 
 
 (2) Any alteration of a Bill necessary to give effect to 
 this section shall not be deemed to be an amendment of 
 the Bill. 
 
 Comment on these provisions is unnecessary. A reading of 
 them shows that at the present time the decisive power of the 
 purse resides wholly in the House of Commons, except in so 
 far as this may be qualified by the veto power of the Crown, 
 which for two hundred years has not been exercised. In fact 
 the use of an executive veto is quite unnecessary under the 
 rule of parliamentary procedure, adopted about two hundred 
 K years ago, making it out of order for a member of Parlia- 
 mefit to move to increase any item in an estimate or appro- 
 priation bill. If the Executive's own measure is passed it 
 would be idle for him to veto it. 
 
 Rules of Procedure Governing the Consideration of Esti- 
 mates in the House of Commons. In England the rules gov- 
 erning the conduct of business in the House of Commons are 
 known as "standing orders." Though these orders may be 
 modified by any Parliament, certain of them have been so 
 long established and affect so vitally the governmental system, 
 and particularly the relations between the Crown and Parlia- 
 Rulesln the ™^"t' that they may be said to be accepted as in the nature 
 Nature of ^ of constitutional law. Particularly is this true of the pro- 
 tional'law visions establishing the rules which have been commented 
 
 118 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 upon in our chapter on some fundamental features of the 
 English financial system, that no appropriation shall be made 
 except in pursuance of a formal estimate submitted on behalf 
 of the Crown, that individual members have not the right to 
 propose expenditures or even to move the increase of the pro- 
 posals of the Crown, etc. 
 
 Following are the standing orders now in force governing 
 the manner in which estimates are considered and appropria- 
 tions made : 
 
 Standing Orders of the House of Commons on Finan- 
 cial Business 
 
 Supply and Ways and Means 
 
 14. This house will, in future, appoint the committees of 
 supply and ways and means at the commencement of 
 every session, so soon as an address has been agreed 
 to, in answer to His Majesty's speech.^ 
 IS- — (i) As soon as the committee of supply has been 
 appointed and estimates have been presented, 
 the business of supply shall, until disposed of, 
 be the first order of the day on Thursday, unless 
 the house otherwise order on the motion of a 
 minister of the Crown, moved at the com- 
 mencement of public business, to be decided 
 without amendment or debate. 
 
 a 
 
 (2) Not more than twenty days, being days before 
 the Sth of August, shall be allotted for the con- 
 sideration of the annual estimates for the army, 
 
 *The language of this rule may be misleading to an American. 
 The word "appoint" does not mean that a special or standing com- 
 mittee shall be appointed, but that, following custom, the House shall 
 at the beginning of the session organize as a committee of the whole 
 for the consideration of the estimates in detail, and shall meet as a 
 matter of course for the consideration of estimates not less frequently 
 than once each week. The estimates may be under review and dis- 
 cussion from February, or earlier, until August. 
 
 119 • 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 navy, and civil services, including votes on ac- 
 count.^ The days allotted shall not include any 
 day on which the question has to be put that 
 the Speaker do leave the chair, or any day on 
 which the business of supply does not stand as 
 first order. 
 
 (3) Provided that the days occupied by the consid- 
 eration of estimates supplementary to those of 
 a previous session or of any vote of credit, or 
 of votes for supplementary or additional esti- 
 mates presented by the Government for war ex- 
 penditure, or for any new service not included 
 in the ordinary estimates for the year, shall not 
 be included in the computation of the twenty 
 days aforesaid. 
 
 (4) Provided also that on motion made after notice, 
 to be decided without amendment or debate, 
 additional time, not exceeding three days, may 
 be allotted for the purposes aforesaid, either 
 before or after the 5th of August. 
 
 ( 5 ) On a day so allotted, no business other than the 
 business of supply shall be taken before eleven, 
 and no business in committee or proceedings 
 on report of supply shall be taken after eleven, 
 whether a general order exempting business 
 from interruption under the standing order 
 (sittings of -the house) is in force or not, un- 
 less the house otherwise order on the motion 
 of a minister of the Crown, moved at the com- 
 mencement of public business, to be decided 
 without amendment or debate. 
 
 (6) Of the days so allotted, not more than one day 
 in committee shall be allotted to any vote on 
 
 ' This means that as a matter of regular rule the estimates may 
 be under discussion in committee bf the whole not more than twenty 
 weeks and not later than August 5. 
 
 120 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 account, and not more than one sitting to the 
 report of that vote.^ At eleven on the close of 
 the day on which the committee on that vote 
 is taken, and at the close of the sitting on which 
 the report of that vote is taken, the chairman 
 of committees or the Speaker, as the case may 
 be, shall forthwith put every question necessary 
 to dispose of the vote or the report. 
 
 (7) At ten of the clock on the last day but one of 
 the days so allotted the chairman shall forth- 
 with put every question necessary to dispose of 
 the vote then under consideration, and shall then 
 forthwith put the question with respect to each 
 class of the civil service estimates that the total 
 amount of the votes outstanding in that class 
 be granted for the services defined in the 
 class, and shall in like manner put severally the 
 questions that the total amoimts of the votes 
 outstanding in the estimates for the navy, the 
 army, and the revenue departments be granted 
 for the services defined in those estimates. 
 
 (8) At ten of the clock on the last, not being earlier 
 than the twentieth, of the allotted days, the 
 Speaker shall forthwith put every question nec- 
 essary to dispose of the report of the resolution 
 then under consideration, and shall then forth- 
 with put, with respect to each class of the civil 
 service estimates, the question, that the house 
 doth agree with the committee in all the out- 
 standing resolutions reported in respect of that 
 class, and shall then put a like question with re- 
 spect to all the resolutions outstanding in the 
 estimates for the navy, the army, the revenue de- 
 
 * A vote on account is on a credit to be g-iven to the executive for 
 use after April i, the beginning of the new fiscal year for which the 
 appropriations are to be made. 
 
 121 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 partments, and other outstanding resolutions 
 severally. 
 (9) On the days appointed for concluding the busi- 
 ness of supply, the consideration of that busi- 
 ness shall not be anticipated by a motion of ad- 
 journment, and no dilatory motion shall be 
 moved on proceedings for that business and the 
 business shall not be interrupted under any 
 standing order. ^ 
 
 (10) Any additional estimate for any new matter not 
 included in the original estimates for the year, 
 shall be submitted for consideration in the com- 
 mittee of supply on some day not later than two 
 days before the committee is closed. 
 
 (11) For the purpose of this order two Fridays shall 
 be deemed equivalent to a single sitting on any 
 other day. 
 
 16. The committees of supply and ways and means shall 
 be fixed for Monday, Wednesday, and Thursday, and 
 may also be appointed for any other day on which the 
 house shall meet for despatch of business.* 
 
 17. Whenever the committe of supply stands as an order 
 of the day, Mr. Speaker shall leave the chair without 
 putting any question, unless on first going into supply 
 on the army, navy, or civil service respectively, or on 
 any vote of credit, an amendment be moved, or ques- 
 tion raised, relating to the estimates proposed to be 
 taken in supply. 
 
 ' This is to prevent "filibustering." 
 
 " The Committee on Ways and Means is also a committee of the 
 whole house sitting for the consideration of the administrative appro- 
 priation, revenue and loan bills. 
 
 122 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 Public Money 
 
 66. This house will receive no petition for any sum re- ' 
 lating to public service, or proceed upon any motion 
 for a grant or charge upon the public revenue, whether 
 payable out of the consolidated fund or out of money 
 to , be provided by parliament, unless recommended - 
 from the Crown.^ 
 
 67. This house will not proceed upon any petition, motion, 
 or bill, for granting any money, or for releasing or 
 compounding any sum of money owing to the Crown, - 
 but in a committee of the whole house. 
 
 68. This house will not receive any petition for compound- 
 ing any sum of money owing to the Crown, upon any 
 branch of the revenue, without a certificate from the 
 proper ofificer or officers annexed tQ the said petition, 
 stating the debt, what prosecutions have been made for 
 the recovery of such debt, and setting forth how much 
 the petitioner and his security are able to satisfy 
 thereof. 
 
 69. This house will not proceed upon any motion for an 
 address to the Crown, praying that any money may be 
 issued, or that any expense may be incurred, but in a 
 committee of the whole house. 
 
 70. This house will not receive any petition, or proceed 
 upon any motion for a charge upon the revenues of In- 
 dia, but what is recommended by the Crown. 
 
 71. If any motion be made in the house for any aid, grant 
 or charge upon the public revenue, whether payable out 
 of the consolidated fund or out of money to be pro- 
 vided by parliament, or for any charge upon the peo- 
 ple, the consideration and debate thereof shall not be 
 presently entered upon, but shall be adjourned till such 
 further day as the house shall think fit to appoint, and 
 
 'This is to fasten responsibility for every finance proposal on the ' 
 executive and prevent "log-rolling." 
 
 123 ' 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 then it shall be referred to a committee of the whole 
 house before any resolution or vote of the house do 
 pass therein. 
 
 Distinction Between the Authorisation of Expenditures and 
 the Appropriation of Funds. Although these rules set forth 
 very clearly the procedure followed in voting on the estimates, 
 there are certain features of this procedure that are of suffi- 
 cient interest to justify special comment. The first of these 
 is the distinction that is made between the authorization of 
 the executive to incur expenditures and the appropriation of 
 the funds with which these expenditures are to be met, or, to 
 use the English expression, between the "voting of supply" 
 and the "provision of ways and means." The former of these 
 two acts is performed by the House sitting in Committee of 
 
 « the Whole on Supply, or more briefly in Committee on Supply ; 
 
 ' the latter by the House sitting in Committee of the Whole on 
 Ways and Means, or more briefly Committee of Ways and 
 Means. 
 
 The procedure followed is this : The House in Committee 
 of Supply considers the estimates and by resolution formally 
 
 ' approves the several votes represented by such estimates — ^the 
 effect of which is foriTially to record the sense of the body. 
 From time to time the Committee of Supply reports to the 
 House in formal session its action in reference to the votes 
 which up to that time have been approved. This action being 
 approved by the House, the latter then goes into Committee 
 of the Whole on Ways and Means for the purpose of voting 
 the funds called for by such votes in Committee of Supply. 
 The action of the Committee on Ways and Means is in turn 
 reported to the House for its approval. These are in the na- 
 ture of authorizations of expenditures, but are not acts of 
 appropriation. After this approval has been had the action 
 taken is embodied in a bill which, upon securing the approval 
 of the House, is transmitted to the House of Lords for its 
 action and from them to the king for his assent. It will be 
 
 124 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 noted that in neither committee of the whole does discussion The Act of 
 take place upon an appropriation bill ; only after a conclusion ' ' tion '^°^" 
 is reached is the result embodied in a bill for formal enact- 
 ment. It is not until the appropriation bill is signed that n 
 money is actually made available for disbursement, except in 
 so far as money may be voted on account. 
 
 It will not, of course, have escaped notice that the distinction 
 that is here made between the voting of supply and the provi- 
 sion of ways and means is substantially that made in the Con- 
 gress of the United States between laws authorizing undertak- 
 ings or the performance of work entailing expenditures, such 
 as public buildings, engineering projects, etc., and the appro- Authoriza- 
 priation of funds with which to meet the liabilities so author- Approp°ia- 
 ized. These authorizations by Congress to undertake projects vtions by 
 
 CJonQTi'css 
 
 may run ahead of appropriations hundreds of millions of dol- 
 lars and may contemplate the making of contracts which it will ) 
 require years to complete; but the acts authorizing the v^ork 
 remain inoperative until the needed appropriations are made — 
 except in so far as certain preliminary steps may be taken, the 
 expenses of which can be met from funds already giranted. 
 
 Though the distinction is thtis the same in both countries, 
 the procedure followed in England has this difference in detail : vr 
 It is the House of Commons alone which considers estimates 
 and determines what expenditures shall be authorized. The i 
 House of Lords participates in the operation only as regards 
 the act of appropriation. Now that the power of the upper 
 house over money bills has been practically destroyed, this may The 
 seem to be a matter of no practical importance. It is none ^^"'"t'^' 
 
 ■^ ^ Difference 
 
 the less of interest to note that the theory that to the House Between 
 of Commons alone pertains the function of considering esti- an™"'"^" 
 mates is one which has always obtained under the British con- • English 
 stitutional system. The real importance of the distinction in 
 England is one that in this country has been missed, namely : 
 that on the estimates, in Committee of the Whole on Supply, n 
 the administration is able to obtain full discussion and have a 
 vote taken before the appropriation bill is drafted, which puts 
 
 125 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 every member on record as to how he stands on every item 
 of the proposed supply. In this country there is no oppor- 
 1 tunity offered to the opposition for public discussion and no 
 way for the administration to know where the majority stands 
 until the appropriation bill is up for passage, and that is usu- 
 ally toward the end of the session. 
 
 Act Known 
 as Consoli- 
 dated Fund 
 Act No. I 
 
 Vote Re- 
 stricted to 
 Services 
 Already- 
 Authorized 
 
 Votes on Account. As has been said, the financial year be- 
 gins on April i. As the estimates are not laid before the 
 House of Commons until February, it is impossible for that 
 body to review and discuss them in detail in committee of the 
 whole, and to act upon them intelligently before the beginning 
 of the year to which they relate. To meet this situation, resort 
 is had to what are known as "votes on account." The Treas- 
 ury submits an estimate setting forth the total amount required 
 for each of the votes comprehended under the civil services 
 and^ revenue departments as contained in the regular estimates 
 and the amount that the Government will require "on account" 
 for a certain period, say three or six months, and asks that 
 that amount of supply be granted to it. This the House does 
 by a vote on account. On the basis of this vote and the grant 
 of ways and means, as above described, an appropriation bill 
 known as Consolidated Fund ( No. i ) Act is passed. 
 
 In order that final action of the House on the estimates may 
 not be forestalled, votes on account are restricted to services 
 I already authorized. It would be exceptional, if it is ever done, 
 to have a vote on account cover a new service. Votes on ac- 
 count are taken only in reference to the civil services and reve- 
 nue departments. They are not required for the Army and 
 Navy, since the practice is to pass the large votes, say, for the 
 pay of the military and naval forces, prior to the beginning 
 of the fiscal year, and, under the power that these two serv- 
 ices have of using, with the approval of the Treasury, money 
 for one vote for other votes, enough money is thus renderfed 
 available for all the needs of these services until final action on 
 the estimates is had. 
 
 126 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 This device of votes on account serves the same purpose 
 as the resolutions which are passed by the Congress of the 
 United States continuing existing appropriations in force i 
 where there is a failure to pass any of the regular appropria- 
 tion bills before the beginning of the fiscal year. The two Similar to 
 
 ,-n- • 1 ■ -T., . r 1 Aumorizing 
 
 actions differ, however, in this respect: The action of the Resolutions 
 
 British Parliament is based upon and constitutes a part of the '''" Congress 
 action in relation to the estimates for the year to be provided 1/ 
 for, while the American action but continues the authorization 
 to expend money made for the preceding year. It should fur- 
 thermore be noted that in the United States resort to resolu- 
 tions of this character is had only on comparatively rare occa- 
 sions; in England the passage of votes on account is a part 
 of the regular procedure by which a grant of funds is made 
 for the conduct of the Government. It might seem that the 
 necessity for this action could be avoided by postponing the 
 beginning of the fiscal year to a later date. The present sys- 
 tem, however, offers the great advantage that but a short in- '' 
 terval of time intervenes between the preparation and sub- 
 mission of the estimates and the period to which the estimates 
 relate. It is believed that this advantage more than corapen- ■ 
 sates for the added complication introduced into the system 
 of voting funds arising out of the use of votes on account. 
 In view of the fact that, as will shortly be pointed out, the 
 House makes no change of any importance in the estimates " 
 as submitted, this belief is probably justified. It is question- t. 
 able, however, whether such a system would work in Amer- 
 ica, unless responsibility for the initiation of finance meas- 
 ures were placed on the Executive, and the estimates were first 
 taken up for review and discussion in a committee of the 
 whole house, and the attitude of a majority was determined 
 before the beginning of the new fiscal year. 
 
 Excess Votes. Under certain circumstances, provided the 
 sanction of the Treasury has been obtained, expenditures can 
 be made in excess of the votes. For this purpose use is made 
 
 127 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Expendi- 
 tures in 
 Excess of 
 Appropria- 
 tions to Be 
 Validated 
 
 of the Civil Contingency Fund, a general emergency fund for 
 the Government as a whole, or of extra receipts. All such ex- 
 : cess expenditures must be subsequently regularized by the 
 House of Commons. This is done by the Ministry presenting 
 an estimate for the amount so expended and the House of 
 Commons voting in supply what is known as an "excess vote." 
 The money with which to make this vote good is appropriated 
 in the Consolidated Fund ( No. i ) Act. Action upon an esti- 
 mate for an excess vote is never had until the matter has been 
 carefully investigated by the Public Accounts Committee of 
 the House, the chairman of which is chosen from the "opposi- 
 tion." 
 
 Authoriza- 
 tion to Meet 
 Emergencies 
 
 Votes of Credit. A vote of credit is a vote having for its 
 purpose the placing at the disposition of the Ministry of a 
 large sum of money, in addition to that provided for the regu- 
 lar conduct of the government, with which to meet some great 
 emergency. The resolution authorizing the grant specifies 
 that the sum is granted to His Majesty "beyond the ordinary 
 grants of Parliament." Votes of this character have been 
 passed in order to provide the Crown with the money required 
 for the financing of the great war in which England is now 
 engaged. 
 
 Appropriation Acts. We have seen that after expenditures 
 have been authorized in Committee on Supply, and ways and 
 means have been provided in Committee on Ways and Means, 
 and the action of these two committees has been approved 
 by the House, two appropriation bills are drafted and enacted 
 as are other general statutes. The first of these two acts, the 
 Consolidated Fund (No. i) Act, is usually passed just at the 
 close of the financial year. Indeed it is apt to bear the date 
 March 31. It has for its purpose to appropriate tlie money 
 required to make good the excess votes and votes on account. 
 It is thus in the nature of a general deficiency act as regards 
 the current year, though for this purpose it has a retro- 
 
 128 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 active character, and a provisional appropriation for the year Consolidated 
 to come. In respect to the latter feature it has this peculiarity, No. i a 
 that though the money carried by it is based' upon the votes ■ ^""P ^H"* 
 already adopted first in supply and then by the whole House, tion 
 it is not specially earmarked to meet the expenditures provided ■ 
 for in those votes, but may be utilized for any of the services 
 provided for by existing law. 
 
 The second act, the Consolidated (Appropriation) Act, is " 
 usually passed at the close of the session. It is thus enacted 
 several months after the beginning of the financial year to <■ 
 which it relates. Though it appropriates only the sum neces- > 
 sary to supplement the grant made by the Consolidated Fund 
 (No. i) Act, it is nevertheless the final and definite authori- The Regular 
 
 Appropria- 
 
 zation for the expenditure of the entire sum voted for the tion Act Ap- 
 conduct of the Government during the year. In form this bv°"Vor*" 
 act consists of a few brief clauses formally appropriating the 
 total amount carried by it, authorizing the use by the Army 
 and Navy of surpluses on any votes for the meeting of deficits 
 on other votes, provided the sanction therefor of the Treasury 
 ■is obtained, authorizing the Treasury to raise funds for tem- 
 porary purposes through the issue of treasury bills, and direct- 
 ing that the money voted shall be applied as set forth in the 
 votes listed in a schedule attached. It will be noted thus that ^ 
 the appropriation act itself carries the itemization of appro- 
 priations only so far as the 153 votes. If information is de- 
 sired regarding the subheads under which the votes must be ' 
 accounted for, reference must be had to the estimates. As 
 the estimates specify the votes as well as the subheads, and 
 these estimates are in fact passed as introduced, it is to the 
 estimates and not to the appropriation acts that one turns for ^ 
 information regarding the details of appropriations.^ 
 
 Extent of Control Over Appropriations Actually Exercised 
 by the House of Commons. In our consideration of some of 
 
 ''For copies of both the Consolidated Fund (No. i) Act and the 
 Consolidated Fund (Appropriation) Act, see Appendixes 2 and 3. 
 
 129 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 I 
 
 Control 
 Limited to 
 Review, 
 Criticism 
 and Ap- 
 proval or 
 Disapproval^ 
 
 Facilities 
 for Critical 
 Review and 
 Discussion 
 
 the fundamental principles of the English financial system, 
 we have seen that the House of Commons has surrendered, 
 if indeed it ever exercised, the right either itself to originate 
 proposals for the expenditure of public funds, or to increase 
 the proposals submitted to it by the Crown. Theoretically the 
 right remains to it to reduce the amounts called for by such 
 proposals. Were it so minded the House could thus make of 
 itself a powerful organ for securing economy in the expendi- 
 ture of funds. Actually, however, the House avails itself of 
 this power only when its action is to be regarded as a vote 
 of "lack of confidence." In fact, any modification of the esti- 
 mates not acceptable to the Ministry would mean a defeat for 
 the latter, because a Ministry cannot stand which cannot 
 count on a majority to support its proposals. A second reason 
 why the power is not exercised is found in the fact that it is 
 the disposition of the House to seek larger appropriations than 
 the Ministry is willing to recommend on its own responsibility. 
 This is of significance since it shows that were the bars let 
 down and the , House given the power to initiate proposals 
 for the expenditure of money or to move the increase of 
 Crown proposals, the situation would be not unlike that ex- 
 isting in the Federal arid State Governments of the United 
 States, where Congress and the legislatures, rather than the 
 Executive, are responsible for lavish if not wasteful appropria- 
 tion of funds, and the executive veto alone is relied on to pro- 
 tect the people. 
 
 Reduced to its final terms, the function performed by the 
 House of Commons in considering estimates may, therefore, 
 be stated to be that of enforcing responsibility on the Execu- 
 jtive for financial planning through review, criticism, and dis- 
 cussion, but not of modifying the proposals of the Government. 
 This being so, it would seem that abundant opportunity should' 
 be afforded for the exercise of this right. In point of fact, 
 a study of the rules and practices of the House shows that the 
 exercise of this right is in practice confined within very nar- 
 row limits, and this has been made possible because the right 
 
 130 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 is clearly recognized. In respect to no class of business is the 
 form of closure known as "the Guillotine" rnore rigidly applied 
 than it is to financial measures. Such is the pressure of public •Limitations 
 business upon its time, that the House has found itself under Discussion 
 the necessity of steadily reducing the time that can be allotted 
 to the consideration of the estimates. A reading of the stand- 
 ing orders governing the matter, which have been reproduced 
 above, shows that a maximum of but twenty-three days is - 
 allowed for a consideration of all the estimates in committee 
 of the whole. Under these conditions all that is possible for 
 those desiring to discuss the expenditure of proposals of the 
 Government is for them to select a few items for discussion, •> 
 concentrate their attention upon them and vote all the remain- 
 ing items without any discussion at all. As Mr. Higgs states,^ 
 "the practice now is for the opposition to choose the Votes 
 which shall be set down for discussion, and when the allotted " 
 time has been exhausted all the outstanding Votes are passed 
 without debate." 
 
 Even this statement fails to bring out the extent to which 
 the estimates are voted without any real consideration of 
 them by the House. The points selected for discussion are, 
 as a rule, not ones in respect to which the opposition wishes i 
 to criticize the expenditure proposals of the Ministry; they ' 
 relate rather to matters regarding which the opposition wishes 
 to criticize the general policy of the Government. The motion 
 that is made to reduce the sum assigned to such items is thus a " 
 purely pro forma motion upon which the opposition can base 
 an attack upon some general policy to which the Ministry 
 has committed itself; and as soon as the discussion is con- - 
 eluded the motion is, more often than not, withdrawn. As 
 President Lowell expresses it,^ "the real object of the debates 
 in supply at the present day is not financial discussion, but 
 criticism of the administration of the departments, their work 
 
 * Henry Higgs: The Financial System of the United Kingdom, 
 
 P- 32- 
 "A. Lawrence Lowell: The Government of England, Vol. I, p. 301. 
 
 131 
 
BRITISFI FINANCIAL ADMINISTRATION 
 
 The Floor 
 as the 
 Opportunity 
 of the 
 Opposition 
 
 What Is 
 Gained by 
 the Open 
 Review of 
 Estimates 
 
 being brought under review as their estimates are considered." 
 In considering this matter it should be borne in mind, how- 
 ever, that the opposition has full opportunity to secure knowl- 
 edge of how the financial affairs of the nation are being admin- 
 istered through the Committee on Public Accounts, through 
 the Comptroller and Auditor General and through open pub- 
 lic question and answer. "Complaint has been made," says 
 Lowell, "that the Government no longer cares what grants 
 are brought forward for debate — leaving that to the Opposi- 
 tion, — or how long the discussion upon them may take, or 
 whether it ends with a vote upon them or not, knowing very 
 well that all these grants must be adopted under closure when 
 the twenty days expire. This is perfectly true; but on the 
 other hand the procedure gives the fullest opportunity for 
 criticising the administration, and forcing a discussion of 
 grievances, the matters to be criticised being selected by the 
 critics themselves." 
 
 What President Lowell says regarding the opportunity that 
 consideration of the estimates, in conjunction with the power 
 to propose pro forma motions for a reduction of an item of 
 appropriation, affords the opposition to criticize the Govern- 
 ment of the day may be quite true, though certainly the oppor- 
 tunity is a limited one, except in Committee on Public Ac- 
 counts. From the standpoint of a critical examination of the 
 estimates themselves in committee of the whole, however, it 
 amounts to- almost nothing. Actually it would appear, there- 
 fore, that the House not only adopts the estimates precisely as 
 they are submitted to it by the Ministry, but does not even sub- 
 ject them to any real discussion or criticism, certainly not to a 
 discussion or criticism that concerns itself with the details 
 of each proposal. 
 
 This being so, the question may be asked : What is the ob- 
 ject gained by having these estimates submitted to the House 
 at all as opportunities for consideration of matters of general 
 policy could easily be provided for in some other way? The 
 answer to this question is that this action accomplished two 
 
 132 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 very important things: It is an exceedingly effective means 
 for securing complete publicity in respect to the financial ' 
 operations, past and proposed, of the Government ; and it af- 
 fords the best means for definitely locating responsibility for 
 the conduct of the financial affairs of the nation and ensuring 
 accountability for the manner in which this responsibility is 
 met. 
 
 In this connection it is of prime importance to note that . 
 this whole system of securing control through publicity de- 
 pends upon the requirement that such publicity shall be a real 
 and not a nominal one. It is safe to say that this system 
 would break down in a moment but for the completeness and " 
 clearness with which the information regarding expenditure, The Vital 
 past and proposed, is laid before Parliament, and the pro- j,f t|jg 
 cedure which requires the Cabinet members to be present to System 
 answer questions or criticism. The power of the Ministry 
 in respect to the expenditure of funds is enormous, but every ' 
 detail of its action must be done in the open. Furthermore, 
 and what is of equal importance, this system would scarcely 
 be feasible but for the fact that in the Treasury there is an -' 
 organ, which may be held responsible to a majority in Parlia- 
 ment, whose exclusive duty is to exercise not an intermittent 
 but a day-to-day control over practically all the financial acts 
 of the spending departments, whether these acts relate to the 
 estimating of future needs or tO' the expenditure of the funds 
 finally granted. Coupled with this is the requirement that all 
 expenditures shall be carefully audited by an officer independ- ' 
 ent of the Ministry, the Comptroller and Auditor General, the 
 result of whose acts must be reported to the House of Com- 
 mons and be there passed upon by a Committee on Public ' 
 Accounts in which the opposition is fully represented. In 
 addition to these is the Select Committee on Estimates, whose - 
 work is described below. These features of the British finan- 
 cial system, which will be fully described elsewhere in this re- 
 port, are here mentioned, * since it is of great importance 
 to realize that nothing approaching the adoption by another 
 
 133 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 government of the English system for parliamentary consid- 
 i, eration of estimates would be feasible unless that government 
 were prepared to adopt at the same time safeguards corre- 
 sponding to the ones which we have just enumerated. 
 
 Establishment in 19 12 of the Select Committee on Esti- 
 mates. Notwithstanding the general satisfaction that exists 
 in England with the system for the handling of estimates in 
 ^ the House of Commons, there is some feeling that the House 
 should, itself, in some more direct way, concern itself with at 
 least a scrutiny of the estimates laid before it. This feeling 
 found expression in the provision that was made in 1902 for 
 the appointment of a select committee "to inquire whether any 
 plan can be advantageously adopted for enabling the House, 
 by select committee, or otherwise, more effectively to make 
 an examination, not involving criticisms of policy, into the 
 details of national expenditure." 
 
 It is of importance to note that, in providing for the ap- 
 pointment of a committee, care was taken to exclude from its 
 province any consideration of matters of policy. It was felt 
 that any attempt to bring into existence an organ that would 
 Desire of share, or in any manner participate, in the responsibility for 
 i^to^Have *^^ determination of a program of work would weaken or 
 a More - dissipate the complete responsibility for the direction of pub- 
 Knowledge 1'*^ affairs now vested in the Ministry, and would thus be a 
 of Estimates direct inroad on that principle of cabinet government and 
 ministerial responsibility which is the keystone to the whole 
 constitutional system of Great Britain. The object sought, 
 therefore, was merely an examination of the question as to 
 whether means might not be devised through which the House 
 w might more effectively examine into the details of national 
 expenditure. 
 
 This committee made an exceedingly interesting investiga- 
 tion into the whole subject of th^ system and procedure em- 
 ployed in the framing of estimates, their consideration, and 
 the control of the expenditure of the funds granted. Its two 
 
 134 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 reports/ one submitted in 1902 and the other in 1903, have 
 been of the greatest service to the commission in the prepara- 
 tion of this report. Its final report contains some very in- 
 teresting remarks and recommendations bearing directly on 
 this matter of providing more effective means whereby the 
 House itself might, if not exercise greater control, at least 
 ' have a greater opportunity for informing itself regarding 
 financial conditions and operations. ' In the first place, it 
 pointed out that the discussion which took place on going into 
 Committee of Supply far from furnished an adequate oppor- 
 tunity for a real consideration of financial matters. It said : 
 
 Eight witnesses who have had special opportunities of 
 
 noticing the effect of discussions in the Committee of the 
 
 House of Commons on Supply gave it as their opinion 
 
 that for many years past the result was to urge increased 
 
 not decreased 'expenditures. Your Committee do not pro- Report of 
 
 , . V. • 1 , 1 . . ^ . the Select 
 
 nounce on this, rsut we consider that the examination of Committee 
 
 Estimates by the House of Commons leaves much to be Expendl"^ 
 desired from the point of view of financial scrutiny. The tures 
 color of the discussions is unavoidably partisan. Few 
 questions are discussed with adequate knowledge or set- 
 tled on their financial merits. Six hundred and seventy 
 members of Parliament, influenced by party ties, occupied 
 with other work and interests, frequently absent from 
 the chamber during the twenty to twenty-three supply 
 days, are hardly the instrument to achieve a close and 
 exhaustive examination of the immense and complex esti- 
 mates now annually presented. They cannot effectively 
 challenge the smallest item without supporting a motion 
 hostile to the Government of the day; and divisions are • 
 nearly always decided by a' majority of members who 
 have not listened to the discussion. Your Committee 
 agree in thinking that the Estimates are used in prac- 
 
 * Report from the Select Committee on National Expenditure, 
 together with the Proceedings of the Committee, Minutes of Evi- 
 dence, Appendix and Index, Decanber 4, 1902; July 7, 1903. 
 
 135 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tice — perhaps necessarily by the Committee of Supply — 
 mainly to provide a series of convenient and useful oppor- 
 tunities for the debating of Policy and Administration, 
 rather than to the criticism and review of financial method 
 and of details of expenditure. 
 
 After all, this is high praise for the English financial sys- 
 tem, for if, with all the facilities given the opposition to de- 
 tect irregularities in practice and to raise questions which may 
 be annoying to the administration, only questions of broad 
 ' policy are made the subjects of attack, there can be little 
 doubt of the fidelity or of the efficiency of management. The 
 demand for a means of independent consideration of the esti- 
 mates by members of Parliament is largely a majority de- 
 mand. Various proposals were brought before the commit- 
 tee to make it possible for members who had no first-hand 
 contact with administration to become better informed. One 
 was "that the estimates should as early as possible be re- 
 ferred to a grand committee and should only be discussed in 
 the whole house on report of that committee." A "grand" 
 committee is a large standing committee consisting of not 
 less than sixty nor more than eighty members of the House 
 Proposal appointed by the Committee of Selection, which has power 
 Commfttee *^° discharge members and substitute others during the course 
 of the session, and is distinguished from a select committee 
 in that it lasts throughout the session and does not expire, 
 as does the select committee, when it has made a report upon 
 the special matter committed to its charge. While tried ex- 
 perimentally in 1882, two grand committees were established 
 in 1888 and made permanent organs of the House. They were 
 designed to relieve the House of the necessity of debate, and 
 in order to secure the presence of persons who may throw light 
 upon any particular bill, the grand committee may appoint not 
 more than fifteen additional members for the consideration of 
 a particular bill. 
 
 The procedure of the grand committee, therefore, to this 
 
 136 
 
ESTIMATES : PARLIAMENTARY ACTION 
 
 extent takes the place of the committee of the whole house, ■ 
 and naturally the Select Committee on National Expenditure, 
 to which this suggestion was made, did not feel that the House 
 would take kindly to the idea of divesting itself of any of its 
 prerogatives in the consideration of so important a matter as 
 that of the estimates in committee of the whole, and merely 
 :said : "We are of the opinion that the House of Commons 
 would be strongly adverse to delegating any of its powers to 
 -such a committee." 
 
 The action finally recommended by the committee by which 
 the House might exert a more effective scrutiny of estimates, 
 was the creation of a committee to be known as the "Estimates 
 -Committee" with a position and functions analogous to those 
 ■of the Public Accounts Committee, except that it was intended ' 
 that it would give special attention to the proposals for future 
 -expenditures, while the Committee on Public Accounts would 
 give more largely their attention to the past expenditures, in 
 which they would be assisted by the Auditor General, whose 
 • duty it is to review and approve or disapprove each transac- 
 tion in passing. Specifically the recommendation was as fol- 
 rlows : 
 
 Your Committee are therefore prepared to recommend 
 that such a Select Committee be appointed; that it be 
 called "The Estimates Committee" ; that it be appointed 
 continuously in the same way and possess the same pow- 
 ers as the Public Accounts Committee; that in order to 
 combine and unify the machinery of financial control, and Select 
 
 , . , T- . ^ . Committee 
 
 as it were dovetail the Estimates Committee on to the on Estimates 
 Public Accounts Committee, a proportion of members be iiien°d^a 
 appointed to sit on both committees; that the Estimates instead 
 Committee with powers to call for witnesses and papers, 
 not of a secret character, should examine a class, portion 
 or branch of the estimates for the current year not ex- ' 
 ceeding one-fourth of the whole ; that this class shall have 
 been selected for them in the previous year by the Public 
 Accounts Committee, who shall likewise notify the De- 
 
 137 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Reasons 
 Urged for 
 Select 
 Committee 
 
 partments concerned and the Treasury; that the PubHc 
 Accounts Committee, while preserving full discretionary 
 power in the selection of the class or portion of the Esti-, 
 mates to be referred to the Estimates Committee, shall 
 , endeavor to pass systematically in review each vote 
 within a limited period of years; that to facilitate exam- 
 ination the selected class or portion shall be presented at 
 the earliest possible date after the day of the meeting of 
 Parliament, and that the consideration of this class by the 
 House of Commons in Committee of Supply shall if con- 
 venient be deferred until the presentation of the Report 
 of the Estimates Committee thereupon. 
 
 In explaining and defending this recommendation the re- 
 port says : 
 
 We are impressed with the advantages, for the pur- 
 poses of detailed financial scrutiny, which are enjoyed by 
 Select Committees, whose proceedings are usually devoid 
 of party feeling, who may obtain accurate knowledge col- 
 lected for them by trained officials, which may, if so de- 
 sired, be checked or extended by the examination of wit- 
 nesses or the production of documents ; and we feel that 
 it is in this direction that the financial control of the 
 House of Commons is most capable of being strength- 
 ened. . . . 
 
 We consider that if the portion of the Estimates se- 
 lected were not unduly large the temporal difficulties inci- 
 dental to their examination would be removed, and that 
 as the Committee would have no power to disallow any 
 expenditure, but only to report thereon, there could be no 
 question of any interference with ministerial responsibil- 
 ity or with Parliamentary control. 
 
 If we analyze this proposition of the committee certain 
 points of importance stand out clearly. The first is that the 
 position is taken that there is a real need for a closer scrutiny, 
 
 138 
 
Executive 
 
 ESTIMATES: PARLIAMENTARY ACTION 
 
 by the House, of estimates and expenditures. Secondly, it Functions 
 is held that in providing the means whereby such closer - investiga- 
 scrutiny may be exercised great care must be taken that the "°° "J"* 
 principle of ministerial responsibility shall not be weakened. 
 The bad consequences that have resulted from the vesting ii 
 of financial powers in the Budget Committee in the Cham- 
 ber of Deputies in France are too well known to make any 
 move in that direction, one that will meet with favor. The Does not 
 third point is that a close scrutiny of estimates and expendi-'^vvith 
 tures can be had without infringing upon the principle of Principle 
 responsible government, provided the committee making the ■ sible 
 scrutiny has no power to disallow items, but has merely the 
 function of investigation and report. 
 
 It is evident that what was here' proposed was the creation 
 of a committee that would have substantially the same func- 
 tions and powers as those possessed by President Taft's Com- 
 mission on Economy and Efficiency in the United States, ex- 
 cept that it was required to report to the legislative branch. 
 Possessed of no power of direction or control, it would have 
 the duty each year of making a detailed investigation of esti- 
 mates, organization, methods of procedure, activities and ex- 
 penditures of some one service or group of services, and re- 
 porting the findings to Parliament. 
 
 This proposal has much to commend it. The evident reason 
 for the committee is that it may serve in an advisory capacity 
 in review of the estimates, with special attention to the actual 
 needs of the services. It is difficult to see, however, why it was 
 thought necessary to provide for a new committee to perform 
 this work. In the Public Accounts Committee the House 
 already has a committee of the highest standing, composed of 
 members who have made matters of public finance their spe- 
 cial concern and who have firmly established the tradition of 
 acting, so far as possible, in a non-partisan manner. It would 
 seem to an outsider that the logical recommendation would 
 have been that Parliament enlarge the powers or duties of the 
 Public Accounts Committee and make of it the one source to 
 
 139 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 which the House would look for information concerning the 
 scrutiny of estimate and expenditure matters. 
 
 The committee made certain other recommendations look- 
 Other ing to strengthening the opportunities of the House to in- 
 Propos"s form itself concerning, and if need be to exercise a greater 
 control over, expenditures. Such, for example, was the recom- 
 mendation that greater opportunity be given to the House tO' 
 consider and discuss estimates, that the powers of the Treas- _ 
 ury. Comptroller and Auditor General and the Public Ac- 
 counts Committee be extended. It furthermore found that 
 the House might well be furnished with greater information 
 than had been the case concerning expenditures in the past 
 and the reason for changes proposed in the estimates. This 
 defect, it was thought, could easily be remedied by the Govern- 
 ment submitting more detailed data in connection with the 
 estimates. It said thus : 
 
 It has been suggested as a means of providing Mem- 
 ,bers with more information that a statistical statement 
 should be presented annually with the Estimates showing 
 the variation of each Vote during a period of ten years. 
 To this should be added a few notes explanatory of any 
 marked rise or fall in certain years. Your Committee 
 approve this suggestion, and they consider that in pre- 
 senting the Estimates to Parliament more detailed infor- 
 mation, especially as to new expenditure might be fur- 
 nished to the House of Commons in the Memoranda 
 which are now circulated with the Army, Navy and Civil 
 Services Estimates. 
 
 This report, though attracting favorable attention, and ex- 
 ercising a certain influence upon public opinion, produced no 
 immediate results in the way of direct action for a period of 
 Select^ ten years. In 1912, however, its central recommendation, that 
 
 o?^a™ized ' ^o^" ^he appointment of a Select Committee on Estimates, was 
 in 191a taken up and put into execution. On April 17 of that year 
 
 the House ordered : 
 
 140 
 
ESTIMATES: PARLIAMENTARY ACTION 
 
 That a select committee be appointed to examine such 
 of the Estimates presented to this House as may seem fit 
 to the Committee, and to report what, if any, economies 
 consistent with the policy implied in those Estimates 
 should be effected therein. 
 
 It will be noted that the recommendation of the Commit- 
 tee on National Expenditure, that this committee be made in What the 
 '^ _ . Committee 
 
 a way dependent upon the Public Accounts Committee, was on 
 
 not followed. This committee immediately entered upon its Has"Done 
 work in the spirit intimated in the suggestion of the Commit- 
 tee on National Expenditure. It selected for examination the 
 first year the estimate of the Office of Works and Public Build- 
 ings. Its report,^ submitted July 25, 191 2, represents a care- 
 ful investigation of the affairs of this branch of the public 
 service, and incidentally throws great light on the whole sub- 
 ject of the procedure employed in framing estimates and in 
 particular the effectiveness of treasury control. 
 
 In this report, while stating that in its opinion the super- 
 vision exercised by the Treasury over estimates constituted Its Interest 
 a real control, it nevertheless added "that in saying this they and 
 would not have it supposed that the criticism of the Treasury Eflfciency 
 is all that is required. They hope and believe that the work 1 
 of this committee will become a very real and useful part of 
 the machinery employed for securing economy and efficiency 
 in the preparation of estimates presented to Parliament." 
 
 This is significant as again stating that, notwithstanding 
 the effectiveness of treasury control,, the House itself should 
 have and exercise the means of scrutinizing estimates and gen- 
 eral methods of administration obtaining in the public services. 
 The suggestion that the committee be continued was acquiesced 
 in. The second report of the committee was made in 1913 and 
 deals with the estimates of the Admiralty. The serious weak- ' 
 ness of the committee for such work is that it has no staff. 
 
 1 Select Committee on Estimates, Report, 1912. 
 
 141 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 It is too early to determine just the part that this commit- 
 tee will play in the future. 
 
 E. Hilton Young, in his recently published volume on the 
 English system of finance,^ says regarding this committee : 
 
 Comment of There is a consensus that as an instrument of economy 
 
 Young the Committee has not justified all of the high hopes that 
 
 were held for it at its first appointment. Confronted 
 
 '^ without preparation with a bulky volume of technical- 
 ities, its members, lacking expert knowledge of the details 
 of the administrative work which they are set to examine, 
 must find themselves inevitably very much at sea. Men 
 contending for economy in general are always at a dis- 
 
 '1 advantage when pitched against men contending for ex- 
 penditure on particulars. For enlightenment the Com- 
 mittee must depend on the officials of the department 
 whose estimate is being subjected to scrutiny and on the 
 Treasury. Now it is those officials who have themselves 
 prepared the estimate, and the Treasury has formally 
 approved it; and although both, we may feel assured, 
 loyally place all means of information at the disposal of 
 the Committee, it is not in the nature of things that under 
 ' such conditions the department or the Treasury officials 
 should find many imperfections in their own work to 
 which to direct the attention of the Committee. In the 
 result the labours of the Committee are prolonged, but its 
 results are not of commensurate importance. As the 
 fruit of many laborious days spent on the Navy estimates, 
 the chief recommendation was one relating to the supply 
 of tobacco to the sailors. It is not to be wondered at, 
 after the first glow of enthusiasm in 1912 was over and 
 when it became apparent to the Committee to what unre- 
 
 "*- warding labours they were confined by their inhibition 
 from questions of policy, that there has even been a diffi- 
 
 ^ E. Hilton Young : The System of National Finance, London, 
 191 5, p. 92. 
 
 142 
 
ESTIMATES : PARLIAMENTARY ACTION 
 
 culty in securing the needed quorum of five at its meet- 
 ings. ... 
 
 It is to be feared that the Estimates Committee, unless 
 it can be suppHed with a servant and helper in a position , 
 similar to that of the Auditor General, is never likely to 
 do very much good ; and in the meanwhile it may even do 
 some harm. Until its institution parliamentary criticism 
 was the bogey which intimidated ministers and others ex- 
 travagantly inclined and made them cautious. The hardi- > 
 est sinner hesitated at the thought that his extravagance 
 might be made the subject of special criticism and debate 
 in th^ House. Seldom indeed were any criticisms of the 
 sort made, but the possibility of them had a restraining 
 effect. Now the bogey is materialised and put into a ^ 
 committee room, and turns out to be something of a hol- 
 low turnip after all. Virtue is gone out of it. Another 
 ill effect of the new system is that it fixes the time at^ 
 which criticism vdll be made, and relieves the depart- 
 ments from all apprehension of unexpected criticism be- 
 tween whiles. At the rate of progress which it has made 
 in the past, the Estimates Committee will get the whole 
 of the estimates scrutinised about once every ten years. 
 Once then that it has undergone its ordeal before the 
 Committee, and no very severe one, each department will > 
 know that it has ten years of safety before it. The dis- 
 appointing result of the Committee's labours, a disap- 
 pointment due in no wise to the Committee itself but 
 wholly to circumstances of its work for which it is not 
 responsible, is therefore not a matter of indifference. It 
 would be better that its powers should be ended if not 
 mended, and to mend them what is chiefly needed, to 
 judge by the experience of the Public Accounts Commit- 
 tee, is a permanent and independent official of its own as . 
 an adviser. 
 
CHAPTER VII 
 DISBURSEMENT OF PUBLIC FUNDS 
 
 Control of Exchequer Issues by the Comptroller and Auditor General ; 
 Grants of "Credits" to the Treasury; Issues of Money from the 
 Exchequer to "Principal Accountants"; The Paymaster General; 
 Departmental "Accounting Officers"; Personal Liability of Ac- 
 counting Officers; Accounting Officers Not Bonded. 
 
 Having reached the point where funds are formally appro- 
 priated by ParliameMt for meeting national expenditures, we 
 have need to consider the machinery and procedure employed 
 in their utilization. This, it will be found, involves a num- 
 ber of distinct operations, the money passing through a num- 
 ber of hands before final payment is made. The motives lead- 
 ing to this splitting up of the work of payment of obligations 
 is due partly to the need for distributing the work so that it 
 can be expeditiously performed, and partly to the necessity for 
 establishing the checks and control that are essential to the 
 securing of full accountability. 
 
 Control of Exchequer Issues by the Comptroller and Auditor 
 General. The theory that final control over the expenditure 
 of public funds rests in the legislative branch of the govern- 
 Functions of ment requires that that body shall provide means for ensuring 
 omptro er ^j^^^^ ^^ money shall issue from the Treasury except in pur- 
 suance of express authorization. To this end, most if not 
 all nations operating under this theory provide for an officer 
 to represent it as guardian of the public funds. To this offi- 
 cer, usually known as "Comptroller," is intrusted the duty of 
 examining all requisitions upon the Treasury for funds and 
 of determining whether they shall be honored. If he finds 
 that sanction of law exists for the payment he issues his war- 
 
 144 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 rant to that effect, and upon this document, and this document 
 alone, payment is made. 
 
 In our account of the Exchequer given in our chapter on 
 some fundamental features of the English financial system,^ ' 
 we have seen that early provision was made in England for 
 an officer of this character. One of the three persons pos- 
 sessing the keys to the strong box was the Auditor, to whom Reviews 
 was intrusted the duty of seeing that no money should be taken tactions 
 from the box until proper authority therefor was shown. Al- ^^°^^ ^ 
 most from the beginning this office was one of great responsi- Treasury 
 bility and power. Mr. Bowles pointed this out in his testi- 
 mony before the Committee on National Expenditure 
 (1902) where he says: ^ 
 
 "The auditor was an officer of very great importance 
 who had absolute control over the issues, and could refuse 
 them even though he were required to make an issue by / 
 the Treasury, if in his opinion the conditions of the issue 
 did not comply with the law. Thus, in 181 1, Lord Gren- 
 ville, then Auditor of the Exchequer, refused to make an 
 issue of £500,000, though required to do so by the First 
 Lord and four other Lords of the Treasury, for want of 
 the due authority from the Crown, which, in consequence 
 of the incapacity of George III., could not then be ob- 
 tained. Another similar instance occurred in 1832 in 
 reference to the Russo-Dutch loan, when the Auditor's 
 scruples were removed by the opinion of the Law Offi- 
 cers of th'e Crown." 
 
 In 1834 this system was changed by the abolition of the ^^l^"^^ 
 two old offices of Clerk of the Rolls and Auditor and the 
 creation of the new office of "Comptroller General of the ' 
 Receipt and Issue of Her Majesty's Exchequer," to which 
 officer was transferred the duty of seeing that no money should 
 
 * See p. 36. 
 "Report, p. 63. 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 issue from the Exchequer unless warrant of law therefor could 
 be shown and all other legal requirements had been met. 
 Thereafter no money could issue from the Exchequer except 
 upon the order of this officer. 
 
 The next change of importance took place through the 
 Exchequer passage of the famous Exchequer and Audit Departments 
 Departoient ^ ^^^ °^ 1866, which thoroughly reorganized the whole account- 
 Act, 1866 ing and auditing system of the Government. In a subsequent 
 chapter we trace the development of the present auditing sys- 
 tem which culminated in the act cited by which for the first 
 time provision was made for a complete audit of expenditures 
 by an officer directly responsible to Parliament. An important 
 V feature of this act was the consolidation in the hands of one 
 officer of the two functions of control of Exchequer issues 
 and audit of expenditures, which until then had been in the 
 hands of separate officers. This new officer to whom the 
 two duties were assigned was officially styled "Comptroller 
 General of the Receipt and Issue of Her Majesty's Exchequer 
 and Auditor General of Public Accounts," but it was pro- 
 vided by the act that he might be designated by the shorter 
 title of "Comptroller and Auditor General." ' 
 
 Grant of "Credits" to the Treasury. Technically public 
 funds are held by the Banks of England and Ireland subject 
 to the order of Parliament. The latter by statute authorizes 
 the Crown to draw upon these funds for the payment of speci- 
 fied obligations. To make these payments the first step to 
 be taken by the Executive is to get possession of the money, 
 or, what is the same thing, establish at the banks its authority 
 to draw against the public funds. In the United States the 
 ^ procedure employed in performing this operation is an ex- 
 ceedingly simple one. All that is required is that the officers 
 charged with the disbursement of the appropriations shall, 
 from time to time, as they have need of funds, make requisi- 
 tion upon the Comptroller of the Treasury for the issue of 
 warrants directing the payment to them of the sum requisi- 
 
 146 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 tioned. The Comptroller, having satisfied himself that the 
 
 money has been duly appropriated for the purposes set forth i 
 
 in the requisition and that there is a balance standing to the 
 
 credit of such appropriation sufficient in amount to meet the 
 
 requisition, executes his warrant directing the Treasury to 
 
 pa,y the money called for, and upon this warrant the disbursing 
 
 officer receives the money. 
 
 In England the procedure is much more complicated. The j^ England 
 . . , . T , „ , „ r 1 Treasury 
 
 first step required is that the i reasury shall secure lormal \ Must First 
 
 authority to requisition funds. This is done by securing what '^^ Funds 
 are known as "credits" upon the Exchequer. In securing these 
 credits a somewhat different procedure has to be followed in 
 respect to the moneys required for meeting consolidated fund 
 services and those for meeting the supply services. To secure 
 the first the Treasury addresses to the Comptroller and Auditor 
 General a requisition signed by two Lords of the Treasury, 
 asking that the necessary credit be given it upon the Treas- 
 ury. If the Comptroller and Auditor General finds the requisi- 
 tion a proper one, he approves it and by warrant directs that 
 the credit be granted. 
 
 In the case of the supply services the same procedure is • 
 gone through, with the exception that before the requisition 
 can be made a royal order must be secured authorizing the 
 requisition. This arises from the fact that in form the supply 
 has been granted to the Sovereign. As the latter is under no 
 legal obligation to make use of the funds so placed at his dis- 
 position, unless he desires to do so, nothing can be done until 
 he has signified his wish that the money be placed at the dis- 
 posal of the Treasury. 
 
 Issue of Money from the Exchequer to "Principal Account- 
 ants." The execution of the foregoing operations does not 
 result in any actual issue of money from the Exchequer. It '^ Gives 
 merely gives the Treasury the right to order such issue. The ^ R^liit'to 
 issues themselves are made only to officers known as "princi- Draw 
 pal accountants." Principal accountants are defined by the 
 
 147 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Funds 
 Received 
 from 
 Principal 
 
 Accountants 
 
 Requisitions 
 of Principal 
 Accountants 
 Must Be 
 Endorsed 
 by the 
 Treasury- 
 
 Exchequer and Audit Departments Act as "those who receire 
 issues directly from the accounts of Her Majesty's Exchequer 
 at the Banks of England and Ireland respectively." According 
 to Mr. Henry Higgs, the only persons coming under this defi- 
 nition, and therefore authorized to receive money from the 
 Exchequer, are : ( i ) The Comptroller General of the National 
 Debt, and the chief cashiers of the Banks of England and 
 Ireland, who are authorized to receive money from the Ex- 
 chequer in order to meet the payments called for by the pub- 
 lic debt charges; (2) the Accountants General of the revenue 
 departments who, under an exceptional arrangement which 
 will be more fully described hereafter, can make use of moneys 
 collected by their services for meeting the expenses of the 
 latter, though from a bookkeeping standpoint the money is 
 treated as passing through the Exchequer; and (3) an officer 
 known as Paymaster General, who, with the exceptions just 
 noted acts as a general paymaster for the entire Government 
 service, military as well as civil.^ 
 
 These officers secure funds by making formal requisition 
 therefor upon the Treasury. If these requisitions are found 
 proper the Treasury issues orders upon the custodian banks 
 to transfer the money called for from the credits to the ac- 
 counts of these principal accountants. It will thus be seen 
 that in effect the money is first transferred to the Treasury 
 and by the latter to the principal accountants. The most im- 
 portant point to be noted in respect to this procedure is that 
 the Comptroller and^ A.uditor General does not intervene in 
 respect to the payment of money to the principal accountants. 
 He has exercised his power of control in the granting of 
 credits to the Treasury.* 
 
 1 Henry Higgs : The Financial System of the United Kingdom, 
 p. 68. 
 
 ' For copies of the forms used by the Treasury in requesting the 
 grant to it of credits by the Comptroller and Auditor General, in 
 granting them, and by the Treasury in directing the issue of money 
 from the Exchequer to principal accountants, see Henry Higgs: 
 The Financial System of the United Kiiagdom, Appendix VH, 
 pp. 181-188. 
 
 148 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 The Paymaster General. Although, as we have pointed 
 
 out, there are three classes of principal accountants, two of 
 
 them have such specialized duties that it will not be neces- Chief 
 
 . , , , , rr^ . , • Paymaster 
 
 sary to consider them further. Treatmg them as exceptions of All 
 
 to a general rule, as they are, we may say that the English Obligations 
 system of disbursing public funds rests upon the principle ' 
 of having a single Paymaster General for the whole Govern- 
 ment. He receives the money from the Exchequer that is 
 required for the payment of public obligations and makes such 
 payment himself or advances money to "sub-accountants" for 
 that purpose. Sub-accountants are defined by the Exchequer 
 and Audit Departments Act as "those who receive advances 
 by way of imprests from principal accountants or who re- 
 ceive fees or other public moneys through other channels." 
 
 The Paymaster General, it will be noted, is in no sense an , 
 accounting officer. He has nothing to do with the examina- 
 tion and settlement of claims. His sole function is that of 
 making payment of orders drawn upon him by accounting 
 officers proper. His responsibility is limited to that of satis- 
 fying himself that the orders for payment are in due form ' 
 and are supported by the proper documents as required by law. 
 As set forth in a pamphlet issued by the Government de- 
 scriptive of the financial machinery of the Government : ^ 
 
 The Paymaster General fulfills all the duties of a to|p^end"ng 
 banker for the various public departments, with certain Officers 
 exceptions. The moneys issued from the Exchequer for 
 the various services are paid to his supply account at the 
 Bank of England. For each of the Civil Service votes 
 he keeps a separate account; but the several votes for 
 army and navy services are included in accounts under 
 the general heads of "Army" and "Navy" respectively. 
 To these accounts he credits the sums issued from the 
 Exchequer, and debits the amount of the various orders 
 
 * "Control and Audit of Public Receipts and Expenditures." Printed 
 for His Majesty's Stationery Offices, London (1907), p. 8. 
 
 149 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Acts Re- 
 viewed by 
 Accounting 
 Officers 
 
 or cheques drawn on him by the several accounting offi- 
 cers. The Paymaster General forwards to the several 
 accounting officers the vouchers in support of his trans- 
 actions on their accounts; and at the end of every month 
 furnishes to each a statement of account showing his 
 receipts and payments during the month and the balance 
 remaining in his hands. The accounting officer, after 
 examination of this account, forwards to the Paymaster 
 General certificates of the correctness of the total 
 amounts of the receipts and payments included therein. 
 These certificates are subsequently furnished by the Pay- 
 master General as vouchers to his banking account. 
 
 Consolida- 
 tion of 
 Paymaster 
 Offices 
 
 How the 
 System 
 Has 
 Worked 
 
 Originally there were a number of paymasters, one for the 
 Army, one for the Navy, and a number for the several civil 
 services. During the years 1830 to 1856 they were consoli- 
 dated into the single office of Paymaster General. The main 
 purpose in view in effecting this consolidation was that of 
 reducing the large number of bank balances called for under 
 the old system. A prime feature of the new system is that, 
 although the Paymaster General keeps a separate account in 
 ' respect to each vote for the civil services and a separate con- 
 solidated account with each of the departments of the Army 
 and Navy, he keeps but one general balance from which he 
 makes payments on account of all the votes. This means that 
 so long as he has a sufficient balance he can pay any order 
 drawn upon him regardless of the vote to which it relates, 
 whether he has requisitioned sufficient funds on account of 
 that vote or not. Any payment on account of a vote in ex- 
 cess of the sum requisitioned for that vote is subsequently 
 adjusted by a future requisition. 
 
 This system, when first established, gave rise to some appre- 
 hension that it would cause a confusion of accounts and in 
 some way would weaken control of the House of Commons 
 over appropriations. As the result of criticism along this Hne 
 the Committee on Public Monies of 1856-1857 made a care- 
 
 150 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 ful investigation of the workings of the system, with the re- 
 sult that it gave the following unqualified endorsement. It 
 said : 
 
 Your Committee are satisfied, from the evidence taken 
 before them, that the consolidation of the Pay Depart- 
 ments has been attended with public benefit; that it has 
 diminished the balances left in the hands of the Public 
 Accountants to the Crown; that it has increased the 
 security of the public money and promoted economy ; and 
 that the regulation which requires the Paymaster General 
 to make all his payments from a single cash balance has 
 been attended with beneficial results. As the issue of 
 money from the Exchequer in amounts sufficient to main- 
 tain a constant balance in the hands of the Paymaster, on 
 each separate grant or head of service, over and above 
 the balances in the Exchequer at the credit of such grant 
 and service, would entirely defeat these objects, your 
 Committee recommend that issues from the Exchequer 
 shall be made in order to adjust the payments under every 
 head of service by placing each in credit in the books of 
 the Paymaster as frequently as possible, consistently with 
 retaining the smallest cash balance, and that such an ad- 
 justment shall be completely made, at least, at the close 
 of every month; that the Paymaster shall be required to 
 make up, for the Commissioners of audit, accounts to the 
 end of every month, showing the balances/ for or against 
 every head of service; and that any provision of the 
 Exchequer Regulation Act of 1834 which may appear to 
 be at variance with this mode of conducting the public 
 payments should be repealed.^ 
 
 Notwithstanding this endorsement, criticism of the system 
 continued to be made. One of the objections upon which 
 special stress was laid was that the system destroyed the value 
 
 ^ Select Committee on National Expenditure, Rep. 1902, App. 13, 
 p. 229. 
 
 151 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 An Official 
 Description 
 of the 
 Treasury 
 System 
 
 of the reports of Exchequer receipts and issues as a means 
 of determining national income and expenditure. On Febru- 
 ary 21, 1885, the Chancellor of the Exchequer took advan- 
 tage of certain questions addressed to him by Mr. W. H. Smith 
 to make an exceptionally clear and full statement of the dis- 
 bursing system of the Treasury. This statement was sub- 
 sequently published as a treasury minute. The importance of 
 the subject warrants our reproducing here the more important 
 parts : ^ 
 
 The Departments of the State obtain money for public 
 services by order on the Paymaster General; the service 
 of the Public Debt and of the Revenue Departments con- 
 stituting almost the only exceptions to this rule. 
 
 Sources from Which Paymaster Derives His Funds.^ 
 The Paymaster General obtains money from various 
 sources : ( i ) He receives sums realised by the Depart- 
 ments in the course of their administration (extra re- 
 ceipts rendered available as appropriations in aid without 
 passing through the Exchequer) ; (2) He holds the bal- 
 ance for the time being of the large fund, called the 
 Treasury Chest Fund, established to meet temporarily 
 expenditure abroad; (3) He holds the Civil Contingen- 
 cies Fund, established to defray provisionally unforeseen 
 expenditure of a civil character; (4) He also holds large 
 sums on account of what are called Deposit Funds under 
 the control of different Departments of the State; (5) 
 He is supplied day by day, according to his needs, with 
 money from the Consolidated Fund. 
 
 Separation of Funds on Books of Paymaster General, 
 But Only One Cash Balance Maintained. These various 
 
 ^ See Epitome of Reports from Committees of Public Accounts 
 (1857-1910) and of the Treasury Minutes thereon, pp. 174-183. 
 
 'The marginal headings have been inserted by the authors of 
 this report in order to make clearer the several features of the 
 system described. 
 
 152 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 keads are carefully distinguished as separate accounts in 
 his books, but he does not at all times keep a separate 
 cash balance upon each head. All receipts under the 
 above heads are treated for the time as part of one gen- 
 eral cash balance, out o>f which he defrays, day by day, 
 the orders for expenditure served upon him; thus he 
 exhausts all cash received from without before he applies 
 to the Treasury for an issue from the Consolidated Fund, 
 and it follows that returns of issues from the Consoli- 
 dated Fund do not fairly represent the public expenditure, 
 except at prescribed periodical times of adjustment. At 
 those times issues are made from the Consolidated Fund 
 which enable the Paymaster General to replace all the 
 sums of which he has made temporary use for the public 
 service. 
 
 Special System for the Revenue Departments. Again, 
 the House sanctions in Supply the expense of collecting 
 the revenue, and it authorises the issue out of the Con- 
 solidated Fund to the Revenue Departments of a sum 
 corresponding to the amounts thus sanctioned. The Rev- 
 enue Departments, however, except in the case of the 
 Telegraph and Packet Service, do not in the first instance 
 make use of this credit on the Consolidated Fund. They 
 defray their expenses of collection out of the revenue as 
 they collect it, and before it is paid into the Consolidated 
 Fund. At regular prescribed intervals, as in the case of 
 the Paymasters' account, the accounts between the Rev- 
 enue and the Consolidated Fund are adjusted. The Rev- 
 enue Departments present to the Treasury a statement of 
 the sums which they have expended, and provided, always 
 that such sums are within the limits of the Parliamentary 
 authority, the Treasury issues corresponding amounts to 
 the Departments out of the proper Votes, and the Depart- 
 ments repay them to the Consolidated Fund as revenue 
 in adjustment of the amounts temporarily used. These 
 
 153 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 methods of procedure may appear somewhat complicated 
 in description, but in practice they are extremely simple. 
 Money is used upon the spot where it comes to hand, be- 
 cause in that manner it can be used most economically. 
 Subsequent adjustment of account between the Depart- 
 ments and the Consolidated Fund brings the expenditure 
 into accord with the Votes of the House of Commons. 
 If that adjustment is not made, if the directions of Acts 
 of Parliament or the regulations of the Service are not 
 observed, or if the expenditure exceeds the sums granted 
 by the House of Commons, the House learns the fact 
 through its own officer, the Comptroller and Auditor Gen- 
 eral, and, through its own Committee of Public Accounts, 
 judges the infraction of law or regulation thus brought 
 to its notice. . . . 
 
 Monthly, Quarterly and Annual Adjustment of Pay- 
 master General's Accounts. An adjustment of accounts 
 (as indicated above) of a general character takes place 
 monthly, a fairly accurate adjustment takes place at the 
 close of each quarter, while at the close of the financial 
 year all the precautions are taken which inquiry and ex- 
 perience can suggest, in order that the issues from the 
 Consolidated Fund for the year, as declared within a few 
 hours of the closing of the books on the 31st March, may 
 correspond as closely as possible with the finally audited 
 expenditure as declared some nine or ten months later by 
 the Comptroller and Auditor General. 
 
 Use of Exchequer Issues for Determination of Total 
 Expenditures. The Board is aware that this annual ad- 
 justment is not a very simple matter; but its general ac- 
 curacy is of considerable importance. The expenditure 
 which is given in the Budget, upon which Parliamentary 
 accounts are based, and which is always taken as the pub- 
 lic expenditure in discussion by Parliament and the Press, 
 
 154 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 is not final expenditure at all; it is a collection of imprests 
 iKued out of the Consolidated Fund to the various spend- 
 ing Departments to carry on a service which in several of 
 its branches is spread over the world. It is, therefore, 
 of great moment that these issues from the Consolidated 
 Fund, which are by general assent accepted as represent- 
 ing the Public Expenditure, should correspond as closely 
 as possible with the expenditure as subsequently ascer- 
 tained by the Comptroller and Auditor General. . . . 
 
 After pointing out that the figures for next year showed 
 that the difference between the two was only about one shilling 
 in five hundred or one-fifth of one per cent, the minute con- 
 tinues : 
 
 These figures speak for themselves ; but the Chancellor 
 of the Exchequer must remind the Board that this accu- 
 racy only applies to the issues from the Consolidated Fund 
 after the adjustment which takes place from time to time, 
 and notably at the close of the quarter and of the finan- 
 cial year. At other times the issues from the Consol- 
 idated Fund would not be found to correspond so closely 
 with the actual expenditure, because of the various meth- 
 ods adopted for economising the use of the public money. 
 Hence the Returns of Issues from the Consolidated 
 Fund, as published weekly, must not be accepted at other 
 times than those named above as accurate statements of 
 the public expenditure. This point may not be clearly 
 apprehended by the many persons interested in finance 
 who study the weekly returns, and the Chancellor of the 
 Exchequer therefore lays stress upon the fact that the 
 expenditure, as shown in the returns, represents accu- 
 rately indeed the issues from the Consolidated Fund, but 
 except at the close of the quarter or year it does not ac- 
 curately represent the actual expenditure.^ 
 
 'Subsequent to the date upon which this was written the system 
 of appropriations in aid has been greatly developed, the result of 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Paymasters 
 Distin- 
 guished from 
 Accounting 
 Officers I 
 
 One Officer 
 to Audit 
 Expenditure 
 against 
 Each Vote 
 
 Departmental Accounting Officers. We have seen that un- 
 der the British system a clear distinction is made betwaen the 
 two functions of paying obligations found to be due and of 
 determining what payments are so due and payable. The first, 
 as we have pointed out, is performed by officers known as 
 "principal accountants," who are really not accounting officers 
 at all, of whom the Paymaster General is the most important. 
 The second is performed by officers who are known as "ac- 
 counting officers" or "chief accounting officers." Technically 
 an accounting officer is the officer charged with the duty and 
 responsibility for the expenditure of a vote and of rendering 
 an account of the manner in which this duty is performed. 
 This he does by the preparation and transmission to the Comp- 
 troller and Auditor General of an account in which the ex- 
 penditure of the vote is set forth in detail according to the 
 subheads enumerated in the estimates. These accounts, when 
 audited by the Comptroller and Auditor General, are laid be- 
 fore Parliament as the appropriation accounts for the year. 
 
 An accounting officer is designated for each vote. Theo- 
 retically there might be as many accounting officers as there 
 are votes. Actually, however, the same person is usually made 
 the accounting officer for ajl the votes for a department or 
 other important branch of the public service. The result is 
 to give to each department or important branch of the public 
 service one official charged with the duty of rendering an ac- 
 count of the manner in which all the funds of that department 
 or service are expended. 
 
 This duty of rendering an account of the manner in which 
 funds are expended constitutes but a part of the duties of this 
 officer. Following the principle of concentrating financial re- 
 sponsibility as far as possible, this officer is charged with the 
 supervision and control of all the financial operations of the 
 
 which is to exclude from Exchequer receipts and issues important 
 sums received by the department as excess, or extra receipts, and 
 directly applied by them in the way of additions to parliamentary 
 grants. 
 
 iS6 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 department to which he is attached. He is the officer whose An Auditor 
 approval is required before any expenditure of funds can ben Money 
 made or liabiHty entered into. Moreover, as has been de- Transaction 
 scribed, he is the official to whom are addressed the estimates 
 circular of the Treasury and who has full charge and responsi- , 
 bility for the preparation of the estimates. 
 
 In this officer the British system makes provision for an 
 official, or rather set of officials, who have nO' counterpart in 
 the federal service of the United States. The nearest analogue 
 to this office is that of the disbursing officers attached tO' the | 
 several departments and bureaus of the federal departments. 
 The accounting officers of the British Government, however,.. ^"T' 
 differ radically from these officers in two fundamental re- Differs from 
 spects. In the first place the accounting officers are not dis- ) practice 
 bursing officers; they make no payments themselves; they 
 merely determine what payments should be made. Under the 
 American system the disbursing officers both determine what 
 payments are due and make such payments. In the second 
 place the accounting officer, under the English system, is an i 
 official of far greater dignity, official status, and responsibility 
 than the disbursing officer under the American system. The 
 American disbursing officer is little more than an expert ac- 
 countant with the duty of seeing that all legal requirements 
 are met before payment of a claim is made. He has little or no " 
 duty in respect to the determination of what expenditures shall 
 be authorized, other than the technical one of seeing that they 
 fall within the provisions of the appropriation. Though his 
 advice may be relied upon to a greater or less extent by the 
 head of a department in respect to the incurring of obligations, 
 and suggestions from him looking to the efifecting of economies 
 may be welcomed, the giving of such advice and suggestions 
 constitutes no part of his official duties. Only in a very lim- 
 ited degree, therefore, is he responsible for the preparation of ' 
 the estimates setting forth the financial needs of the service 
 or for the economy and efficiency with which the funds granted 
 are expended. 
 
 157 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 High 
 
 Dignity of 
 English 
 Accounting 
 Officer 
 
 Inquiry 
 into Work 
 of Account- 
 ing Officers 
 
 The English accounting officer, on the other hand, is the 
 one responsible financial officer of the service to which he be- 
 longs. He has entire charge of the financial operations of his 
 service. He is responsible for the collection of the extra re- 
 ceipts of the service, all expenditures and the rendition of 
 the accounts. His duties pertain not only to the settling of 
 accounts, but to the incurring of the obligations in the first 
 instance. He has the duty of seeing not only that the law is 
 strictly complied with, but that all expenditures are made to 
 the best possible advantage. He is in every sense the finan- 
 cial watchdog of his service, and the one upon whom definitely 
 rests responsibility for the efficiency and economy with which 
 the affairs of the department are managed and the funds esti- 
 mated for and expended. He is, in a word, the permanent 
 
 f financial secretary of his department. 
 
 It is impossible to lay too great stress upon the importance 
 of this officer from the standpoint of securing efficiency and 
 
 ,| economy in the expenditure of public money. Valuable as is 
 the control over expenditures exercised by the Treasury, such 
 control cannot possibly reach the point of ensuring that ex- 
 
 ll penditures in all cases correspond to real needs, or that the 
 maximum return for expenditures is had in the way of serv- 
 ices rendered or goods received. These are features of con- 
 trol that must primarily be exercised inside the several ad- 
 ministrative services. In making provision for an officer of 
 this character, in defining the scope of his duties and powers, 
 in giving to him a position of high dignity and authority, and in 
 concentrating upon him all financial responsibility, the British 
 system has gone as far as it seems possible to go in meeting this 
 primary requisite for an economical and efficient administra- 
 tion of financial affairs. 
 
 This matter of the responsibility of accounting officers in 
 respect to the incurring of obligations and of seeing that 
 moneys voted are expended to the greatest possible advantage 
 was carefully inquired into by the Committee on National Ex- 
 penditure of 1902. All of the accounting officers who were 
 
 158 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 called upon to testify regarding their duties were emphatic in 
 stating that they considered the exercise of such discretion 
 as clearly within the scope of their duties. Treasury officials, 
 in giving their evidence, testified to the same effect. Though 
 anxious to magnify the effectiveness of treasury control, they 
 nevertheless stated that their control largely ceased at the point j 
 where the wisdom of the expenditure was determined; that 
 they had to look to the accounting officers of the several "de- 
 partments to see that the moneys devoted to these purposes 
 were applied to the best advantage. Thus Mr. Robert 
 Chalmers, one of the principal clerks in the Treasury, that 
 is, one of the officials through whom control over expenditures 
 is exercised by the Treasury, when asked the question : Now 
 I want to ask you a question with regard to the Accounting 
 Officers of the Departments over which you exercise control. 
 To what extent are they financial controllers, or financial 
 officers exercising power in the interests of financial control? 
 replied : 
 
 "They undoubtedly do act very much indeed in the 
 direction of financial control. We undoubtedly look to 
 the Accountant General of the Army and the Accountant 
 General of the Navy as the people inside the Department Report of 
 whose disposition is towards economy, and who do scru- 
 tinise expenditure to see that the money expended is ex- 
 pended to the best advantage ; and I believe if you inquire 
 from the Accountants General of the Army and Navy, 
 you will find that that is a very considerable portion of 
 their work, and that they understand it to be within the 
 scope of their duty." ^ 
 
 Regarding the fact that the accounting officer is directly re- 
 sponsible for the management of the financial affairs of his j Treasury- 
 department, and that this responsibility is a real and not a Describing 
 nominal one and cannot be shifted to the shoulders of subordi- Duties 
 nates, the Treasury Minute of August 14, 1872, through which 
 
 'Report of Committee on National Expenditure (1902), p. 30. 
 
 159 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 the present system was definitely established, is very emphatic. 
 It reads : ^ 
 
 He signs the Appropriation Account, and thereby 
 makes himself responsible for its correctness. This offi- 
 cer is the person whom Parliament and the Treasury 
 regard as primarily responsible for the balance in the 
 • custody of the department, although he himself may not 
 hold one farthing of it. In respect of him, every person 
 having charge of any portion of the money issued to, or 
 received on behalf of, the department, is simply in the 
 position of a subaccounting officer. It cannot be too dis- 
 tinctly announced that responsibility for the proper con- 
 duct of financial business cannot be delegated to the sub- 
 ordinate officers who may be placed in charge of the De- 
 partmental Accounts. The signature appended to the 
 Appropriation Account would be otherwise an idle form, 
 calculated only to mislead Parliament. 
 
 Manifestly an officer having this large responsibility should 
 be one having a position of corresponding dignity and power. 
 Thus the Treasury Minute from which we have just quoted 
 says : ^ 
 
 It cannot be doubted that the officer entrusted with the 
 duty should occupy a sufficient standing to enable him 
 not only to exercise a direct supervision and control over 
 the persons executing the detailed business of account 
 and bookkeeping, but also to influence the working of his 
 department in all those respects which affect the method 
 of its receipts or expenditure. He must also be qualified 
 to represent his department before the Parliamentary 
 Committee of Public Accounts. These conditions are 
 satisfied in the permanent chiefs of the various depart- 
 ments. They are responsible for the general conduct and 
 
 ^ Epitome of the Reports from the Committee of Public Accounts 
 (1857-1910) and of the Treasury Minutes thereon, pp. 31-32. 
 " Epitome, etc., p. 34. 
 
 160 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 for the discipline of their departments. They have the 
 best means of acquiring a personal knowledge of the staff 
 placed under their orders, and their functions would be 
 logically incomplete if they were not held responsible for 
 the due discharge of financial as well as other business 
 transacted in their departments. 
 
 My Lords (of the Treasury) are therefore prepared 
 to lay down the rule that, in the exercise of the powers 
 conferred upon them by the Exchequer and Audit Act, . 
 they will nominate, whenever it is practicable, the perma- 
 nent heads of the departments to render the Appropria- 
 tion Accounts of grants for the services under their con- 
 trol. As, however, there may be reasons for making, in 
 some instances, exceptions to this rule, my Lords will 
 not issue final directions until an opportunity has been 
 afforded to the departments to express an opinion upon 
 the proposal, and they will be prepared to give their care- 
 ful consideration to any representation which may be 
 made to them. 
 
 This quotation brings out two important features of this Accounting 
 system. The first is that the designation of the accountings Responsible 
 officer is made by the Treasury and not by the department for /^ *^^ 
 which he acts. It would seem almost as though the theory 
 was that responsibility for the conduct of the financial affairs 
 of the several departments rested primarily on the Treasury 
 and that in discharging this responsibility it designated a high 
 official in each department to act as its agent. The second is 
 that the policy is pursued of vesting financial responsibility, 
 as far as possible, in the hands of the officer exercising admin- 
 istrative responsibility. This means that the persons responsi- 
 ble for the preparation of the estimates and the rendering of ' 
 the accounts shall be the ones responsible for the authorizing 
 of the incurring of liabilities and the approval of expenditures. 
 It follows from this that the responsibility of this officer is 
 not a mere technical one such as would be the responsibility 
 
 i6i 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 of an accountant or disbursing officer of the ordinary type, but 
 one comprehending the discretion and judgment displayed in 
 determining needs and in expending funds. In a word, it 
 brings responsibiHty home to the person upon whom such 
 responsibility rests. 
 
 Command 
 of Superior 
 Officer No 
 Defence in 
 United 
 States 
 
 In England 
 Responsi- 
 bility 
 Centralized 
 
 Personal Liability of Accounting Officers. An important 
 feature of any disbursing system is the extent to which the 
 officer making or authorizing the expenditures is personally 
 and pecuniarily responsible for any improper payments made 
 or authorized by him, and the manner in which this liability 
 can be avoided or discharged. In the United States Govem- 
 
 -1 ment the disbursing officer is not only personally liable for all 
 improper payments made by him, but this liability extends even 
 to those cases where he makes the payment under protest on 
 the command of a superior officer. He is thus placed in the 
 peculiar position that at times he has to choose between re- 
 fusing to make a payment ordered by his superior and thereby 
 incurring the displeasure of the latter or even running the risk 
 of dismissal from his office, or of making the payment and 
 running the risk of having the item disallowed in his accounts 
 and then being held responsible financially for the pa3mient. 
 The law, in other words, is that a disbursing officer cannot 
 
 ) allege a command from a superior officer as justification for 
 making a payment. 
 
 In England the law is different. Under the British system 
 the accounting officer can relieve himself of liability in all 
 , cases when he has made a payment upon the command of a 
 superior officer, provided he can show that before he did so 
 he made a formal protest against such action. This point, con- 
 cerning which there was for some years considerable uncer- 
 tainty, was finally cleared up by a circular letter addressed 
 to all accounting officers by the Treasury in 1883. This cir- 
 cular reads : ^ 
 
 ' Epitome of the Reports from Committee of Public Accounts 
 (1857-1910) and of the Treasury Minutes thereon, p. 132. 
 
 162 
 
DISBURSEMENT OF PUBLIC FUNDS 
 
 Accounting Officers will understand that if they are 
 desired by their superior officers to order a payment 
 which, under Act of Parliament, Order in Council, order^Mi 
 Queen's Warrant, Treasury Minute, or otherwise, they Subject 
 believe to be wrong, they must represent their objection, 
 and the reason for it, to such superior officer in writing. 
 If the order is then repeated in writing, they may obey 
 without further responsibility, but if the officer directing 
 the payment is not the supreme chief of the Department 
 they should ask to obtain the authority in writing of such 
 chief before obeying. The responsibility is then trans- 
 ferred to the directing officer, who will be held person- 
 ally liable. 
 
 This principle, the commission believes, is the correct one. 
 It should be stated that under the American system the dis- 
 bursing officer has the right, in all cases where he is doubtful 
 of the propriety of making a payment, to call for the opinion 
 of the Auditor, and, if need be, of the Comptroller, before 
 making the payment. It is doubtful whether many, if any, 
 cases occur where a disbursing officer is directed to make a 
 payment after the Auditor or Comptroller has declared such 
 a payment to be an improper one. 
 
 Accounting Officers Not Bonded. Another feature in re- 
 spect to which the British system dififers from that of the 
 United States is in respect to the matter of requirement of 
 bonds from financial officers. In the United States Govem- 
 *ment disbursing officers are required to give heavy bonds con- 
 ditioned upon their giving a full accounting for all moneys British 
 coming into their hands and for all payments made by them. Carries"lts'* 
 
 In England no bonds are required of accounting officers. The ^O^" 
 
 , . . , , . . . , , Insurance 
 
 explanation given why no such requirement exists is that the 
 
 Government has ample protection in the high positions occu- 
 pied by these officers, in the fact that these positions are only 
 reached after years of service during which the integrity and 
 
 163 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 ability of the incumbent have been thoroughly tested, and in 
 the sums of money in possession of the Government repre- 
 sented by the accrued value of the service pensions to which 
 the accounting officers are entitled upon retirement. Certain 
 it is that in practice the British Government has suffered little 
 or no loss through the inefficiency or misconduct of these 
 officers. 
 
CHAPTER VIII 
 
 TREASURY CONTROL OVER EXPENDITURES 
 
 Expenditure of Appropriations Not Mandatory; The Treasury the 
 Authority for the Authorization of Expenditures; Treasury Con- 
 trol Over Organization and Personnel ; Treasury Control Over Ex-- 
 penditures for Quarters, Equipment, Supplies, etc. ; Organization of 
 the Treasury for the Exercise of Its Powers of Control; Treasury 
 Use of Departmental and Interdepartmental Committees of Investi- 
 gation; The Treasury as a General Organ of Administrative Con- 
 trol. 
 
 In our consideration of the manner in which the estimates 
 are prepared and submitted to Parliament, we have seen that, 
 subject to a possible appeal to the Cabinet as a whole, the Treas- ' 
 ury exercises complete control in respect of the determination 
 of the funds that Parliament shall be asked to grant to the 
 Crown for the conduct of the Government. We have now 
 to consider the powers possessed by this department in con- 
 trolling the expenditure of these funds after they are granted. " 
 Great as are the powers of the Treasury over estimates, we 
 will find them scarcely less over expenditure. 
 
 Expenditure of Appropriations Not Mandatory. The start- 
 ing point in considering this phase of the functions of the 
 Treasury is the recognition of the fact that under the Eng- 
 lish system the expenditure of appropriations is not manda- ■^ 
 tory. In form appropriations are mere grants to the Crown Authority 
 
 to be used by the latter as required for the conduct of the Gov- to Spend a 
 .-..,,. , . , Grant Not a 
 
 ernment. As Maitland picturesquely puts it : ^ Command 
 
 "Money is granted to the queen ; it is placed at the dis- 
 posal of her and her ministers. But she and they are not 
 bound by law to spend it, at least not bound by the Ap- 
 'F. W. Maitland: Constitutional History of England, pp. 445-446. 
 
 i6s 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 propriation Act. Of course, if the queen's advisers with- 
 drew all ambassadors from foreign courts, or disbanded 
 the navy or the like, they might be severely blamed and 
 possibly they might be impeached. But statute does not 
 say to the queen: 'You shall spend so much on your 
 embassies, so much on your navy.' Rather its language 
 is : 'Here is money for this purpose and for that ; spend 
 it as you please; we trust the discretion of your advisers; 
 the account of the expenditure will be presented to us, 
 and votes of censure may follow.' . . . The fact that par- 
 liament has voted a supply to the queen for the payment 
 of such salaries or pensions does not give them a remedy 
 against the lords of the treasury or the secretaries of 
 state who are charged with the expenditure. No one can 
 say : 'Under the Appropriation Act, the secretary of state 
 for war or the lords of the admiralty, have received 
 money which they hold upon trust for me.' " 
 
 Mandate 
 Must Come 
 from 
 Executive 
 
 The Treasury the Authority for the Authorisation of Ex- 
 penditures. It follows from this principle that something more 
 than the mere appropriation of funds is required by the serv- 
 ices before they can proceed to the expenditure of the funds 
 that have been granted to the Government for their support. 
 As the funds have been granted to the Crown the Crown must 
 indicate the desire that the money shall be spent. It is at this 
 point that the power of the Treasury to control expenditures 
 enters. Just as the Treasury is the organ through which the 
 Crown formulates and makes known its wishes regarding its 
 financial needs, so it is the organ through which the Crowrft 
 afterwards determines the extent to which it will utilize the 
 funds that have been granted to it and the conditions that shall 
 be observed in their utilization. Moreover, just as the power 
 of the Treasury to frame estimates is not a nominal one, but 
 carries with it the exercise of a determining voice as to what 
 funds shall be asked for, so this second and complementary 
 function of controlling expenditures is equally a real one. 
 
 i66 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 Theoretically every expenditure, as every estimate, must 
 
 receive a treasury sanction. In practice this means that when Must Be 
 1 ,• 1 , . , , Sanctioned 
 
 the expenditures contemplated are for purposes that have pre- by Treasury 
 
 viously been authorized, and do not call for a larger sum than <-■ 
 has already been approved, treasury sanction will be taken 
 for granted, unless the Treasury has for some reason decided ' 
 that a retrenchment is necessary and so directs. But where 
 any departure from prior practice is proposed, the employment ^ 
 of a single additional clerk, the undertaking of any new work, 
 the express sanction of the Treasury must first be obtained 
 before any action can be had. Speaking to this point, Mr. 
 William Blain, clerk in charge of estimates in the Treasury 
 Department, in his testimony before the Committee on Na- 
 tional Expenditure of 1902, said: ^ 
 
 "Apart from what one inay call the necessary normal 
 expenditure of the Department, new proposals, new de- 
 partures, and new programmes must always come to the 
 Treasury for sanction, and that is quite a separate mat- 
 ter from the approval of the Estimates. . . . The pass- 
 ing of the Estimate does not necessarily sanction the 
 expenditure. Taking the case of an Establishment (i. e., 
 a personnel) beyond its necessary strength, the mere fact 
 that the Treasury have approved of the Estimate which 
 the Department was submitting tO' Parliament would not 
 authorise the Department to increase its establishment. 
 If the Estimate contained an establishment showing an 
 increase over that of the previous year, they would still 
 have to get a separate Treasury sanction for the increase 
 of that establishment, and the Audit Office would not 
 pass its expenditure without that." 
 
 Another leading authority on the British financial system 
 puts it in this way, * 
 
 ^ Report of the Committee on National Expenditure, 1902, p. 3. 
 2 Henry Higgs: The Financial System of the United Kingdom, 
 pp. 82-83. 
 
 167 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Powers of 
 Control 
 Independent 
 of 
 
 Expending 
 Depart- 
 ments 
 
 "The powers of the Treasury are very great, resting 
 partly upon the prerogative of the Crown in so far as the 
 exercise is committed to the Treasury in the matters of 
 finance, and partly upon a variety of statutes. Section 
 27 of the Exchequer and Audit Act, 1866, gives it prac- 
 tical control over the whole public expenditure and en- 
 ables it to require that any measure tending to increase 
 that expenditure should be submitted for its concurrence 
 before it is adopted under pain of being disallowed. Pro- 
 posals for the increase of establishments (i. e., personnel), 
 increased rates of pay, additional services or new works, 
 require Treasury sanction, and are questioned by the 
 Auditor General if they are put in force without the au- 
 thority of the Treasury. By reason of. its central posi- 
 tion the Treasury undertakes the regulation of general 
 questions affecting the organisation of the Civil Service 
 at large, prepares Orders in Council governing the serv- 
 ice, and issues circulars designed to promote uniformity 
 in the treatment of ofificials in different departments. 
 The bulk of its departmental business consists of the con- 
 trol of expenditure by the examination of proposals for 
 increased pay or establishments or new services, for all 
 which it requires full justification, and the award of pen- 
 sions for the Civil Services." 
 
 Control 
 
 Goes 
 
 Beyond 
 
 Regularity 
 
 and 
 
 Authority 
 
 In weighing the significance of these broad powers of finan- 
 cial control it is important to appreciate that they exercise 
 them not in the way of approving expenditures proper, that 
 is, in passing upon orders, vouchers, contracts, etCj but in the 
 approval or disapproval of actions which will give rise to the 
 I necessity for increased expenditures. Its control, in a word, is 
 one over the incurring of liabilities, over the program of work, 
 the plant, organization, personnel, equipment, etc., that shall be 
 employed for the conduct of Government operations. Its power 
 in respect to these matters is practically absolute. Through it 
 and through the approval of proposals for the expenditure of 
 
 168 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 funds, the Treasury thus is in effect a general board of admin- // 
 istrative control. Among the many striking features of the 
 British financial system none is more noteworthy than this. 
 It is our purpose, therefore, to consider in some detail the man- 
 ner in which the Treasury exercises this exceedingly important 
 function. 
 
 Treasury Control Over Organization and Personnel. The 
 estimates, as we have seen, contain tables showing for each Executive 
 service the number and compensation of all employees to be ity for Or- 
 provided for. These detailed statements of organization andt^^°"^"°" 
 personnel are, however, purely for purposes of information. 
 Legislative determination of how the services shall be organ- 
 ized and the number and compensation of employees goes 
 no further than the allotment of lump sums for the subhead ' 
 "Salaries and Wages," and even this allotment can be changed 
 through the effecting of transfers from one subhead to an- 
 other upon the approval of the Treasury being obtained. 
 Though Parliament is thus given as full information regard- 
 ing organization and personnel as is furnished by the esti- 
 mates of the United States Government to Congress, there ex- ( 
 ists nothing approaching the practice of the latter body of 
 appropriating in detail for specific positions and rates of com- 
 pensation. Under the British system practically the whole 
 
 matter of organization and personnel is left to executive de- Treasury 
 
 Control 
 termmation. Agent of 
 
 The authority through which this determination is had is g^ecuti 
 the Treasury. Though there are general statutes governing v 
 the classification and compensation of personnel, practically 
 full discretion is exercised by the Treasury in applying these 
 general rules to particular services. The organization and per- 
 sonnel that each service now has is the result of past action on 
 the part of the Treasury. This organization and personnel each 
 service retains until it has received an authorization from the 
 Treasury to effect a change in respect to them. It results from 
 this that the Treasury is constantly passing upon applications 
 
 169 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Control 
 Over 
 Salaries 
 and 
 
 Personal 
 Adminis- 
 tration 
 
 for changes and is thus constantly passing in review the admin- 
 istrative organization and problems of the several services. 
 
 It is hardly necessary for us to point out how effective a 
 system of control this procedure provides and how it dovetails 
 into the work of the Treasury in determining the estimates 
 that shall be put forward each year. It means that no in- 
 crease can be made until an independent authority has been 
 convinced of its necessity. The mere fact that all increases 
 must be so justified even though approval may follow almost 
 as a matter of course — which, however, is by no means the case 
 — constitutes a powerful deterrent upon increases not war- 
 ranted by the public needs. 
 
 Neither is it necessary to dwell upon the superiority of this 
 system over the one obtaining in the United States, where the 
 attempt is made to determine in detail the number and compen- 
 sation of the personnel of each office by legislative act. Under 
 
 J the British system this determination is made by an authority 
 in intimate and constant touch with the working conditions 
 of each service and thus technically competent to perform this 
 difficult task; and the determination is made item by item as 
 needs for changes arise. The system resulting is thus one in 
 
 I which strict control is combined with great flexibility. Un- 
 der the American system this operation is performed by a 
 body with a fluctuating personnel not directly or currently 
 in touch with administrative problems; the determination is 
 had at one time, months in advance of the time when the de- 
 cision made will go into effect, and no provision is made for 
 effecting readjustments as new conditions present themselves. 
 
 ' Knowing this, each service seeks to obtain the maximum force 
 that it can persuade Congress to grant it, in order that it may 
 be on the safe side. To the British system of effective control 
 and great flexibility the United States opposes one of ineffec- 
 tive control and great rigidity. 
 
 Treasury Control Over Expenditures for Quarters, Equip- 
 ment, Supplies, etc. Practically the same principles which we 
 
 170 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 have set forth as governing expenditures for personnel apply 
 with respect to expenditures for quarters, equipment, supplies, Control 
 and like objects. In performing the function of control in Purchase 
 respect to these classes of expenditure the Treasury, however, and Cus- 
 makes use of two special organs: His Majesty's Stationery ,, Material 
 Office, which attends to all matters connected with the fur- 
 nishing to the several services of stationery and the execution 
 of the printing required by them ; and the Office of Works and ^ 
 Public Buildings, which in like manner attends to the furnish- 
 ing of the services with quarters, building supplies, etc. Th^ 
 ' most interesting feature of these two services is that they are 
 not merely the two great central supply services for the whole ; 
 Government, but organs of control in respect to expenditures 
 for the services and supplies furnished by them. The opera- 
 tions of these two services constitute such an important feature 
 in the general scheme of the English Government for con- 
 trolling expenditures that the commission has thought it de- 
 sirable to describe their organization and methods of work in 
 some detail. 'This is done in the two chapters which im- 
 mediately follow the present one. 
 
 Organization of the Treasury for the Exercise of Its Powers 
 of Financial Control. In the foregoing we have seen that the 
 Treasury Department of Great Britain is in effect a great 
 service for exercising the broadest sort of control over all 
 those operations of the Government which in any manner affect 
 the amount of funds that Parliament will be called upon to 
 vote for their support or the expenditure of funds when 
 granted. In view of these large responsibilities it is a matter 
 of great importance to determine the character of organiza- f 
 tion that this department has provided itself with in order 
 that it may discharge them properly. 
 
 Though termed a department, the Treasury is technically f 
 a board. Prior to 1714 the head of the department of financial office 
 affairs was an officer known as Lord High Treasurer. In ?^ ■paaT'^ 
 that year the office was put in commission ; that is, while the Board 
 
 171 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 ) office remained a single one, provision was made that its duties 
 should be performed by a boai'd consisting of a First Lord of 
 the Treasury and three junior Lords. Though this board 
 has continued in existence until the present time, all real au- 
 «' thority has in fact passed from its hands into those of an 
 officer known as Chancellor of the Exchequer. Thus, as Presi- 
 dent Lowell puts it,^ "by a strange process of evolution the 
 powers of the Lord High Treasurer have, by law, become 
 vested in a board ; and by a still later custom they are actually 
 wielded by quite a different officer, whose title indicates neither 
 his succession to the Treasurer nor the nature of his present 
 duties." 
 
 The position of First Lord of the Treasury is usually held 
 '' by the Prime Minister, but whether this is so or not this offi- 
 cial does not concern himself with the actual management of 
 the affairs of the department of which he is nominally the 
 The Lords chief officer. The three junior Lords may have certain minor 
 Treasury duties in Connection with the Treasury, but their real duties 
 consist in acting as assistants to the Parliamentary Secretary 
 of the Treasury, who is often designated as the Patronage 
 Secretary, and who is the chief whip of the Government in the 
 House of Commons. Thus the officers nominally in charge 
 i\ of the Treasury in fact pay little or no attention to the direc- 
 tion of the affairs of that department, but concern themselves 
 almost wholly with parliamentary matters. 
 
 The real responsible head of the Treasury is, as has been 
 i stated, the Chancellor of the Exchequer. On the parlia- 
 mentary side he is assisted by a parliamentary or patronage 
 Chancellor secretary and by the three Junior Lords of the Treasury. On 
 Exchequer ' the administrative side, the Chancellor of the Exchequer has 
 Responsible ^g j^jg chief assistants two officers known as "Permanent Secre- 
 
 rleaa 
 
 tary to the Treasury" and "Permanent Financial Secretary." 
 Both, as their names imply, are permanent officials. Unlike 
 ' the Chancellor of the Exchequer and the Lords of the Treas- 
 ury, they do not leave office when a change of ministry takes 
 'A. Lawrence Lowell: Government of England, vol. I, p. 8i. 
 
 172 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 place. The former of these two officials, the permanent secre- 
 tary, performs the duties of administrative head of the de- ■ 
 partment; the latter, the financial secretary, has immediate t-^ 
 charge of the duties of the department relating to the exercise 
 of its powers of financial control over the other services. It 
 is with the duties of this official and the organization that he 
 possesses for their performance that we are here chiefly con- 
 cerned. 
 
 To enable him to perform his duties the financial secretary • 
 has a stafif composed of principal clerks, estimate clerks, and |*^*^ °f . 
 junior clerks. The several services to be controlled are grouped "Secretary 
 into seven divisions with a principal clerk in charge of the 
 affairs of each division. It is the duty of each principal clerk 
 to familiarize himself with the organization, work, problems 
 and financial needs of each of the services under his super- 
 vision. . All matters affecting these services requiring the 
 attention of the Treasury pass through his hands. As ques- 
 tions of this character are constantly arising, these officials 
 are thus in constant touch with the services controlled by them. 
 Sir Robert Chalmers, the permanent secretary of the Treas- 
 ury, has described the duties of these officers in the following 
 way ; ^ 
 
 "The Treasury consists of six [since increased to 
 seven] divisions, each with a principal clerk at the head. 
 Among those six [seven] divisions is distributed the work 
 of all the departments of State; one, for instance, has 
 the Army, the Navy and the Colonial Office ; another one 
 has the Legal Departments and the Home Office ; a third 
 has the Irish Departments, and so on, until you have dis- 
 tributed them all in that way among the six [seven] divi- 
 sions. All the departments of State have their work dis- ' 
 tributed to a division of the Treasury, and every paper 
 relating to a department goes to the division which has 
 to deal with that Department of the State. Those prin- 
 
 ^Report of the Select Committee on Estimates (1912), p. 11. 
 
 ^73 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 cipal clerks at the head of the six [seven] divisions are 
 the people who consider the general question of expendi- 
 ture, economy, and efficiency in the departments of State 
 which relate to their division. Those are the real peo- 
 ple, and they are bringing forward such matters through- 
 out the year. ... All through the year one of the six 
 [seven] divisions of the Treasury is considering, to the 
 ' full of its time and power, all the topics belonging to the 
 departments which fall to that division." 
 
 The estimate clerks are next in rank, and constitute the chief 
 assistants of the principal clerks. Their duties as described 
 by Sir Robert Chalmers, in his testimony just alluded to, are 
 as follows : ^ 
 
 "The Estimate Clerk is not an officer of the highest 
 
 grade with us— 'he is an officer of the middle grade. His 
 
 function is to bring together the facts, to bring them out 
 
 and to bring them before higher officers, ending with the 
 
 Financial Secretary to the Treasury. It is an important 
 
 office, but it is not of the highest rank. He brings in 
 
 higher officers on the passage of the Estimate to the 
 
 J^f financial secretary, so far as there is anything very sig- 
 
 Estimate ._ ..,,., ,,.,-, 
 
 Clerks nificant m it ; but he is the man who has immediately to 
 
 deal with these things and to draw attention to anything 
 that requires attention as being large in amount or irreg- 
 ular in its nature." 
 
 Under the estimate clerks are the junior clerks and the gen- 
 eral clerical and office assistants required for the conduct of 
 any administrative office. 
 
 Treasury Use of Departmental and Interdepartmental Com- 
 mittees of Investigation. It is manifest that the efficiency 
 with which the Treasury can discharge its important duty of 
 supervision and control over the financial affairs of the several 
 
 'Report of Committee on Estimates (1912), p. 4. 
 
 174 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 services is dependent upon the extent to which it is in posses- Reliance 
 sion of detailed information regarding the organization, opera- Esprit de 
 tions, and needs of such services. It does not appear that the ,^'"'P' 
 Treasury has put in force any scheme of reporting by which it , 
 will receive exact information regarding the operations of the 
 services controlled. In response to inquiries by the commis- 
 sion, treasury officials stated that this was not necessary be- 
 cause the several principal clerks were in day-to-day touch with 
 air that was going on in the services assigned to their divisions. 
 These clerks had worked up to their position from subordinate 
 posts. For years their duties had thus involved continuous 
 consideration of the conditions prevailing in the services under 
 their control. In many cases they had conducted careful inves- 
 tigations into conditions before recommending that treasury 
 sanction be given to a proposed change. 
 
 In addition to the foregoing means of securing information 
 growing out of the regular performance of their duties, the i 
 principal clerks and the Treasury as a whole have an exceed- 
 ingly efifective means of securing information through the use 
 of what are known as departmental or interdepartmental com- 
 mittees. These are committees which are appointed to inquire 
 into some special feature of the organization or work of a 
 department or departments, or into the organization, work, 
 and needs generally of a department or departments. If only 
 one department is inquired into the committee is denominated ' 
 a departmental committee. If two or more departments are 
 involved the committee is termed an interdepartmental com- 
 mittee. 
 
 These committees are primarily committees created by the^ 
 departments themselves for the purpose of investigating their Self-lnves- 
 
 ™. • rr-i 1, , 1 • • i ligation by 
 
 own affairs. They are usually brought into existence when Departments 
 some important change in organization or work is contem- 
 plated, the head of the department desiring that the proposals 
 shall be fully investigated and reported upon before he com- 
 mits himself to their advocacy. The significant feature of this 
 method of investigation, from the standpoint of treasury con- 
 
 175 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 trol, is that on all or practically all such committees the Treas- 
 ury is represented by one or more members. This representa- 
 tion on the part of the Treasury is welcomed by the depart- 
 ments concerned, since the change under consideration cannot 
 be made until the approval of the Treasury has been obtained, 
 and the latter will not be given until full information has been 
 given regarding the desirability of the change. 
 
 The Treasury, however, does not necessarily wait to receive 
 an invitation to participate in a committee investigation. If 
 for any reason it is not thoroughly satisfied with conditions in 
 a particular service or group of services, it itself raises the 
 question of the appointment of a departmental or interdepart- 
 mental committee. Indeed it may be said that the Treasury 
 pursues the policy of having the several services brought under 
 investigation in this way at reasonably frequent intervals of 
 time. Thus Sir Robert Chalmers, the Permanent Secretary of 
 the Treasury, when asked the question,^ "Assuming that a 
 Civil Service Department, we will say, asks for no increase — 
 
 Independent that it is a small Department, and that everybody is very happy 
 Inquiries , . .... , . ^ , , . „ f 
 
 by Treasury and comfortable m it; and, m fact, that there is a small de- 
 crease each year, and it looks quite pretty on paper, is it any- 
 body's duty to see that the Department is efficient, and to see 
 that it has not twice the staff that it ought to have, for in- 
 stance?" made the following reply: 
 
 "Yes. In practice the principal clerk at the head of one of 
 the six [seven] divisions of the Treasury would be observing 
 that Department, and would raise the question, not necessarily 
 at the Estimates time, but at some other time he would say : 'I 
 think we ought to have an inquiry into this' ; and I should prob- 
 ably write privately to the head of the Department and say: 
 'It is some time since there was an inquiry; do not you think 
 we had better have an inquiry by agreement at oncei" We 
 should take that as a part of our functions at the Treasury, so 
 far as we can, to be aware of the changing circumstances from 
 time to time, and we should try to get the Department in its 
 1 Report of the Select Committee on Estimates, 1912, p. 7. 
 
 176 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 organisation to conform to the position for the time being." 
 These committees also often come into existence when there 
 is a difference of opinion between a department and the Treas- i 
 ury regarding the granting of an authorization that has been 
 requested. If the department insists upon urging its request 
 the Treasury will say : "We do not feel justified-in approving ■ 
 the request until we have investigated the matter more thor- 
 oughly," and a proposal is then made that the matter be in- 
 quired into by a departmental or interdepartmental committee 
 on which the Treasury is represented. 
 
 On the other hand the proposal for the appointment of suchbinqui"e» on 
 a committee not infrequently comes from the head of the de- Department 
 partment interested, either because he believes that if the 
 Treasury is more fully informed regarding the needs of his 
 service it will be more liberal in meeting demands for changes, 
 or because he desires in this way himself to secure a better 
 knowledge of and control over some subordinate branch of his 
 service. In such cases he suggests privately to the Treasury 
 that it propose an investigation. "Departments frequently ask ■ 
 for an inquiry rather than the Treasury calling upon them to 
 have one. Heads of Departments find it a convenient thing 
 for managing their more important satraps to have an inquiry ° 
 at times." ^ 
 
 This point of the extent to which the Treasury acts as a Ensures 
 means for securing efficiency and economy in matters of cur- and 
 rent administration, and not merely as a body 'to pass upon ^fficienjy 
 applications for new expenditure, is one to which the commis- 
 sion gave very careful attention. In general it is inclined to 
 believe that this attempt to secure efficiency and economy 
 through outside control is carried about as far as is prac- n ^ 
 ticable. To carry it much further would introduce the danger i\ 
 that responsibility on the part of those actually entrusted with 
 the conduct of Government operations would be unduly weak- 
 ened. Sir Robert Chalmers, whose testimony has been repeat- 
 
 1 Testimony of Sir Robert Chalmers. Select Committee on Esti- 
 mates, 1912, p. 4. 
 
 177 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 A Central 
 Business 
 Agenqr 
 of the 
 Government 
 
 edly quoted, put the matter in this way.^ When asked the 
 question, "Do you consider the supervision which is exer- 
 cised by those principal clerks is sufficient for the purpose?" 
 he replied : 
 
 "I do not think you can get any further without doing 
 a great deal- of evil. I think it is a very wrong principle of 
 administration to supervise people too much and to remove 
 their responsibility. I feel very strongly on that point. At 
 the same time, I think it is very important that the Treas- 
 ury should be strong enough to put each Department on its 
 defence very frequently, so that they should know they always 
 have to make good their case." 
 
 The Treasury as a General Organ of Administrative Con- 
 trol. The commission entered upon its study of the financial 
 system of Great Britain with a fair appreciation of the fact 
 that to the Treasury Department was given large powers of 
 control in respect to the formation of the estimates that were 
 to be submitted to Parliament. Only as it prosecuted its in- 
 quiries into the details of the manner in which the Treasury 
 exercised its powers did it come to a realization that, important 
 as is this power of the Treasury in respect to estimates, it con- 
 stituted but one feature, one manifestation, as it were, of the 
 far broader power that the Treasury has to supervise and 
 control, not only all matters relating to the financial opera- 
 tions of the Government, but practically all matters of acquir- 
 ing funds and property and all matters of incurring obligations 
 — which may be called the business functions as distinguished 
 from the public service activities of the Government. More 
 and more, as its investigation proceeded, the commission had 
 borne in upon it the fact that in the Treasury the British Gov- 
 ernment had a great organ of general administrative control; 
 that upon it fell the duty and responsibility for the final deter- 
 mination of what form of organization the several departments 
 of the Government should have, what personnel was needed, 
 
 ^Report of Committee on Estimates (1912), p. ii, 
 
 178 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 what compensation should be paid, what new undertakings 
 should be authorized, what changes should be made in the 
 employment of funds as provisionally allotted by Parliament, 
 what new grants Parliament should be asked to make, what the 
 works program of the Government should be, etc.; that in 
 discharging this function it was its duty to keep itself thor- 
 oughly informed regarding the conditions and needs of the ' 
 several services and use its utmost endeavor to see that the 
 Government operations were conducted with the maximum of 
 efficiency and economy ; that, in a word, the Treasury was the 
 one authority to which Parliament and the public looked to j, 
 see that public affairs were administered in an economical and 
 efficient manner. 
 
 The investigation also brought out 'another fact which the 
 commission is sure has never been adequately appreciated by Continuous 
 foreign students,, namely, that these broad powers of the 
 Treasury, instead of being exerted once a year when the esti- |/ 
 mates are brought under consideration, are exerted from day 
 to day throughout the year. 
 
 Still more important, the fact was developed that not only 
 had the Treasury this important duty of acting as a general 
 organ of administrative control but this duty constituted prac-f' p^tached 
 tically its exclusive function. It is difficult to overestimate the trolling the 
 importance of this fact. Until it is appreciated one totally mis-t> p^j„"* °* 
 conceives the place of the Treasury in the British administra- Business 
 tive system. Misled by the name, the commission began its 
 inquiries under the impression that the British Treasury corre- 
 sponded to the Treasury Department of the United States 
 Government, that to it was entrusted, as its primary duty, the 
 management of the national finances, the collection, custody, 
 and disbursement of the public revenues, and that its powers in 
 respect to the framing of estimates were, so to speak, incidental 
 to this duty. 
 
 Nothing is further from the fact. It cannot be stated too 
 emphatically that the British Treasury is, properly speaking, \ 
 not a public service department at all. It has no public service 
 
 179 
 
^ BRITISH FINANCIAL ADMINISTRATION 
 
 duties of its own. Its functions are entirely auxiliary and con- 
 Not a trolling — restricted to looking after the financial and physical 
 Service De- measures, and to the supervision and control of the activities 
 partment ^f other departments. .It thus stands in a class by itself as a 
 service superior to, and in no sense coordinate with, the depart- 
 1 ments which render sefvices direct to the public, properly 
 I speaking. In fact, it does not deal with the public ; it does not 
 collect the public revenues — this is done by the so-called 
 "revenue" departments; it does not have the custody of the 
 public funds — it has to secure "credits" before it has any con- 
 trol over such funds; it does not audit public expenditures — 
 that is done by the Comptroller and Auditor General; it does 
 not administer the public debt — that is performed by a separate 
 organ, the National Debt Commissioners. It is true that these 
 several services are often spoken of and in a way treated as 
 ,, subordinate services of the Treasury, but their subordination is 
 practically the same as that of departments which perform 
 public services.^ 
 
 It is hardly necessary to point out how fundamental it is that 
 this principle of organization should be understood by anyone 
 who may advocate the principle of treasury control over esti- 
 mates and expenditures for our own political system. It has 
 always been a matter of difificulty for American students to 
 understand how it was that in England one department would 
 
 ^ The fundamental distinction between the Treasury and the 
 public service departments proper on the one hand, and the 
 fiscal agencies on the other, is evidenced by the line that is con- 
 stantly drawn between the Treasury on the one hand and the so- 
 called "Spending Departments" and "Revenue Department" on the 
 other. To the statement that the Treasury is not a public service 
 department or spending department one serious exception must be 
 made. For reasons which are not clear to the commission the 
 national social insurance systems have been placed under the direct 
 administration of the Treasury. As the result of this policy, which 
 is wholly due to the action of the present Chancellor of the Exchequer, 
 the Honorable Lloyd-George, the Treasury is now responsible for 
 the expenditure of a huge and growing sum of money. This con- 
 stitutes a serious break in the theory upon which the organization 
 and functions of the Treasury rest. This departure has not escaped 
 notice and criticism. It is very pertinently pointed out that whereas 
 
 1 80 
 
TREASURY CONTROL OVER EXPENDITURES 
 
 submit to the exercise of a control over it by another depart- An 
 ment. Any suggestion that our own Treasury Department be point of 
 given powers analogous to those possessed by the British ^"^ 
 Treasury has always been met by assertions like these : That 
 never would the other departments submit to any such super- 
 vision or control; that if the attempt were made it would 
 break down in practice; that either the control would be of a 
 merely nominal, and thus inefficient, character, or that con- 
 stant friction would prevail. This view is so different from ' 
 the experience of the average business man that we may won- 
 der if there is, after all, something so essentially different 
 about public business as to make the usual standards for judg- 
 ment of no avail. When, however, it is found that in a great ^ 
 government the principles employed are those with which men 
 of large business experience are familiar, a new hope may be 
 entertained that citizens will in time insist that public business 
 be efficiently managed and that the Government to that end be 
 provided with adequate machinery for central administrative 
 control. 
 
 Once we grasp the fundamental status of the British Treas- 
 ury and the principle upon which its powers rest, all difficulty , 
 in the way of understanding why the British system works so 
 smoothly disappears. The important fact that the United 
 States has to learn from this is that if it has any desire or 
 
 the Treasury formerly had the duty of questioning proposals for 
 the expenditure of money brought forward by others, it is now 
 itself an applicant for funds on a large scale. It is thus in the ] 
 anomalous position where it is its duty to question its own proposals 
 or to let those proposals go without question. It is not merely 
 that this is a seeming violation of the essential principles upon 
 which the whole British system of control of estimates and ex- 
 penditure rests, but it raises question as to whether it does not 
 necessarily weaken the powers of the Treasury to control other 
 departments. Manifestly the Treasury's powers to resist demands 
 for funds brought forward by other departments is weakened by 
 the fact that it is itself in the field for increased grants. This 
 seeming mistake of policy is, however, one that can easily be cor- 
 rected, and one may confidently expect the creation before long of a 
 special department for the administration of the social insurance work 
 of the Government. 
 
 i8i 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Failure of 
 Congress to 
 Recognize 
 an Under- 
 lying 
 Principle 
 
 intention to build up in the Government a system of financial 
 control analogous to that possessed by England it must be 
 prepared radically to reorganize its Treasury Department as it 
 now exists or to bring into existence an entirely new organ to 
 perform this function. The Treasury Department of the 
 United States as now organized is largely an administrative 
 department. 
 
 It not only has entire charge of the collection, custody, and 
 issue of public moneys and the management of the public 
 finances generally ; but it includes within its scope the audit of 
 accounts — a duty which manifestly should be performed by an 
 independent central agency. It also operates such public 
 activities as the Revenue Cutter and Life Saving Services, 
 recently united in a general Coast Guard Service. The con- 
 struction and operation of public buildings through the office 
 of the Supervising Architect of the Treasury may be recon- 
 ciled with central control, but not the public services. Until 
 Congress is prepared both to accept the principle involved in 
 having the financial affairs of the administrative services sub- 
 jected to a superior supervision and control, and to provide for 
 the creation of a proper organ through which this power shall 
 be exercised, it will not be possible for the United States to 
 have incorporated in its system of government that feature 
 of the British Government which more than anything else is 
 responsible for the efficiency and economy with which the 
 details of Governmental operations are conducted. 
 
CHAPTER IX 
 OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 Distinction between Public Works Proper and Government Works; 
 Government Works: Military and Naval Establishments; Govern- 
 ment Works : Civil Services ; Office of Works and Public Buildings ; 
 The Estimating and Voting of Funds for Public Buildings; Com- 
 mitments; Distinction between Cgst of Construction, Maintenance 
 and Repairs, Operation, etc. ; Office of Works and Public Buildings 
 Submits Estimates for all Public Works Proper ; Transfer of Funds 
 from One Item to Another in the Works Program; Construction 
 of Public Buildings; Renting of Buildings; Maintenance and Repair 
 of Buildings; Supply Work of the Office of Works and Public 
 Buildings; Powers of Office of Works and Public Buildings to 
 Control Expenditures. 
 
 There are few features, in the system followed by a country 
 in the voting and expending- of public moneys, that are of 
 greater interest than the policy and methods pursued in deter- 
 mining what public works shall be undertaken and the manner 
 of their presentation. To the United States this is a matter of 
 special importance on account of the magnitude of the scale 
 on which public works are constructed and the confessedly 
 defective system that is employed for the authorization and 
 construction of such works. Due to this special interest in the 
 subject the commission took especial pains to inform itself 
 concerning how this subject was handled by the Government 
 of England. 
 
 Distinction between Public Works Proper and Works of the 
 Government. In considering this matter it is necessary at the 
 outset to distinguish clearly between* what may be called public ) 
 works proper — that is, works intended for the use and benefit 
 of the public generally, such as roads, river and harbor im- 
 provements, canals and the like — and works of the Govern- • 
 
 183 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Radically 
 Difiterent 
 Questions 
 Involved 
 
 ment, or those intended for the use of the Government itself, 
 of which the most important are buildings. It is evident not 
 only that these two classes of work are radically different in 
 purpose and character, but that quite different policies and pro- 
 cedures should be followed in their authorization, financing, 
 and, possibly, in their construction. In the United States this 
 distinction is of especial importance on account of the extent 
 to which the Federal Government has entered the field of public 
 - works proper. In England comparatively little is done in this 
 way. So little does it do, in fact, that this class of public works 
 may be almost ignored. It will be understood, therefore, that 
 the description that follows has to do wholly with the manner 
 in which Great Britain makes provision for the construction 
 and operation of works required by the Government itself for 
 the proper conduct of its work. 
 
 Distinction 
 to Be Made 
 between 
 Civil and 
 Military 
 
 Lack of 
 Parliamen- 
 tary Inter- 
 ference ; , 
 
 Works of the Government: Military and Naval Establish- 
 ments. Restricting ourselves to works of this character, a 
 second distinction should be made between works intended for 
 the two military branches, the Army and the Navy, and those 
 for the civil services. Following what is probably an almost 
 universal practice, the planning and execution of works for 
 the two military services are, in Great Britain, entrusted to 
 these two services themselves, each maintaining for this pur- 
 pose what is, in effect, a construction department. These 
 works are not only of a very special and technical character, 
 but also their undertaking and location are determined almost 
 wholly by military exigencies. To an unusual degree, there- 
 fore, discretion in respect to the undertaking, the location and 
 the character of these works should be left to the services 
 which alone are able to determine these requirements. This, 
 in fact, is the policy pursued by Great Britain. Not only does 
 the initiative rest wholly with these services, but, after a deci- 
 sion has once been reached by the Cabinet as regards the pro- 
 gram as a whole, no modification of any importance is made 
 in it by Parliament. Only in slight degree, if at all, do we 
 
 184 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 find Parliament attempting to do what the Congress of the 
 United States habitually does, determine where naval stations, 
 army posts, etc., shall be located, the character of the structures 
 that shall then be erected, and even the nature of the offensive 
 and defensive works that shall be installed. 
 
 In Great Britain, consequently, we have no such manifest 
 evils as the location and character of military and naval posts 
 being determined in large part by purely political considera- 
 tions, and of useless posts being maintained at great cost to the 
 public treasury and loss to the military and naval efficiency 
 simply in response to the desires of particular Senators or 
 Representatives that works of this character may be located in 
 their districts. In England army and navy posts are con- Absence of 
 structed solely with reference to the needs of the services as Legislation 
 determined by those services. It would involve us in too great 
 detail to attempt a description of the particular organization 
 and methods employed by the war and navy departments 
 in attending to this branch of their duties. We will therefore 
 content ourselves with pointing out this fundamental feature 
 of the system and devote the remainder of our attention to 
 the system followed in planning, authorizing and constructing ' 
 government works for the civil services. 
 
 Works of the Government: Civil Services. Following the 
 policy that has been adopted throughout this report, of at- 
 tempting to analyze each question taken up for consideration, 
 in order that its full purport may be seen, a study of the 
 problem of providing the civil services with the physical plants 
 needed by them shows that involved in it are four important 
 factors : ( i ) The question as to by whom and how a decision ^ 
 shall be reached regarding what works are needed; (2) the 
 authority or organization by which the construction work shall 
 be performed; (3) the authority by which the subsequent 
 work of maintenance and repairs shall be performed ; and Elements of 
 (4) the manner in which these works, representing as they do 
 capital expenditure, shall be financed. 
 
 185 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 In meeting the first three of these points two alternative 
 I policies may be pursued, that of distributing and that of con- 
 centrating responsibility and authority. Under the first of 
 these policies each service determines for itself what the needs 
 are and attends to their satisfaction. Under the second, provi- 
 sion is made for a general public works department which 
 has the function of acting for all of the civil service depart- 
 ments. It is, of course, not essential that either of these poli- 
 ' cies should be rigidly adhered to. Thus, for example, there 
 may be a concentration of authority in respect to construction 
 work and a diffusion of authority in respect to maintenance 
 and repair. Under either system, of course, the individual 
 e services will take the initiative, for the most part, in making 
 known what are their needs and desires. 
 
 The foregoing analysis has been made in order to bring out 
 the significance of the policy that has been actually adopted • 
 by Great Britain. This policy is that of carrying the prin- 
 ii ciple of concentration, both in respect of the final decision as 
 to what works shall be undertaken and in respect of the subse- 
 quent work of construction, maintenance and repairs, to the 
 furthest point practicable. 
 
 Office of Works and Public Buildings. This policy of con- 
 centration has been accomplished through the establishment 
 of a public service known as the "Office of Works and Public 
 Buildings," to which is entrusted, as far as is practicable, final 
 authority in respect of the provision of all the civil services of 
 the government with the buildings, grounds, and other works 
 required by them for the proper discharge of their duties. 
 Drganiza- The extent of this authority may be seen from the fact that 
 CentraHzed ^* covers not only planning and construction of buildings 
 Control and their maintenance and repair, but also the decision as to 
 
 whether provision for a service shall be made through the pur- 
 chase or erection of a building or through the renting of a 
 privately owned building. To this service is also entrusted 
 , the work of equipping public buildings with the necessarv 
 
 i86 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 office fixtures and of supplying them with the articles required 
 for their current operation and upkeep. More specifically the 
 duties of this office embrace : 
 
 ( 1 ) The making of estimates, the preparation of plans and 
 the construction of public buildings for the civil services 
 of the Government. This relates not only to buildings in 
 London but in all parts of the United Kingdom and even in 
 foreign countries where, as in the case of the diplomatic and 
 consular services, buildings have to be provided. Included in 
 
 the construction work under its charge are also certain mis- Functions 
 cellaneous works such as the erection of stands for public cere- 
 monies, the execution of works for the Sovereign, the Imperial 
 College of Science and Technology, the London University 
 and other institutions at South Kensington. 
 
 (2) The alteration, maintenance and repair of not only all 
 the above described buildings but also all buildings used by 
 the civil departments and all royal palaces. Included in this 
 part of its work is the duty of maintaining, and in large part 
 operating and controlling the use of, royal parks, pleasure 
 gardens, ancient monuments and such institutions as the 
 Osborne Convalescent Home for naval and- military officers, 
 the state departments at Osborne, the Brompton Cemetery, the 
 British Museum property, etc. 
 
 (3) The renting of buildings for the civil departments, 
 both in and outside London, where it is deemed better policy 
 for the Government to make use of privately owned structures. 
 
 (4) The provision of all buildings used by the civil serv- 
 ices, whether owned or rented, with the permanent equipment 
 needed by them in the way of fixtures, carpets, furniture, etc. 
 
 (5) The supply to such services of the articles required by 
 them for the proper operation of such buildings, such as fuel, 
 toilet supplies, brooms, towels, etc. 
 
 The Estimating and Voting of Funds for Public Buildings. 
 A crucial point in the public works policy of a country is the 
 manner in which the needs of the several services of the Gov- 
 
 187 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 System in eminent are determined and brought to the attention of the 
 Washington , money-granting authority. In the United States, as is well 
 known, the erection of public buildings is, in great part, under- 
 J taken at the instance of localities desiring to have public money 
 spent and public improvements made in their districts. The 
 <j desire is made known through the members of Congress repre- 
 senting the several districts, the means employed being the 
 ' introduction of bills in Congress providing for the making of 
 such improvements; on the basis of these several bills a gen- 
 > eral building bill is prepared and put through by the employ- 
 ment of the well-known log-rolling procedure. To a large 
 extent no regard is paid to the real needs of the public service. 
 In many cases not only are the buildings authorized not asked 
 " for by the services for whose use they are intended, but they 
 are frequently voted against the strenuous opposition of such 
 services. The result is a misapplication and a waste of public 
 * funds that constitute one of the scandals of American adminis- 
 tration. 
 
 Under the British system no such wasteful expenditure of 
 Contrast of public funds is possible. No building is authorized except upon 
 System ^^^ demand of the service interested. This demand, more- 
 
 ' over, is not presented directly to Parliament, but to the Office 
 of Works and Public Buildings, and it remains for that office 
 to determine whether any further action shall be taken upon 
 it. It is to this office, therefore, that Parliament looks for 
 direction with respect to the need for public buildings and the 
 character and cost of the structures that are required. The 
 final determination whether a request for a building shall even 
 be made rests with this service. If a request is made it appears 
 as a part of the estimates of the Office of Works and Public 
 Buildings and not as a part of the estimates of the service 
 for which the building is intended. What the Office of Works 
 and Public Buildings in effect says to Parliament through its 
 estimates is: "We have carefully investigated all applications 
 for public buildings that have been addressed to us by the 
 several civil services of the Government, and as the result of . 
 
 i88 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 such investigation we recommend that the following provision 
 be made." These estimates, of course, have to be submitted 
 to the Treasury and are subject to its superior control as are 
 all other estimates. The result is, thtis, that each year Parlia- y 
 ment is furnished with a works program that has been care- 
 fully elaborated by a technical service and has passed the 
 scrutiny of the Treasury. 
 
 Commitments. A special feature of the problem of pro- 
 viding for public works consists in the fact that many works I 
 require a number of years for their completion. In adopting 
 a works program a government should therefore take irito 
 consideration not only the question of new works to be author- 
 ized, but the extent to which provision has to be made for 
 works that have been authorized in the past. This point is 
 very carefully covered by the British system of estimating for 
 public works. Thus the Estimates submitted to Parliament are 
 in a form that shows clearly for each work for which an 
 appropriation is requested, and for the works program as a 
 whole: (i) The original estimate for the total cost of the 
 work; (2) the revised estimate for such total cost if for any 
 reason the original estimate has undergone revision; (3) the 
 
 probable total expenditure that will be entailed to the end of Based on a 
 1 / ^ 1 11-1 Complete 
 
 the current year; (4) the amount voted for the current year; works 
 
 (5) the further amount required to complete the work; and ^'"'S':^'^ 
 
 (6) the amount asked for for the ensuing year. It will thus 
 be seen that Parliament is in a position where it can determine : 
 
 ( I ) The extent to which it is already committed to expendi- " 
 tures for public works; (2) the extent to which these com- 
 mitments will require the voting of money for the next year ; 
 (3) the extent to which it is requested to charge the Govern- 
 ment with new commitments; and (4) the amount of money 
 that such new commitments will call for during the year for 
 which provision is being made. 
 
 Distinction between Cost of Construction, Maintenance and 
 Repair, Operation, etc. The estimates furthermore distin- 
 
 189 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 guish carefully between the expenditures for construction and 
 those for subsequent acts in connection with the upkeep and 
 operation of the buildings. They thus give the figures sepa- 
 rately for: (i) New works, alteration, additions, and pur- 
 chases; (2) maintenance and repairs; (3) furniture; (4) fuel, 
 light, water, and household articles; (5) caretakers, etc.; (6) 
 rents, tithes, net charges, insurance, etc. As regards the first 
 three items the estimates are given for individual buildings. 
 As regards the remaining items, the estimates are for classes 
 of buildings, the sum so provided thus being available for ex- 
 penditure at the discretion of the OfiSce of Works and Public 
 Buildings upon any of the buildings falling within a class. 
 This itemization, it should be noted, is in the way of subheads 
 of appropriations. The votes themselves are for classes of 
 works or buildings such as "diplomatic and consular build- 
 ings," "revenue buildings," etc.^ 
 
 Office of Works and Public Buildings Submits Estimates 
 for All Public Works Proper. In addition to submitting esti- 
 mates for the funds needed by it in performing work directly 
 in its charge, the Office of Works and Public Buildings also 
 submits the estimates for all public works proper. Thus the 
 estimates for the year ending March 31, 1915, included esti- 
 mates for: (i) Surveys of the United Kingdom; (2) Har- 
 bors under the Board of Trade; (3) Peterhead Harbor; (4) 
 Rates on Government Property ; ( 5 ) Public Works and Build- 
 ings, Ireland; and (6) Railways, Ireland. Their inclusion 
 makes it possible for Parliament to see in one place the total 
 cost of the works program of the Government, and thus to 
 distinguish in a way between expenditures for capital outlay 
 and for current operation. 
 
 Transfer of Funds from One Item to Another in the Works 
 Program. Another feature of no little importance in the 
 British public works system is the facility with which money 
 
 1 See List of Votes, p. 76. 
 
 190 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 allotted for one work may be applied to another. Thus, if the 
 Office of Works and Public Buildings find, that, owing to delay j 
 in the preparation of plans or the delivery of materials, or 
 through any other contingency, all the money appropriated for 
 one building will not be expended during the year, and there is 
 another building or work upon which a sum larger than the i, 
 appropriation can, with advantage, be expended, it can bring 
 the matter to the attention of the Treasury and secure a trans- ^English 
 f er. It is, of course, to be understood that the total authorized l^Puts Re- 
 cost of a building cannot be increased in this way, nor the sponsibihty 
 total sum appropriated for public buildings exceeded. This Executive 
 flexibility in the expenditure of moneys permits the Office of 
 Works and Public Buildings to use to the greatest advantage v 
 the money voted. Under the American system of rigid appro- 
 priations for particular items and inability to make transfers, 
 the construction of buildings is often delayed because the ap- i 
 propriations for those buildings are exhausted, while unused 
 balances stand to the credit of other appropriations. Abuse of l 
 the large powers of discretion granted to the Office of Works 
 in respect to the expenditure of appropriations is guarded 
 against through the requirement that treasury sanction must be -^ 
 obtained for all transfers. The grant by Parliament of this 
 power of making transfers is but another illustration of the 
 general policy of Great Britain to grant large discretionary 
 powers to the Executive in carrying out the general policies 
 outlined by Parliament. This is in marked contrast with the 
 system which prevails in the United States, where the Con- 
 gress goes as far as it possibly can in the way of controlling in 
 detail how moneys voted shall be spent. 
 
 Construction of Public Buildings. A few words should' be 
 said regarding the policy of the Office of Works in respect to 
 the performance of the work entrusted to it. In respect to the 
 erection of new buildings the practice of the office is to pre-^ und"^*"^ 
 pare the plans and supervise the work, but to have the work Supervision 
 itself done by private firms under the contract system. When 
 
 191 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 the building to be erected is of special importance, however, as 
 in the case of such buildings as the new Law Courts Building, 
 Westminster Hall Extension, Admiralty Extension Building, 
 new War Office, and new Public Offices Building, it is usual to 
 call for the submission of plans from outside architects. In 
 such cases the construction work is supervised by the Office. 
 This is substantially the system followed by the United States. 
 
 A Control- 
 ling as Well 
 as a 
 Renting 
 Agency 
 
 Renting of Buildings. As stated, the Office of Works and 
 Public Buildings is the agent made use of by all the civil serv- 
 
 I ices in securing quarters, whether through erection, purchase 
 or lease. A service finding itself in need of additional quarters 
 addresses itself to this Office. The latter, on its own responsi- 
 
 ■■bility, can execute a lease when the rental called for does not 
 exceed £ioo per annum and the term does not exceed seven 
 years. If a greater expenditure or a longer term is involved 
 
 ' the approval of the Treasury must first be secured. In dis- 
 charging this, as well as all other branches of its duties, the 
 Office is not a mere executing agency. It is its duty, before 
 executing a lease, to assure itself that there is a real need for 
 the additional quarters, that the quarters are of a proper char- 
 acter and location and represent the most advantageous ar- 
 rangement that can be made. Its function is, in other words, 
 distinctly one of control. Responsibility for the action taken 
 rests upon it rather than upon the petitioning service. 
 
 Usually 
 Done by 
 Contract 
 
 Maintenance and Repair of Buildings. After buildings are 
 constructed they, as well as all rented quarters, are maintained 
 and kept in repair by the Office of Works. In performing 
 this branch of the work, in almost all cases use is made of the 
 contract system. The only important exception to this is in 
 the case of the repair of blinds of buildings in London. For 
 some reason the Office came to the conclusion that it could do 
 this work more satisfactorily by its own employees. It accord- 
 ingly, in 1895, organized a special shop to do this work, and 
 its small force is permanently employed in repairing, fitting, 
 
 192 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 and removing blinds on the ptiblic buildings of the city. For 
 cities other than London contracts are awarded upon competi- 
 tive bids to local contractors for the maintenance and repair 
 of individual buildings or all the Government buildings in 
 a city. The maintenance and repair of public buildings in 
 London is provided for under a general contract' cover- 
 ing all classes of work and running for a period of three 
 years. 
 
 There seems to have been some question as to whether this 
 
 arrangement was in all respects satisfactory. It was accord- A Critical 
 ,. ,. ., ., ,, . ,, „ . , ^ Review of 
 
 mgly mquired mto with considerable care by the Special Com- Methods 
 
 mittee on Estimates of 19 12. The committee seemed, how- 
 ever, to be satisfied with the explanation given by the Office 
 of the working of the system. The Office admitted that the 
 system as it had formerly existed was open to criticism, but 
 maintained that the evils earlier existing had been corrected by 
 a change made in 191 1. The revised system together with 
 the changes made by it over the old system is described in a 
 memorandum submitted to the Committee on Estimates, from 
 which the following is taken : ^ 
 
 "The present triennial maintenance contract for Lon- 
 don, held by Messrs. Leslie & Co., Lt'd., commenced on 
 the 1st April, 191 1. In connection with this contract a 
 new basis of tendering was adopted, the essential features 
 of which will be best brought out by a comparison with 
 the previously existing basis. In previous years tenders 
 for the London Maintenance Contract had been invited 
 on a priced schedule. This schedule was prepared by the 
 •measurers of His Majesty's Office of Works, and com- 
 prised all classes of work likely to be executed, and ma- 
 terials likely to be required, in the maintenance of Lon- 
 don buildings, together with a price per unit in respect of 
 each item of work or materials. In respect of labour in 
 day work the tenderer was required to quote a percentage 
 
 * Report of the Select Committee on Estimates, 1912, p. 141. 
 
 193 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 on the standard rates of wages which under the fair 
 wages resolution had to be paid to the workmen. In 
 respect of measured work and materials, the tenderer was 
 asked to quote one percentage addition or deduction to 
 cover every item in the schedule. 
 
 "It was thought that this method gave an unfair ad- 
 vantage in tendering to the existing contractors, as they 
 alone knew the quantity of work and materials required. 
 After prolonged consideration it was decided that the 
 only method whereby this advantage of existing contrac- 
 tors could be overcome, was to prepare a schedule show- 
 ing the quantities of work and material that had actually 
 been required by the Board in one year, and to ask the 
 tenderer himself to fill in the prices per unit. The sched- 
 ule then became in reality a bill of quantities which en- 
 abled a comparison of the tenders to be easily made. The 
 lowest tender was accepted, and the price per unit filled 
 in by the tenderer automatically became the basis of the 
 contract." 
 
 Furnishes 
 All Office 
 and 
 
 Building 
 Supplies 
 
 Evolution 
 of the 
 British 
 System 
 
 Supply Work of the Office of Works and Public Buildings. 
 As indicated in the enumeration of the duties of the Office 
 of Works and Public Buildings, this Office is not only one for 
 construction, maintenance, repair and equipment of public 
 buildings but also a supply department for the furnishing of 
 all articles required for the current operation of these build- 
 ings. The Office, in a word, stands towards all the civil serv- 
 ices as a general supply department with respect to quarters. 
 In a way it is the general landlord and all the several services 
 
 . are its tenants. 
 
 It would appear that, as regards its supply work proper, 
 
 i the Office originally did little more than act as a contracting 
 agency for the other departments. Step by step, however, it 
 has passed to the system of itself making purchases, of ware- 
 housing the articles purchased, and of issuing them to the 
 services upon their requisition. The evolution of this system 
 
 194 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 is thus described in a Memorandum prepared for the Com- 
 mission by the Office: 
 
 "In 1894 a central store was established in the Post 
 Office Building at Clerkenwell and removed in 1901 to 
 Lambeth Palace Road, for soap, candles and all such 
 household requisites for the London Offices. Formerly 
 such articles were delivered by the various contractors, 
 who, of course, took into account the cost of distribution 
 in making their tenders. The new system has resulted in 
 a substantial saving and much quicker deliveries. 
 
 "In 1895 the repair, maintenance, fitting and removal 
 of blinds for the buildings in the Board's charge was 
 taken over by the Board's staff, instead of being done by 
 outside contractors. The staff supervises a small body 
 of permanent workmen. New blinds are, as before, sup- 
 plied by a contractor. 
 
 "The system of supply of coal to government depart- 
 ments was revised in 1899- 1900. An expert on coal was 
 engaged as an assistant in the supplies division and two 
 coal stores have been formed in London. Contracts are 
 now made with colliery owners, the middleman being 
 dispensed with. The arrangement has effected a very 
 large saving and has proved most satisfactory in every 
 respect. 
 
 "In 1901 the Board took over the supply of fuel to 
 Country Post Offices and the Prisons. In 1907 an iron- 
 monger store was established. In .1909 an engineering 
 store was established at Elephant Buildings, Newington 
 Butts, S. E." 
 
 Powers of Office of Works and Public Buildings to Control 
 Expenditures. Important as is the question of the system 
 followed in providing the government with public buildings 
 and in afterwards attending to their maintenance and repair, 
 we should scarcely have felt justified in giving to it the atten- 
 
 195 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tion that we have, did the Office of Works and Public Build- 
 I ings constitute a mere supply department to execute requisi- 
 tions drawn upon it. As has been intimated, the functions of 
 the office go beyond this. It is, in fact, one of the great agen- 
 '' cies through which control is exercised over all the civil 
 services with respect to their expenditure for quarters. It 
 / cannot be too distinctly stated that it is under no obligation 
 Has Broad , , to fill requisitions until it has satisfied itself that the quarters, 
 aiy Powers equipment, or supplies requisitioned correspond to the needs of 
 the service. That it has these powers and that it is its duty to 
 exercise them is brought out by the following description of 
 the duties of the Controller and Deputy Controller of Sup- 
 plies as given in the special memorandum furnished to our 
 commission by the Office of Works and Public Buildings: 
 
 "Controller of Supplies: Directs the general adminis- 
 tration of the division. Decides all important questions 
 as to supply or refusal of furniture or supplies of an 
 unusual character; iall requisitions for large or important 
 supplies are submitted for the approval of the controller. 
 Deals with the recommendations in connection with all 
 important contracts. Determines the standard equipment 
 for different classes of officers and offices. Deals per- 
 sonally with all important rentings of property for official 
 purposes in London. Controls the estimates and expen- 
 ditures of the division. Exercises general personal super- 
 vision over the stores, methods of purchase and distribu- 
 tion, workshops appointment of employees and work gen- 
 erally of the divisio;n. Advises the Board on all ques- 
 tions of policy in connection with supplies and contracts 
 for same and labour questions arising on contracts. 
 
 "Deputy Controller of Supplies: Supervises the sup- 
 ply of all furniture, etc., to public buildings, deciding 
 whether supplies are in accordance with practice or reg- 
 ulations and, subject to reference to the controller, what 
 requisitions shall be complied with or refused. Advises 
 
 196 
 
OFFICE OF WORKS AND PUBLIC BUILDINGS 
 
 the Board on all less important contracts. Regulates the 
 expenditure of the division. Reviews all cost or labour- 
 saving commodities and devices submitted to the depart- 
 ment before submission to the controller. Reviews speci- 
 fications, etc., for store purchases and conditions of ten- 
 der. Deals with all questions . affecting the division in 
 general and with questions in regard to the supply of fuel 
 in particular, except such as are of sufficient importance 
 to necessitate their submission to the controller. Acts 
 for the controller in his absence." 
 
CHAPTER X 
 STATIONERY OFFICE . 
 
 The Estimating and Voting of Funds for Stationery and Printing; 
 Allotment of Appropriations ; Procedure in Purchase, Warehousing, 
 and Issue of Supplies; Powers of Stationery Office to Control Ex- 
 penditures. 
 
 In His Majesty's Stationery Office the British Government 
 has a supply service for the furnishing of stationery and the 
 execution of printing for the several departments, that is 
 organized and conducted on precisely the same principles as 
 those governing the Office of Works and Public Buildings. 
 Unlike the latter office, however, its activities cover all the 
 departments, military and naval as well as civil, and include 
 stations wherever situated, outside as well as inside London. 
 
 This office came into existence as the result of Burke's 
 Administrative Reform Act of 1782. "Stationery before that 
 was supplied by persons who held patents, or was bought 
 directly by the Departments. All these patents gradually fell 
 in, and the Departments ceased their separate purchases. The 
 provision of stationery was undertaken by the Stationery 
 Office, on whom further duties were subsequently laid, until 
 the office is now a great purchasing, contracting, distributing, 
 and selling Department, having a turnover of £897,670 and 
 serving every other Department, and every quarter of the 
 worid." ^ 
 
 The Estimating and Voting of Funds for Stationery and 
 
 Printing. As in the case of the Office of Works and Public 
 
 1 Report from the Select Committee on Publications and Debates' 
 Reports, 191 1, p. iii. This committee made a thorough investiga- 
 tion of the operations of the Stationery Office and published its 
 findings in two reports, 191 1 and 1912. 
 
 198 
 
STATIONERY OFFICE 
 
 Buildings, the Stationery Office, and not the several depart- 
 ments, is the authority which determines what funds shall be 
 asked for and for which appropriations are to be made. Under Submits All 
 the head of stationery and printing it submits in one place an for 
 estimate of the money that will be required for all branches of ' ^p^^*™*"*' 
 the Government. The several Services themselves stibmit no /, 
 estimates for stationery and printing. The character of the 
 estimates is shown by the estimate for the year 1914-1915 pre- 
 cisely as it appears in the book of estimates, reproduced here 
 on page 200. 
 
 It will be seen that though there is but a single vote the ' 
 money has to be accounted for under sixteen heads. The 
 segregation that is made has for its purpose to distinguish 
 between: First, appropriations for the great branches of the 
 public service, viz., (i) the administrative departments, (2) Only One 
 the two Houses of Parliament, (3) the Stationery Office, and 
 (4) certain special purposes; and second, the main classes of 
 supplies to be furnished to the administrative departments, 
 viz., (i) printing, (2) paper, (3) parchment and vellum, (4) 
 binding, etc., (5) books and maps, and (6) miscellaneous 
 small stores. 
 
 As was pointed out in our consideration of the form and 
 character of estimates, each estimate proper, consisting of the 
 vote and the subheads tmder which an accounting of the money 
 voted is to be had, is supported by tables 'giving for purposes 
 of information the details entering into each of the lettered 
 subheads appearing in the statement that we have reproduced. Supporting 
 Thus, for example, there is given for the subhead "F. Paper 
 for Public Departments" the table on page 201. 
 
 It is evidently a matter of interest to determine how expen- 
 ditures for stationery and printing are distributed according 
 to services. This is shown in a special table which gives the 
 actual expenditure for: (i) Printing, (2) paper and other 
 supplies, and (3) total for both items for each of 134 separate 
 organization units during each of the years 191 o- 11, 1911-12 
 and 1 9 12- 13. Thus, though the appropriation for stationery 
 
 199 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Stationery and Printing 
 
 I. Estimate of the Amount required in the year ending 31st 
 March, 1915, to defray the Expense of providing Sta- 
 tionery, Printing, Paper, Binding and Printed Books, 
 for the Public Service; to pay the Salaries and Ex- 
 penses of the Stationery Office; and for sundry Mis- 
 cellaneous Services, including Reports of Parlia- 
 mentary Debates. 
 One Million and Sixty-nine Thousand Two Hundred and 
 Seventy-Two Pounds. 
 II. Subheads under which this Vote will be accounted for 
 by the Stationery Office. 
 
 
 1914-S 
 
 1913-4 
 
 Increase 
 
 Decrease 
 
 A. Salaries, Wages, and Allowances. 
 
 B. Horses and Carts, and Carriages 
 ■C. Police 
 
 £ 
 
 55.747 
 7,200 
 
 175 
 
 2,800 
 
 378.000 
 
 392,000 
 
 7,000 
 
 92,000 
 
 49,000 
 
 108,000 
 
 80,000 
 
 50,000 
 
 5.800 
 
 9,000 
 
 300 
 
 250 
 
 £ 
 
 49.983 
 9.500 
 
 175 
 
 3.000 
 
 360,000 
 
 423.000 
 
 6,000 
 
 88,000 
 
 49,000 
 
 105,000 
 
 80,000 
 
 50,000 
 
 6,000 
 
 7.500 
 
 300 
 
 250 
 
 £ 
 5,764 
 
 18,000 
 
 1,000 
 4,000 
 
 3,000 
 1,500 
 
 £ 
 2,300 
 
 D. Incidental Expenses 
 
 E. Printing for Public Departments 
 P. Paper for Public Departments. . 
 -G. Parchments and Vellum for Pub- 
 lic Deoartments 
 
 200 
 31,000 
 
 H. Binding, etc., for Public De- 
 
 
 I. Books and Maps for Public De- 
 partments . . 
 
 J. Miscellaneous Small Stores for 
 Public Departments 
 
 
 
 K. Printing, Paper, Binding, etc., 
 for Two Houses of Parliament. 
 
 L. Printing, Paper, Binding, etc., 
 for Stationery Office Publica- 
 tions 
 
 
 M. Printing, Paper, Binding, etc.. 
 
 200 
 
 N. Parliamentary Debates and 
 
 Records 
 
 •0. Printing, Paper, etc., for Cus- 
 ' toms Bills of Entry 
 
 
 P. Parliamentary Papers for Free 
 Libraries 
 
 
 Gross Total £ 
 
 Deduct: 
 Q. Appropriations in Aid 
 
 1,237,272 
 168,000 
 
 1,237,708 
 160,000 
 
 33,264 
 
 33.700 
 
 8,000 
 
 Net Total £ 
 
 1,069,272 
 
 1,077,708 
 
 33,264 
 
 41,700 
 
 Net decrease — £8,436 
 
 200 
 
STATIONERY OFFICE 
 
 F. Paper for Public Departments 
 
 The provision under this subhead may be roughly classified 
 as follows : 
 
 Paper, for printing only 
 
 Paper for official correspondence (much of which is 
 
 partly printed) 
 
 Envelopes for ditto 
 
 Note paper and corresponding Envelopes for Official 
 
 use 
 
 Paper to be bound into Account Books 
 
 Telegraph Envelopes 
 
 Wrapping, household, and miscellaneous Paper 
 
 Total for Paper for Public Departments 
 
 £ 72,000 
 
 135,000 
 85,000 
 
 21,000 
 
 38,000 
 
 5,000 
 
 18,000 
 
 £392,000 
 
 1913-1914 
 
 £ 93.000 
 
 143,000 
 85,000 
 
 21,000 
 
 38,000 
 
 7,000 
 
 36,000 
 
 £423,000 
 
 and printing is made in one lump sum and with sixteen sub- 
 heads between which transfers may be made, Parliament is 
 furnished with detailed data regarding how the money is spent 
 by individual services. 
 
 Allotment of Appropriations. As the Stationery Office re- 
 ceives one lump sum for meeting the demands of all branches 
 of the Government for printing and stationery, it is desirable 
 that some system be devised for apportioning the money avail- 
 able among the several services. Until recently no attempt was 
 made to do this, the total allotted under each subhead being " 
 generally available for all services covered by such head. 
 Under this system there was no incentive to economy. Each 1 Incentives 
 service felt that any saving on its part but swelled the sum Economy 
 remaining for the other services. This feature of the work 
 of the Stationery Office received careful consideration at the 
 hands of the select committee which investigated in 191 1 and 
 191 2 the operations of that office. In his testimony before 
 this committee the Controller of the Stationery Office recom- 
 mended strongly that the total appropriated under each sub- 
 head for the public departments be allotted to them on the 
 basis of past expenditures, and that an allotment so made 
 
 201 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Recommen- 
 dations of 
 Committee 
 Accepted 
 
 Order of 
 Treasury 
 Governing 
 
 should not be exceeded until the approval of the Treasury 
 had been obtained. Following this suggestion, the committee 
 included in its report for 191 1 the following recommenda- 
 tion : ^ 
 
 "Your Committee recommend that with a view to 
 pressing upon Departments the necessity of keeping 
 within a specific limit the expenditure for which they call 
 upon the Stationery Office, the sum indicated annually 
 as the estimate for the Department in the Stationery Of- 
 fice Vote, should be a real estimate prepared by' the Sta- 
 tionery Office, inclusive of all requirements, and not to 
 be exceeded without the permission of the Treasury. At 
 present the savings of one economical Department may 
 go, via the Stationery Office vote, to provide the means 
 of extravagance for another." 
 
 This recommendation was accepted by the Treasury in so 
 - far as the items assigned for printing and publications were 
 concerned, but was rejected as regards stationery items. In 
 the Treasury Minute dated February 22, 1912, through which 
 it put into effect most of the recommendations of the commit- 
 tee, it stated as follows : ^ 
 
 "Expenditure on Stationery and Printing is of such a 
 nature that it is peculiarly difficult for the Department on 
 whose vote the expenditure falls (the Stationery Office) 
 to exercise effective control over the demands of other 
 Departments, and it must mainly rest with the Depart- 
 ments themselves to effect the economies (the possibility 
 of which My Lords do not question) by reduction of 
 demands for Paper, Printing and other Stationery. . . . 
 As regards the supply of Paper and other articles, My 
 Lords think economy would best be served by the sug- 
 
 1 Report from the Select Committee on Publications and Debates' 
 Reports, 191 1, p. v. 
 
 " Report from the Select Committee on Publications and Debates' 
 Reports, 1912, Appendix No. i, p. 67. 
 
 202 
 
STATIONERY OFFICE 
 
 gestions approved above for departmental control of de- 
 mands, and for inspection, standardisation, etc., and that 
 if these are acted upon it will not be necessary to require 
 Treasury authority for expenditure in excess of a neces- 
 sarily somewhat conjectural estimate. 
 
 "On the other hand, as regards cost of Printing, My 
 Lords think that the suggestion of the Select Committee 
 should prove of service in directing the attention of De- 
 partments to their Printing expenditure in years in which 
 this expenditure is exceptionally heavy. They are there- 
 fore giving directions to the Controller of the Stationery 
 Ofifice to prepare an Estimate based on the expenditure 
 on Printing for various Departments in previous years 
 (as shown in the Stationery Office Estimates), and They 
 propose to adopt that Estimate as the limit of Printing 
 expenditure for each Department for each financial year, 
 beyond which any new expenditure would require their 
 Lordships' sanction." 
 
 The result of this action on the part of the Treasury was Allotment 
 to establish the allotment system for the item of printing, but" Printing 
 not for that of stationery. To control expenditures under *-*°^y 
 the latter head, the Treasury adopted recommendations of the 
 Committee : 
 
 That demands for Stationery and Printing in each De- 
 partment should be under the direct charge of an officer 
 of sufficient status and that he should work under the 
 direct supervision of an officer of the highest rank (i. e., 
 not below the rank of Assistant Secretary or its equiv- 
 alent) who should countersign the demands ; that the 
 Stationery store of each Department 'should be period- 
 ically inspected by the Stationery Office ; that a list of 
 ordinary consumable stores be compiled by the Stationery 
 Office, and that supplies of articles not on the list be only 
 allowed on cause being shown; that standardising of ar- 
 
 203 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 tides supplied be encouraged, and that "touting" by out- 
 side firms be forbidden. 
 
 Procedure in Purchase, Warehousing and Issue of Supplies. 
 The Stationery Office kindly prepared for the commission a 
 statement describing the practice and procedure followed by 
 it in the discharge of its duties. From this statement the 
 following is taken as covering some of the most important 
 aspects of its work:^ 
 
 Purchase of Supplies: "Up to the present the govern- 
 ment owns no mills or printing works, although a pro- 
 posal to establish a state printing office is now under con- 
 sideration. Supplies are therefore obtained under con- 
 tracts made by the Controller of Her Majesty's Station- 
 ery Office with suitable firms. All important contracts 
 are put up to open competition and are widely advertised ; 
 in the case of smaller items required specially, a limited 
 tender is issued to those firms known to be in a position 
 to supply satisfactorily. As a general rule the lowest 
 tender is accepted. 
 
 Inspection: "Everything supplied is carefully exam- 
 ined at His Majesty's Stationery Office to see that it is 
 strictly in accordance with the specification. In every 
 branch of the department where technical knowledge and 
 experience are of value the Controller has at his disposal 
 a staff of experts, chosen by special competitive examina- 
 tion in the subjects appertaining to the particular branch. 
 Also, when advisable, the accounts rendered by the vari- 
 ous firms employed are checked by officers of technical 
 experience. 
 
 Standardisation: "It may be noted that, so far as pos- 
 sible, supplies made for the public service are standard- 
 ised, departments being informed of the desirability of 
 
 * In some cases side headings have been inserted. 
 
 204 
 
STATIONERY OFFICE 
 
 cooperation in this respect. It is found that by this"- 
 means more favorable terms can be obtained in buying. 
 
 Marking: "Wherever practicable a government mark 
 is placed upon all articles supplied by His Majesty's Sta- 
 tionery Office as a safeguard against their improper use.- 
 
 Storage: "As far as space allows, a stock equal to six- 
 months' supply is kept by His Majesty's Stationery Office- 
 of all articles for which there is a regular demand, sav-- 
 ing only perishable material, such as printing paper,, 
 which is ordered as required under running contracts.- 
 No store is kept of articles for which there is only affl 
 occasional demand, the government departments require 
 ing them holding their own stock. The same arrange- 
 ment applies to printed forms, other than official publi- 
 cations (which will be dealt with under a separate head- 
 ing). His Majesty's Stationery Office, in this case, pro- 
 tecting itself against having to pay fresh charges for 
 composition when the forms are reprinted by inserting a 
 clause in the contracts that the type shall be kept stand- 
 ing for a specified period. 
 
 Issue of Supplies: "Departments are expected to de- 
 mand supplies equal to about six months' consumption to 
 obviate the economic disadvantage of purchasing small 
 quantities. The distribution of printing and stationery is 
 arranged through the medium of clerks of stationery in 
 the various government departments. Requisitions are 
 made by these officials on special forms issued by His 
 Majesty's Stationery Office, which, with certain excep- 
 tions to be specified, are sent to that department. As a 
 guarantee that the articles demanded are necessary for 
 the work of the department, each form must be counter- 
 signed by an official of superior rank. 
 
 Direct Purchases: "The privilege of direct communi- 
 cation with contractors is allowed to certain departments 
 
 205 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 whose work involves specially urgent or confidential 
 printing. Special forms of demand are issued, on receipt 
 of which the contractor will execute the work required, 
 the demands being afterwards forwarded to His Maj- 
 esty's Stationery OfHce for the issue of covering orders 
 to the contractor and for purposes of account. It is of 
 course understood that the use of these forms is restricted 
 to cases of absolute necessity. 
 
 Official List of Articles Furnished: "Lists of articles 
 authorised by His Majesty's Treasury for use in the pub- 
 lic service are issued to the clerks of stationery, and arti- 
 cles not on the approved list are only supplied to depart- 
 ments that have special need of them. In the case of 
 printed matter a small pamphlet is issued for the purpose 
 of instructing the departments how 'copy' may be pre- 
 pared in a form which can be most economically printed. 
 
 Allotment of Funds for Printing to the Several De- 
 partments: "Also the printing for each department of 
 the service is restricted to an annual allowance based on 
 the expenditure of previous years and the estimate re- 
 quirement of the department concerned. A record is 
 kept and the allowance may not be exceeded without 
 treasury sanction being first obtained. 
 
 Control by Stationery Office: "On receipt at His Maj- 
 esty's Stationery Oiifice the demands pass through the 
 hands of technical experts, who scrutinise them most 
 carefully with a yiew to efifecting economies in quality of 
 paper, printing, etc. Attention is also given to the 
 requisitions with the object of checking extravagance. 
 
 Delivery: "As regards the actual issue of the articles, 
 departments in the London district are served by motor 
 vans belonging to His Majesty's Stationery Office; out- 
 side this area advantage is taken of the cheapest available 
 
 206 
 
STATIONERY OFFICE 
 
 means of transit, the cost being borne on the vote of the 
 department to which the supply is made. In the case of 
 large quantities of one article required for a particular 
 service, arrangements are sometimes made for direct 
 delivery by the contractor, samples from the supply being 
 sent to His Majesty's Stationery Offitcfor examina- 
 tion. Paper required by printing and binding contractors 
 is issued to them in bulk, the contractor being required to 
 render an exact account of its consumption. 
 
 Printing and Distribution of Public Documents: "His 
 Majesty's Stationery Office is responsible for the printing 
 and distribution of all official government publications in 
 the United Kingdom. These are divided into two 
 classes: (a) Parliamentary Papers, which include bills 
 and acts of Parliament, papers presented to both Houses 
 by command of His Majesty, and papers ordered printed 
 by either House, (b) Stationery Office Publications, 
 which comprise all the official publications issued by His 
 Majesty's Stationery Office for sale to the public other 
 than those included under 'a.' A stock of these publica- 
 tions, sufficient to meet the requirements of the public 
 departments, is held at His Majesty's Stationery Office, 
 arrangement for sales to the public being in the hands of 
 contractors, who pay a certain premium for the right of 
 holding the contract. There are a few exceptions to this 
 arrangement, while in Scotland, His Majesty's Stationery 
 Office has recently, by way of experiment, dispensed with 
 the services of an agent and is now. selling direct to the 
 public. 
 
 Waste: "The disposal of waste paper is also carried 
 out under contract, the contractor paying a certain sum 
 to His Majesty's Office for the privilege." 
 
 Powers of Stationery Office to Control Expenditures. 
 Though the powers of the Stationery Office to control the ex- 
 
 207 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 penditures of the several services by questioning and revising 
 their requisitions are not so clear as in the case of the Office of 
 Works and Public Buildings, the commission was informed 
 that the Stationery Office did, in fact, carefully scrutinize all 
 requisitions made upon it, for the purpose of determining 
 whether a real need existed for the articles requisitioned and 
 whether a cheaper grade of articles than the ones asked for 
 would not suffice. It would appear that this control is much 
 stricter in regard to printing and the supply of forms than is 
 the case with respect to paper and ordinary stationery sup- 
 plies. We thus read in the report of the Select Committee on 
 Publications and Debates Reports : ^ 
 
 "As the result of the recommendations of previous 
 Committees, Departments increasingly consult the Sta- 
 tionery Office before work is carried out. A Revising 
 Branch of that Office was established in 1907, through 
 which control is exercised over the requisitions of Depart- 
 ments ; and it is estimated that a saving has been effected 
 by its action, during the four years of its existence, of 
 about f 1 10,000, many of the items being recurring." 
 
 1 1911, p. V. 
 
Audit 
 
 CHAPTER XI 
 THE AUDIT OF PUBLIC ACCOUNTS 
 
 History of Development of the Present Audit System; Status of the 
 Comptroller and Auditor General ; The Method of Keeping and 
 Rendering of Accounts Prescribed by the Treasury ; Audit of Pub- 
 lic Accounts; Powers of Comptroller and Auditor General in Re- 
 spect to Disallowance of Items; Duty of Comptroller and Auditor 
 General in Respect to the Control of Unwise or Extravagant Ex- 
 penditures ; Standing Committee of Public Accounts of the House 
 of Commons. 
 
 More than once allusion has been made to the remarkable 99°^?*": 
 
 tional Sig- 
 
 fact that though almost from the begmnmg of constitutional nificance of 
 government in England the theory has been held that the con- 
 trol of the public purse lay in the House of Commons, that 
 body failed, until a very recent date, to develop the means 
 through which that control might in fact be made effective. 
 We have traced the development of certain of these means 
 in our account of the rise of an appropriation system and the 
 requirement that the Executive shall keep and render to the 
 House accurate reports regarding the manner in which the 
 funds granted to it are expended. 
 
 Important as these means are, they evidently fail fully to 
 meet the requirements of complete control unless they are 
 supplemented by some system by which the House may sub- 
 ject these accounts to an inspection with a view to determin- 
 ing whether they in fact represent a real carrying out of the 
 conditions imposed in making the grants. "I have always been 
 greatly struck," declares Lord Welby in his testimony before 
 the Select Committee on National Expenditures,^ "by the fact 
 that for, you may say, a- hundred and sixty years, the 
 
 ^ Report, 1902, p. 175. 
 
 209 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 House of Commons, always anxious to establish its control, 
 should have remained all that time under the illusion that it 
 could control expenditure by putting checks upon the issue of 
 money from the Exchequer instead of ascertaining how the 
 money had been spent. It is most singular that all the able 
 men who represented the House of Commons during that time 
 should have remained under that illusion." "The fact is," he 
 elsewhere stated,^ "that Chancellors of the Exchequer, their 
 advisers, and Parliament itself were still under the illusion that 
 V Parliamentary control over expenditure could be effectively 
 secured by safeguards on the issue of money from the Ex- 
 chequer without following the expenditure further." 
 
 History of Development of the Present Audit System. Ob- 
 vious as this fact now is, it was not until the middle of the 
 nineteenth century that it was fully realized or at least until 
 then no adequate means were provided for an audit. The idea 
 of an examination of some accounts, and some attempt to put 
 this idea into execution, it is true, can be found in earlier years. 
 "There was, indeed," writes Lord Welby in his Memorandum 
 on the Control of the House of Commons over the Public Ex- 
 penditure,* "an audit conducted by officers of the Exchequer 
 under regulations framed for the times of the Tudors and 
 Stuarts. It was left unaltered at the Revolution of 1688, 
 Methods and for nearly a century afterwards. It limped leisurely 
 hTthe'^irth ^1°"S' so much so that in 1 782 great accounts twenty and thirty 
 and the i8th years old were still open, and there were accounts not yet set- 
 tled which went back to the reign of William III. But this 
 limping audit was not an audit for Parliament. The accounts 
 when audited were not submitted to Parliament ; they were 
 declared before and passed by the Treasury, and the author- 
 ity of the Treasury in passing them was unquestioned." 
 
 The great defect in this system was not merely that the ex- 
 
 ' Report of Committee on National Expenditure, 1902, p. 229. 
 ' Report of Committee on National Expenditure, 1902, Appendix 
 No. 13, p. 228. 
 
 210 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 amination of accounts was made in a dilatory and inefficient ^ 
 
 way, but that this examination was made by the branch of the pefects in 
 •^ "^ . System 
 
 Government responsible for making the expenditures. 
 
 "Here was the great blot of our financial system. De- 
 fects in the Estimates and in the method of voting them 
 were gradually removed, but the chief defect of all, that 
 the House of Commons did not know how its grants had 
 been expended, remained unremedied until the Exchequer 
 and Audit Act came into force. It is singular that two 
 of our greatest Chancellors of the Exchequer, Mr. Pitt 
 and Sir Robert Peel, did not seize the point. It is the 
 more singular as regards Mr. Pitt, because he reformed 
 the system of audit, he swept away the old audit by Offi- 
 cers of the Exchequer and transferred the duty to a new 
 authority, the Board of Audit, which he endowed with 
 considerable powers. The audit applied by the new " 
 Board was effective as far as it went, and prompt as com- 
 pared with that of the Exchequer Officers, but he made 
 no provision for laying the results of the audit before the 
 House of Commons. The Treasury passed the audited 
 accounts,. it owed no responsibility to Parliament in re- 
 spect to them, and remained, as under the previous sys- 
 tem, master of the situation." ^ 
 
 A great opportunity to correct this defect was presented 
 in 1834 when the old Exchequer was abolished and provision ^ 
 was made for a new officer known as Comptroller of the Ex- 
 chequer, who was to have control over the custody of public 
 funds and whose authorization was required before any mon- 
 eys could be drawn from the Treasury. In the creation of this The Devel- 
 office the idea of Parliament was to protect the Treasury by the Present 
 controlhng issues from the Treasury for expenditure purposes. System 
 These issues were simply advances of large sums to disbursing 
 officers as authorized by appropriation acts ; they were not ex- 
 penditures proper. 
 
 ^ Lord Welby Memorandum, etc., p. 228. 
 
 211 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The credit of developing and having adopted the modem 
 principle of control through an examination of the expendi- 
 tures themselves Lord Welby ascribes primarily to Sir James 
 Graham, who became first Lord of the Admiralty in 1831, and 
 the Public Monies Committee of 1856-7. 
 
 "In 1 83 1 that most able administrator, Sir James 
 Graham, became First Lord of the Admiralty. He found 
 the civil branches of that department organised as they 
 had been organised in the time of Elizabeth. He left 
 them organised on the principle that has worked, and 
 worked well, to the present day. Sir James Graham's 
 speech in moving the Navy Estimates of 183 1 is of his- 
 torical interest. In the course of it he said that he and 
 Statement Mr. Hume in 1829 and 1830, when calling attention to 
 
 Welby the Navy Estimates, 'had too much neglected the details 
 
 of the Estimates in their anxiety to effect a tangible 
 reduction of the general sums of the Votes. Had they 
 not been so much occupied in pointing out savings, they 
 would have effected much benefit in investigating how 
 far the actual expenditure under each head squared with 
 each Estimate. The only remedy which he saw then was 
 to lay before the House annually a balance sheet, in 
 which would be specifically placed under each head the 
 actual expenditure of the Navy and Victualing Boards.' 
 Parliament in consequence, and at his instance, passed an 
 Act requiring the Admiralty annually to present such an 
 account to the House of Commons. This account, called 
 the Navy Appropriation Account, has been annually pre- 
 sented up to the present time. It is based on the audited 
 account of naval expenditure, and it shows the actual 
 expenditure, as ascertained by the auditor, under each 
 head of service. The precedent thus created was applied 
 in later years to other great divisions of the public ex- 
 penditure, and has formed the model on which the Ap- 
 propriation Accounts of public expenditure are now ren- 
 
 212 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 dered. It is the first instance, as far as I am aware, in ' 
 which a minister grasped the importance, I might say the 
 necessity, of laying before the House of Commons a 
 return of actual expenditure; but it was an isolated in- 
 stance, applying to only one branch of expenditure, and 
 there being no provision in the Act which forced the 
 House of Commons to pass a judgment on the Account, 
 it practically passed year by year without the notice 
 which it deserved." ^ 
 
 Though the precedent thus established of having an audited 
 statement of actual expenditures laid before Parliament an- , Further 
 nually was gradually extended to certain other services, and Evolution 
 notably to the War and Ordnance Offices in 1846, the next 
 step of real importance was not taken until twenty-five years 
 later. This step consisted in the appointment in 1856, and 
 the report in 1857, of the able committee of the House of 
 Commons on the receipt, issue and audit of public moneys in 
 the Exchequer, the Pay Office and the Audit Department. Re- 
 garding this committee, which is usually known by the name 
 of the Public Monies Committee of 1856-7, Lord Welby, in 
 his testimony before the Committee on National Expenditures, 
 1902, said : ^ 
 
 "It was only very gradually that the change [i. e., to 
 the modem system of audit] took place. That change is 
 marked by that very remarkable Committee of 1856-7, 
 the Public Monies Committee, which is, I think, one of 
 the most remarkable Committees, both as regards its con- 
 stitution and the work it did, that I remember. The Pub- 
 lic Monies Committee knocked on the head once for all' , 
 the idea that any effective control could be exercised by 
 watching the issue of money from the Exchequer and 
 showed that the real control of Parliament must be by 
 
 ''■ Lord Welby Memorandum, etc., p, 229. 
 'Report, p. 175. 
 
 213 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Recommen- 
 dation of 
 the Public 
 Monies 
 Committee 
 
 Advocacy 
 of an 
 
 Independent 
 Board or 
 Office 
 
 Responsible 
 to 
 Parliament 
 
 ascertaining, through independent officers of its own, 
 how the money had been spent." 
 
 This committee made a number of recommendations cover- 
 ing a wide range of topics, many of which were approved by 
 Parliament and incorporated into law. Indeed, it is not too 
 much to say that this report laid the basis for the whole mod- 
 em system of financial management and control. We shall 
 have occasion in other places to speak of a number of these 
 recommendations. In respect to the particular subject under 
 consideration, it recommended in the strongest terms possible 
 the extension of the principle of laying before Parliament an- 
 nual statements of audited expenditures of all branches of the 
 public service. Furthermore, it brought out, in a way that 
 had never been done before, the imperative necessity that this 
 audit and report should be made by officers of Parliament 
 itself responsible only to that body for the manner in which 
 they performed their duties. The report thus said : ^ 
 
 "The concurrent audit or appropriation check first ap- 
 plied to the expenditure of the grants for naval services 
 in 1832, and subsequently extended to the several Army 
 grants, was a new security introduced for ensuring the 
 strict appropriation of the grants of Parliament. It was 
 not intended to limit the discretion of the responsible 
 Departments of the Executive Government in which it 
 was established, but to secure a revision of their accounts 
 by an independent authority, invested with sufficient 
 power of investigation to detect any misapplication of the 
 Votes, or any deviation from the appropriations sanc- 
 tioned by Parliament. This check now applies to the 
 Naval and Military expenditure, and is regulated by the 
 provisions of an Act passed in 1846, also to tlie expendi- 
 ture of the Offices of Woods and Forests, and Public 
 Works, and the Commissioners of Audit transmit an- 
 nually to the Treasury, for presentation to the House of 
 ^ See Report of Committee on National Expenditure, 1902, p. 229. 
 
 214 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 Commons, accounts of Naval and Military expenditure 
 compared with the grants, accompanied by reports iij 
 which they direct attention to every departure from the 
 provisions of the Appropriation Act. Your Committee 
 recommend that this important check upon the applica- 
 tion of the public money be extended to the accounts of 
 the income and expenditure kept at the Treasury, to the 
 accounts of the Revenue Departments, and to the various 
 accounts comprising the expenditure of the Votes for 
 Civil Services, including Civil Contingencies. . . . Your 
 Committee are also of opinion that the whole of these 
 accounts, finally audited, should be presented to Parlia- 
 ment before the close of the year succeeding that to which 
 they relate. . . . 
 
 ". . . Your Committee suggest that the Audit Board 
 should no longer transmit through the Treasury those 
 accounts which they are bound to lay before Parliament, 
 but should communicate them direct, and that the appro- 
 priation and inspection of Army and Navy Accounts, the 
 selection of officers for the respective duties, their re- 
 moval or dismissal should rest entirely with the Audit 
 Board. 
 
 "Your Committee have recommended a large extension 
 of the duties and powers of the Board of Audit. If these 
 suggestions be adopted it will be necessary that the com- 
 position and relative position of this Board, as a great 
 department of State, should be reconsidered by the Exec- 
 utive Government. The Board of Audit is responsible to 
 Parliament alone, and the station and emoluments of the 
 person at the head of it should be equal to the importance 
 of the duties to be performed, and not second in rank to 
 any of the permanent officers presiding over other prin- 
 cipal departments." 
 
 Though action did not immediately follow this report, it, 
 as Lord Welby expresses it, "practically decided the form in 
 
 215 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The Idea 
 Established 
 by Standing 
 Orders 
 
 Exchequer 
 and Audit 
 Act of 1866 
 
 which parliamentary control over expenditures should be es- 
 tablished." The two great recommendations of the commit- 
 tee — that provision should be made for a standing committee 
 of the House of Commons, to whom all audited accounts 
 should be referred for consideration and report, and that all 
 accounts of the Government should be audited by an officer 
 directly representing Parliament and independent of the 
 Crown — were adopted, the one in 1861 through a standing 
 order to that effect, and the other in 1866 through the passage 
 of the famous Exchequer and Audit Departments Act 
 (i866).i 
 
 The passage of this act marks almost the final stage in the 
 evolution of the present system of public expenditures. It 
 stands on the statute books in almost the same form in which 
 it was originally enacted, such amendments as have been made 
 to it covering little more than matters of detail. "The House 
 of Commons," to quote Lord Welby again, "learned at last 
 that it could not insure correct appropriation by cimibrous 
 checks imposed before the expenditure took place, and that it 
 could only enforce its control by early audit of the expendi- 
 ture after it had taken place and by examining itself the re- 
 sults of that audit." 
 
 The 
 
 Exchequer 
 under Con- 
 trol of 
 Parliament 
 
 Status of the Comptroller and Auditor General. To under- 
 stand the status and functions of the Comptroller and Auditor 
 General one must start with an appreciation of the fact that 
 the public funds technically are> neither in the possession nor 
 under the control of the Crown. Legally such possession and 
 control are in Parliament. The latter merely grants authority 
 to draw upon these funds for certain designated purposes and 
 in certain specified amounts. It is the function of the Comp- 
 troller and Auditor General, acting as the direct representa- 
 tive and officer of Parliament, to see that no funds are drawn 
 from the Exchequer except in pursuance of authority given 
 by Parliament, and that such* funds as are drawn are applied 
 
 ' 29 and 30 Vict., c. 39. 
 
 216 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 only to the specific purposes and in the way ordered by that 
 body. 
 
 The great reform from the auditing standpoint that was 
 accomplished by the act of 1866 was not only the provision 
 that all accounts of the Government should be audited, but also 
 that this audit should be by an officer of Parliament making V^^- 
 report directly to it. That this theory of the status of the General 
 Comptroller and Auditor General might be fully carried out pariiamen" 
 in practice, it was necessary to give to this officer such a posi- ) 
 tion as would render him independent of the executive the 
 acts of which it was his duty to control. This was secured 
 by the provisions that, though the Comptroller and Auditor \, 
 General is appointed by the Crown, he holds office during J^j""'^ . 
 good behavior and can be removed only on an address from of Executive 
 the two Houses of Parliament, and that his salary constitutes 
 a permanent charge upon the Consolidated Fund. The same 
 provisions which are employed to secure the independence of - 
 judges were thus applied to him. 
 
 In making this statement it is necessary, however, to dis- 
 tinguish between the personal independence of the Comptroller ii 
 and Auditor General and that of the office held by him. All 
 that the provision given above acconiplishes is to ensure that 
 the Comptroller and Auditor General shall be in a position 
 where he can exercise such authority as is conferred upon him 
 with perfect independence of the Crown. When we come to 
 consider the scope of his authority, and especially the pow- * 
 ers that he possesses to determine accounting procedure, on 
 matters such as the organization and personnel of even his 
 own office, we encounter the rather remarkable fact that final '- however to 
 authority rests not in his hands, but in those of the Treasury. Adminis- 
 The Exchequer and Audit Departments Act thus provides that 
 "the Treasury shall from time to time appoint the officers, 
 clerks and other persons in the department of the Comptroller 
 and Auditor General" ; that "Her Majesty by Order in Council 
 may from time to time regulate the numbers and salaries of 
 the respective grades or classes into which the said officers, 
 
 217 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 The Office 
 Kept "Out 
 of Politics" 
 
 clerks and others shall be divided" ; that the Comptroller and 
 Auditor General may have power to frame orders and regula- 
 tions for the internal business of his department, but that such 
 orders shall not be issued nor have validity until "all such or- 
 ders and forms shall be approved by the Treasury." 
 
 Prescribed 
 by the 
 Treasury 
 
 Regulations 
 of Auditor 
 General 
 
 The Method of Keeping and Rendering of Accounts Pre- 
 scribed by the Treasury. Strictly in line with this theory of 
 preserving the administrative authority of the Treasury over 
 the management of the public finances is the provision that 
 the Treasury, and not the Comptroller and Auditor General, 
 shall be the authority to determine the manner in which all 
 public accounts shall be kept and rendered. The act thus 
 reads: "The Treasury shall determine by what departments 
 such accounts {i. e., appropriation accounts] shall be prepared 
 and rendered to the Comptroller and Auditor General" ; that 
 "a plan of account books and accounts, adapted to the require- 
 ments of each service in order to exhibit in a convenient form 
 the whole of the receipts and pa)mients in respect of each vote, 
 shall be designated under the supervision of the Treasury, and 
 Her Majesty may, from time to time, by Order in Council, pre- 
 scribe the manner in which each department shall keep its 
 accounts" ; that any official receiving public moneys "shall at 
 such time and in such form as the Treasury shall determine 
 render an account of his receipts and payments to the Comp- 
 troller and Auditor General" ; and that, though the Comptroller 
 and Auditor General may prepare regulations setting forth 
 the time and .form in which accountants shall submit their ac- 
 counts with supporting authorizations and vouchers, "no such 
 regulations shall be obligatory on such accountants until they 
 shall have been approved by the Treasury." 
 
 The foregoing represents a reproduction of only a few of 
 the more significant clauses of the Exchequer and Audit De- 
 partments Act bearing upon the matter of the prescribing of, 
 the methods to be followed by the several services of the Gov- 
 ernment in keeping and rendering their accounts. All through' 
 
 218 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 the act, however, constant reference is made either to the 
 power of the Treasury itself to direct how this or that feature 
 of the accounting system shall be managed, or to the require- '^ 
 ment that the approval of that department shall be had before 
 regulations otherwise formulated shall have validity. 
 
 Audit of Public Accounts. A description has already been 
 given of the duties of the Comptroller and Auditor General < 
 as a comptroller of Exchequer issues,. We have now to con- , 
 sider the duties of this ofificer as an auditor general. In this 
 capacity. Parliament, by the Exchequer and Audit Depart- 
 ments Act and other acts, has imposed upon the Comptroller 
 and Auditor General the duty of examining and auditing all 
 or practically all the accounts of the Government, whether these 
 accounts relate to general revenues and expenditures or to the 
 financial operations of special institutions such as arsenals, hos- 
 pitals, etc. In some cases the audit required is a detailed one "^ 
 involving the examination of every item of expenditure with 
 a view to determining whether it is in accordance with law, 
 has been properly authorized, is supported by proper vouchers, 
 etc. In other cases the examination represents only what is^ Procedure 
 known as a "test audit," that is, an audit of a certain class of 
 expenditures, or expenditures during a particular brief period. 
 Test audits of this kind are thus made of store accounts, manu- 
 facturing and expense accounts of the Army and Navy, manu- 
 facturing establishments, etc. 
 
 It is manifestly impracticable to attempt in this place to 
 enter into atiy detailed consideration of the procedure em- 
 ployed in conducting these different audits. Our interest is di- 
 rected only to that feature of the work of the Comptroller and 
 Auditor General which bears directly upon the great problem W ' 
 of securing control over the expenditures generally. We have 
 seen that expenditures fall into two great categories : Those v 
 represented by Consolidated Fund services, and those repre- 
 sented by the supply services. The audit of expenditures of ' 
 the first class is a comparatively simple matter, and requires 
 
 219 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Audit Ex- 
 penditures 
 of Supply 
 Services 
 
 no special comment. It remains, therefore, for us to consider 
 only the work of the Comptroller and Auditor General in audit- 
 ing the expenditures provided for by the supply services.^ 
 
 As has been pointed out, appropriations are made for the 
 supply services in the form of votes, and designation is made 
 in the estimates of the subheads under which each vote must 
 be accounted for. For each vote an official of the department 
 to which the vote relates is designated by the Treasury as "ac- 
 counting officer" with the duty of controlling and rendering 
 an account of its expenditures. This account is rendered to 
 the Comptroller and Auditor General. Each vote is the sub- 
 ject matter of a separate account. There are thus as many 
 accounts as there are votes. These accounts constitute the so- 
 called "appropriation accounts," which as audited are laid be- 
 fore Parliament by the Comptroller and Auditor General. It 
 will be noted that each vote is treated as a financial entity, and 
 the account must cover the receipt as well as the expenditure 
 side of the vote. This is a matter of importance, since as the 
 result of the system of appropriations in aid many votes are 
 credited with important receipts. As described by the official 
 pamphlet, "Control and Audit of Public Receipts and Expendi- 
 tures," ^ this account is designed to show, under the several 
 subheads, "the amount granted by Parliament for the service, 
 as detailed in the estimate, the expenditure compared with the 
 grant, the appropriations in aid estimated and realised, the sur- 
 ' plus or deficit under each subhead of the vote, with an accom- 
 panying explanation of the causes which led thereto, the total 
 
 ' Students desiring to study more in detail the accounting and 
 auditing methods of the English Government should consult : ( i ) The 
 Exchequer and Audit Departments Act (1866), a copy of which 
 is appended to this report; (2) the pamphlet "Control and Audit 
 of Public Receipts and Expenditures" issued by the English Govern- 
 ment in 1907; and (3) the pamphlet "General Instructions for 
 Guidance in the Examination of Accounts in the Exchequer and 
 Audit Department," Seventh Edition (Oct. i, 1911). These are not 
 public documents in the ordinary sense, but copies can probably be 
 secured by addressing the Comptroller and Auditor General. 
 
 2 P. 14. 
 
 220 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 surpluses to be surrendered to the Exchequer, or the deficit to 
 be voted and the amount of extra receipts received and paid 
 over to the Exchequer." 
 
 The Exchequer and Audit Departments Act provides that 
 these accounts shall be rendered to the Comptroller and 
 Auditor General on or before December 31 in the case of 
 the army vote, and on or before November 30 in the case of Time of 
 the other votes ; that they shall be audited by the Comptroller Accounts 
 and Auditor General and transmitted to the Treasury not later ^f "V^X"'' 
 than January 31 in the case of the army vote, or January 15 
 in the case of the other votes; and that the Treasury shall 
 transmit them to the House of Commons not later than Febru- 
 ary 15 and January 31 respectively. If Parliament is not sit- 
 ting on those dates the audited accounts must be transmitted 
 within one week after it assembles. It follows then that Par- p 
 liament, almost immediately upon assembling and before it 
 has received the estimates for the year to come, has laid be- 
 fore it an audited statement of the manner in which the votes 
 for the year preceding the current one have been expended. 
 
 It is evident that in order to secure this prompt renditiotr of 
 an audited account of expenditures, the work of audit must v 
 not be postponed until the account is rendered. The Exchequer 
 
 and Audit Departments Act thus provides that "in order that Audit 
 
 , .- ,. r -11 1 • Continuous 
 
 such exammation may, as far as possible, proceed pan passu (< 
 
 with the cash transactions of the several accounting depart- 
 ments, the Comptroller and Auditor General shall have free 
 access, at all convenient times, to the books of account and 
 other documents relating- to the accounts of such departments, 
 and may require the several departments concerned to furnish 
 him from time to time, or at regular periods, with accounts of 
 the cash transactions of such departments respectively up to 
 such times or perfods." ^ 
 
 Powers of Comptroller and Auditor General with Respect 
 to Disallowance of Items. To students familiar with the audit- 
 
 ' Sec. 28. 
 
 221 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 No Power 
 of Dis- 
 allowance, 
 Only of 
 Examination 
 and Report 
 
 Does not 
 Interfere 
 with 
 
 Executive 
 Responsi- 
 bility 
 
 ing system of the United States Government it will probably 
 come as a matter of surprise that the powers of the English 
 Comptroller and Auditor General in auditing public accounts 
 are confined strictly to those of examination and report and 
 that he has no power finally to disallow an item of expenditure 
 which in his opinion has been improperly made. Under the 
 American system it is of the essence of the powers of the 
 
 J auditor in settling an account to "suspend" all items which 
 appear to represent an improper payment or one for which a 
 proper voucher or other authority is not produced; and if a 
 satisfactory explanation is not then forthcoming finally to "dis- 
 allow" such items. This means that the officer rendering the 
 account will receive no credit for such pa.yva.ent, and thus he 
 or his bondsmen must make good the amount by securing, if 
 possible, a repayment on the part of the person to whom the 
 money was paid, by making good the amount out of his own 
 funds, or by seeking a relief from the liability through an act 
 of Congress. 
 
 Under the English system the Comptroller and Auditor Gen- 
 eral, as stated, has no such powers to disallow an item. All 
 that he can do is to bring the matter to the attention of the 
 Treasury for determination as to what action shall be taken. 
 It is certainly a remarkable fact that this latter authority ap- 
 parently has full power to waive any irregularity' and to use 
 its free discretion as to whether an item shall or shall not be 
 allowed. It thus exercises a power which under the American 
 
 ' system can only be exercised by Congress itself. That this is 
 the law appears from the following provisions of the Ex- 
 chequer and Audit Departments Act relative to this matter: 
 
 Rule 
 
 Governing 
 
 Settlementi 
 
 "If during the progress of the examination by the 
 Comptroller and Auditor General hereinbefore directed 
 any objection should arise to any item to be introduced 
 into the appropriation account of any grant, such objec- 
 tion shall, notwithstanding such account shall not have 
 been rendered to him, be immediately communicated by 
 
 222 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 him to the department concerned, and if the objections 
 should not be answered to his satisfaction by such depart- 
 ment, they shall be referred by him to the Treasury, and 
 the Treasury shall determine -in what manner the items 
 in question shall be entered in the annual appropriation 
 account." ^ 
 
 "In all cases in which an accountant may be dissatisfied 
 with any disallowance or charge in his accounts made by 
 the Comptroller and Auditor General such accountant 
 shall have a right of appeal to the Treasury, who, after 
 such further investigation as they may consider equitable, 
 whether by viva voce examination or otherwise, may 
 make such order directing the relief of the appellant 
 wholly or in part from the disallowance or charge in ques- 
 tion, as shall appear to them to be just and reasonable, 
 and the Comptroller and Auditor General shall govern 
 himself accordingly." ^ 
 
 The vesting of this power to allow or disallow items in the 
 Treasury is but another illustration of the fact that Parlia- ^, 
 ment in providing for an audit of expenditure by its own offi- No Division 
 cer was yet careful to retain intact the general principle that 
 the Treasury is the organ upon which rests the general re- 
 sponsibility for the manner in which the finances of the na- 
 tion are administered. No one can read the provisions of 
 the Exchequer and Audit Departments Act without being im- 
 pressed with the strength of the feeling that financial responsi- 
 bility should not be weakened by distributing control between 
 two authorities. 
 
 Duty of Comptroller and Auditor General in Respect to the 
 Control of Unwise or Extravagant Expenditures. There has 
 always been a difference of opinion on the part of students of " 
 financial administration as to whether the functions of an 
 auditor or comptroller should be restricted to those of a mere 
 
 * Sec. 31. 
 ' Sec. 43. 
 
 223 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Control 
 over 
 
 Questions 
 of Economy 
 
 examination of accounts with a view to ensuring that the laws 
 and regulations governing the expenditure of funds have been 
 complied with, or whether he should have the larger responsi- 
 bility of seeing that funds voted are applied in the most 
 economical and efficient manner possible. For example, cases 
 ' frequently arise where one service will pay a higher price for 
 an article or service than is paid by another service, or where 
 the accounts will reveal that one service will make use of much 
 more expensive articles than are used by other services for 
 precisely the same purpose. In all these and many other 
 analogous cases where expenditures are made which are not 
 justified by the real needs of the service making them, the ques- 
 tion arises whether it is the duty of the auditor to question 
 and if need be disallow the items representing such expendi- 
 tures, even though the technical accounting requirements are 
 met. 
 
 Generally speaking, it may be said that in the United States, 
 or at least in the Federal Government of the United States, 
 auditors have no such function or powers. The furthest that 
 they may go is, in extreme cases, to call the matter to the at- 
 tention of the spending department and suggest a change of 
 practice in the future. A reading of the report of the Com- 
 mittee on National Expenditure (1902) indicates that in Eng- 
 land a feeling exists that the duties of the Comptroller and 
 Auditor General should go further than this; that upon him 
 rests, in some degree at least, responsibility for checking un- 
 wise or extravagant expenditures. Thus we find the clerk in 
 charge of estimates in the Treasury in his testimony before 
 the committee giving the following replies to questions put 
 to him regarding this matter : ^ 
 
 Auditor 
 General's 
 View of 
 His 
 Powers 
 
 "Is not the examination by the Comptroller and Audi- 
 tor General rather one in respect to form, and audit, and 
 regularity, than in respect of the merit of the expendi- 
 ture? The Comptroller and Auditor General frequently 
 
 ' Report, pp. 2-3. 
 
 224 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 reports to the Public Accounts Committee cases in which 
 he thinks that value has not been received for money. 
 
 "Would the Comptroller and Auditor General go so 
 far as to say that he considered this or that establishment 
 [i. e., staff and force of clerks] excessive ? Not if it had 
 been sanctioned by the Treasury. 
 
 "The point I want to get at is this : Assume as a 
 hypothetical case that there is a Department where ex- 
 travagance is going on, where the establishment is exces- 
 sive, or where too much money is being spent, who would 
 discover that and stop it? If the establishment is exces- 
 sive the Treasury must discover that for itself; but the ^ 
 other kind of extravagance, that of buying goods, for 
 instance, at excessive prices, would, I think, very prob- 
 ably be discovered by the Comptroller and Auditor Gen- 
 eral. 
 
 "Is^that distinctly within his attributions? He cer- 
 tainly calls attention to cases, for instance, where an • 
 article lias been bought by the War Office or Admiralty 
 at one price, and another article of much the same char- 
 acter has been bought at a different price. He calls atten- 
 tion to cases of that kind as indicating that in the one case 
 there may have been extravagance. 
 
 "Is he authorised to do that ; is it a part of the dis- 
 charge of his duties, or is it rather an occasional and 
 exceptional act on his part? I think it is a frequent act ^ 
 on his part; but I am not aware that there is any regula- 
 tion binding him to do it." 
 
 The present Comptroller and Auditor General in a personal 
 
 interview with the commission gave much the same statement His _ 
 
 of his conception of the duties of his office in respect to the Power as 
 
 prevention of wasteful expenditure. It is to be noted that Officer of 
 
 7 ^ Parliament 
 
 whatever obligation he has m this respect is not in consequence 
 
 of any specific duty imposed upon him by law or regulation, 
 
 but rather grows out of his status as the officer to whom Par- 
 
 225 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Auditor's 
 Ultimate 
 Remedy 
 Lies in 
 Report to 
 Parliament 
 
 liament looks to keep it informed regarding the manner in 
 which the funds voted by it are in fact expended. 
 
 To the commission it would seem that this is a duty which 
 should be discharged to a far greater extent than it apparently 
 is under the English system, and that there is no reason why 
 the Auditor as Comptroller under the American system should 
 not do the same. These officers have passed under their 
 scrutiny the vouchers representing expenditures for all the 
 services of the Government. They are in a peculiarly favorable 
 position to detect whether one department is paying higher 
 prices for the same articles or services than others, or is mak- 
 ing an apparently lavish or unwise expenditure in any way. 
 There would seem to be no reason why it should not be their 
 specific duty to call all such cases to the attention of the head 
 of the department in which such expenditure takes place, and 
 if no heed is given to such notice, to mention the facts in their 
 annual reports. In most cases the heads of the departments 
 
 ' are only too glad to secure information regarding the man- 
 ner in which affairs are being conducted, and the proper ac- 
 tion to secure economy will be taken without any publicity. 
 Only in extreme cases will it be necessary to mention the mat- 
 ter in official reports. It would probably be a mistake to ex- 
 tend the duties of auditors, with respect to this matter, beyond 
 this point of calling all cases of apparent waseful expenditure 
 of money first to the attention of the interested service, and 
 then, if need be, to the authority to whom report is made. To 
 
 ^ do more would be to substitute, in part at least, the responsi- 
 bility of the auditor for that of the administration. This 
 'would mean a division of authority and a weakening of re- 
 sponsibility on the part of officials directly responsible for the 
 coriduct of affairs, that would be in the highest degree un- 
 fortunate. 
 
 Standing Committee on Public Accounts of the House of 
 Commons. The commission has taken pains to point out how 
 essential to the establishment of real control on the part of 
 
 226 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 the fund granting authority is the putting into operation of a 
 system by which that authority secures a complete and 
 thorough report on the manner in which the funds granted by A Means 
 it have been expended by an officer independent of the spend- lative 
 ing departments and responsible to it alone. Such a system cj-j.;^^^"* 
 England finally secured through the creation of the office 
 of Comptroller and Auditor General and the general pro- 
 visions regarding public accounting and reporting that are 
 contained in the Exchequer and Audit Departments Act of 
 1866. 
 
 Important as was this action, one further step had to be 
 taken before England could fully meet the requirements of a (| 
 system that would enable the House, in fact as well as in the- 
 ory, to exercise a real control over expenditures. This con- 
 sisted in the provision of means by which the House should 
 avail itself of the information furnished to it by the audited 
 statements of expenditures which it required of its officer, the 
 Comptroller and Auditor General. Without the existence of 
 means of this character through which the House would con- 1 
 sider, and if need be, act upon the information given it, the 
 submission of the audited statements of expenditure would be 
 but an empty form. As Lord Welby pointed out in com- 
 menting upon the praiseworthy act of the Admiralty in inaugu-' An Essential 
 rating the system of audited statements of expenditures, this Responsi- 
 act accomplished little immediate good, since, "there being no ^^^^^ 
 provision in the act which forced the House of Commons to 
 pass judgment on the account, it practically passed year by 
 year without the notice it deserved." 
 
 The importance of ensuring that the accounts of expendi- 
 ture would receive due consideration at the hands of the House 
 of Commons did not escape the attention of the great Com- v 
 mittee on Public Monies of 1856-7. After recommending 
 that there be a complete audit of all public accounts by an 
 officer of, and directly responsible to, the House of Commons, 
 it further recommended "that these audited accounts be an- '^ 
 nually submitted to the revision of a Committee of the House 
 
 227 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 of Commons to be nominated by the Speaker." This sugges- 
 tion was one of the first recommendations of the committee 
 to be acted upon. In i86r Mr. Gladstone, as Chancellor of 
 ^ the Exchequer, secured the adoption of a standing order mak- 
 ing provision for a standing committee of this character under 
 the title of Committee on Public Accounts. 
 
 In this committee, which has had an uninterrupted exist- 
 ence since that date, England possesses one of the most in- 
 teresting features of her whole system of financial adminis- 
 tration. It is the crowning point of the system which she has 
 step by step built up through wjiich a real control over public 
 expenditures is secured. Its organization, character and duties 
 have been excellently described by Mr. Thomas Gibson Bowles, 
 who was for years a member of the committee, in his testi- 
 mony before the Select Committee on National Expenditure 
 (1902), from which we take the following: ^ 
 
 An Instru- 
 ment in the 
 Hands of 
 the 
 Opposition 
 
 "The Committee of Public Accounts is a Standing 
 Committee of 11 members (I think it has been increased 
 now to 15), whereof 5 constitute a quorum. It was 
 established in 1862; that was the date of the first Stand- 
 ing Order. The committee is nominated at the com- 
 mencement of every Session by the House of Commons 
 under Standing Order 57 for the 'examination of ac- 
 counts showing the appropriation of the sums granted by 
 Parliament to meet the public expenditure'; a phrase 
 which, as will, I think, be seen, by no means completely 
 describes the duties it performs, those duties being con- 
 siderably wider than that phrase would suggest. The 
 Chairman of the Committee is by usage always appointed 
 from amongst the members of the Committee belonging 
 to the Opposition. Though not restricted to the ground 
 covered by the Comptroller and Auditor General in his 
 annual Reports on the Appropriation Accounts, the Com- 
 
 ' Report of Select Committee on National Expenditure, 1902, pp. 
 65-66. 
 
 228 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 mittee in its usual practice is guided by those Reports -in 
 its selection of subjects for consideration, and of the 
 officials, whether Accounting Officers or others whom it 
 directs to attend for examination. The Comptroller and 
 Auditor General calls its attention to the points whereon 
 question has arisen during the audit of those accounts 
 conducted by himself and his staff, and the Committee 
 elucidates each point and reports on the whole to the 
 House. Thus the Comptroller and Auditor General is, i 
 to a large extent, the acting hand of the Committee. He 
 detects the points of question, presents them with such 
 information concerning them as he has obtained, and 
 leaves the Committee to pursue them further, to consider 
 them, and report on them. It is therefore essential that 
 the preliminary work of the Comptroller and Auditor 
 General should be well and thoroughly done, or the Com- 
 mittee may fail in its subsequent work, and in its final 
 object of securing and enforcing Parliamentary control 
 over the public accounts. 
 
 "The Comptroller and Auditor General, I may say. The 
 always attends the Committee sittings, as does also a General 
 principal permanent officer of the Treasury. Now the '^^ ^T% 
 functions of the Public Accounts Committee extend be- the 
 yond the formality of the expenditure, to its wisdom, ) °™"' ** 
 faithfulness and economy. Those functions, it must be 
 remembered, embrace as well the receipt side as the issue 
 side of the account. They amount to an enlarged revi- 
 sion of the Comptroller and Auditor General's Report on 
 his Appropriation audit. They supplement the inquiries 
 made by hitn and his officers in the course of that audit, 
 by further inquiries made by oral examination, not alone 
 of the Accounting Officer strictly so called, but of any 
 other officials concerned in the expenditures whom the 
 Committee may call before them. 
 
 "Moreover, and this is most important, the functions 
 of the Committee extend to a supervision over the form 
 
 229 
 
tion 
 
 BRITISH FINANCIAL ADMINISTRATION 
 
 and number of the Estimates for the Grants in Supply, 
 any change in which should be submitted to be approved 
 by the Committee before being made, as was done in 
 1867 and 1881. 
 
 "The Committee has always shown itself, I may say, 
 strongly opposed to any diminution in the number of 
 Votes of which the Estimates are composed as being cal- 
 culated to diminish the control over those Votes of the 
 House of Commons ; it has set its face generally against 
 ^1 making large Votes of lump sums, and has favored the 
 subdivision of Votes rather than their inclusion in one. I 
 have illustrative references here to a number of documents 
 with which I need not at present trouble the Committee. 
 
 A Critic "I ijjay add that the functions of the Committee extend 
 
 of Treasury -^ . . 
 
 Administra- to an examination of the executive action of the Treasury 
 
 as regards its compliance with the law (see Second Re- 
 port, 1900). With so wide an horizon, so considerable 
 a freedom in action, and so great opportunities in its 
 methods of inquiry as the Public Accounts Committee 
 possesses, its capacities for public uses are great. It does 
 actually on the Appropriation Accounts what the House 
 of Commons does theoretically on the Estimates, and 
 does it to far more purpose ; for it deals not with possibly 
 inaccurate Estimates of expenditure, but with the actual 
 ascertained expenditure itself; and has before it for ex- 
 , amination, not alone a Minister often imperfectly in- 
 formed, but the very officers concerned with all the details 
 of the expenditure, whom, in case of question, it puts 
 upon their defence and elicits their first-hand explana- 
 tions. As a check upon, not merely extravagant or un- 
 authorised expenditure, but .also upon unwise methods of 
 management, this Committee is probably more eflfectual 
 than the House of Commons itself." 
 
 We have reproduced this statement of the work and province 
 of the Committee on Public Accounts, notwithstanding the 
 
 230 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 length, since it presents in a peculiarly authoritative and clear 
 form not only the technical duties and powers of the commit- 
 tee, but the spirit in which these duties and powers are ex- 
 ercised.^ Mr. Bowles has not overdrawn the importance of 
 this body in the general system for the control of public ex- 
 penditures. All officials interviewed by the commission united 
 in affirming the important place that it occupied and the great 
 value of the work done by it. Its duties are taken very seri^^^'*** , . 
 ously by the members of the committee and are performed the Services 
 with the utmost conscientiousness. Particular notice should committee 
 be taken of the wide scope of its powers. It is not limited to ) 
 the investigation of points raised by the appropriation ac- 
 counts as reported by the Comptroller and Auditor General; 
 on the contrary, it has the power to scrutinize and report upon 
 almost any matter having to do with the management of the 
 public finances. It considers the form in which the estimates 
 should be submitted ; it passes upon the question of the num- 
 ber of votes under which appropriations should be made and 
 the subheads under which an accounting should be had; it 
 examines into the conduct of the Treasury; it satisfies itself 
 as to whether due economy and efficiency have been displayed 
 by the several services in the expenditure of funds ; finally, it 
 pays special attention to the technical accounting procedure 
 employed by the Government. 
 
 To such an extent does it consider this latter matter that 
 its reports, together with the Treasury minutes setting forth 
 the action of that authority on the recommendations of the 
 committee, constitute in effect the general regulations govern- 
 ing the accounting methods of the Government. This is evi- 
 denced by the fact that in 191 1 the Comptroller and Auditor 
 General caused to be prepared and published an epitome of all 
 the reports of this committee since its establishment, with the 
 Treasury minutes relating thereto, which was fully indexed 
 in order that all accounting officers might readily consult the 
 
 ' See also. Young: The System of National Finance, London, 1915. 
 
 231 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 To Insure 
 
 Impartiality 
 
 Committee 
 
 Reports 
 
 Findings 
 
 to Treasury 
 
 This 
 Practice 
 Fastens 
 Responsi- 
 bility on 
 Executive 
 
 orders that have been issued and were in force governing ac- 
 counting methods.^ 
 
 Another point of no little importance is the fact that this 
 committee both in its personnel and its work is essentially 
 non-partisan in character. With the chairman chosen from 
 "the opposition," there is no danger of the committee pass- 
 ing over delinquencies of the Executive as a matter of party 
 expediency. On only two occasions has the custom of choos- 
 jing the chairman from "the opposition" been departed from. 
 All officials interviewed emphasized in the strongest way pos- 
 sible this high character of the committee and the spirit in 
 which it performs its duties. 
 
 Finally, attention should be directed to the skill displayed 
 in adjusting the powers of this committee to those of the 
 Treasury. We have already seen how careful Parliament was, 
 in defining the duties and powers of the Comptroller and 
 Auditor General, to avoid distributing responsibility for the 
 management of the financial affairs of the nation between 
 that officer and the Treasury, and to preserve the latter body 
 as the one authority possessing final responsibility and power. 
 The same care has, consciously or unconsciously, been dis- 
 played in defining the function of the Committee on Public 
 Accounts. This committee, with all its great powers of investi- 
 gation and report, is in no sense the supreme authority with 
 respect to methods of financial management. Its conclusions, 
 as embodied in its reports, in themselves have no force. All 
 of its recommendations are reported to the Treasury : they are, 
 in effect, recommendations that the Treasury do this or that, 
 or that it require that this or that be done by the services it 
 controls. It remains for the Treasury to decide whether 
 it will or will not act upon such recommendations. Its de- 
 cisions are embodied in what are known as "treasury min- 
 
 ''Epitome of the Reports from the Committees of Public Accounts 
 1857 to 1910 and of the Treasury Minutes thereon, with an Index. 
 The compilation goes back to 1857, since there was a Committee on 
 Accounts prior to the establishment of the Permanent Standing Com- 
 
 mittee in 1862. 
 
 232 
 
THE AUDIT OF PUBLIC ACCOUNTS 
 
 utes," which recite the recommendations of the committee and 
 set forth the action that the Treasury has decided to take upon 
 them. It is by no means unusual for the Treasury to decHne 
 to put the recommendations of the committee into force, or 
 at least to adopt them in a partial or modified form. The 
 Treasury, of course, must feel that it is on very solid ground 
 when it declines to act upon the recommendation of the com- 
 mittee, and it takes pains to point out in its minute the reasons 
 for such refusal. 
 
 This absence of determinative power., together with the fact 
 that the House as a whole devotes but little time to a consid- ! I 
 eration of the reports of the committee, has given rise to a 
 feeling on the part of many that certain changes might, with 
 advantage, be introduced intO' the system as it now exists. Proposal 
 We thus find that Mr. Bowles, though strongly emphasizing Committee 
 the power and influence of the committee, yet believes that, ' ^"" 0'^°, 
 in two respects at least, its system could be improved. In his 
 testimony, to which allusion has been made, he thus said : ^ 
 
 "The Public Accounts Committee, however, is under 
 some serious disadvantages. It has no power, even after 
 the most minute examination and on the clearest evi- 
 dence, to disallow any item. It can only 'call attention' 
 to that item. Moreover (and, this I think is serious), 
 there is no provision, either in the Standing Orders or in 
 the unwritten law of the House of Commons, providing 
 for the certain consideration of the Reports of the Public 
 Accounts Committee in which it has called attention to 
 matters of question. Matters of very high financial im- 
 portance or irregularities and abuses of a most mischiev- 
 ous character thus escape all public attention or Parlia- 
 mentary discussion. I should suggest (and this I suggest 
 most definitely) that, in order that the work of the Com- 
 mittee may have its due effect, some certain occasion -/ 
 should be provided for the consideration by the House of 
 
 * Report of Select Committee on National Expenditure, 1902, p. (^y. 
 
 233 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Commons of its Reports when presented, and for taking 
 a decision of the House upon the recommendations em- 
 braced therein." 
 
 Would Be 
 in Violation 
 of Principle 
 of Control 
 
 Logical as this action would seem to be, it yet should be 
 recognized that any step having for its effect the vesting of 
 discretion in the committee or even in the House as a whole, 
 except possibly when the issue of rules of the most general 
 character are concerned, would represent a serious inroad upon 
 the fundamental principle now enforced that responsibility 
 for action rests in the Treasury, The commission doubts 
 whether Parliament could consistently, or would seriously, 
 consider any action that would do violence to this basic prin- 
 ciple which constitutes, as it were, the very cornerstone of the 
 whole system for the administration of the English national 
 finances. 
 
CHAPTER XII 
 THE SYSTEM OF FINANCIAL REPORTS 
 
 Finance Accounts; Appropriation Accounts; The Estimates; Lack of 
 Any General Report of Audited Receipts and Expenditures. 
 
 The theory of legislative determination and control of pub- 
 lic revenues and expenditures, if it is to be effectively carried 
 out, demands that the legislature, and through it the people, 
 shall be put in possession of full and detailed information re- 
 garding the financial condition and operations of the Govern- 
 ment. Only as it is given this information, and given it in 
 such a form that its significance can be readily seen, can it 
 properly perform its function of determining the financial and ' 
 work program of the Government. In our consideration of 
 the control of exchequer issues, the preparation and submis- 
 sion of estimates, and the audit of accounts, we have inci- 
 dentally made reference to certain reports and information 
 that are laid before Parliament. It is now our purpose to de- 
 scribe more in detail the character of these and other docu- 
 ments with a view to presenting in one place a statement of the 
 character of the information that is furnished Parliament, and \ 
 upon which the latter bases its action. 
 
 In considering this phase of the English financial system, Two Sets 
 the first point to be noted is that Parliament is furnished with "„ ' 
 
 two sets of figures purporting to show national income and Parliament 
 outgo : ( I ) Those showing exchequer receipts and is'sues ; and ' 
 (2) those showing audited receipts and expenditure. We will 
 consider in turn the reports giving each of these two classes 
 of data. 
 
 Finance Accounts. The oldest and most used report giving 
 information regarding national finances is the annual report 
 
 235 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 entitled "Finance Accounts of the United Kingdom of Great 
 
 Britain and Ireland for the Financial Year ended March 
 
 31st ," but which in ordinary use is referred to by the 
 
 short title of "Finance Accounts." The publication of this 
 report dates from 1802. Nothing illustrates more clearly the 
 ^ old idea that the function of Parliament in respect to the ex- 
 penditures of the Government ceased when it had granted a 
 certain sum of money to the Crown for the conduct of Gov- 
 ernment than the fact that it was not until this date, that is, 
 the beginning of the nineteenth century, that the Crown was 
 ■' even so much as required to submit an account or report of the 
 moneys received and expended by it. As Lord Welby points 
 out in the Memorandum from which we have so frequently 
 quoted : ^ 
 
 "Until 1802, therefore. Parliament had no information 
 of any kind as to the expenditure of the money which it 
 \ had voted, unless a return for a special object was asked 
 and granted. It is true that under the financial pressure 
 of the wars of William and Anne, Commissioners were 
 from time to time appointed to examine the accounts, but 
 
 Description " these Commissons were too often of a party character; 
 
 We^bv'' their reports were not, therefore, trustworthy, and wer» 
 
 used for party purposes. During the long peace no de- 
 mand arose for such inquiries, and though more thorough 
 examination into accounts was instituted by Commissions 
 appointed after the American and during the French 
 War, and though these Commissions brought to light 
 irregularities and pointed out defects in financial organ- 
 isatioji, they had no continuity, and had none of the ele- 
 ments of an audit. ... It will be seen, then, that from 
 J the Revolution (1688) until 1802 the House of Commons 
 received no information as to the public expenditure ex- 
 cept that which the Chancellor of the Exchequer might 
 think fit to give them in his Budget speech, and that was 
 
 ' Report of Select Committee on National Expenditure, 1902, p. 228. 
 
 236 
 
 Welby 
 
THE SYSTEM' O'F FINANCIAL REPORTS 
 
 usually of very meagre character. It may be added that 
 from 1802 until 1866 (the date of the Exchequer and 
 Audit Act) the House learned only the issues from the 
 Exchequer. Thus it knew the sums which, had been im- 
 prested (advanced) to the Departments from the Ex- 
 chequer; it did not know l\ow the Departments had ac- 
 tually expended those imprests." 
 
 This report, "Finance Accoimts," has n5t changed its essen- 
 tial character since its first issue. It is a summary statement of 
 Government income and expenditure from the standpoint of 
 Exchequer receipts and issues, and of the resources and liabili- 
 ties of the Government at the end of the year to which it re- 
 lates. It consists of two basic tables, in the form of balanced Two 
 statements, giving a grand recapitulation of the facts regard- Tables 
 ing these two points, and a series of supporting tables giving 
 the details entering into the totals shown in these tables. All 
 this information is presented in an exceptionally clear and com- 
 pact form. The whole report for the year ended March 31, 
 1 91 4, made but a small octavo pamphlet of loi pages. 
 
 One of the great merits of this report is the promptness j 
 with which it is rendered. Thus the report for 1914 was 
 submitted and ordered printed May 25 following, or less than 
 two months after the close of the year to which it related. In 
 point of fact the first and most important of the two basic 
 tables is laid before Parliament in the form of a special return 
 at a still earlier date, that for 1914 being submitted on April 27, 
 less than a month after the closing of the books for the year. 
 
 This return, constituting as it does the general summing up 
 of the financial operations of the Treasury during the year, 
 is much the most important financial return that is laid be- ' 
 fore Parliament. It is upon the figures contained in it and 
 in the Estimates that the Chancellor of the Exchequer bases 
 his budget proposals. As it consists of but a single table in 
 two parts and occupies but two quarto pages, the return for 
 19 14 is here reproduced in full : 
 
 237 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Year Ended 31ST 
 
 Part I. — An Account of the Public Income and Expenditure of thb 
 3 1 ST March, 1914, Prepared in Compliance with Section 
 
 Income 
 
 £ s. d. 
 
 Customs 35,450,000 
 
 Excise 39,590,000 
 
 Estate, &c.. Duties 27,359,000 
 
 Stamps (excluding Fee, &c.. Stamps) 9,966,000 
 
 Land Tax 700,000 
 
 House Duty 2,000,000 
 
 2,700,000 
 
 Property and Income Tax (including Super Tax) 41,249,000 
 
 Land Value Duties 715,000 
 
 Post Office 30,800,000 
 
 Crown Lands (net) 530,000 
 
 Receipts from Suez Canal Shares and Sundry Loans i ,579,972 9 7 
 
 Miscellaneous 2,303,924 14 5 
 
 Total Income £198,242,897 4 — 
 
THE SYSTEM OF FINANCIAL REPORTS 
 
 March, 1914 
 
 United Kingdom of Great Britain and Ireland in the Year Ended the 
 4 OF THE Sinking Fund Act, 1875 (38 & 39 Vict., c. 45). 
 
 Expenditure 
 
 I. Consolidated Fund Services 
 National Debt Services: 
 Permanent or Fixed Annual Charge: 
 
 Funded Debt: 
 • £ s. d. £ s. d. 
 
 Interest 14,787,108 16 2 
 
 Terminable Annuities 3,202^,02612 5 
 
 Unfunded Debt — Interest 1,115,84918 7 
 
 Management of Debt 166^529 19 9 
 
 New Sinking Fund 5,228,48413 I 
 
 ^4,500,000 
 
 Road Improvement Fund ; I>394i95i — 
 
 Pajrments to Local Taxation Accounts, &c 9.734ii27 10 6 
 
 Other Consolidated Ftuid Services: 
 
 Civil List 470,000 
 
 Annuities and Pensions 3i6,575 I3 6 
 
 Salaries and Allowances 56,547 21 
 
 Courts of Justice. ._ 533>042 7 3 
 
 Miscellaneous Services 317,725 4 — 
 
 1.693.890 6 10 
 
 II. Supply Services 
 
 Army and Ordnance Factories 28,346,000 
 
 Navy 48,833,000 
 
 Civil Services 53,901,000 
 
 Customs and Excise and Inland Revenue 
 
 Departments 4,483,000 
 
 Post Office Services 24,607,000 
 
 160,170,000 
 
 Total Expenditure 197,492,968 17 4 
 
 Surplus of Income over Expenditure in the Year Ended 31st 
 March, 1914 749.928 6 8 
 
 £198,242,897 4 — 
 
Part II.— An Account of the Balances of Public Money Remaining 
 
 MENTS (not being INCOME AND EXPENDITURE AS SHOWN IN 
 
 THE Balances in the 
 
 Receipts £ s. d, £ s. d. 
 
 Balances in the Exchequer on the 1st 
 April, 1913: 
 
 At the Bank of England 5,389ii3S 8 4 
 
 At the Bank of Ireland 940.024 '3 2 
 
 6,329,160 I 6 
 
 Repayment of Advances: 
 
 For purchase of Bullion for Coinage. . . 1,235,000 
 
 Interest on Exchequer Bonds issued un- 
 der the Capital Expenditure (Money) 
 Act, 1904, repaid from Army and 
 Navy Votes 121,827 
 
 1,356.827 
 
 Raised by creation of Debt: 
 
 By Treasury BiUs for Supply 27,500,000 
 
 Under the Telegraph (Money) Act, 1913: 
 By Terminable Annuities charge- 
 able on Post Office Vote 90,000 — . — 
 
 Under the Telephone Transfer Act, 1911 : 
 By Terminable Annuities charge- 
 able on Post Office Vote 3.939.249 
 
 Under the Post Office (London) Rail- 
 way Act, 1913: 
 , , By Terminable Annuities charger 
 
 ' able on Post Office Vote 7.000 
 
 Under the Land Registry (New Buildr; 
 ings) Act, 1900: 
 
 By Terminable Annuities charge- 
 able on the Vote for Public 
 
 Buildings, Great Britain 10,000 
 
 31,546,249 
 
 Temporary Advances on the credit of 
 Ways and Means: 
 
 By Treasury Bills 6,500,000 
 
 By Other Advances. 3,500,000 
 
 10,000,000 
 
 Cunard Loan: 
 
 Repayment on account of Principal 130,000 
 
 Suez Canal Drawn Shares 8,427 18 9 
 
 China Indemnity. 571,606 13 7 
 
 East Africa Protectorate Loan: 
 
 Repayment on account of Principal and Interest. . . 2,115 
 
 Surplus of Income over Expenditiire in the Year ended 
 
 31st March, 1914 749,928 
 
 ^_ ^ J50.694.314 — 6 
 
 * The balance at the Bank of England includes a sum of £454.000 representing the un- 
 Section of the Finance Act, 1008, and £1,679,000 representing the unissued part of the Old 
 Finance Act, 1911. 
 
 Note. — Exchequer Bonds for £380,000 were issued in the year to the National Telephone 
 Transfer Act, 1911. The transaction does not appear in the above statement, as it did not 
 
 Treasury, 13th April 1914. 
 
 I hereby certify, pursuant to the provisions of the Act 33 & 39 Vict. c. 45, s. 4, 
 
 Exchequer and Audit Department, 
 20th April, 1914. 
 
 240 
 
IN THE Exchequer on the ist April, 1913: of the Receipts] and Pay- 
 Part I.) IN THE Year Ended 31ST March, 1914; and of 
 Exchequer on that Day. 
 
 Payments £ s. d. £ s. d. 
 
 Issues to meet Capital Expenditure: 
 
 Under theTelegraph(Money) Act, 1913 90,000 
 
 Under the Telephone Transfer Act, 191 1 3,939,249 
 
 UnderthePost Office (London)Act,i9i3 7,000 — — 
 Under the Land Registry (New Build- 
 ings) Act, 1900. 10,000 — 
 
 Advances: 
 
 For purchase of Bullion for Coinage... 1,025,000 
 
 Interest on Exchequer Bonds issued un- 
 der the Capital Expenditure (Money) 
 Act, 1904, repayable from Army and 
 Navy Votes 121,827 
 
 4,046,249 — 
 
 1,146,827 
 
 Redemption of Unfunded Debt: 
 
 Treasury Bills for Supply 24,000,000 
 
 Temporary Advances on the credit of, . 
 
 Ways and Means repaid: 
 
 Treasury Bills 6,500,000 
 
 Other Advances 3,500,000 
 
 10,000,000 
 
 Old Sinking Fund, 1907-8, issued under 
 
 Section9of the Finance Act, 1908 ' 86,000 
 
 Old SinHng Fund, 1910-11: 
 Issued under the Finance Act, 1911 : 
 
 Section 16 (i) (b) 88,500 
 
 Old SinJdng Fund, 1912-13, issued to reduce Debt 180,068 16 2 
 
 Cunard Loan Repayments: 
 Issued to the National Debt Commissioners under the 
 
 Cunard Agreement (Money) Act, 1904 130,000 
 
 Suez Canal Drawn Shares: 
 
 Issued to reduce Debt under the Finance Act, 1898 . . 8,427 18 9 
 
 China Indemnity: 
 
 Issued to reduce Debt under the Finance Act, 1906 , 571,60613 7 
 
 East Africa Protectorate Loan Repayments: 
 
 Issued to reduce Debt under the Finance Act, 1911 2,115 
 
 Balances in the Exchequer on the 31st 
 March, 1914: 
 
 At the Bank of England* 9,349.052 2 11 
 
 At the Bank of Ireland. 1,085,467 9 I 
 
 10,434,519 12 
 
 £50,694,314 
 
 issued part of the Old Sinkjng Fund, 1907-8, which was made appUcable to Expenditure under 
 Sinking Fund', 1910-11, which was made applicable to Expenditure, under Section 16 of the 
 
 Company in j)art jpayment of the purchase money of theii undertaking under the Telephone 
 involve any Exchequer receipt or issue of cash. 
 
 , JOHK Bradbury. 
 
 that the foregoing Accounts are correct. ^tt-o^m^t 
 
 H. J. GIBSON, 
 
 Comptroller General of the Receipt and Issue of His 
 Majesty's Exchequer and Auditor General of Public 
 Accounts. 
 
 241 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Much the most interesting feature of this showing is the 
 distinction that is made between "public income and expendi- 
 ture" proper, on the one hand, and "receipts and payments, 
 not being income and expenditure," on the other, and the fur- 
 ther distinction in respect to the first set of figures between 
 expenditures constituting a permanent charge upon the Con- 
 solidated Fund and those that are met by annual appropria- 
 tions for the supply services. This table, as has been stated, 
 is in effect an advance statement of one of the two basic tables 
 contained in the Finance Accounts, and consequently is sup- 
 ported by the detail tables contained in that report which ap- 
 pears about a month later. 
 
 The second basic table of the "Finance Accounts" report, 
 that showing the resources and liabilities of the Government at 
 the end of the year, is apparently not laid before Parliament 
 as a Special return. For it reference must accordingly be made 
 to the "Finance Accounts" report itself. This table is repro- 
 duced in full on page 244. 
 
 It will be noted that in this table no efifort is made to include 
 other than purely commercial assets. In other words, only 
 those items are listed which represent assets which, theo- 
 retically at least, the Government can convert into cash. No 
 attempt is made to include the value of the physical properties 
 of the Government, such as Crown lands, public buildings, 
 Cash navy and other vessels, materials and supplies on hand, etc. 
 
 Assets 'pjjg report includes other tables giving: "Contingent and 
 
 Listed nominal liabilities," which a note states are ones which the 
 
 state is not likely to be called upon to meet ; "loans guaranteed 
 by the British Government," and "unrepaid advances made to 
 Colonial Governments, etc., from votes of Parliament, 
 etc." 
 
 Incidentally the table reproduced brings out certain informa- 
 tion regarding the method pursued by England in financing 
 Government works requiring a large capital expenditure. This 
 is a feature of the English financial system that it would be 
 of great interest to examine in greater detail. To do so would, 
 
 242 
 
THE SYSTEM OF FINANCIAL REPORTS 
 
 however, involve an examination of so many special statutes 
 and so large an amount of descriptive matter that it is not 
 feasible to pursue the subject further in the present re- 
 port. 
 
 Mention has been made of the fact that the "Finance Ac- 
 counts," in addition to presenting the general summary of Debt 
 assets and liabilities which we have reproduced, also gives a 
 series of tables showing operations during the year in relation 
 to the public debt. For purposes of completeness, mention 
 should here be made of a special return which is annually sub- 
 mitted to Parliament, in which are given the figures regarding 
 public debt operations duringf a series of years. The figures 
 are taken largely, if not wholly, from the "Finance Accounts" 
 reports. This return, the title of which for the 1914 return 
 is "National Debt : -Return Showing for Each Financial Year 
 commencing the ist April from 1875 to 191 4, inclusive," 
 shows : 
 
 I. The total amount of dead weight debt outstanding 
 on the 1st April; the amounts which were made available 
 in each year to 191 3- 14, inclusive, for reduction of Debt; 
 distinguishing the sum expressly provided for service of 
 the Debt, the old Sinking Fund, and Miscellaneous Re- 
 ceipts ; the Gross Amount of Debt redeemed ; the amount 
 of Debt Created; and the Net Increase or Decrease of 
 Debt in the Year. 
 
 II. A similar Statement in respect of other Capital Lia- 
 bilities. 
 
 III. A similar Statement in respect of the aggregate 
 Gross Liabilities of the State gives very full information 
 regarding all transactions and changes which have taken 
 place during the years covered with respect to the fiinded 
 and other liabilities of the Government. 
 
 These two special returns, that giving Exchequer receipts 
 and issues and that giving information regarding national debt 
 
 243 
 
 Statement 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 National Debt 
 
 Statement Showing the Aggregate Gross Capital Liabilities of 
 the State, the Estimated Assets, and also the Exchequer 
 Balances on 31st March 1913, and 31st March 1914. 
 
 On March 
 31, 1913 
 
 On March 
 31. 1914 
 
 Increases (+) 
 IT Decreases ( — ) 
 in the year ended 
 March 31, 19x4 
 
 Funded Debt 
 
 Terminable Annuities: Estimated Capital 
 
 Liability in respect of 
 
 Unfunded Debt 
 
 Totsl 
 
 Other Capital Liabilities: 
 
 Under Telegraph Acts, 1892 to 1913 
 
 Under Telephone Transfer Act, 191 1. . . . 
 Under Uganda Railway Acts, 1896 to 1902 
 Under Public Offices (Acquisition of Sites) 
 
 Act, X89S. Session 2 
 
 Under Pi^lic Offices (Whitehall) Site Act, 
 
 1807 
 
 Under Royal Niger Company Act, 1899. . 
 Under Naval Works Acts, 189s to 1905 . . 
 Under Military Works Acts, 1897 to 1903. 
 Under Land Registry (New Buildmgs) Act, 
 
 1900 
 
 Under Pacific Cable Act, 19011 
 
 Under Public Offices Site (Dublin) Act, 
 
 1903 
 
 Under Public Buildings Expenses Act ,1903 
 Under the Cunard Agreement (Money) 
 
 Act, 1904. 
 
 Under Post Office (London) Railway Act, 
 
 1913 
 
 Total 
 
 Total Oross Liabilities 
 
 Estimated Assets: 
 
 Estimated Market Value of Suez Canal 
 Shares 
 
 Amount of Advance from the Exchequer un- 
 repaid: Bullion, etc. , 
 
 Loan to the Government of the East Africa 
 Protectorate 
 
 Contribution of Colonies to Capital Exp'endi- 
 ture on the Pacific Cable 
 
 Nominal Value of Debenture Stock of the 
 Cunard Steamship Company held as 
 security for repayment of Advances un- 
 der the Cunard Agreement (Money) 
 Act, 1904 
 
 Total Estimated Assets 
 
 Exchequer Balances at the Banks of England 
 and Ireland 
 
 £ 
 593,453.857 
 
 31,519,908 
 31,500,000 
 
 656.473,765 
 
 8.423.549 
 9.328,563 
 3,417.099 
 
 380,091 
 
 423.592 
 
 558.647 
 
 17.045,010 
 
 9.700.177 
 
 200,415 
 1,792.433 
 
 201,828 
 I.393.2S2 
 
 1,950,000 
 
 54.814.656 
 
 £711.288,421 
 
 39,015,000 
 
 400,000 
 
 46,530 
 
 1,311,203 
 
 1,950,000 
 
 £ 42,722,733 
 
 £ 6,329,160 
 
 £ 
 
 586,717.872 
 29.552.219 
 
 33.500,000 
 
 649,770,091 
 
 11,452,240 
 9,478,052 
 3,196,832 
 
 373.777 
 
 4IS.9P4 
 
 530,932 
 
 16,354,807 
 
 9,231,962 
 
 ifOS.709 
 1.768,661 
 
 195.284 
 1.352,859 
 
 1,820,000 
 
 7,000 
 
 56,384,019 
 
 706,154,110 
 
 34,929.000 
 
 190,000 
 
 46,044 
 
 I.294.S34 
 
 1,820,000 
 
 38,279,578 
 
 £ 
 —6.735.985 
 — 1,967,689 
 
 +2,000,000 
 
 >,703.674 
 
 +3,028,691 
 
 + 149.489 
 
 — 230,267 
 
 — 6,314 
 
 — 7.688 
 
 — 27,71s 
 
 — 690,203 
 
 — 468,215 
 
 + 5.294 
 
 — 23.772 
 
 — 6,544 
 
 — 40.393 
 
 ^ 130,000 
 
 + 7.000 
 
 +1.569.363 
 
 +S.134.311 
 
 — ^4,086,000 
 
 — 210,000 
 
 — 486 
 
 — 16,669 
 
 — 130,000 
 
 4.443.IS5 
 
 10.434.519 
 
 +4.105.359 
 
 244 
 
THE SYSTEM O'F FINANCIAL REPORTS 
 
 operations, have been considered in connection with the gen- statements 
 eral report entitled "Finance Accounts," since they are in ef- ^a^"ndon 
 feet little more than advance sheets of that report, though the Gazette 
 data are presented in a form somewhat different from that 
 which they have in the report itself. In this connection men- 
 tion should also be made of the fact that current information 
 regarding Exchequer receipts and issues is published weekly 
 in the official organ, the London Gazette, from which it is 
 reproduced in other papers. The statement published in this 
 way is of a more summary character than the corresponding 
 table in the "Finance Accounts" and the special return. The 
 figures are given in a form to show total receipts and issues 
 by main categories from the beginning of the fiscal year to 
 the date of the statement, in comparison with the figures for 
 the corresponding period of the previous year. 
 
 If, therefore, we consider all these statements and reports 
 together, the conclusion must be reached that they get before [ j 
 Parliament and the public the most essential facts regarding 
 treasury conditions and operations in an exceeding clear and 
 compact form arid with gyeat promptness. In making this A Summary 
 statement, however, two facts of great importance should be Essential 
 borne in mind. The first is that the figures here given are of' Facts 
 Exchequer receipts and issues and not of audited income and 
 expenditure ; and, furthermore, that even from this standpoint 
 they do not include all public receipts and payments, since those 
 extra receipts which are granted to the services producing 
 them, in the way of appropriations in aid, do not pass through 
 the Exchequer, and thus do not appear upon either side of 
 the Exchequer account. The second is that, for the reasons 
 pointed out in the Treasury Minute of April i6, 1885, which 
 has been quoted,^ the figures do not fairly represent public ex- v 
 penditures according to votes or classes of votes except at the 
 dates when the quarterly and annual adjustment of issues has 
 been had. 
 
 It follows from the foregoing that the figures contained in 
 
 ^See p. 152. 
 
 245 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 the "Finance Accounts," and the returns and statements pre- 
 pared on the same basis as that publication, cannot be taken 
 as furnishing either a complete or an accurate statement of 
 public income and expenditure. Even were they complete, they 
 I are not of a character to give information regarding the de- 
 tails of expenditure. The furthest point to which the itemiza- 
 tion of expenditure is carried is that of the 153 votes and the 
 items constituting a permanent charge upon the Consolidated 
 Fund. This statement is not made in the way of criticism. 
 \ Parliament and- the public have need of two kinds of informa- 
 tion regarding the national finances; that showing in a large 
 way the resources and liabilities of the Government as a basis 
 upon which to frame financial policies and a general work 
 program, and that giving the details of revenue and expendi- 
 ture in order that rigid control may be exercised over the man- 
 ner in which the financial affairs of the Government are being 
 administered. If we make exception of the various defects 
 arising out of the system of appropriations in aid, it may be 
 said that the statements that we have been considering meet 
 ' the requirements for information of the first class. For the 
 purposes which they are to serve it is not necessary that they 
 should be absolutely accurate, nor that they should itemize 
 the figures to any great extent. 
 
 In one respect, however, the "Finance "Accounts" as a pub- 
 A Defect lic document is, in the opinion of the commission, open to 
 Form' of serious criticism. Reference is made to the failure to include 
 Statement jn the report tables giving the facts regarding treasury condi- 
 . tions and operations for a series of years, such, for example, 
 as is given in the special return for the national debt. It is 
 only as figures for a given year are compared with the corre- 
 sponding figures for a series of years preceding that their full 
 significance can be seen. The latter figures can, of course, be 
 secured by consulting the "Finance Accounts" for those years, 
 but members of Parliament and the general public should not 
 be put to the necessity of making such a search. 
 
 Appropriation Accounts. If we turn now from the ques- 
 
 246 
 
THE SYSTEM -OF FINANCIAL REPORTS 
 
 tion of Exchequer receipts and issues to that of actual receipts ; 
 and expenditures, information must be sought in the reports 
 of the Comptroller and Auditor General. Of these, far the, 
 most important is the annual report made by him entitled "Ap- v 
 propriations Accounts," in which is given his audited statement 
 of the manner in which the votes for the supply services have 
 been expended, this expenditure being accounted for accord- 
 ing to the subheads set forth in the estimates. 
 
 In form this report consists of a collection of statements 
 of account by the accounting officers charged with the render- i 
 ing of the accounts for the several votes, with the certificate 
 of the Comptroller and Auditor General attached and accom- '^ 
 panied by such explanations and comments as the latter deems Analyses 
 it fit to make. Each vote is the subject of a separate account, o '^ 
 and thus there are as many statements as there are votes. These ^ 
 several statements are bound in volumes, one for the civil serv-. 
 ices and the revenue departments, one for the army, and one 
 for the navy. 
 
 The only attempt to bring together the figures contained in 
 the several accounts is represented by tables in which the 
 facts are summarized by classes of votes and by individual 
 votes. Following is a copy of the table contained in the "Ap- 
 propriation Accounts" for 1912-1913 for the civil services 
 and revenue departments, in which the figures are given by Summary 
 classes of votes. Other tables give the same facts according 
 to individual votes. Tables are quoted on pages 248 fif. 
 
 The only further attempt to analyze the figures showing 
 expenditures so as to bring out significant features is repre- 
 sented by a very interesting table given at the back of the re- 
 port, in which the effort is made to adjust payments made by 
 one service on account of another in such a way as to show 
 the gross and net cost of each service. It will be remembered Supple- 
 
 ° ... mentary 
 
 that the expenses of the several services are not entirely cov- '>|Summary 
 ered by their respective votes. The best example of this is 
 furnished by the practice of having all expenditures for quar- 
 ters, stationery, etc., borne by the votes for Public Works and 
 
 247 
 
BRITISH FINANCIAL ADMINISTRATION 
 
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 248 
 
THE SYSTEM OF FINANCIAL REPORTS 
 
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 249 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Gross and Net Total Cost of Civil Services and Revenue Departments 
 
 IMATELY, the GrOSS AND NeT CoST OF EACH VOTE. It IS COMPILED 
 
 THE Respective Departments (Office of Works, Sta 
 curred, or Services Rendered, on 
 
 No. 
 
 of 
 
 Votes 
 
 Service 
 
 Expenses Charged on Other Funds or 
 
 Finance 
 Accounts 
 
 Consoli- 
 dated 
 Fund 
 
 Class I 
 Vote 4-10 
 15 Build- 
 ings :Main- 
 tenance, 
 Furni- 
 ture, etc. 
 
 Class I 
 Vote II 
 Surveys 
 
 Class I 
 Vote 14 
 Rates 
 
 Class II 
 Vote IS 
 Cost of 
 Audit 
 
 Royal Palaces and Marlbor- 
 ough House 
 
 Osborne 
 
 Royal Parks and Pleasure 
 Gardens 
 
 96 
 
 £. 
 IS4 
 194 
 
 I.S9I 
 
 S6 
 15 
 
 250 
 
THE SYSTEM OF FINANCIAL REPORTS 
 
 FOR THE Year Ended 31st March, 1913. This Statement Shows, Approx- 
 FROM the Finance Accounts and from Returns Furnished by 
 tionery Office, Etc.) by Whom Expenditure is in- 
 Behalf OF Other Departments. 
 
 Votes 
 
 Class II 
 Vote a4 
 Printing 
 
 and 
 Station- 
 ery 
 
 Class III 
 Votes I, 
 II, 15 
 Law ex- 
 penses 
 
 Class VI 
 Vote I 
 Superan- 
 nuation 
 
 Revenue 
 Votes 
 
 Postage, 
 Telegraph 
 
 and Tele- 
 phone 
 
 Miscel- 
 laneous 
 Services 
 
 Add 
 
 Expeddi- 
 
 tuj^ 
 
 shown in 
 Appro- 
 priation 
 Account 
 
 Gross 
 Total 
 Cost 
 
 Deduct 
 Realised 
 
 Appro- 
 priation 
 
 in 
 Aid and 
 
 Other 
 Receipts 
 
 Net 
 Total 
 Cost 
 
 £. 
 
 678 
 
 £. 
 
 £. 
 64 
 
 £. 
 3 
 
 £. 
 66,234 
 13,810 
 
 136,930 
 
 £. 
 66,597 
 13,139 
 
 142,308 
 
 £. 
 
 1.425 
 1,816 
 
 1 1 ,854 
 
 £. 
 65,172 
 11,333 
 
 130,454 
 
 251 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 the Stationery Office. If the true cost of maintaining each 
 service is to be known, it is thus necessary to add to the ex- 
 penditures of each service as borne by the vote the expendi- 
 tures met out of votes for these and other services and to de- 
 duct the expenditures made from its vote for services other 
 , than its own. This has been done in the table, to which atten- 
 tion has been directed. The preceding representation of the 
 column headings and the figures for the first few votes will 
 show the character of the table on pages 250-51. 
 
 In this table it will be seen that the facts are given only by 
 
 votes. As many votes cover a whole group of services, that 
 
 for the Home Office, for example, covering the Home Office 
 
 jjo proper, the inspection of factories, the inspection of mines. 
 
 Comparison g^(.^ inadequate information is given regarding the cost of 
 
 particular services. 
 
 Finally, it should be noted that no recapitulation or analyses 
 ■ are given showing audited expenditure for a series of years, 
 nor are the several summary tables in the separate volume con- 
 taining the appropriation accounts brought together in a con- 
 solidated statement for all the supply services. 
 
 The Estimates. Although a full account has been given of 
 the character of data contained in the books of estimates, men- 
 tion of these documents should be made here since they con- 
 '( stitute one of the means through which information regarding 
 the finances of the Government is laid before Parliament. Ref- 
 Comparative erence to the chapter in which the form and character of the 
 ummary Estimates are considered will show that, in addition to giving 
 the estimates proper in comparison with grants for the current 
 year, each volume contains a table in which the estimates are 
 \ compared with grants for the current year, expenditures as 
 per appropriation accounts for the year next preceding, and 
 audited expenditures for each of the eight years preceding 
 that. This comparison is by votes and classes of votes. The 
 same criticism that has been made of the showings in the 
 "Appropriations Accounts," that the comparison goes no 
 
 252 
 
THE SYSTEM OF FINANCIAL REPORTS 
 
 deeper than the individual votes and thus does not even reach ' 
 the several distinct services of the Government, applies 
 to this table, and also that no attempt is made to bring 
 the figures contained in the several books of estimates 
 into one consolidated statement covering all the supply serv- 
 ices. 
 
 Lack of Any General Report of Audited Receipts and Ex- 
 penditures. If we attempt now to consider at one time all 
 the various documents in the nature of financial reports which 
 are laid before Parliament, we cannot but be struck with the 
 fact that there exists no document in which the data contained^ No Con- 
 in the several reports that we have been considering have been statement 
 brought together in a consolidated statement. Surprising as it 
 may be, the fact is that the English Government makes no \\ 
 general report of the real expenditures of the Government. In 
 the appropriation accounts and in the other reports of the 
 Comptroller and Auditor General one can follow in great de- 
 tail the expenditures for particular purposes, but nowhere can 
 one find a complete statement of the audited 'expenditures of 
 the Government as a whole. Furthermore, due primarily to 
 the present system of appropriations in aid, it is doubtful ' 
 whether such a statement can be prepared. The fact is that 
 there seems to belittle demand. in England for detailed data Difficulty 
 that will go beyond the vote, and for expenditures by votes E."^ *? -^P" 
 the figures showing exchequer issues are deemed to be suf- Jn Aid 
 ficiently accurate for all practicable purposes. The. question of ' 
 having . expenditures analyzed by functions, objects of ex- 
 penditure, character of expenditure, etc., such as was urged in 
 the report of President Taft's Commission on Economy and 
 Efificiency on "The Need for a National Budget," never seems 
 to have been raised. 
 
 To the commission the absence of a general consolidated 
 statement of audited expenditures of the Government as a 
 whole, in which the items are classified not only by votes but 
 also by individual services, and in which are brought together 
 
 253 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Changes 
 Necessary 
 to Consol- 
 idation 
 
 expenditures for the same services or purposes, if met partly 
 from the Consolidated Fund services and partly from the 
 supply services — this absence constitutes a serious defect in the 
 British financial system. It is one, moreover, which could 
 easily be remedied did Parliament so desire. All that would be 
 
 ^ required would be : ( i ) The abolition of the system of appro- 
 priations in aid; (2) the removal of the inconsistencies now 
 existing in the distribution of charges between the Consoli- 
 dated Fund services and the supply services; and (3) the re- 
 quirement that the Comptroller and Auditor General, in addi- 
 tion to submitting his technical reports on appropriation and 
 other accounts, shall prepare and lay before Parliament a gen- 
 eral report on the audited receipts and expenditures of the 
 Government as a whole. Such a report would present expendi- 
 . tures primarily by organization units, but it might be feasible 
 further to analyze the figures from the functional and other 
 points of view. This report, in a word, would do for the 
 real income and expenditure of the Government what the 
 
 ^ "Finance Accounts" report does for Exchequer receipts and 
 issues. Thus in the supporting tables of the two basic tables 
 in "Finance Accounts" we find the analyses of: Income ac- 
 cording to sources from which derived ; expenditures for Con- 
 solidated Fund services, in sufficient detail to show individual 
 salaries and pensions constituting a charge upon the fund; 
 expenditures for supply services itemized by vote ; the composi- 
 tion of the public debt; other liabilities of the Government; 
 and realizable assets of the Government. Such information 
 and analyses for the material in the general report of audited 
 receipts and expenditures would be of great practical value. 
 
CHAPTER XIII 
 THE BUDGET 
 
 Financial Statement 1914-1915, Showing Revenues and Expenditures 
 as Laid before the House of Commons by the Chancellor of the 
 Exchequer when Opening His Budget, May 4, 1914; Financial 
 Statement 1914-1915, Explaining the Proposals Made by the Chan- 
 cellor of the Exchequer in His Pitttrfeial Statement on Monday, 
 May 4, 1914; Budget Speech of the Chancellor of the Exchequer; 
 Lack of Any General, Comprehensive Budgetary Statement. 
 
 It may be thought remarkable that in a description of the 
 financial administration of a country which, above all others, 
 is noted for its budget system, no mention should be made of 
 its budget until the description is practically completed. That 
 this has been the case has been due to the fact that a budget, 
 as we have pointed out in our analysis of the problem of finan- 
 cial administration, is not so much one of the distinct opera- \\ 
 tions which have to be performed in administering the finan- 
 cial afifairs of a government, as the means through which these w 
 several operations are correlated and brought under survey at 
 one time to the end that their relations and bearings one upon 
 the other may be made apparent. It follows from this that it 
 is not feasible to consider the nature and role of a budget in 
 any given system until the character of the several operations o 
 which it is the function of a budget to bring into adjustment 
 is known. 
 
 Without attempting to define accurately the term "budget," 
 for it is one which is used with majiy diflferent meanings, we 
 may say that the idea underlying the conception of a budgetary', 
 as opposed to a non-budgetary, system is that in the former ) 
 the effort is made, by those who are responsible for initiating 
 financial measures, to consider both sides of the national ac- 
 
 255 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Distinction 
 between 
 Budgetary 
 and Non- 
 Budgetary 
 Plan 
 
 The Budget 
 a Summary 
 Statement 
 
 count at one and the same time, or at least in their relations 
 to each other, and to place them before the legislative branch 
 where appropriations are requested, while, in the latter, no such 
 attempt is made. It is of the essence of the budgetary system 
 that the fund raising and granting authority shall be presented 
 with a balanced statement of estimated receipts and expendi- 
 tures to the end that it may see whether there is a prospective 
 deficit to be provided for or a surplus which may be applied in 
 the way of reduction of the national debt or for some other 
 purpose, or avoided by remission of taxation. 
 
 In the preceding chapters we have pointed out and described 
 the several documents through which Parliament is placed in 
 possession of detailed information regarding the resources and 
 liabilities, the receipts and expenditures, and the estimated 
 needs of the Government for the year to come. It now re- 
 mains for us to consider the means employed by the Minis- 
 try in bringing together the information so imparted and, 
 on its basis, of formulating a financial program for the year; 
 in other words, of preparing and laying before Parliament a 
 budget. 
 
 A study of this feature of the financial system of Great 
 Britain shows that use for this purpose is made of three sepa- 
 rate documents, the titles of which, if we take the year 1914- 
 19 1 5 as an example, are as follows: 
 
 1. Financial Statement 1914-1915: Statement of Reve- 
 nues and Expenditures as Laid before the House by the Chan- 
 cellor of the Exchequer when opening the Budget, May 4, 
 1914. 
 
 2. Budget Speech of the Chancellor of the Exchequer, 
 May 4, 1914. 
 
 3. Financial Statement 1914-191 5: Statement Explaining 
 the Proposals Made by the Chancellor of the Exchequer in 
 His Financial Statement on Monday, May 4, 191 4. 
 Though not so designated popularly, this statement constitutes 
 in effect the real budget: the other two statements are but 
 explanatory of the financial program here outlined. Accord- 
 
 256 
 
THE BUDGET 
 
 ing to the Memorandum on the English Financial System, pre- 
 pared by the Treasury, to which allusion has several times been 
 made, "an annual statement, partaking of the nature of a 
 budget, has been made in the House of Commons yearly since 
 the Revolution (1688) or for over two hundred years. But 
 for many years they were not of ihe complete and elaborate 
 character which now distinguishes them; while the fact that 
 for many years speeches were not reported makes it difficult 
 to estimate the value of them. The phrase mentioned above 
 that the Chancellor of the Exchequer 'opens the budget' was 
 in force soon after 1750." ^ 
 
 The statement for the year 1914-1915 covers but 7 pages. 
 The importance of this document warrants our reproducing it 
 in full, in order that an opportunity may be given to observe 
 its general scope and to appreciate fully the character of the 
 items which are included in it. 
 
 Financial Statement 1914-1915: Statement Explaining the 
 Proposals Made by the Chancellor of the Exchequer in 
 His Financial Statement on Monday, May 4, 19 14. 
 It will be noted that in the financial statement submitted May 4, 
 a copy of which has been reproduced on pages 258-264, the 
 Chancellor of the Exchequer mentions in the table giving esti- 
 mated revenues for 1914-1915 certain items of income to be 
 derived through a modification of the existing system of taxa- 
 tion. The present statement has for its purpose to give the 
 details of the modification of rates there proposed and the 
 manner in which the increased burden of taxation will be dis- 
 tributed among the different classes of taxpayers. The state- 
 ment is very brief, being but six pages, and contains nothing 
 in the way of argument in favor of the changes proposed. It 
 is difficult to see why this elaboration of the figures given in 
 the first statement was not made a part of that statement in- 
 stead of being issued as a separate document. 
 
 ^The word "budget" is derived from the French word "hougette," 
 a derivative of "bouge," a leather bag containing papers or accounts. 
 
 257 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Table I. Showing How the Amount Issued from the Exchequer to 
 
 Meet the Expenditure in 1913-1914 Compares with 
 
 THE Estimated Expenditure 
 
 
 1913-14 
 
 
 Total 
 
 Expenditure 
 
 provided 
 
 for in the 
 
 Budget 
 
 Additional 
 Expenditure 
 for which 
 Supplemen- 
 tary Estimates 
 were 
 presented 
 
 Total 
 
 Estimated 
 
 Expenditure 
 
 Amount 
 
 issued 
 
 to meet 
 
 Total 
 
 Expenditure 
 
 I. Consolidated Fukd Services 
 
 National Debt Services: 
 
 Inside the Fixed Debt Charge: 
 Interest and Management. . 
 
 £. 
 
 16,944,000 
 7,556,000 
 
 £. 
 
 £. 
 
 16,944,000 
 7,550,000 
 
 £. 
 16,894,000 
 
 
 
 
 
 
 24,500,000 
 1,340,000 
 
 9,665,000 
 1,704,000 
 
 
 24,500,000 
 1,340,000 
 
 9,665,000 
 1.704,000 
 
 24,500,000 
 I,39S,000 
 
 9,734,000 
 1,694.000 
 
 Road Improvement Fund 
 
 
 Payments to Local Taxation Ac- 
 counts, &c 
 
 
 Other Consolidated Fund Services.. . 
 
 
 
 
 Total Consolidated Fund Serv- 
 ices 
 
 37,209,000 
 
 
 37,209.000 
 
 37.323.000 
 
 
 
 II. Supply Services 
 
 Amy (including Ordnance Factor- 
 ies) 
 
 28,235,000 
 46,309,000 
 54.988,000 
 
 4,533,000 
 24,366,000 
 
 196,000 
 
 2,500,000 
 
 675,000 
 
 28.431,000 
 48,809,000 
 55,663,000 
 
 4.533.000 
 24,366,000 
 
 28,346,000 
 48,833.000 
 53,901,000 
 
 4,483,000 
 24,607,000 
 
 Navy 
 
 Civil Services 
 
 Customs and Excise and Inland Rev- 
 
 Post Office Sesrvices 
 
 
 
 
 Total Supply Services 
 
 158,431,000 
 
 3,371,000 
 
 161,802,000 
 
 160.170,000 
 
 Grand Total 
 
 195,640,000 
 
 3,371,000 
 
 199.011,000 
 
 197,493.000 
 
 
 In order to show the entire expenditure for which the State was responsible in 1913-14, 
 there has to be added the expenditure chargeable to Capital Account as given in the following 
 statement: 
 
 £. 
 I. Expenditure chargeable against |levenue, as in above table. . 197,493,000 
 
 £. 
 II. Expenditure chargeable against Capital, viz.: — 
 
 Telegraph (Money) Act, 1913 90,000 
 
 Telephone Transfer Act, 1911 *4,3i9,ooo 
 
 Post Office (London) Railway Act, 19J3 7,000 
 
 Land Registry (New Buildings) Act, 1900 10.000 
 
 4,426,000 
 
 Total 201,919,000 
 
 * Includes £.709.000 in payment of the balance of the purchase money of the National 
 Telephone Company's undertaking. Payment of £,380,000 of that sum was made by an 
 wsue to the Company of Exchequer Bonds of an equivalent amount. 
 
THE BUDGET 
 
 Table II. Showing How the Revenue in 1913-14 Compares with the 
 
 Budget Estimate and with the Revenue of the Previous 
 
 Year, 1912-13 
 
 Receipts in 
 1912-13 
 
 Budget 
 
 Estimate for 
 
 1913-14 
 
 Receipts in 
 1913-14 
 
 Receipts, 
 
 more \-\-) 
 
 or less ( — ) 
 
 than Budget 
 
 Estimate 
 
 £. 
 
 33,485,000 
 
 38,000,000 
 
 25,248,000 
 
 10,059,000 
 
 700,000 
 
 2,000,000 
 
 41,206,000 
 
 3,600,000 
 
 455.000 
 
 154.753.000 
 
 20,300,000 
 
 3,100,000 
 
 5,775,000 
 
 530,000 
 
 1,419,000 
 
 2,925,000 
 
 34,049,000 
 188,802,000 
 
 Customs 
 
 Excise 
 
 Estate, &c., Duties. 
 
 Stamps 
 
 Land Tax 
 
 House Duty 
 
 Income Tax 
 
 Super-Tax 
 
 Land Value Duties . 
 
 £. 
 
 35,200,000 
 
 38,850,000 
 
 26,750,«Doo 
 
 9,800,000 
 
 700,000 
 
 2,000,000 
 
 42,700,000 
 
 3,250,000 
 
 750,000 
 
 £. 
 
 35,450,000 
 
 39,590,000 
 
 27,359,000 
 
 9,966,000 
 
 700,000 
 
 2,000,000 
 
 43,929,000 
 
 3,320,000 
 
 715,000 
 
 £. 
 
 + 250,000 
 + 740,000 
 + 609,000 
 + 166,000 
 
 +1,229,000 
 + 70,000 
 35,000 
 
 Total Receipts from Taxeis £ 
 
 Postal Service 
 
 Telegraph Service 
 
 Telephone Service 
 
 Crown Lands 
 
 160,000,000 
 
 163,029,000 
 
 +3,029,000 
 
 Receipts from Suez Canal \ 
 Shares and Sundry Loans / 
 
 Miscellaneous 
 
 21,125,000 
 
 3,150,000 
 
 6,350,000 
 
 530,000 
 
 1,370,000 
 2,300,000 
 
 Total Receipts from Non- 
 Tax Revenue 
 
 Totals £ 
 
 34,825,000 
 194,825,000 
 
 21,190,000 
 
 3,080,000 
 
 6,530,000 
 
 530,000 
 
 1,580,000 
 2,304,000 
 
 + 65,000 
 — 70,000 
 + 180,000 
 
 + 210,000 
 + 4,000 
 
 35,214,000 
 198,243,000 
 
 + 389,000 
 +3,418,000 
 
 259 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Table III. Giving the Exchequer Balance Sheet of 1913-14 
 
 Receipts 
 
 £. 
 Exchecmer Balance on 
 31st March 1913 6,329,000 
 
 Revenue 198,243,000 
 
 « 
 Repayments in excess of 
 Advances 210,000 
 
 Treasury Bills issued in 
 lieu of those tempora- 
 rily paid ofE in 1912-13 5,000,000 
 
 Payments 
 
 209^782,ooo 
 
 Expenditure 197,493,000 
 
 Treasury Bills tempora- 
 rily paid off in the year 
 which are renewable 
 not later than the 30th 
 June 1914, under 6 
 Edw. 7.C.20. s. 10(1)... 1,500,000 
 
 Old Sinking Fund 1907-8: 
 Issued under Section 9 
 of the Finance Act, 
 1908 86,000 
 
 Old Sinking Fund 1910- 
 1 1 : Issued under Sec- 
 tion 1 6 of the Finance 
 Act, 1911 89,000 
 
 Old Sinking Fund 1912- 
 13: Issued to reduce 
 Debt 180,000 
 
 Exchequer Balance on 
 31st March 1914 10,434,000 
 
 209,782,000 
 
THE BUDGET 
 
 Table IV. Showing How the Estimated Expenditure to be Provided 
 
 FOR IN 1914-15 Compares with the Corresponding 
 
 Estimated Expenditure a Year Ago 
 
 Service 
 
 Estimate 
 for 1914-1S, 
 more (+) or 
 less ( — ) than 
 1913-14 
 
 I. Consolidated Fund Services 
 
 National Debt Services: 
 Inside the Fixed Debt Charge: 
 
 Interest and Management 
 
 Repayment of Capital 
 
 16,944,000 
 7,556,000 
 
 16,741,000 
 7.759,000 
 
 — 203,000 
 + 203,000 
 
 Road Improvement Fund 
 
 Payments to Local Taxation Accounts, &c 
 Other Consolidated Fimd Services .... 
 
 24,500,000 
 1,340,000 
 9,665,000 
 1,704,000 
 
 24,500,000 
 1,545,000 
 9,885,000 
 1,706,000 
 
 + 205,000 
 + .220,000 
 + 2,000 
 
 Total Consolidated Fund Services. 
 
 II. Supply Services 
 Army (including Ordnance Factories).. . . 
 
 Navy 
 
 Civil Services* 
 
 Customs and Excise, and Inland Revenue 
 
 Departments 
 
 Post Office Services : 
 
 37,209,000 
 
 37,636,000 
 
 + 427,000 
 
 28,235,000 
 46,309,000 
 54,988,000 
 
 4.533.000 
 24,366,000 
 
 28,885,000 
 51,550,000 
 57,066,000 
 
 4,696,000 
 26,152,000 
 
 + 650,obo 
 +5,241,000 
 +2,078,000 
 
 + 163,000 
 +1,786,000 
 
 Total Supply Services . 
 Total 
 
 158,431,000 
 
 168,349,000 
 
 +9,918,000 
 
 195,640,000 
 
 205,985,000 
 
 +10,345,000 
 
 t Estimated Expenditure chargeable 
 against Capital 
 
 3,175,000 
 
 5,265,000 
 
 +2,090,000 
 
 * Civil Services:^ 
 
 Public Education 
 
 Old Age Pensions 
 
 Labour Exchanges, In- 
 surance, &c 
 
 Other Civil Services,. . 
 
 18,717,000 
 12,600,000 
 
 7,499,000 
 16,172,000 
 
 54,988,000 
 
 1914-1S 
 
 £. 
 
 18,978,000 
 12,710,000 
 
 8,312,000 
 17,066,000 
 
 57,066,000 
 
 tExpenditure chargeable 
 against Capital: — ' 
 
 Telegraph (Money) 
 Act, 1913 
 
 Telephone Transfer 
 Act 
 
 Post Office (London) 
 Railway Act, 1913 . . 
 
 Military Work Acts. . 
 
 Land Registry (New 
 Buildings) Act 
 
 Public Buildings Ex- 
 penses Act 
 
 1913-14 
 
 t3,ooo,ooo 
 
 65,000 
 
 10.000 
 
 100,000 
 
 §4,500,000 
 
 600,000 
 65,000 
 
 100,000 
 
 3,175,000 5,265,000 
 
 t Exclusive of the balance of the purchase money of the National Telephone Company's 
 Ubdertaking. § Provisional figure. 
 
 261 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Table V. Giving "Final Balance Sheet," 1914-15, 
 
 Estimated Revenue, 1914-1$ 
 
 £. 
 Customs 35i3SO,ooo 
 
 Excise 39,650,000 
 
 £. 
 
 Estate, &c. Duties as in Table V 28,000,000 
 
 Add: — Proposed revision of duties (net) 800,000 
 
 28,800,000 
 
 Stamps 9,900,000 
 
 Land Tax 700,000 
 
 House Duty 2,000,000 
 
 £. 
 
 Income Tax as in Table V 45,250,000 
 
 Add: — Proposed increase of 2d. in the £ and 
 other alterations (net) 5,500,000 
 
 50,750,000 
 
 Super Tax as in Table V. .... i 3,300,000 
 
 Add. — Proposed alteration of scale 2,500,000 
 
 ' 5,800,000 
 
 Land Value Duties 725,000 
 
 Total Receipts from Taxes £173,675,000 
 
 Postal Service 21,750,000 
 
 Telegraph Service '. 3,100,000 
 
 Telephone Service 6,900,000 
 
 Crown Lands 530,000 
 
 Receipts from Suez Canal Shares and Sundry 
 Los^s 1,370,000 
 
 Miscellaneous 2,130,000 
 
 Total Receipts from Non-Tax Revenue £35,780,000 
 
 Total Revenue £209,455,000 
 
 Borrowings to meet expenditure chargeable against Capital £ 5,265,000 
 
 262 
 
THE BUDGET 
 AS Proposed by the Chancellor of the Exchequer 
 
 Estimated Expenditure, igi4-is 
 
 I. Consolidated Fund Services 
 
 National Debt Services: £. 
 
 Interest and Management 16,741,000 
 
 £. 
 
 Repayment of Capital as in Table IV 7.759,000 
 
 Deduct: — Proposed reduction of Sinking 
 
 Fund 1,000,000 
 
 6,759,000 
 
 23,500,000 
 
 Road Improvement Fund ^ 1,545,000 
 
 Payments to Local Taxation Accounts, &c 9,885,000 
 
 Other Consolidated Fund Services 1,706,000 
 
 Total Consolidated Fund Services £36,636,000 
 
 II. Supply Services 
 
 Army (including Ordnance Factories) 28,885,000 
 
 Navy 51,550,000 
 
 £. 
 
 Civil Services as in Table IV 57,066,000 
 
 Add: — Insurance ; 1,000,000 
 
 Education , 586,000 
 
 Public Health and Local Taxation. . 2,432,000 
 
 61,084,000 
 
 Customs and Excise, and Inland Revenue Depart- 
 ments, as in Table IV 4,696,000 
 
 Add: — Valuation . 80,000 
 
 Collection of proposed additional 
 
 duties 45,000 
 
 4,821,000 
 
 Post Office Services as in Table IV 26,152,000 
 
 Add: — Proposed increase to low- wage em- 
 ployees 75,000 
 
 26,227,000 
 
 Total Supply Services £172,567,000 
 
 Total Expenditure £209,203,000 
 
 Balance , ,. £ 252,000 
 
 Total , £209,455,000 
 
 Expenditure chargeable against Capital £5,265,000 
 
 263 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Table VI. Showing How the Estimated Receipts in 1914-15 from 
 
 Revenue and from Borrowings to Meet Capital Expenditure 
 
 Compare with the Corresponding Receipts in 1913-14 
 
 (On Basis of Existing Taxation) 
 
 Receipts in 
 ■ 19 13-14 
 
 Estimate 
 for 1914-15, 
 on 
 basis of 
 existing 
 Taxation 
 
 Estimate 
 
 for I9ii-is, 
 
 more (+) or 
 
 less ( — ) than 
 
 Receipts in 
 
 1913-14 
 
 Customs 
 
 Excise 
 
 Estate, &c. Duties 
 
 Stamps 
 
 Land Tax 
 
 House Duty 
 
 Income Tax 
 
 Super Tax 
 
 Land Value Duties 
 
 Total Receipts from Taxes £ 
 
 Postal Service .... 
 Telegraph Service. 
 Telephone Service. 
 Crown Lands 
 
 Receipts from Suez Canal Shares and 
 Sundry Loans 
 
 Miscellaneous. 
 
 Total Receipts from Non-Tax Rev- 
 enue £ 
 
 Total Revenue £ 
 
 Borrowings to meet Expenditure 
 chargeable against Capit^ £ 
 
 £. 
 35,450,000 
 
 39,590.000 
 
 27.359.000 
 
 9,966,000 
 
 700,000 
 
 2,000,000 
 
 43,929,000 
 
 3,320,000 
 
 715,000 
 
 163,029,000 
 
 21,190,000 
 
 3,080,000 
 
 6,530,000 
 
 530,000 
 
 1,580,000 
 2,304,000 
 
 35,214,000 
 
 198,243,000 
 
 
 ♦3,717,000 
 
 £. 
 35,350,000 
 
 39,650,000 
 
 28,000,000 
 
 9,900,000 
 
 700,000 
 
 2,000,000 
 
 45,250,000 
 
 3,300,000 
 
 725,000 
 
 . £. 
 
 — 100,000 
 
 + 60,000 
 
 + 641,000 
 
 — 66,000 
 
 164,875,000 
 
 21,750,000 
 
 3,100,000 
 
 6,900,000 
 
 530,000 
 
 1,370,000 
 2,130,000 
 
 35,780,000 
 
 200,655,000 
 
 5,265,000 
 
 -f-1,321,000 
 — 20,000 
 -1- 10,000 
 
 -f 1,846,000 
 
 + 560,000 
 + 20,000 
 -f- 370,000 
 
 — 210,000 
 
 — 174,000 
 
 + 566,000 
 
 -1-2,412,000 
 
 -1-1,548,000 
 
 * Exclusive of the sum required to complete the purchase of the National Telephone Com- 
 pany s undertakmg (See note * on tableji). 
 
 264 
 
THE BUDGET 
 
 Budget Speech of the Chancellor of the Exchequer. We 
 have stated that the Financial Statement constitutes in effect 
 the budget; certainly it is the document in which^a balanced 
 statement of estimated receipts and expenditures is presented "^ 
 together with an indication of the financial proposals of the 
 ministry. Oddly enough, however, the term "budget" is never 
 applied to this statement, but is reserved for the speech which 
 the Chancellor of the Exchequer makes in laying this state- 
 ment befoTe the House. Thus the Memorandum on the Eng- 
 lish Financial System says: 
 
 "The English budget is merely the speech of the Chan- 
 cellor of the Exchequer when, soon after the close of the 
 financial year, which is on the 31st of March, he lays 
 before the House of Commons the financial result of the 
 year just expired, the estimates of income and expendi- 
 ture for the year just commencing, and proposals for an 
 increase or diminution of taxation, or other changes in 
 financial administration, which the Government recom- 
 mended to the approval of Parliament. This speech is 
 not oificially published. It is, in fact, only to be found -" 
 in the pages of 'Hansard's Parliamentary Debates,' an 
 unofficial publication which reports every speech deliv- 
 ered in Parliament. The speech is necessarily but a sum- 
 mary of the figures of the year under consideration and 
 in this it dififers widely from the Budget as generally 
 understood abroad; viz., a large volume giving in great 
 detail the estimated income and expenditure of the year 
 to which it applies." 
 
 As indicated in this quotation the speech by the Chancellor' ' 
 of the Exchequer is far from a general analysis of the financial 
 history of the year just closed or even a detailed consideration 
 of the expenditure program of the Government for the year 
 to come. Indeed, the whole question of expenditure, except 'i 
 as it may involve certain large features of public policy, is 
 
 26s 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 English 
 
 Budget 
 
 Deals 
 
 Primarily 
 
 with 
 
 Revenues 
 
 almost wholly ignored. In the United States and in Europe 
 one thinks of the budget primarily as a document through 
 which a pjrogram of expenditures is laid before the appro- 
 priating authority. So much is this the case that the term 
 - "budget," more often than not, is employed as synonymous 
 with that of estimates of expenditures. Just the contrary is 
 the case in England. There the budget is the document or 
 speech through which the finance minister outlines the policy 
 of the Government in respect to revenues — the estimates of 
 expenditure having already been laid before Parliament and 
 considered in Committee of the Whole. One can not possibly 
 understand the significance of the English budgetary pro- 
 cedure until he appreciates the fact that the interest of Parlia- 
 ment and the people centers on the receipt and not on the 
 expenditure side of the budget. The presentation of the Finan- 
 cial Statement and the delivery of the budget speech of the 
 Chancellor of the Exchequer are anxiously awaited, and when 
 given arouse great interest, not because they will throw any 
 light upon the proposals of tlie Ministry in respect to expendi- 
 tures, but because they will reveal what changes are proposed 
 in the system by which the revenues of the Government are 
 obtained. The formal statement of the Chancellor of the 
 Exchequer thus forecasts the nature of the revenue or finance 
 act rather than that of the appropriation act. 
 
 This has been so almost from time immemorial. The 
 struggle of the House to control the public purse has been 
 The Historic one to control the power of the Crown to impose taxation« 
 Background father than the power to expend money. All of its efforts 
 were directed to the establishment of the principle that no 
 \new burden could be imposed upon the people without its con- 
 sent. As we have pointed out, it was not until comparatively 
 recent times that Parliament concerned itself with the matter 
 of the expenditure of the funds, the raising of which it had 
 authorized. This spirit prevails at the present time. It is true 
 that Parliament formally appropriates money for meeting pub- 
 lic expenses, but this appropriation is made upon the motion 
 
 266 
 
THE BUDGET 
 
 o£ the Crown, according to estimates prepared by the latter, 
 under a few general heads and with large powers to effect 
 transfers from one subhead to another. The House has re- 
 signed all right itself to propose an expenditure or to increase | 
 an item proposed by the Crown. Even its powers of criticism 
 have been reduced to the minimum consistent with their exer- 
 cise at all. 
 
 The expenditure of public moneys is thus treated as a matter 
 pertaining primarily to the Executive. Practically, the legis- 
 lature has confined its participation in this important govern- 
 mental act to the requirement that it shall be given full infor- 
 mation regarding both what the Executive proposes to do and 
 how these proposals have in fact been carried out. Under 
 these conditions the interest of both the House and the people 
 in the estimates is directed chiefly to the point whether the 
 estimates as a whole are of such a character as will require the 
 imposition of additional taxes or permit of a reduction of 
 those already in force. 
 
 In this withdrawal of the matter of appropriations so largely 
 from legislative determination we have one explanation of 
 the fact of interest centering upon the income side of the 
 budget. Another and still more potent reason for this phe- Revenue 
 nomenon consists in the fact that, contrary to the practice pre- ^variable 
 vailing in the National Government of the United States, in- Factor 
 come, and not expenditure, is the variable element in the // 
 budget. In the United States the income of the Government is c 
 in general fixed by permanent law. Congress starts from the 
 point that there is a certain sum available for expenditure and 
 proceeds to determine how it shall be spent. In England the 
 contrary is the case. The Government first determines what 
 is the total of expenditure that must be provided for and 
 proceeds to regulate taxation accordingly. 
 
 Lack of a General Comprehensive Budgetary Statement. 
 The foregoing is a practical explanation of what, to the com- 
 mission, seems to be a serious defect .in the English budgetary v, 
 system — the failure to bring together in one coordinated state- 
 
 267 
 
 ? 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 Different 
 
 Elements 
 
 Not 
 
 Brought 
 
 Together 
 
 ment the several reports and documents through which Parlia- 
 ment is given information regarding financial conditions and 
 proposals. The finance accounts and the estimates are, it is 
 true, in the nature of supporting documents to the budgetary 
 statements and speech of the Chancellor of the Exchequer, 
 but they are not made such^in form. When it would be a 
 matter of so little trouble to make all of the financial reports 
 
 J which we have described annexes to the budgetary statement 
 and have them all go into Parliament as one consolidated 
 statement, it is difficult to see why it^is not done. In par- 
 ticular it is difficult to see why the three statements relative 
 to the budget proposals proper are not issued in one instead of 
 three separate documents. In the same way the Estimates and 
 the appropriation accounts, instead of appearing as separate 
 volumes for the civil services and revenue departments, the 
 Army, and the Navy, should form in each case a single docu- 
 ment with parts corresponding to the present division by 
 volumes. 
 
 In a way it may almost be said that England has all the 
 
 '^ elements of a comprehensive budgetary statement with sup- 
 porting documents, but has failed to bring these elements to- 
 gether. The work of making such a statement would be 
 ■ largely a matter of compilation, though advantage should be 
 taken of the opportunity to harmonize inconsistencies and, to a 
 greater extent than is now done, to prepare comprehensive 
 statements of receipts and expenditures covering a series of 
 years. 
 
CHAPTER XIV 
 CONCLUSION 
 
 The chief reason for undertaking this inquiry concerning' 
 the system of financial administration of Great Britain was 
 that a more detailed knowledge of a system which is generally 
 held to be one of the most efficient that has been devised by 
 any nation for the management of its national finances could 
 not fail to prove of value to the United States in the efforts 
 now being made to put the administration of our own public 
 finances-^— national, state and local — upon a more satisfactory 
 basis. 
 
 While, therefore, it is no part of our purpose to consider 
 specifically the problems of financial reform now under 
 active discussion in the United States, and still less to urge 
 for adoption any particular measure of reform, it is neverthe- 
 less thought that a useful purpose would be served by bringing 
 together in a concluding chapter the more significant features 
 of the British financial system as previously considered in de- 
 tail, pointing out wherein these features differ from American 
 practice and indicating the extent to which they represent prin- 
 ciples and procedures which should at least be given careful 
 consideration in any efifort looking to the improvement of our 
 present admittedly ineffective method of locating and en- 
 forcing responsibility for the manner in which control over 
 the public finances is exercised. 
 
 The already considerable literature dealing with the applica- 
 tion of budget principles to American financial administration 
 is perhiaps sufficient reason for not attempting here any gen- 
 eral consideration of the budgetary problem in the United 
 
 269 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 States. The valuable and comprehensive contributions which 
 have recently been made to this subject in the reports of Presi- 
 dent Taft's Commission on Economy and Efficiency, in the 
 publications of the Bureau of Municipal Research of New 
 York, and in various papers published by Dr. F. A. Cleveland, 
 Chairman of the Commission and Director of the Bureau, 
 should be examined by those who are interested in the signifi- 
 cance and possible applications of English experience to Amer- 
 ican problems of financial administration.^ 
 
 1 "The Need for a National Budget," Report of the Commission on 
 Economy and Efficiency, 191 2, House Document No. .854, 62nd Con- 
 gress, 2nd session, Washington, pp. 567. 
 
 The recommendations of the Commission concerning content of a 
 budget, its definition and purpose, and method of introduction ; part I, 
 historical and descriptive materials relating to present policies in the 
 United States ; part II, the constitutional aspects of a national budget ; 
 suggested forms of financial statements, estimates and accompanying 
 data; part III, a pro forma budget and supporting documents with 
 classification, and reasons therefor, of expenditures, appropriations 
 and estimates.' Appendix material gives answers to questionnaire on 
 budget methods and procedure in 38 foreign countries; bibliography, 
 etc. ; also digest of laws governing preparation and submission of esti- 
 mates, and pertaining to appropriations and allotments, and descrip- 
 tion of reports at present submitted to Congress by governmentar de- 
 partments. 
 
 "A Budget — ^with Supporting Memoranda and Reports," Message 
 of the President submitting such for the consideration of Congress. 
 Senate Document No. 1113, 62nd Congress, 3rd session, Washington, 
 
 PP- 433- 
 
 The message (44 pages) is an interpretation and argument for "The 
 Budget," corresponding roughly to the budget speech under usual for- 
 eign procedure. The budget gives summaries of data showing finan- 
 cial conditions and operating results, summary of estimates, summary 
 of proposed changes in law. Appendices give schedules supporting 
 budget statements ; memorandum on organization of a bureau of 
 central administrative control ; recommendations of departmental 
 officers; and summary of constructive recommendations culled from 
 annual reports of executive departments. 
 
 "The Budget as a Means of Locating Responsibility for Waste and 
 Inefficiency," by Frederick A. Cleveland. Proceedings New York 
 Academy of Political Science, vol. Ill, No. 2, 1912, pp. 16. 
 
 A discussion of what the President is trying to do by way of 
 budget-making- for the National Government. Summarizes budget 
 procedure recommended by President Taft's Commission on Economy 
 and Efficiency and discusses essential differences between the present 
 and the proposed method. 
 
 Municipal Research, monthly periodical issued by the Bureau of 
 
 270 
 
CONCLUSION 
 
 The prime features of the British system of financial ad- 
 ministration may be summarized as follows: 
 
 I. The adoption of the principle of a budget. This means 
 the definite acceptance of the principle that all of the financial 
 needs of the government for the period to be financed shall 
 be considered at one and the same time, according to a well- 
 defined plan to the end that the executive, the Parliament, 
 and the people shall all have clearly before them the full pur- 
 port of the problem as it affects the condition of the treasury, 
 
 Municipal Research and Training School for Public Service, 261 
 Broadway, New York. 
 
 Various issues discuss budgets— municipal, state and national, and 
 budgetary procedure. See especially : 
 
 No. 57 (January, 1915), "Next Steps in the Development of a 
 Budget Procedure for the City of Greater New York" — a report ad- 
 dressed to the board of estimate and apportionment, New York City, 
 pp. 5-142. 
 
 No. 58 (February, 1915) — "A State Budget — Constructive Pro- 
 posals to Be Submitted to the State Constitutional Convention," by 
 Frederick A. Cleveland, pp. 147-168; also published in Proceedings 
 New York Academy of Political Science, v, 141-192; also memoran- 
 dum on "The Practical Side of Budget Procedure" by Charles D. 
 Norton, pp. 169-172, and appendix to Dr. Cleveland's paper giving 
 illustrations of budget summaries adapted to submission by the execu- 
 tive to the legislative branch of the Government, pp. 173-198. 
 
 No. 62 (June, 1915), "Budget Systems — a Discussion Before the 
 New York Constitutional Convention." Contains proposed constitu- 
 tional amendment to provide a scientific budget system for the state 
 and exposition of the amendment by former Senator John G. Saxe 
 and Dr. Frederick A. Cleveland; also testimony before committees 
 of the Constitutional Convention by Hon. John J. Fitzgerald, chair- 
 man of committee on appropriations, House of Representatives, on 
 "American Financial Methods from the Legislative Point of View" ; 
 ex-President William H. Taft on "American Financial Methods from 
 the Executive Point of View"; President Frank J. Goodnow, Johns 
 Hopkins University, on "Administration and Financial Methods"; 
 President A. Lawrence Lowell, Harvard University, on "Financial 
 Administration with Special Reference to English Experience." An 
 appendix gives the report of the committee on finance of the conven- 
 tion favoring an executive budget. 
 
 No. 69 (January, 1916), "Responsible Government." A collection 
 of papers and addresses by Dr. Frederick A. Cleveland on : "Defects 
 in Our Constitutions" ; "Responsible Leadership — an Essential to 
 Efficient Democracy"; "Visible vs. Invisible Government"; "The 
 Budget Idea in the United States" (also published in the Annals of 
 the American Academy of Political and Social Science, November, 
 1915) ; and a memorial addressed to the legislature of New York, 
 
 271 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 present and prospective. This means that Parliament, beifore 
 taking final action, requires that there shall be prepared and 
 presented to it a series of balanced statements showing the 
 resources 'and liabilities of the government, receipts and ex- 
 penditures in jthe past and estimated receipts and expenditures 
 for the future. These data are classified and exhibited in 
 comparative statements so that their significance for the prob- 
 lem of providing for the financial needs of the future may be 
 plainly apparent. 
 
 2. The adoption of the principle that the preparation and 
 submission of this definite financial plan or proposal with sup- 
 porting details of information devolve upon the executive. 
 This means that the executive branch of the government has 
 placed upon it the obligation of bringing before the fund- 
 raising and fund-granting authority, in one comprehensive 
 statement, a definite financial and work program, which shall 
 include an estimate of the cost of carrying on each activity 
 
 signed by the trustees of the Bureau of Municipal Research, together 
 with correspondence with the Governor of New York concerning his 
 budget proposal to the legislature of 1916. Appendix contains draft 
 of proposed amendment of the legislative and executive laws of New 
 York and a list of bills introduced in 1915 calling for expenditures 
 of money, together with a list of those passed by one house and sent 
 to the other for concurrence, and a brief abstract of each bill re- 
 ported. 
 
 No. 70 (February, 1916), "Budget Legislation in Two States," pp. 
 102. Introduction on "The Measuring Stick of Democracy"; part I 
 on Financial Legislation in New Jersey; part II, Financial Legislation 
 in New York; with discussion of various proposals before the legis- 
 latures of 1916 in both New York and New Jersey. 
 
 No. 72 (April, 1916), "The History of Appropriations in the Legis- 
 lative Session of 1916, New York State," pp. 134. A detailed study 
 of all the financial proposals before the legislature of that year and 
 what was done with them, together with copious quotations from 
 legislative debates and critical comments by Dr. Burl E. Shultz, who 
 followed these sessions at Albany and prepared the report upon them. 
 
 No. 73 (May, 1916), "Three Proposed Constitutional Amendments 
 for Control of the Purse," pp. 86. Contains discussion of executive 
 vs. legislative budget ; alternatives before Governor Whitman in New 
 York; the Maryland proposed constitutional amendment for an ex- 
 ecutive budget; the proposed New York constitutional amendments; 
 together with certain open letters addressed to the legislature by the 
 New York Bureau of Municipal Research. 
 
 272 
 
CONCLUSION 
 
 and a plan for raising the necessary funds for the definite and 
 stated period to be financed. 
 
 3. The adoption of the principle of control over the ex- > 
 ecutive through the grant to Parliament, and especially to the 
 opposition in that body, of an opportunity to subject such re- 
 port of past operations and of proposals for the future to crit- 
 ical examination. This means that the executive shall be 
 placed where at all times it is compelled to answer all ques- 
 tions, to explain and defend before all the members, in 
 committee of the whole, all' of its acts past and proposed, 
 while the details of estimates are being initially consid- 
 ered. ' 
 
 4. The adoption of the principle that, while ParHament 
 shall thus be given full and detailed information regarding 
 financial transactions, and be afforded adequate opportunity 
 to criticize such action and proposals, responsibility not only 
 for the proposal as initially submitted, but for every change 
 made in it as the result of discussion shall normally rest with 
 the executive. The adoption of this principle is but putting 
 into effect the more general principle of responsible govern- 
 ment that the executive^— the ministry in power, is responsi- 
 ble for leadership both in planning and in executing plans 
 having to do with the actual conduct of the financial and busi- 
 ness affairs of government and that the function of Parlia- 
 ment is restricted to that of seeing that this responsibility for 
 leadership is not shifted or confused. This principle is put 
 into effect through the adoption by Parliament of rules of pro- 
 cedure which expressly prohibit all motions looking to the in- 
 crease of proposals for expenditures as brought forward 
 by the executive and the observance of conventions which 
 in effect restrain it from making any change of a ma- 
 terial character in the financial program as formulated 
 by the executive, whether in the way of increases or de- 
 creases. 
 
 5. The no less definite adoption of the principle that, 
 though the determining voice in respect to the preparation 
 
 273 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 of a plan for raising and expending all revenues lies with 
 the executive, the latter must wait on approval by Parlia- 
 
 () ment, and after approval shall render a rigid accounting 
 to Parliament in respect to the manner in which authoriza- 
 tions granted are carried out. This is secured by the estab- 
 
 'lishment of a system of accounting and reporting which 
 gives to Parliament and the people full information regard- 
 ing all financial transactions in an exceptionally clear and 
 detailed manner. 
 
 6. The adoption of the principle of a parliamentary audit 
 of receipts and expenditures as a means of exercising rigid 
 scrutiny over the manner in which authorizations are car- 
 ried out. This is secured by making provision for the 
 audit of all accounts by a Comptroller and Auditor General, 
 who is an officer of Parliament and reports directly to it. 
 This officer, though appointed by the executive, enjoys com- 
 plete independence due to the fact that he has had conferred 
 upon him the status of a judicial officer, that his salary is 
 a direct charge upon the Consolidated Fund, that he holds 
 office during good behavior and that he can be removed 
 from office only in the same manner as is provided for the 
 removal from office of judicial officers. 
 
 7. The adoption of the principle that the reports of this 
 officer shall in fact be subjected to careful examination and 
 scrutiny by members of Parliament. This is secured 
 through the establishment of a standing committee on pub- 
 lic accounts of the House of Commons, the chairman of 
 which is taken from the opposition ^ having for its sole 
 function the examination and report upon all transactions 
 regarding which any question of propriety can be raised. This 
 committee has the power to take testimony and to bring be- 
 fore it all officers of the government having knowledge 
 of the facts to be inquired into. It furnishes thus an effec- 
 tive means by which Parliament, making use of the report 
 
 1 In only one year since 1866 has Parliament taken the chairman 
 of this committee from the majority, and that was the year 1869. 
 
 274 
 
CONCLUSION 
 
 made to it by its officer, the Comptroller and Auditor Gen- 
 eral, can examine into all financial transactions of the execu- 
 tive. 
 
 8. The adoption of the principle that the work of exer- - 
 cising an immediate and direct control over the preparation 
 of estimates and expenditure of funds shall be performed by ^ 
 a special organ which shall in effect act in this capacity as an 
 agent of Parliament. This organ, known as the Treasury De- 
 partment, is in principle not itself an operating department. 
 It is not coordinate with such departments, but has a posi- ' 
 tion superior to them, which is well recognized and estab- 
 lished. 
 
 9. The adoption of the principle that in making appropria- \i 
 tions a clear distinction shall be made between : ( i ) Appro- 
 priation heads, (2) appropriation subheads, and (3) support- 
 ing details. The purpose of making these distinctions is that 
 of harmonizing the desirability, on the one hand, of prescrib- 
 ing in all practical detail the purposes for which funds shall ^^ 
 be granted, and, on the other, of permitting the maximum 
 flexibility in the actual expenditure of funds that is consistent 
 with adequate control. This is secured by providing that 
 the details of expenditures set forth in the supporting tables 
 are incorporated in the Estimates for purposes of information 
 only; that the amounts carried by the subheads of appropria- 
 tions shall be deemed to be in the nature of allotments sub-- 
 ject to change by the effecting of transfers of money from 
 one subhead to another; and that only the totals carried by 
 the appropriation heads or "votes," as they are called, shall 
 be in the nature of definite appropriations not subject to 
 change.^ Abuse of the power to effect transfers from one 
 subhead to another is abundantly safeguarded by the pro- "^ 
 visions; that no transfers shall be made except upon the ap- 
 proval of the Treasury; that account of expenditures shall • 
 
 ^ To this latter statement there is the exception that transfers 
 between appropriation heads may be effected in the case of the Army 
 and Navy votes. 
 
 275 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 be kept according to sub-appropriation heads; and that the 
 ' report of expenditures shall show clearly the extent to which 
 this power to make transfers has been exercised. 
 
 lo. The adoption of the principle that the expenditure of 
 I appropriations is not mandatory. Under the British system 
 appropriations are mere grants to the executive, and the lat- 
 ter is held responsible for the manner in which this discretion 
 to make use of funds is exercised. To ensure that the funds 
 granted will in fact be only expended as public needs require, 
 the principle ii firmly established that no funds shall be ex- 
 i pended except upon the authorization of the Treasury. 
 
 It is hardly necessary to point out how radically this system 
 ,; differs from American practice. Scarcely one of these fun- 
 
 vdamental principles of financial procedure finds expression 
 
 ' in our own system. The basic principle underlying the use of a 
 budget as the central instrument for correlating all of the 
 financial transactions of the government so that the whole 
 problem of financing the government may be considered at 
 
 >■ one and the same time, is hardly understood in this country, 
 much less acted upon. Though the executive is called upon 
 to keep account of receipts and expenditures, to make reports 
 and to submit estimates, the technical problem of having them 
 -so kept and submitted as to constitute a comprehensive report 
 of past transactions and a work program for the future has 
 not been satisfactorily worked out. The result is that Con- 
 gress does not get before it a statement of the financial and 
 
 X work program of the executive in such a form that it can 
 clearly see its full purport. The fact that Congress does not 
 get the information to which it is entitled is evidenced by die 
 necessity ihat its committees, having the consideration of ap- 
 propriation bills, (is under of holding elaborate hearings for 
 the purpose of securing information regarding estimate pro- 
 posals. Most important of all, Congress, and not the execu- 
 
 ,, tive, is deemed to be the body that should formulate the defi- 
 nite program of receipts and expenditures. The reports and. 
 
 276 
 
CONCLUSION ... : 
 
 estimates that are submitted to it are not looked upon as an 
 executive program, but rather as data to enable Congress to '> 
 perform its function as a program-framing body. The audit ) 
 of accounts, instead of being made by an officer of the body 
 granting the funds, is made by an officer of the branch of the ■ 
 government whose operations are to be passed upon. Though 
 early provision was made by the House for committees on 
 expenditures in the executive departments, these committees ' 
 have never attempted to make any thorough or systematic ex- 
 amination of the financial transactions of the executive as re- 
 vealed in the audited accounts. Congress thus has no effective ^ 
 machinery for the exercise of supervision and control over 
 the manner in which the executive performs its duties such 
 as is possessed by the British Parliament in its Comptroller and 
 Auditor General and its standing committee on public ac- 
 counts. In respect to the granting of ftmds, the general prin- v 
 ciple is followed that all appropriations are morally, if not 
 legally, obligatory, that they represent an order given by Con- 
 gress to the executive, and that it is the duty of the latter 
 to act upon such order. The result is that the executive feels •' 
 called upon to expend all the funds voted to it whether it 
 deems such expenditure to be wise or not. Nothing approach- 
 ing the British system of securing flexibility in the expendi- 
 ture of funds by distinguishing between appropriation heads 
 and subheads and of permitting of transfers to be effected 
 between subheads is to be found in the American system. 
 Finally, there is totally lacking in the National Government 
 any organ having the duty of exercising a day to day super- 
 vision and control over the financial transactions of the Gov- 
 ernment, such as the British Government possesses in its Treas- 
 ury Department. ,.i. 
 
 In both the detailed description of the British financial sys- 
 tem and in the foregoing enumeration of its leading features 
 the effort has been made to do two things: To make known 
 the fundamental principles upon which this system rests and to 
 bring out clearly the specific means employed in putting these 
 
 277 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 principles into execution. The importance of considering both 
 of these factors cannot be overemphasized. In the movement 
 constantly gaining force for the adoption in the United States 
 of the budgetary principle by all public bodies, there has been 
 too little appreciation of the administrative features of the 
 problem. There is no more important lesson to be deduced 
 from the foregoing study than that the success with which the 
 British system works is in large part due to the effectiveness 
 with which provision has been made for an administrative 
 
 \ machinery and procedure devised for the accomplishment of 
 the end sought. 
 
 Take for example the crucial point of the British system, 
 
 \ that represented by the exercise by the executive of the con- 
 trolling voice in the formulation and determination of the 
 financial and work program. Can anyone for a moment sup- 
 pose that Parliament would acquiesce in any such arrange- 
 
 » ment were not provision at the same time made, in the Treas- 
 ury Department, in the office of the Comptroller and Auditor 
 General and in the standing committee on public accounts of 
 the House of Commons, for organs superior in status and 
 authority to those of the operating or spending departments 
 proper through which an effective supervision and control 
 over all administrative acts might be maintained ? Or, again, 
 is it at all likely that a scheme of appropriation would be 
 
 ° adopted under which definite appropriations are made only 
 under a relatively few main heads and a large liberty is per- 
 mitted for the transfer of funds from one subhead to another, 
 were not provision at the same time made that this discretion 
 'in respect to the expenditure of funds should be subject to 
 the fcontrol of a department whose function it is to act as the 
 general business manager and agent of Parliament to see that 
 all powers granted are properly exercised ? 
 
 The importance of these considerations must be apparent 
 in all efforts looking to the adoption of the budgetary system 
 in the United States. It would be futile to attempt to per- 
 suade Congress and the state legislatures to surrender the 
 
 278 
 
CONCLUSION 
 
 authority which they now exercise over the appropriation of 
 funds in favor of an executive determination unless coupled \\ 
 with this demand is a proposal to set up organs and a pro- 
 cedure which will ensure a more effective supervision and 
 control over the financial acts of administrative officers than 
 is now secured by these bodies seeking to act directly. More- 
 over, it is almost certain that unless provision is made in this 
 way for the exercise of a superior direction, supervision and 
 control, that the system of an executive budget, if it did not 
 develop abuses equal to those of the existing system, would 
 certainly fail to give the results expected of it. 
 
 Another matter of great importance is. the making of a 
 clear distinction between the operations of formulating the j 
 budgetary program and of acting upon such program. It is 
 one thing to maintain that the executive shall draft and lay 
 before the legislature a comprehensive report of financial 
 transactions in the past and a program for operations in the 
 ^future, and quite another to hold that no material change in 
 the latter shall be made by the body to which it is submitted, i 
 One can quite well endorse the first without acquiescing in " 
 the second. Indeed, the need for the submission by the execu- 
 tive of a proper statement of financial operations, past and ^ 
 proposed, is, if possible, even greater under the system of legis- 
 latively determined appropriations than under one of execu- 
 tive determination. As long as the legislature exercises this 
 high power, it is only proper that it should insist that the v 
 executive shall place it in possession of all the facts in such 
 a form that it can exercise this power effectively. The de- 
 mand for an executively formulated budget is thus in no sense'=- 
 a demand that the legislature abdicate any of the powers that 
 it now has over the appropriation of funds. On the contrary, 
 it involves only a demand that the legislature shall be fur- 
 nished with the means through which its powers may be more 
 effectively exercised. 
 
 To recapitulate, it would therefore seem highly desirable to ], 
 distinguish clearly between the three basic factors of the 
 
 279 
 
BRITISH FINANCIAL ADMINISTRATION 
 
 budgetary problem: (i) The formulation of a budget; (2) 
 action upon the budget, and (3) the provision of organs and 
 a procedure through which budgetary control may be secured. 
 As a matter of practical expediency, it would further seem 
 that greater progress in the direction of reform can be antici- 
 pated if, for the present, attention is concentrated upon the 
 first and last of these three factors. To neither of these can 
 the most ardent advocate of the system of legislative deter- 
 mination of appropriations find any objection. So great would 
 be the improvement resulting from proper action in respect 
 to these factors tiiat they may well be regarded as necessary 
 intermediate steps before the American public is prepared to 
 pass judgment on the second, which can only arouse intense 
 opposition and thus might jeopardize any progress at all. 
 With the principle of an executively formulated budget and 
 the principle of a proper rhachinery for exercising budgetary 
 control once firmly established, the .basis will be laid for a 
 change in procedure in respect to the second — that having to 
 do with action upon the budget — if such change is then deemed 
 to be desirable. 
 
APPENDICES 
 
APPENDIX I 
 
 EXCHEQUER AND AUDIT DEPARTMENTS ACT, 1866, 
 AND TREASURY MINUTE THEREON 
 
 29 & 30 ViCT. Chapter 39 
 
 An Act to consolidate the Duties of the Exchequer and Audit 
 Departments, to regulate the Receipt, Custody, and Issue 
 of Public Moneys, and to provide for the Audit of the 
 Accounts thereof. [28th June 1866.] 
 
 'Whereas it is expedient to consolidate the powers and duties 
 'of the Comptroller of Her Majesty's Exchequer and of the 
 'Commissioners for Auditing the Public Accounts, and to unite 
 'in one department the business hitherto conducted by the sepa- 
 'rate establishments under them; and to make other provi- 
 'sions for the more complete examination of the public ac- 
 'counts of the United Kingdom:' Be it therefore enacted by 
 the Queen's most Excellent Majesty, by and with the advice 
 and consent of the Lords Spiritual and Temporal, and Com- 
 mons, in this present Parliament assembled, and by the author- 
 ity of the same, as follows: 
 
 1. This Act may be cited for all purposes as the Exchequer 
 and Audit Departments Act, 1866. 
 
 2. In this Act "the Treasury" shall mean the Commis- 
 sioners of Her Majesty's Treasury for the time being, or any 
 two or more of them; "the Bank of England" shall mean the 
 Governor and Company of the Bank of England; "the Bank 
 of Ireland" shall mean the Governor and Company of the 
 Bank of Ireland ; "the National Debt Commissioners" shall 
 mean the Commissioners for the Reduction of the National 
 
 28s 
 
APPENDIX I 
 
 Debt; "principal accountants" shall mean those who receive 
 issues directly from the accounts of Her Majesty's Exchequer 
 at the Banks of England and Ireland respectively; "sub- 
 accountants" shall mean those who receive advances, by way 
 of imprest, from principal accountants, or who receive fees 
 or other public moneys through other channels; "the Secre- 
 taries of the Treasury" shall include the Assistant Secretary. 
 
 3. At any time within twelve months after the passing of 
 this Act it shall be lawful for Her Majesty, Her heirs and 
 successors, by letters patent under the Great Seal of the United 
 Kingdom, to nominate and appoint the person who shall at 
 that time hold the office of Comptroller-General of the Re- 
 ceipt and Issue of Her Majesty's Exchequer, and Chairman 
 of the Commissioners for Auditing the Public Accounts, to 
 be Comptroller-General of the Receipt and Issue of Her 
 Majesty's Exchequer and Auditor-General of Public Accounts, 
 in this Act referred to as "Comptroller and Auditor-General," 
 and also to nominate and appoint one of the persons who shall 
 at that time hold the offices of Commissioners for Audit- 
 ing the Public Accounts to be "Assistant Comptroller and 
 Auditor." 
 
 The said Comptroller and Auditor-General arid Assistant 
 Comptroller and Auditor shall hold their offices during good 
 behaviour, subject, however, to their removal therefrom by 
 Her Majesty, Her heirs and successors, on an address from 
 the two Houses of Parliament; and they shall not be capable 
 of holding their offices together with any other office to be 
 held during pleasure under the Crown or under any officer 
 appointed by the Crown; nor shall they be capable, while 
 holding their offices, of being elected or of sitting as members 
 of the House of Commons ; nor shaill any peer of Parliament 
 be capable of holding either of the said offices. 
 
 4. Her Majesty may, by such letters patent, grant to the 
 persons therein named the following salaries ; that is to say, — 
 
 To the Comptroller and Auditor-General a salary of two 
 thousand pounds per annum, and to the Assistant 
 284 
 
APPENDIX I 
 
 Comptroller and Auditor a salary of one thousand five 
 hundred pounds per annum ; and such salaries shall be 
 charged upon and paid out of the Consolidated Fund 
 of the United Kingdom or the growing produce thereof. 
 It shall be lawful for Her Majesty, Her heirs and suc- 
 cessors, by letters patent as aforesaid, to grant to any 
 person who shall have executed the offices of Comptrol- 
 ler and Auditor-General, or Assistant Comptroller and 
 Auditor, on his ceasing to hold such office, an annuity 
 or pension not exceeding one-half of the salary of his 
 office to which he shall have been entitled immediately 
 before he ceased to hold such office, if he shall have 
 held either, or one after the other, of the said, offices, 
 or the office of Commissioner of Audit for a period 
 not less than fifteen year^ and two-thirds of his said 
 salary if he shall have held either, or one after the 
 otherj of the said offices for a period not less than 
 twenty years: Provided always, that no such annuity 
 or pension shall be granted to either of the said 
 officers unless he be sixty years of age at the least, or 
 be afflicted with some permanent infirmity disabling 
 him from the due execution of his office, the same to 
 be distinctly recited in such grant: Provided also, 
 that nothing herein contained shall prevent either of 
 the said officers from receiving, in lieu of such annuity 
 or pension, if he shall so elect, the amount of super- 
 annuation allowance to which he would have been 
 entitled in respect of the full period during which he 
 shall have served in the permanent Civil Service of 
 the State under the provisions of the Superannuation 
 Act, 1859. 
 5. On the appointment as aforesaid of a Comptroller and 
 Auditor-General and an Assistant Comptroller and Auditor, 
 the then existing letters patent of appointments of Comptroller- 
 General of the Exchequer and of Commissioners of Audit shall 
 be ipso facto revoked, and the present offices of ComptroUer- 
 
 285 
 
APPENDIX I 
 
 General of the Exchequer and Commissioners of Audit shall 
 be abolished, but the person appointed to be Comptroller and 
 Auditor-General shall have and perform all the powers and 
 duties conferred or imposed on the Comptroller-General of 
 the Exchequer and the Commissioners for Auditing the Public 
 Accounts respectively by any enactments relative to those 
 authorities respectively as far as the same are not repealed 
 or altered by this Act or any other Act of the present session 
 of Parliament; and it shall be lawful for the Treasury to 
 grant to each of the said Commissioners of Audit whose 
 offices shall be abolished under the provisions of this Act, 
 and who shall not be appointed to either of the said offices 
 of Comptroller and Auditor-General or Assistant Comptroller 
 and Auditor, an annual allowance, by way of compensation, 
 not exceeding the sum charged on the Consolidated Fund as 
 the salary of such Commissioners : Provided always, that any 
 Commissioners who may be in receipt of emoluments exceed- 
 ing the salary so charged on the Consolidated Fund shall be 
 entitled to receive, in addition to the aforesaid compensation 
 allowance, such proportion of the said emoluments as the 
 Treasury are empowered to grant under the provisions of 
 the Superannuation Act, 1859; and such allowances shcill be 
 charged upon and paid out of the Consolidated Fund of the 
 United Kingdom or the growing produce thereof. 
 
 6. On the death, resignation, or other vacancy in the office 
 of the Comptroller and Auditor-General, or of the Assistant 
 Comptroller and Auditor, Her Majesty, Her heirs and suc- 
 cessors, may by letters patent as aforesaid nominate and 
 appoint a successor, who shall have the same powers, authori- 
 ties, and duties, and who shall be paid the like salary and the 
 like annuity or pension out of the Consolidated Fund.* 
 
 7. Anything which under the authority of this Act is 
 directed to be done by the Comptroller and Auditor-General 
 may, in his absence, be done by the Assistant Comptroller 
 and Auditor, except the certifying and reporting on accounts 
 for the House of Commons. 
 
 286 
 
APPENDIX I 
 
 8. The Treasury shall from time' to time appoint the 
 officers, clerks, and other persons in the Department of the 
 Comptroller and Auditor-General, and Her Majesty by Order 
 in Council may from time to time regulate the numbers and 
 salaries of the respective grades or classes into which the said 
 officers, clerks, and others shall be divided. 
 
 9. The Comptroller and Auditor-General shall have full 
 power to make from time to time orders and rules for the 
 conduct of the internal business of his department, and to 
 promote, suspend, or remove any of the officers, clerks, and 
 others employed therein; and to prescribe regulations and 
 forms for the guidance of principal and of sub-accountants in 
 making up and rendering their periodical accounts for exami- 
 nation : Provided always, that all such regulations and forms 
 shall be approved by the Treasury previously to the issue 
 thereof. 
 
 10. The Commissioners of Customs, the Commissioners of 
 Inland Revenue, and the Postmaster-General shall, after 
 deduction of the payments for drawbacks, bounties of the 
 nature of drawbacks, repayments, and discounts, cause the 
 gross revenues of their respective departments to be paid, at 
 such times aind under such regulations as the Treasury may 
 from time to time prescribe, to accounts to be intituled "The 
 Account of Her Majesty's Exchequer" at the Bank of Eng- 
 land and at the Bank of Ireland respectively, and all other 
 public moneys payable to the Exchequer shall be paid to the 
 same accounts, and accounts of all such payments shall be 
 rendered to the Comptroller and Auditor-General daily in such 
 form as the Treasury may prescribe: Provided always, that 
 this enactment shall not be construed to prevent the collectors 
 and receivers of the said gross revenues and moneys from 
 cashing, as heretofore, under the authority of any Act or 
 regulation, orders issued for naval, military, revenue, civil, 
 or other services, repayable to the Revenue Depairtments out 
 of the Consolidated Fund or out of moneys provided by 
 Parliament. 
 
 2S7 
 
APPENDIX I 
 
 11. All moneys paid into the Bank of England and the 
 Bank of Ireland on account of the Exchequer shall be con- 
 sidered by the Governor and Company of the said banks 
 respectively as forming one general fund in their books; and 
 all orders directed by the Treasury to the said banks for issues 
 out of credits to be granted by the Comptroller and Auditor- 
 General, as hereinafter provided, for the public service, shall 
 be satisfied out of such general fund; and with a view to 
 economise the public balances the Treasury shall restrict the 
 sums to be issued or transferred from time to time to the 
 credit of accounts of principal accountants at the said banks, 
 as hereinafter provided, to such total sums as they may con- 
 sider necessary for conducting the current payments for the 
 public service intrusted to such principal accountants ; and the 
 said principal accountants may consider the sums so trans- 
 ferred to their accounts as constituting part of their general 
 drawing balance applicable to the payment of all the services 
 for which they are accountable; but such sums shall be 
 carried in the books of such accountants to the credit of 
 the respective services for which the same may be issued, 
 as specified in such orders : Provided always, that this enact- 
 ment shall not be construed to empower the Treasury or any 
 authority to direct the payment, by any such principal ac- 
 countant, of expenditure not sanctioned by any Act whereby 
 services are or may be charged on the Consolidated Fund, or 
 by a vote of the House of Commons, or by an Act for the 
 appropriation of the supplies annually granted by Parliament. 
 
 12. At the close of each of the quarters ending on the thirty- 
 first day of March, the thirtieth day of June, the thirtieth 
 day of September, and the thirty-first day of December in 
 every year, the Treasury shall prepare an account of the 
 income and charge of the Consolidated Fund in Great Britain 
 and in Ireland for such quarter, and the charges for the public 
 debt due on the fifth day of April, the fifth day of July, the 
 tenth day of October, and the fifth day of January, shall be 
 included in the accounts of the said charge for the quarters 
 
 288 
 
APPENDIX I 
 
 ending on the days preceding the latter dates; and a copy of 
 such account shall forthwith be transmitted by the Treasury 
 to the Comptroller and Auditor-General; and if it shall appear 
 by such account that the income of the Consolidated Fund in 
 Great Britain or in Ireland for the quarter is not sufficient to 
 defray the charge upon it, the Comptroller and Auditor- 
 General, if satisfied of the correctness of the deficiency, shall 
 certify the amount thereof, to the Bank of England or to the 
 Bank of Ireland, as the case may be, and upon such certifi- 
 cates the said banks shall be authorised to make advances, 
 from time to time, during the succeeding quarter, on the 
 application of the Treasury, by writing, in a form to be from 
 time to time determined by them, to an amount not exceeding 
 in the aggregate the sums specified in such certificates; and 
 all such advances shall be placed to the credit of the Ex- 
 chequer accounts at the said banks, and be available to satisfy 
 the orders for credits granted or to be granted upon the said 
 accounts by the Comptroller and Auditor-General; and the 
 principal and interest of all such advances shall be paid out of 
 the growing produce of the Consolidated Fund in the said suc- 
 ceeding quarter. 
 
 13. The Comptroller and Auditor-General shall grant to 
 the Treasury from time to time, on their requisitions author- 
 ising the same, if satisfied of the correctness thereof, credits 
 on the Exchequer accounts at the Banks of England and 
 Ireland, or on the growing balances thereof, not exceeding the 
 amount of the charge in the aforesaid quarterly account of 
 the income and charge of the Consolidated Fund remaining 
 unpaid. 
 
 The Comptroller and Auditor-General shall also grant 
 from time to time to the Treasury, on similar requisitions, 
 supplemental credits for services payable under any Act out 
 of the growing produce of the Consolidated Fund, and not 
 included in the aforesaid quarterly account; and the issues 
 or transfers of moneys required from time to time by the 
 principal accountants to enable them to make the payments 
 
 289 
 
APPENDIX I 
 
 intrusted to them shall be made out of such credits on orders 
 issued to the said banks, signed by one of the Secretaries of 
 the Treasury, or in their absence by such officer or officers as 
 the Treasury may from time to time appoint to that duty, 
 and in all such orders the services for which the issues may be 
 authorised shall be set forth. 
 
 A daily account of all issues or transfers made from the 
 Exchequer accounts, in pursuance of such orders, shall be 
 transmitted by the said banks to the Comptroller and Auditor- 
 General. 
 
 14. When any sum or sums of money shall have been 
 granted to Her Majesty by a resolution of the House of Com- 
 mons, or by an Act of Parliament, to defray expenses for any 
 specified public services, it shall be lawful for Her Majesty 
 from time to time, by Her Royal Order under the Royal Sign 
 Manual, countersigned by the Treasury, to authorise and 
 require the Treasury to issue, out of the credits to be granted 
 to them on the Exchequer accounts as hereinafter provided, 
 the sums which may be required from time to time to defray 
 such expenses, not exceeding the amount of the sums so voted 
 or granted. 
 
 15. When any ways and means shall have been granted by 
 Parliament to make good the supplies granted to Her Majesty 
 by any Act of Parliament or resolution of the House of Com- 
 mons, the Comptroller and Auditor-General shall grant to 
 the Treasury, on their requisition authorising the same, a 
 credit or credits on the Exchequer accounts at the Bank of 
 England and Bank of Ireland, or on the growing balances 
 thereof, not exceeding in the whole the amount of the ways 
 and means so granted. Out of the credits so granted to the 
 Treasury issues shall be made to principal accountants from 
 time to time on orders issued to the said banks, signed by one 
 of the Secretaries of the Treasury, or in their absence by such 
 officer or officers as the Treasury may from time to time 
 appoint to that duty; and the services or votes on account 
 of which the issues may be authorised shall be set forth in such 
 
 290 
 
APPENDIX I 
 
 orders : Provided always, that the issues for Army and Navy 
 services shall be made under the general heads of "Army" 
 and "Navy" respectively. 
 
 A daily account of all issues made from the Exchequer 
 accounts in pursuance of such orders shall be transmitted by 
 the said banks to the Comptroller and Auditor-General. 
 
 ^ i6. Within fifteen days after the expiration of the 
 quarters ending on the thirty-first day of March, the thirtieth 
 day of June, the thirtieth day of September, and the thirty- 
 first day of December in every year, the Treasury shall prepare 
 an account of the public income and expenditure of the United 
 Kingdom, according to the actual receipt and issue of moneys 
 on the Exchequer accounts at the Bank of England and Bank 
 of Ireland in the twelve months ending on such quarter days 
 respectively; and if there shall appear by such account to be 
 a surplus of income above expenditure, the Treasury shall 
 certify the same to the National Debt Commissioners, and one- 
 fourth part of such surplus shall be applicable to the reduction 
 of the national debt as herein-after directed ; and the National 
 Debt Commissioners shall publish from time to time in the 
 London Gazette the sum which will be so applied in the 
 ensuing quarter. The Treasury shall cause one- fourth part 
 of such surplus income to be charged on the Consolidated 
 Fund in the quarter succeeding the termination of such 
 account; and the sum so charged shall be issued by the 
 Treasury from time to time in the next ensuing quarter to 
 the National Debt Commissioners, who shall apply the same, 
 during the said quarter, in redeeming funded or unfunded 
 debt, or in repaying to the Bank of England or to the Bank 
 of Ireland any advances made by them, under the provisions 
 of this Act, towards supplying the deficiency of the Consoli- 
 dated Fund during the said quarter; and all debt so redeemed 
 shall be forthwith cancelled. And a copy of every account 
 prepared by the Treasury as aforesaid, certified by the Comp- 
 troller and Auditor-General, shall be laid before the House of 
 
 * Section i6 is repealed by 38 & 39 Vict. c. 45, s. 6. 
 
 291 
 
APPENDIX I 
 
 Commons within fifteen days after the expiration of the said 
 quarterly periods, if Parliament be then sitting, or, if not 
 sitting, then within one week after Parliament shall be next 
 assembled. 
 
 1 17. All debts accruing due under any contract or lease 
 now or hereafter entered into or taken for the public service, 
 and payable out of the supplies from time to time voted by 
 Parliament to Her Majesty for the public service, in any 
 department for which the payments are made by the 
 Paymaster-General, shall be discharged and paid in manner 
 following; that is to say, such debts shall be payable on the 
 order of the department, and the payment thereof shall be 
 made by a draft drawn by the Paymaster-General on the 
 Bank of England, according to the course and practice of his 
 office, payable to the persons to whom such debts may be 
 due, or to their agents. 
 
 18. The Treasury may from time to time determine at 
 what banks accountants shall keep the public moneys entrusted 
 to them, and they may also determine what accounts so opened 
 in the names of public officers or accountants in the books 
 of the Bank of England, of the Bank of Ireland, or of any 
 other bank, shall be deemed public accounts; and on the 
 death, resignation, or removal of any such public officers or 
 accountants the balances remaining at the credit of such 
 accounts shall, upon the appointment of their successors, 
 unless otherwise directed by law, vest in and be transferred 
 to the public accounts of such successors at the said banks, and 
 shall not in the event of the death of any such public officers 
 or accountants, constitute assets of the deceased, or be in any 
 manner subject to the control of their legal representatives. 
 
 19. It shall be lawful for the Treasury, whenever they shall 
 consider it for the advantage of the public service, to direct 
 that the accounts of any public officer or department, which 
 by any Act or Acts are required to be kept under separate 
 heads at the Bank of England or at the Bank of Ireland, shall 
 
 ' Section 17 is repealed by 52 & 33 Vict. c. S3, s. 2. 
 
 292 
 
APPENDIX I 
 
 be consolidated in such manner as they shall judge most con- 
 venient for the public service. 
 
 20. It shall be lawful for the Bank of England and Bank 
 of Ireland, at the request of the Treasury, signified by one of 
 their secretaries, for the public convenience, to open and keep 
 accounts of Government stock and annuities in the books 
 of the said banks under the official description of any public 
 officer for the time being without naming him and the divi- 
 dends on such stock and annuities may from time to time be 
 received, and the stock and annuities, or any part thereof, to 
 the credit of such account may from time to time be trans- 
 ferred by the officer for the time being holding such office, as 
 if such stock and annuities stood in his own name; and upon 
 the death, resignation, or removal of any such public officer, 
 the stock and annuities standing to the credit of such account, 
 and all dividends thereon, including any dividends not there- 
 tofore received, shall become vested in his successor in office, 
 and be receivable and transferable accordingly. And any such 
 public officer in whose official description such Government 
 stock and annuities may be standing may, by letter of attorney, 
 authorise the Bank of England or the Bank of Ireland, or all 
 or any of their cashiers, to sell and transfer all or any part of 
 the stock or annuities from time to time standing in the books 
 of the said banks on such account, and to receive the dividends 
 due and to become due thereon; but no stock or annuities 
 shall be sold or transferred at the said banks under the author- 
 ity of such general letter of attorney, except upon an order 
 in writing, signed by one of the Secretaries of the Treasury, 
 directed to the proper officers of the said banks. 
 
 Appropriation Accounts 
 
 21. The Treasury shall cause an account to be prepared 
 and transmitted to the Comptroller and Auditor-General for 
 examination on or before the thirtieth day of September in 
 every year, showing the issues made from the Consolidated 
 
 293 
 
APPENDIX I 
 
 Fund of Great Britain and Ireland in the financial year ended 
 on the thirty-first day of March preceding, for the interest 
 and management of the public funded and unfunded debt, 
 for the Civil List, and all other issues in the financial year for 
 services charged directly on the said fund; and the Comp- 
 troller and Auditor-General shall certify and report upon the 
 same with reference to the Acts of Parliament under the 
 authority of which such issues may have been directed; and 
 such accounts and reports shall be laid before the House of 
 Commons by the Treasury on or before the thirty-first day of 
 January in the following year, if Parliament be then sitting, 
 and if not sitting, then within one week after Parliament shall 
 be next assembled. 
 
 22. On or before the days specified in the respective col- 
 umns of Schedule (A) annexed to this Act, accounts of the 
 appropriation of the several supply grants comprised in the 
 Appropriation Act of each year shall be prepared by the 
 several departments, and be transmitted for examination to 
 the Comptroller and Auditor-General and to the Treasury, 
 and when certified and reported upon as herein-after directed 
 they shall be laid before the Hciuse of Commons; and such 
 accounts shall be called the "Appropriation Accounts" of 
 the moneys expended for the services to which they may 
 respectively relate; and the Treasury shall determine by 
 what departments such accounts shall be prepared and 
 rendered to the Comptroller and Auditor-General, and the 
 Comptroller and Auditor-General shall certify and report 
 upon such accounts as herein-after directed; and the reports 
 thereon shall be signed by the Comptroller and Auditor- 
 General : Provided always, and it is the intention of this Act 
 that the Treasury shall direct that the department charged 
 with the expenditure of any vote under the authority of the 
 Treasury shall prepare the appropriation account thereof: 
 Provided also, that the term "department," when used in 
 this Act in connexion with the duty of preparing the said 
 appropriation accounts, shall be construed as including any 
 
 294 
 
APPENDIX I 
 
 public officer or officers to whom that duty may be assigned 
 by the Treasury. 
 
 23. A plan of account books and accounts, adapted to the 
 requirements of each service in order to exhibit, in a convenient 
 form, the whole of the receipts and payments in respect of 
 each vote, shall be designed under the superintendence of the 
 Treasury; and Her Majesty may from time to time, by 
 Order in Council, prescribe the manner in which each depart- 
 ment of the public service shall keep its accounts. 
 
 24. An appropriation account of supply grants shall ex- 
 hibit on the charge side thereof the sum or sums appropriated 
 by Parliament for the service of the financial year to which 
 the account relates, and on the discharge side thereof the sums 
 which may have actually come in course of payment within 
 the same period; and no imprest or advance, of the applica- 
 tion of which an account may not have been rendered to and 
 allowed by the accounting department, shall be included on 
 the discharge side thereof. 
 
 25. The department charged with the duty of preparing 
 the appropriation account of a grant shall, if required so to 
 do by the Comptroller and Auditor-General, transmit to him, 
 together with the annual appropriation account of such 
 grant, a balance-sheet so prepared as to show the debtor and 
 creditor balances in the ledgers of such department on the 
 day when the said appropriation account was closed, and to 
 verify the balances appearing upon the annual appropriation 
 account : Provided always, that the Comptroller and Auditor- 
 General may, if he thinks fit, require the said department 
 to transmit to him in lieu of such balance-sheet a certified 
 statement showing the actual disposition of the balances 
 appearing upon the annual appropriation account on the 
 last day of the period of such account. 
 
 26. Every appropriation account when rendered to the 
 Comptroller and Auditor-General shall be accompanied by an 
 explanation showing how the balance or balances on the grant 
 or grants included in the previous account have been adjusted, 
 
 29s 
 
APPENDIX I 
 
 and shall alsd contain an explanatory statement of any excess 
 of expenditure over the grant or grants included in such 
 account, and such statement as well as the appropriation 
 account shall be signed by such department. 
 
 27. Every appropriation account shall be examined by 
 the Comptroller and Auditor-General on behalf of the House 
 of Commons; and in the examination of such accounts the 
 Comptroller and Auditor-General shall ascertain, first, whether 
 the payments which the accounting department has charged 
 to the grant are supported by vouchers or proofs of payments, 
 and, second, whether the money expended has been applied 
 to the purpose or purposes for which such grant was intended 
 to provide: Provided always, and it is hereby enacted, that 
 whenever the said Comptroller and Auditor-General shall be 
 required by the Treasury to ascertain whether the expenditure 
 included or to be included in an appropriation account, or any 
 portion of such expenditure, is supported by the authority 
 of the Treasury, the Comptroller and Auditor-General shall 
 examine such expenditure with that object, and shall report 
 to the Treasury any expenditure which may appear, upon 
 such examination, to have been incurred without such 
 authority; and if the Treasury should not thereupon see fit 
 to sanction such unauthorised expenditure, it shall be regarded 
 as being not properly chargeable to a Parliamentary grant, 
 and shall be reported to the House of Commons in the manner 
 hereinafter provided. 
 
 28. In order that such examination may, as far as possible, 
 proceed pari passu with the cash transactions of the several 
 accounting departments, the Comptroller and Auditor-General 
 shall have free access, at all convenient times, to the books 
 of account and other documents relating to the accounts of 
 such departments, and may require the several departments 
 concerned to furnish him from time to time, or at regular 
 periods, with accounts of the cash transactions of such depart- 
 ments respectively up to such times or periods. 
 
 29. In conducting the examination of the vouchers relating 
 
 296 
 
APPENDIX I 
 
 to the appropriation of the grants for the several services 
 enumerated in Schedule (B) to this Act annexed, the Comp- 
 troller a:nd Auditor-General, after satisfying himself that the 
 accounts bear evidence that the vouchers have been completely 
 checked, examined, and certified as correct in every respect, 
 and that they have been allowed and passed by the proper 
 departmental officers, may admit the same as satisfactory 
 evidence of payment in support of the charges to which they 
 may relate: Provided always, that if- the Treasury should 
 desire any such vouchers to be examined by the Comptroller 
 and Auditor-General in greater detail, the Comptroller and 
 Auditor-General shall cause such vouchers to be subjected to 
 such a detailed eJ^amination as the Treasury may think fit 
 to prescribe. 
 
 30. In conducting the examination of the vouchers relating 
 to the appropriation of the grants for any services not enumer- 
 ated in the aforesaid schedule, the Comptroller and Auditor- 
 General shall test the accuracy of the castings and computation 
 of the several items of such vouchers: Provided always, 
 that when any vouchers have been certified to be cor- 
 rect by any . officers specially authorised to examine the 
 same, it shall be lawful for the Comptroller and Auditor- 
 General, with the consent of the Treasury, to dispense 
 with a second examination of the particular items of such 
 vouchers. 
 
 31. If during the progress of the examination by the 
 Comptroller and Auditor-General herein-before directed any 
 objections should arise to any item to be introduced into the 
 appropriation account of any grant, such objections shall, 
 notwithstanding such account shall not have been rendered 
 to him, be inimediately communicated by him to the depart- 
 ment concerned, and if the objections should not be answered 
 to his satisfaction by such department, they shall be referred 
 by him to the Treasury, and the Treasury shall determine 
 in what manner the items in question shall be entered in the 
 annual appropriation account. 
 
 297 
 
APPENDIX I 
 
 32. In reporting as herein-before directed, for the informa- 
 tion of the House of Commons, the result of the examination 
 of the appropriation accounts, the Comptroller and Auditor- 
 General shall prepare reports on the appropriation account 
 of, the Army and on that of the Navy separately. 
 
 He shall prepare a report on the appropriation accotmts of 
 the Departments of Customs, Inland Revenue, and Post Office. 
 
 He shall prepare a report or reports on the accounts 
 relating to the several grants included within each of the 
 classes into which the grants for civil services are divided in 
 the Appropriation Act. 
 
 In all reports as aforesaid he shall call attention to every 
 case in which it may appear to him that a grant has been 
 exceeded, or that money received by a department from other 
 sources than the grants for the year to which the account 
 relates has not been applied or accounted for according to the 
 directions of Parliament, or that a sum charged against a 
 grant is not supported by proof of payment, or that a payment 
 so charged did not occur within the period of the account, 
 or was for any other reason not properly chargeable against 
 the grant. 
 
 If the Treasury shall not, within the time prescribed by 
 this Act, present to the House of Commons any report made 
 by the Comptroller and Auditor-General on any of the appro- 
 priation accounts, or on the accounts of issues for Consolidated 
 Fund services, the Comptroller and Auditor-General shall 
 forthwith present such report. 
 
 Accounts other than Appropriation Accounts 
 
 "33. Besides the appropriation accounts of the grants of 
 Parliament, the Comptroller and Auditor-General shall exam- 
 ine and audit, if required so to do by the Treasury, and in 
 accordance with any regulations that may be prescribed for his 
 guidance in that behalf by the Treasury, the following ac- 
 counts: viz., the accounts of all principal accountants, the 
 
 298 
 
Appendix i 
 
 accounts of the receipt of revenue by the Departments of 
 Customs, Inland Revenue, and Post Office, the accounts of 
 every receiver of money which is by law payable into Her 
 Majesty's Exchequer, and any other public accounts which, 
 though not relating directly to the receipt or expenditure of 
 imperial funds, the Treasury may by minute to be laid before 
 Parliament direct. 
 
 34. The accounts which by the last preceding section the 
 Treasury ai^e empowered to subject to the examination of the 
 Comptroller and Auditor-General shall be rendered to him 
 by the departments or officers who may be directed so to do 
 by the Treasury; and the term "accountant," when used 
 in this and the following sections of this Act with reference 
 to any such accounts, shall be taken to mean the department 
 or officer that may be so required by the Treasury to render 
 the same; and every public officer into whose hands public 
 moneys, either in the nature of revenue or fees of office, shall 
 be paid by persons bound by law or regulation to do so, or 
 by subordinate or other officers whose duty it may be to pay 
 such moneys wholly or in part into the receipt of Her 
 Majesty's Exchequer, or to apply the same to any public serv- 
 ice, shall, at such times and in such form as the Treasury shall 
 determine, render an account of his receipts and payments to 
 the Comptroller and Auditor-General ; and it shall be the duty 
 of the Treasury to inform him of the appointment of every 
 such officer. 
 
 35. Accountants shall transmit their accounts together 
 with the authorities and vouchers relating thereto to the office 
 of the Comptroller and Auditor-General in such form, and for 
 such periods, and under such regulations as he may from time 
 to time prescribe for the guidance of such accountants: 
 Provided always, that no such regulations shall be obligatory 
 on such accountants until they shall have been approved by 
 the Treasury. 
 
 36. The Comptroller and Auditor-General shall examine 
 the several accounts transmitted to him with as little delay 
 
 299 
 
APPENDIX I 
 
 as possible, and when the examination of each account shall 
 be completed he shall make up a statement thereof in such 
 form as he may deem fit, and if it shall appear from the 
 statement so made up of any account, being an account 
 current, that the balance thereon agrees with the accountant's 
 balance, or if it shall appear from any account rendered by 
 an accountant, as well as from the statement of such account 
 by the Comptroller and Auditor-General, that the accountant 
 is "even and quit," the Comptroller and Auditor-General is 
 hereby required to sign and pass such statement of account 
 so made up by him as aforesaid: Provided always, that in 
 all other cases whatever the Comptroller and Auditor-General, 
 haying made up the statement of account as herein-before 
 directed, shall transmit the sanie to the Treasury, who, having 
 considered such statement, shall return it to him, with their 
 warrant attached thereto, directing him to sign and pass the 
 account, either conformably to the statement thereof, or with 
 such alterations as the Treasury may deem just and reasonable; 
 and a statement of the account made up by the Comptroller 
 and Auditor-General in accordance with such Treasury 
 warrant shall then be signed and passed by him: Provided 
 further, that a list of all accounts which the Comptroller and 
 Auditor-General may sign and pass (such list to be so pre- 
 pared as to show thereon the charge, discharge, and baljince of 
 each account respectively) shall be submitted by him to the 
 Treasury twice in every year, videlicet, not later than the 
 first week of February and the first week of August. 
 
 37. It shall be lawful for the Comptroller and Auditor- 
 General, in the examination of any accounts, to admit and 
 allow, in cases where it shall appear to him to be reasonable 
 and expedient for the public service, vouchers for any moneys 
 expressed therein, although such vouchers be not stamped 
 according to law. 
 
 38. As soon as any account shall have been signed and 
 passed by the Comptroller and Auditor-General, he shall 
 transmit to the accountant a certificate, in which the total 
 
 300 
 
APPENDIX I 
 
 amount of the sums forming respectively the charge and 
 discharge of such account, and the balance, if any, remaining 
 due to or by such accountant shall be set forth; and every 
 such certificate shall be signed by him, and shall be valid and 
 effectual to discharge the accountant as the case may be, 
 either wholly or from so much of the amount with which he 
 may have been chargeable as he may appear by such certificate 
 to be discharged from : Provided always, that when any 
 account, not being an account current, has been signed and 
 passed by the Comptroller and Auditor-General with a balance 
 due thereon to the Crown, he shall not make out or grant any 
 such certificate as aforesaid until the accountant has satisfied 
 him either that he has discharged the full amount of such 
 balance, and any interest that may as herein-after provided 
 be payable thereon, or that he has been relieved from the 
 payment thereof, or of so much thereof as has not been paid, 
 by a warrant from the Treasury. 
 
 39. No declaration shall be made by the Comptroller and 
 Auditor-General before the Chancellor of the Exchequer in 
 relation to any account or any state or statement thereof; 
 nor shall any such state or statement be enrolled as of record 
 in the office of Her Majesty's Remembrancer of the Court of 
 Exchequer, any law, usage, or custom to the contrary not- 
 withstanding; but every statement of an accoimt made out, 
 signed, and passed as aforesaid, shall be recorded in the office 
 of the Comptroller and Auditor-General, and the recording of 
 such statement of account in his office shall be as valid and 
 effectual for enabling any process in the law against the 
 party chargeable, and any other proceeding for the recovery 
 of any balances and any interest thereon, and for all other 
 purposes, as the enrolment of a declared account in the office 
 of Her Majesty's Remembrancer would have been if this Act 
 had not been passed; and a copy, certified under the hands 
 of the Comptroller and Auditor-General, of the record of any 
 such statement of account, shall be taken notice of and pro- 
 ceeded upon in the like manner as the record of any such 
 
 301 
 
APPENDIX I 
 
 declared account, enrolled as aforesaid, might have been if 
 this Act had not been passed. 
 
 40. In all cases where the Comptroller and Auditor-General 
 shall be required by the Treasury to examine and audit the 
 accounts of the receipt, expenditure, sale, transfer, or delivery 
 of any securities, stamps, Government stock or annuities, 
 provisions, or stores, the property of Her Majesty, he shall, 
 on the examination of such accounts being completed, transmit 
 a statement thereof, or a report thereon, to the Treasury, who 
 shall, if they think fit, signify their approval of such accounts 
 to him, and he shall thereupon transmit to the accountant 
 a certificate in a form to be from time to time determined by 
 the Comptroller and Auditor-General, which shall be to such 
 accountant a valid and effectual discharge from so much as 
 he may thereby appear to be discharged from. 
 
 41. Every accountant shall, on the termination of his 
 charge as such accountant, or in case of a deceased accountant 
 his representatives, shall forthwith pay over any balance of 
 public money then due to the public in respect of such charge 
 to the public officer authorised to receive the same; and in 
 all cases in which it shall appear to the Comptroller and 
 Auditor-General that balances of public money have been 
 improperly and unnecessarily retained by an accountant, he 
 shall report the circumstances of such cases to the Treasury ; 
 and the Treasury shall take such measures as to them may 
 seem expedient for recovering by legal process, or by other 
 lawful ways and means, the amount of such balance or bal- 
 ances, together with interest thereon, upon the whole or part 
 of such balance or balances, for such period of time and at 
 such rate, not exceeding five pounds per centum per annum, 
 as to the Treasury may appear just and reasonable. 
 
 42. In all cases where any estate belonging to a public 
 accountant shall be sold under any writ of extent or any 
 decree or order of the Courts of Chancery or Exchequer, and 
 the purchaser thereof or of any part thereof shall have paid 
 his purchase money into the hands of any public accountant 
 
 302 
 
APPENDIX I 
 
 authorised to teGeive the same, such purchaser shall be wholly 
 exonerated and discharged from all further claims of Her 
 Majesty for or in respect of any debt arising upon the account 
 of such accountant, although the purchase money so paid be not 
 sufficient in amount to discharge the whole of the said debt. 
 
 43. In all cases in which an accountarit may be dissatisfied 
 with any disallowance or charge in his accounts made by the 
 Comptroller and Auditor-General such accountant shall have 
 a right of appeal to the Treasury, who, after such further 
 investigation as they may consider equitable, whether by 
 viva voce examination or otherwise, may make such order 
 directing the relief of the appellant wholly or in part from the 
 disallowance or charge in question, as shall appear to them 
 to be just and reasonable, and the Comptroller and Auditor- 
 General shall govern himself accordingly. 
 
 44. It shall be lawful for the Treasury, from time to time, 
 if they see fit so to do, to dispense with the transmission, to 
 the Comptroller and Auditor-General, of any accounts not 
 being accounts of the receipt and expenditure of public 
 money, and with the audit of such accounts by him, any law, 
 usage, or custom to the contrary notwithstanding: Provided 
 always, that copies of any Treasury Minutes dispensing with 
 the audit of such accounts shall be laid before Parliament. 
 
 45. Nothing in this Act contained shall extend to abridge 
 or alter the rights and powers of Her Majesty to control, sus- 
 pend, or prevent the execution of any process or proceeding, 
 under this Act or otherwise, for recovering money due to the 
 Crown. 
 
 46. The Acts mentioned in Schedule (C) to this Act 
 annexed shall be repealed to the extent mentioned in such 
 Schedule, and all accounts required or directed to be audited 
 by the board of audit shall be audited according to the pro- 
 visions of this Act; but nothing herein shall be deemed to 
 confer upon the Treasury the powers with respect to audit 
 vested in the Admiralty by the Greenwich Hospital Act, 1865, 
 or to affect any right, title, obligation, or liability acquired 
 
 303 
 
APPENDIX I 
 
 or accrued before the commencement of this Act: Provided 
 always, that this Act shall not affect any proceeding which 
 may have been commenced under any of the said Acts before 
 this Act comes into operation. 
 
 47. This Act shall commence on the first day of April one 
 thousand eight hundred and sixty-seven. 
 
 SCHEDULE A 
 
 Grants or Services to which 
 
 the Appropriation Accounts 
 
 relate. 
 
 Anny 
 
 Navy 
 
 Miscellaneous Civil Services — 
 (Classes I, to VII.) . . . 
 
 Revenue Departments (Salaries, 
 Superannuation, &c. and Ex- 
 penses) 
 
 Post Office Packet Service 
 
 and 
 
 All other Services voted in Sup- 
 ply 
 
 Dates after the Termination of every Financial 
 
 Year to which Appropriation Accounts relate, 
 
 on or before which they are to be made up 
 
 and submitted. 
 
 To the Comp- 
 troller and 
 Auditor-General 
 by the Depart- 
 ments. 
 
 31 December 
 
 30 November 
 
 To the Treasury 
 by Comptroller 
 and Auditor- 
 General. 
 
 31 January 
 
 15 January 
 
 To the House 
 
 of Conmions 
 
 by the 
 
 Treasury. 
 
 IS February 
 
 31 January 
 
 
 M . 
 
 cj; Sj E 
 
 3-w * 3- 
 Si = gK 
 
 a.:aftS 
 
 SCHEDULE B 
 
 Army; 
 
 Navy; 
 and such other services as the Treasury, by their minute to be laid before 
 Parliament may direct; but no such minute shall take effect until it shall 
 have lain before the House of Commons thirty days, unless it shall have 
 been previously approved by a resolution of the House of Commons. 
 
APPENDIX I 
 
 SCHEDULE C 
 
 Enactments Repealed 
 
 25 Geo. 3. c. 52. 
 
 27 Geo. 3. c. 13. 
 in part. 
 
 39 & 40 Geo. 3. 
 
 c. 54. 
 
 in part. 
 
 45 Geo. 3. c. 55. 
 
 46 Geo. 3 
 
 c. 141 
 
 47 Geo. 3 
 
 Sess. 2. c. 39 
 
 52 Geo. 3. c. 52 
 
 in part; namely, — 
 
 An Act for better examining and auditing the Publick 
 Accounts of this Kingdom. 
 
 An Act for repealing the several 
 Duties of Customs and Excise, 
 and granting other Duties in lieu 
 thereof, and for appljring the said 
 Duties, together with the other 
 Duties composing the Publick 
 Revenue; for permitting the Im- 
 portation of certain Goods, Wares, 
 and Merchandize, the Produce or 
 Manufacture of the European 
 Dominions of the French King, 
 into this Kingdom; and for apply- 
 ing certain unclaimed Monies, 
 remaining in the Exchequer for 
 the Payment of Annuities 
 Lives, to the Reduction of the 
 National Debt 
 Section seventy-two. 
 
 An Act for more effectually charg- 
 ing Publick Accountants with the 
 Payment of Interest; for allow- 
 ing Interest to them in certain 
 Cases; and for compelling the 
 Payment of Balances due from 
 them 
 
 Sections four, five, six, nine, ten, and thirteen. 
 
 An Act to amend an Act made in the Twenty-fifth Year 
 of His present Majesty, for better examining and 
 auditing the Publick Accounts of this Kingdom; and 
 for enabling the Commissioners, in certain Cases, to 
 allow of Vouchers, although not stamped according 
 to Law. 
 
 An Act for making more effectual Provision for the more 
 speedy and regular Examination and Audit of the 
 Public Accounts of this Kingdom. 
 
 An Act for more effectually charging Publick Account- 
 ants with Interest upon Balances, and for other 
 Purposes relating to the passing of Publick Accounts. 
 
 An Act to provide for the speedy and regular Exami- 
 nation and Audit of the Public Accounts of Ireland; 
 and to repeal certain former Acts relating thereto. 
 
 in part; namely,^ 
 
APPENDIX I 
 
 53 Geo. 3. 
 c. ISO. 
 
 57 Geo. 3. c. 48. 
 
 1 & 2 Geo. 4. 
 
 c. 121. 
 
 in part. 
 
 10 Geo. 4. 0. 
 
 27 
 
 2&3WiU 
 
 .4 
 
 c. 
 
 26 
 
 2&3WiU 
 
 .4 
 
 c. 
 
 99 
 
 c. 104. 
 
 4 & 5 Will. 4. 
 
 0. 15. 
 
 in part. 
 
 An Act for the more speedy and effectual Examination 
 and Audit of the Accounts of Military Expenditure 
 in Spain and Portugal; for removing Delays in passing 
 the Public Accounts; and for making new Arrange- 
 ments for conducting the Business of the Audit 
 Office. 
 
 An Act to make further Provision for the Adjustment 
 of the Accoimts of the ConsoUdated Fund of the 
 United Kingdom; and for making good any occa- 
 sional Deficiency which may arise in the said Fund 
 in Great Britain or Ireland respectively; and to 
 direct the Application of Monies by the Com- 
 missioners for the Reduction of the National 
 Debt. 
 
 An Act to alter and abolish certain 
 Forms of Proceedings in the Ex- 
 chequer and Audit Office relative 
 to Public Accountants; and for 
 making further Provisions for the 
 Purpose of facilitating and expe- 
 diting the passing of Public Ac- 
 counts in Great Britain; and to 
 render perpetual and amend an 
 Act passed in the Fifty-fourth 
 Year of His late Majesty for the 
 effectual Examination of the 
 Accounts of certain Colonial 
 Revenues 
 
 Except sections twenty-seven, twenty-eight, and 
 twenty-nine. 
 
 An Act to amend the several Acts for regulating the 
 Reduction of the National Debt. 
 
 An Act to authorize the Commissioners for Auditing 
 the Public Accounts of Great Britain to examine and 
 audit Accounts of the Receipt and Expenditure of 
 Colonial Revenues. 
 
 An Act for transferring the Powers and Duties of the 
 Commissioners of Public Accounts in Ireland to the 
 Commissioners for Auditing the Public Accoimts of 
 Great Britain. 
 
 An Act to regulate the Period of rendering the Public 
 Accounts and making up the General Imprest Cer- 
 tificates. 
 
 An Act to regulate the Office of] 
 the Receipt of His Majesty's > : — 
 Exchequer at Westminster J 
 
 Except sections seven and twenty-six. 
 
 306 
 
APPENDIX I 
 
 3 & 4 Vict. 
 
 c. 108 
 
 in part 
 
 9 & 10 Vict 
 
 0.92 
 
 4 & IS Vict 
 
 c. 42 
 
 in part 
 
 17 & 18 Vict. 
 
 c. 19. 
 
 c. 94. 
 
 in part. 
 
 18 & 19 Vict. 
 
 c. 96. 
 
 in part. 
 
 24 & 25 Vict. 
 
 C.93. 
 
 28 & 29 Vict. 
 c.93. 
 
 An Act for the Regulation of] 
 Municipal Corporations in Ire- [ in part; namely, — 
 land J 
 
 Sections two hundred and thirteen and two hundred 
 and fourteen. 
 An Act to provide for the Preparation, Audit, and 
 Presentation to Parliament of Annual Accounts of the 
 Receipt and Expenditure of the Naval and Military 
 Departments. 
 An Act to make better Provision 
 for the Management of the Woods, 
 Forests, and Land Revenues of • in part; namely, — 
 the Crown, and for the Direction 
 of Public Works and Buildings j 
 
 Section thirty-eight wholly, and section thirty-nine 
 as far as it relates to the Accounts of the Com- 
 missioners of Her Majesty's Works and Public 
 Buildings. 
 
 > The Naval Pay and Prize Act, 1854 
 
 An Act to alter the mode of pro- 
 
 . viding for certain Expenses now 
 
 charged upon certain Branches 
 
 of the Public Revenues and upon 
 
 the Consolidated Fund 
 
 Sections three, four, and five. 
 
 The Supplemental Customs Con- 1 j^^ ^^ ^^ . _ 
 solidation Act, 1855 J 
 
 Section one. 
 
 An Act to provide for the Preparation, Audit, and 
 Presentation to Parliament of Annual Accounts of 
 the Appropriation of the Moneys voted for the 
 Revenue Departments. 
 
 An Act to consolidate the Ofifices of Comptroller-General 
 of the Exchequer and Chairman of the Commis- 
 sioners for auditing the Public Accovmts, and for 
 other Purposes. 
 
 in part ; namely, — 
 
 TREASURY MINUTE DATED 2nd MARCH 1867 
 
 I. My Lords have had under consideration the Act 29 & 
 30 Vict. c. 39, intituled "An Act to consolidate the Duties 
 of the Exchequer and Audit Departments, to regulate the 
 Receipt, Custody and Issue of Public Moneys, and to provide 
 for the Audit of the Accounts thereof." 
 
 307 
 
APPENDIX I 
 
 2. The regulations necessary for carrying into effect the 
 provisions of this Act may be divided under three heads : — 
 
 1st. The Regulations connected with the accounts of the^ 
 "Appropriation" of the Grants of Parliament. 
 
 2nd. The Regulations applicable to the Audit of the Ac- 
 counts of persons intrusted with the receipt and dis- 
 bursement of Public or other Moneys. 
 
 3rd. The Regulations for carrying into effect the provisions 
 of the Act so far as they relate to the receipt and issue 
 of Public Moneys on the Exchequer Account. 
 
 3. The provisions relating to the Audit of the "Appropria- 
 tion" Accounts referred to under the first head are contained 
 in the sections 21 to 32 of the Act. My Lords have already, 
 as appears by Their Minute of June 22nd, 1866, taken steps 
 to enable them to discharge the duties imposed upon them 
 by the 23rd section of the Act, by appointing a Committee 
 to prepare plans and regulations for keeping and rendering 
 for audit the several Departmental Accounts. They have 
 instructed the Committee to consider also what improvements 
 may be made in the classification of the Annual Estimates for 
 Miscellaneous Services, the accounts for which (with the 
 exception of those of the Departments of Works and Public 
 Buildings, and of Woods) are now, for the first time, to be 
 subjected to an "Appropriation" Audit. When the Com- 
 mittee shall have made their Reports upon these matters 
 My Lords will be prepared to make such regulations as may 
 appear to them advisable, in order to carry out the intentions 
 of the Act in this respect; and they direct that, until such 
 Reports shall have been received, and instructions consequent 
 thereupon shall have been issued in reference to the preparing 
 and rendering of any of the Appropriation Accounts, every 
 account which is now audited by the Commissioners of Audit, 
 and which relates to the final expenditure of a vote, shall 
 continue to be examined in the same manner, and under 
 the same regulations as they would have been, if the Com- 
 
 308 
 
APPENDIX I 
 
 missioners of Audit had continued to be charged with the 
 Audit thereof. 
 
 4. With respect to the Audit of Accounts, other than 
 Appropriation Accounts, referred to under the second head. 
 My Lords direct that the Accounts specially designated in 
 the 33rd section of the Act, annexed to this Minute shall be 
 audited by the Exchequer and Audit Department in the same 
 manner and under the same regulations (so far as the same 
 are not affected by the Act) as they would have been if the 
 Commissioners of Audit had continued to be charged with 
 the Audit thereof. 
 
 My Lords will be prepared, by a subsequent Minute, to 
 direct what other Public Accounts, not relating directly to the 
 Receipt or Expenditure of Imperial Funds, shall be trans- 
 mitted to the Comptroller and Auditor-General for examina- 
 tion and audit under the provisions of the said 33rd section. 
 
 5. My Lords proceed to define the regulations for the 
 Receipt and Issue of Public Money on the Exchequer Account, 
 referred to under the third head. 
 
 6. The loth section of the above Act relates to the payment 
 of the gross receipts of the Revenue Departments to the 
 Account of Her Majesty's Exchequer at the Bank of England, 
 and to a similar Account at the Bank of Ireland. My Lords 
 desire that the Commissioners of Customs, and the Commis- 
 sioners of Inland Revenue, will continue to cause the Revenue, 
 collected in their respective Departments, to be paid to the 
 Banks daily, as prescribed by Treasury Minute of the 2nd 
 March 1855 ; ^ and the Postmaster-General and the Commis- 
 sioners of Woods and Forests, and the Paymaster-General 
 will also continue to regulate the payments of Revenue, and 
 other receipts in their respective Departments to the Ex- 
 chequer Account, from time to time, according to the present 
 custom. The several Revenue Departments will transmit 
 to this Board as well as to the Comptroller and Auditor- 
 General certificates, according to the forms annexed. No. i 
 
 ' See Parliamentary Paper No. Z7S< Session 1856, Appendix, page 583. 
 
 309 
 
■ APPENDIX I 
 
 (a & b), of the sums so paid to the Exchequer Account, at the 
 same time as their orders are sent to the Banks to place the 
 moneys to the credit of the said Account. 
 
 7. The 1 2th section of the Act directs that accounts of 
 the income and ^ charge of the Consolidated Fund shall be 
 prepared by the Treasury at the close of each quarter, and 
 that such accounts shall be forthwith transmitted to the 
 Comptroller and Auditor-General. The object of this enact- 
 ment is to enable that officer to certify the amount of the 
 deficiency for which this Board may be authorised to obtain 
 advances, from the Banks of England and Ireland, to meet 
 the charges of the Consolidated Fund for each quarter; and 
 also to enable him to satisfy, himself of the correctness of the 
 amount for which credits on the Exchequer Account, to 
 meet such charges, may from time to time be authorised by 
 this Board under the 13th section of the Act. My Lords will 
 cause the said accounts to be transmitted to the Comptroller 
 and Auditor-General as soon as possible after the close of 
 each quarter, prepared in the Form No. 2, annexed to this 
 Minute; and the Comptroller and Auditor-General, after 
 satisfying himself of the cortectness of the deficiency of the 
 income to meet the charge of the Consolidated Fund for the 
 said quarter, will transmit to the said Banks a certificate of 
 the amount, of such deficiency according to the Form No. 3, 
 annexed. 
 
 8. The applications of the Treasury to the Banks for 
 advances from time to time on account of the said deficiency 
 will be according to the Form No. 4, annexed. 
 
 9. The 13th section of the Act requires the Comptroller 
 and Auditor-General to grant to this Board, on their requisi- 
 tions authorising the same, credits on the Exchequer Account 
 at the Banks of England and Ireland to provide for the pay- 
 ment of the charges on the Consolidated Fund included in the 
 aforesaid quarterly accounts of Income and Charge remaining 
 
 ' The words "incoming charge" are a palpable slip and have been cor- 
 rected. 
 
 310 
 
ArFEJMDI^ I 
 
 unpaid; as well as to grant credits from time to time during, 
 the succeeding quarter, on similar requisitions for services 
 payable out of the "growing produce" of the Consolidated, 
 Fund. 
 
 10. At the periods when the quarterly charges on the 
 Consolidated Fund become payable, My Lords will authorise 
 the Comptroller and Auditor-General, by requisitions according 
 to Forms Nos. 5 and 6, to grant such credits, in part or in full 
 of such charges. When the credits so authorised shall have 
 been granted to this Board by the Comptroller and Auditor- 
 General according to Forms Nos. 7 and 8, My Lords will 
 direct the Banks, from time to time, to make the necessary 
 issues or transfers, as required by the Act, from the Exchequer 
 Account to the accounts of the Principal Accountants, charged 
 with the duty of making the public payments, according to 
 Form No. 9, annexed to this Minute. These authorities, 
 when acted upon, are to be transmitted by the Banks to the 
 Comptroller and Auditbr-Genaral. 
 
 11. A daily account of such issues (including the issues 
 out of credits granted for supply services hereinafter referred 
 to) is to be transmitted by the Bank of England to the Comp- 
 troller and Auditor-General and to this Board, according to 
 Form No. 10; and a similar account is to be sent by the 
 Bank of Ireland to the two departments according to Form 
 No. II, annexed to this Minute. 
 
 12. The issues to Principal Accountants will be regulated 
 according to the provisions of the i5th section of the Act. 
 When Ways and Means shall have been granted to Her 
 Majesty by Act, My Lords will authorise the Comptroller and 
 Auditor-General by requisition according to Form No. 12, 
 annexed, to place credits at their disposal at the Banks of 
 England and Ireland to enable them to supply the Principal 
 Accountants with the funds necessary for carrying on the 
 public service. Upon the grant of credits on the Exchequer 
 Accounts at the said Banks by the Comptroller and Auditor- 
 General (according to Form No. 13), the actual issues or 
 
 •?ii 
 
APPENDIX I 
 
 transfers to the accounts of such Accountants will be made 
 by orders of this Board, under the authority of a Royal Order 
 (see Form No. 14, annexed), in accordance with the provi- 
 sions of the 14th and iSth sections of the Act. 
 
 13. The orders for issues for Supply Services will be 
 prepared according to Form No. 15, annexed to this minute, 
 and when acted upon they will be transmitted by the Bank 
 of England and the Bank of Ireland to the Comptroller and 
 Auditor-General to afford him the means of verifying the 
 accounts to be prepared by this Board, under the i6th section 
 of the Act, and which he is required by the Act to certify 
 previously to their being submitted to Parliament. A daily 
 statement of such issues will be included in the accounts to 
 be transmitted to this Board, and to the Comptroller and 
 Auditor-General, by the Banks of England and Ireland (as 
 hereinbefore directed), according to Forms Nos. 10 and 11. 
 
 14. On the first application of the new regulations after 
 the close of the present financial year, if will be necessary that 
 a Royal Order should be obtained for cancelling all previous 
 Royal Orders for public Supply Services, so far as they may 
 remain unexecuted on the 31st March next. A new Royal 
 Order will therefore be obtained to authorise the issues to 
 Principal Accountants out of credits to be granted upon the 
 Exchequer Account to the extent of the bal2ince of Ways and 
 Means of prior years which may remain unissued on that day. 
 
 15. As under the existing system of granting credits upon 
 the Account of Her Majesty's Exchequer at the Bank of 
 England to Public Accountants, there will remain unexhausted 
 credits on that Account on the 31st March next, and as after 
 the 1st April next, actual transfers to those Accounts are to 
 be substituted for credits on the Exchequer Account, My 
 Lords request that the Bank of England will, on 31st March 
 next, transfer all such balances of credits from the Exchequer 
 Account to the separate Accounts of the persons in whose 
 favour they may have been granted. 
 
 16. It will be necessary, in the case of the Paymaster- 
 
 312 
 
APPENDIX I 
 
 General, to open in the books of the Bank of England a new 
 account, to be called "The Paymaster-General's Supply 
 Account," to which the balance of credits above mentioned 
 granted to that officer should be transferred. This Account 
 is to be operated upon by the Paymaster-General solely by 
 Writes-off to his Drawing and Bill Accounts. 
 
 17. The 1 6th section of the Act, so far as its provisions 
 relate to the preparation of the Account therein referred to, 
 showing the surplus of Revenue applicable to the reduction 
 of the National Debt, is already in operation under the pro- 
 visions of the Act 57 Geo. III. c. 48; but a new provision has 
 been added to the section, which renders it necessary that the 
 Account in question should be certified by the Comptroller 
 and Auditor-General, before it is presented to Parliament. 
 My Lords will cause the Account to be transmitted to the 
 Comptroller and Auditor-General immediately after the 
 expiration of each quarter, in order that it may be certified 
 and presented to the House of Commons within the period 
 of fifteen days specified in the Act. 
 
 18. Let a copy of this Minute be transmitted to Sir William 
 Dunbar,^ to the Paymaster-General, the several Revenue 
 Departments, the Bank of England, the National Debt Com- 
 missioners, the Bank of Ireland, the Inclosure Commissioners, 
 the Master of the Mint, and the Commissioners of Public 
 Works in Ireland, for their information and guidance; and 
 request Sir William Dunbar to inform this Board if he has 
 any alteration to suggest in the Forms of Authorities, Nos. 3, 
 7, 8, and 13, annexed to this Minute, which are to emanate 
 from his department. 
 
 19. Let a copy of this Minute be laid before the House of 
 Commons. 
 
 *Then Comptroller and Auditor General. 
 
APPENDIX II 
 
 CONSOLIDATED FUND (NO. I) BILL, X9I2 
 
 A Bill to apply certain sums out of the Consolidated Fund to 
 the service of the years ending on the thirty-first day 
 of March one thousand nine hundred and eleven, one 
 thousand nine hundred and twelve, and one thousand 
 nine hundred and thirteen. 
 
 Most Gracious Sovereign — ^We, Your Majesty's most duti- 
 ful and loyal subjects, the Commons of the United Kingdom 
 of Great Britain and Ireland in Parliament assembled, 
 towards making good the supply which we have cheerfully, 
 granted to Your Majesty in this session of Parliament, have 
 resolved to grant unto Your Majesty the sums herein-after 
 mentioned; and do therefore most humbly beseech Your 
 Majesty that it may be enacted, and be it enacted by the 
 King's most Excellent Majesty, by and with the advice and 
 consent of the Lords Spiritual and Temporal, and Commons, 
 in this present Parliament assembled, and by the authority 
 of the same, as follows : — 
 
 1. The Treasury may issue out of the Consolidated Fund 
 of the United Kingdom of Great Britain and Ireland, and 
 apply towards making good the supply granted to His Majesty 
 for the service of the years ending on the thirty-first day of 
 March one thousand nine hundred and eleven and one thou- 
 sand nine hundred and twelve, the sum of two hundred and 
 forty-one thousand one hundred and seventeen pounds. 
 
 2. The Treasury may issue out of the Consolidated Fund 
 of the United Kingdom of Great Britain and Ireland, and 
 apply towards making good the supply granted to His Majesty 
 
 314 
 
APPENDIX II 
 
 for the service of the year ending on the thirty-first day of 
 March one thousand nine hundred and thirteen the sum of 
 fifty-nine million seventy-two thousand one hundred pounds. 
 
 3. — ^( I ) The Treasury may borrow from any person, by the 
 issue of Treasury Bills or otherwise, and the Bank of England 
 and the Bank of Ireland may advance to the Treasury on the 
 credit of the said sums, any sum or sums not exceeding in the 
 whole fifty-nine million three hundred and thirteen thousand 
 two hundred and seventeen pounds. 
 
 (2) The date of payment of any Treasury Bills issued 
 under this section shall be a date not later than the thirty- 
 first day of March one thousand nine hundred and thirteen, 
 and section six of the Treasury Bills Act, 1877 (which relates 
 to the renewal of bills), shall not apply with respect to those 
 bills. 
 
 (3) Any money borrowed otherwise than on Treasury Bills 
 shall be repaid, with interest not exceeding five pounds per 
 cent per annum, out of the growing produce of the Con- 
 solidated Fund, at any period not later than the next suc- 
 ceeding quarter to that in which the money was borrowed. 
 
 (4) Any money borrowed under this section shall be placed 
 to the credit of the account of the Exchequer, and shall form 
 part of the said Consolidated Fund, and be available in any 
 manner in which such Fund is available. 
 
 4. This Act may be cited as the Consolidated Fund (No. i) 
 Act, 1912. 
 
 • AToie.— Section 6 of the Treasury Bills Act, 1877, referred to in 
 Clause 3 (2) of the above Bill, empowers the Treasury to issue Treas- 
 ury Bills or Exchequer Bills in lieu of Bills paid off during the same 
 financial year. 
 
APPENDIX III 
 
 CONSOLIDATED FUND (APPROPRIATION) ACT, I912 
 
 2 & 3 Geo. v. c. 7 [yth August 1912] 
 
 An Act to apply a sum out of the Consolidated Fund to the 
 service of the year ending on the thirty-first day of March 
 one thousand nine hundred and thirteen, and to appro- 
 priate the Supplies granted in this Session of Parliament. 
 
 Most Gracious. Sovereign — ^We, Your Majest/s most duti- 
 ful and loyal subjects, the Commons of the United Kingdom 
 of Great Britain and Ireland in Parliament assembled, towards 
 making good the supply which we have cheerfully granted to 
 Your Majesty in this session of Parliament, have resolved to 
 grant unto Your Majesty the sum herein-after mentioned; 
 and do therefore most humbly beseech Your Majesty that it 
 may be enacted; and be it enacted by the King's most Ex- 
 cellent Majesty, by and with the advice and consent of the 
 Lords Spiritual and Temporal, and Commons, in this present 
 Parliament assembled, and by the authority of the same, 
 as follows: — 
 
 Grants out of Consolidated Fund 
 
 I. The Treasury may issue out of the Consolidated Fund 
 of the United Kingdom of Great Britain and Ireland, and 
 apply towards making good the supply gfranted to His Majesty 
 for the service of the year ending on the thirty-first day of 
 March one thousand nine hundred and thirteen the sum of 
 ninety-two million eight hundred and forty-seven thousand 
 three hundred and forty-three pounds. 
 
 316 
 
APPENDIX III 
 
 2.^(1) The Treasury may borrow from any person, by the 
 issue of Treasury Bills or otherwise, and the Bank of England 
 and the Bank of Ireland may advance to the Treasury on the 
 credit of the said sums, any sum or sums not exceeding in 
 the whole ninety-two million eight hundred and forty-seven 
 thousand three hundred and forty-three pounds. 
 
 (2) The date of payment of any Treasury Bills issued 
 under this section shall be a date not later than the thirty- 
 first day of March one thousand nine hundred and thirteen 
 and section six of the Treasury Bills Act, 1877 (which relates 
 to the renewal of bills), shall not apply with respect to those 
 bills. 
 
 (3) Any money borrowed otherwise than on Treasury Bills 
 shall be repaid, with interest not exceeding five pounds per 
 cent per annum, out of the growing produce of the Consoli- 
 dated Fund, at any period not later than the next succeeding 
 quarter to that in which the money was borrowed. 
 
 (4) Any money borrowed under this section shall be placed 
 to the credit of the account of the Exchequer, and shall form 
 part of the said Consolidated Fund, and be available in any 
 manner in which such Fund is available. 
 
 Appropriation of Grants 
 
 3. All sums granted by this Act and the other Act men- 
 tioned in Schedule (A.) annexed to this Act out of the said 
 Consolidated Fund towards making good the supply granted 
 to His Majesty, amotmting, as appears by the said schedule, 
 in the aggregate, to the sum of one hundred and fifty-two 
 million one hundred and sixty thousand five hundred and sixty 
 pounds are appropriated, and shall be deemed to have been 
 appropriated as from the date of the passing of the Acts 
 mentioned in the said Schedule (A.), for the services and 
 purposes expressed in Schedule (B.) annexed hereto. 
 
 The abstract of schedules and schedules annexed hereto, 
 with the notes (if any) to such schedules, shall be deemed to 
 
 317 
 
APPENDIX III 
 
 be part of this Act in the same manner as if they had been 
 contained in the body thereof. 
 
 In addition to the sums hereby granted out of the Con- 
 solidated Fund, there may be applied out of any money 
 directed under section two of the Public Accounts and Charges 
 Act, 1 89 1, to be applied as appropriations in aid of the grants 
 for the services and purposes specified in Schedule (B.) an- 
 nexed hereto, the sums respectively set forth in the last 
 column of the said schedule. 
 
 4. — (i) So long as the aggregate expenditure on naval and 
 military services respectively is not made to exceed the 
 aggregate sums appropriated by this Act for those services 
 respectively, any surplus arising on any vote for those services, 
 either by an excess of the sum realised on account of appro- 
 priations in aid of the vote over the sum which may be applied 
 under this Act as appropriations in aid of that vote, or by 
 saving of expenditure, on that vote, may, with the sanction of 
 the Treasury, be temporarily applied either in making up any 
 deficiency in the sums realised on account of appropriations 
 in aid of any other vote in the same department, or in defray- 
 ing expenditure in the same department which is not provided 
 for in the sums appropriated to the service of the department 
 by this Act, and which it may be detrimental to the public 
 service to postpone until provision can be made for it by 
 Parliament in the usual course. 
 
 (2) A statement showing all cases in which the sanction of 
 the Treasury has been given to the temporary application of 
 a surplus under this section, and showing the circumstances 
 under which the sanction of the Treasury has been given, 
 shall be laid before the House of Commons with the appropri- 
 ation accounts of the naval and military services for the year, 
 in order that any temporary application of any surplus sanc- 
 tioned by the Treasury under this section may be submitted 
 for the sanction of Parliament. 
 
 5. Whereas under the powers given for the purpose by the 
 Appropriation Act, 1910, and the Appropriation Act, 191 1, 
 
 318 
 
APPENDIX III 
 
 surpluses arising on certain votes for the naval and military 
 services respectively have been temporarily applied as shown 
 in the accounts set out iri Schedule (C.) to this Act: 
 
 It is enacted that the application of those surpluses as 
 shown in the said accounts is hereby sanctioned. 
 
 6. A person shall not receive any part of a grant which 
 may be made in pursuance of this Act for half-pay or army, 
 navy, or civil non-effective services, until he has subscribed 
 such declaration as may from time to time be prescribed by a 
 warrant of the Treasury before one of the persons prescribed 
 by such warrant: 
 
 Provided that, whenever any such pajrment is made at 
 more frequent intervals than once in a quarter, the Treasury 
 may dispense with the production of more than one declara-' 
 tion in respect of each quarter. 
 
 Any person who makes a declaration for the purpose of 
 this section, knowing the same to be untrue in any material 
 particular, shall be guilty of a misdemeanour. 
 
 7. This Act may be cited for all purposes as the Appropria- 
 tion Act, 1912. 
 
APPENDIX III 
 
 ABSTRACT of SCHEDULES (A.) and (B.) to which this Act refers 
 
 SCHEDULE (A.) 
 
 Grants out of the Consolidated Fund .... £152,160,560 
 
 SCHEDULE (B.)— Appropriation of Grants 
 
 Sums not exceeding 
 
 Supply Grants, 
 
 Appropriations in Aid. 
 
 1910-1911-1912. 
 Part 1. NavyExcesses,1910-1911 
 " 2. Civil Services (Supple- 
 mentary), 1911-1912 
 
 1912-1913. 
 3. Navy . . . . 
 
 I Army .... 
 Army (Ordnance Fac- 
 tories) 
 
 5. Civil Services, Class I. 
 
 6 
 7. 
 
 ' 8. 
 
 ' 9. 
 
 ' 10. 
 
 ' 11. 
 
 ' 12. 
 
 Class II. 
 Class III. 
 Class IV. 
 Class V. 
 Class VI. 
 Class VII. 
 Class VIIL 
 
 Total Civil Services. 
 13. Revenue Dpts., &c. . 
 Grand Total . 
 
 £ s. d. 
 100 
 
 241,017 
 
 £ s. d 
 28,795 10 10 
 
 27,190 
 
 241,117 
 
 55,985 10 10 
 
 45,075,400 
 27,860,000 
 
 100 
 
 1,863,892 
 3,414,165 
 
 2,923,000 
 
 72,935,500 
 
 8,201,057 
 
 3,831,430 
 
 4,182,144 
 
 4,621,535 
 
 19,705,454 
 
 2,142,768 
 
 13,014,564 
 
 380,699 
 
 3,042,669 
 
 125,263 
 
 828,481 
 
 851,101 
 
 30,774 
 
 138,366 
 
 7,250 
 
 202,500 
 
 50,921,263 
 
 2,183,735 
 
 28,062,680 
 
 734,963 
 
 152,160,560 
 
 11,175,740 10 10 
 
APPENDIX III 
 
 SCHEDULE (A.) 
 
 Grants out of the Consolidated Fund 
 
 For the service of the years ended on the £ s. d. 
 
 31st day of March 1911 and 1912:— 
 Under Act 2 Geo. S. c. 1 . . . 241,117 
 
 For the service of the year ending on the 
 31st day of March 1913: — 
 
 UnderAct2Geo. S. c. 1 . . . 59,072,100 
 Under this Act 92,847,343 
 
 Total 152,160,560 
 
 SCHEDULE (B.)— Part 1 
 Navy Excesses, 1910-1911 
 
 Sums not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 Sum granted to make good Excesses of 
 Navy Expenditure beyond the Grants 
 for the year ended on the 31st day of 
 March 1911 * 
 
 s. d. 
 
 100 
 
 s. d. 
 
 28,795 10 10 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 2 
 
 Civil Services (Supplementary), 19U-1912 
 
 Schedule of Supplementary Sums granted to defray the charges for the 
 Services herein particularly mentioned for the year ended on thd 31st 
 day of March 1912; viz.: — 
 
 
 Sums not 
 
 exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 
 £ 
 
 £ 
 
 CIVIL SERVICES. 
 
 
 
 Class II. 
 
 
 
 For the Salaries and Expenses in the Offices 
 
 
 
 of the House of Commons .... 
 
 10 
 
 940 
 
 For the Salaries and Expenses of the Board 
 
 
 
 of Agriculture and Fisheries, and of Royal 
 
 
 
 Botanic Gardens, Kew, including certain 
 
 
 
 Grants in Aid 
 
 11,400 
 
 18,105 
 
 For Stationery, Printing, Paper, Binding 
 
 
 
 and Printed Books for the PubUc Service, 
 
 
 
 for the Salaries and Expenses of the Sta- 
 
 
 
 tionery Office, and for Sundry Miscella- 
 
 
 
 neous Services, including Reports of Parlia- 
 
 
 
 mentary Debates 
 
 47,000 
 
 2,000 
 
 For the Salaries and Expenses of the Depart- 
 
 
 
 ment of Agriculture and other Industries 
 
 
 
 and Technical Instruction for Ireland, 
 
 
 
 and of the Services administered by that 
 
 
 
 Department 
 
 5 
 
 6,645 
 
 For the Salaries and Expenses of the Local 
 
 
 
 Government Board, Ireland, and to en- 
 
 
 
 able it to make good certain Statutory 
 
 
 
 advances 
 
 50,000 
 
 , , 
 
 Class III. 
 
 
 
 For certain Miscellaneous Legal Expenses 
 
 1,000 
 
 .. 
 
 For such of the Salaries and Expenses of the 
 
 
 
 Supreme Court of Judicature and Court 
 
 
 
 of Criminal Appeal as are not charged on 
 
 
 
 the Consolidated Fund .... 
 
 1,600 
 
 .. 
 
 For the Salaries and Expenses of the Estab- 
 
 
 
 lishment of the Crofters Commission . 
 
 120 
 
 •• 
 
 Carried forward 
 
 111,135 
 
 27,690 
 
 322 
 
APPENDIX III 
 
 Sums not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 Brought forward 
 For the Salaries and Expenses of the Com- 
 missioner of Police, the Police Courts, 
 and Metropolitan Police Establishment 
 of Dublin 
 
 Class IV. 
 
 For the Salaries and Expenses of the Nation- 
 al Gallery, including a Grant in Aid for 
 the Purchase of Pictures .... 
 
 For the Salaries and Expenses of the Nation- 
 al Portrait Gallery 
 
 For Public Education in Scotland, and for 
 Science and Art in Scotland 
 
 Class V. 
 For making good the net loss on trans- 
 actions connected with the raising of 
 money for the various Treasury Chests 
 Abroad in the year 1910-1911 . 
 
 Class VII. 
 
 For Expenditure in connection with Inter- 
 national Exhibitions (including a Grant 
 in Aid of the Expenses of the Royal Com- 
 mission for the Brussels, Rome, and Turin 
 Exhibitions) i . . . . 
 
 For a Grant in Aid of the Expenses incurred 
 on account of the Coronation of His 
 Majesty the King, including the State 
 Visits to Ireland, Wales and Scotland . 
 
 Class VIII. 
 For the Salaries and Expenses of the Offices 
 of the Insurance Commissioners in Eng- 
 land, Wales, Scotland and Ireland, and of 
 the Joint Committee 
 
 111,135 
 
 £ 
 
 27,690 
 
 Total 
 
 3,500 
 
 500 > 
 
 17,776 
 
 .. 
 
 40 
 
 • • 
 
 15,000 
 
 ■• 
 
 42,666 
 
 •• 
 
 19,300 
 
 ■ • 
 
 10 
 
 ■• 
 
 * 
 
 31,590 
 
 
 241,017 
 
 27,190 
 
 1 Deficit. 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 3 
 
 NAVY 
 
 Schedule of Sums granted, and of the sums which may be applied as appro- 
 priations in aid in addition thereto, to defray the charges of the Navy 
 Services herein particularly mentioned, which will come in course of 
 payment during the year ending on the 31st day of March 1913; viz.: — 
 
 
 
 Suzns not 
 
 exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 
 £ 
 
 £ 
 
 1. 
 
 For wages, &c., to 137,500 officers, sea- 
 men, and boys, coastguard, and royal 
 marines (including an additional num- 
 ber of 1500 men and boys and an addi- 
 
 
 
 
 tional sum of 60,000/.) .... 
 
 7,687,000 
 
 174,500 
 
 2. 
 
 For victualling and clothing for the navy, 
 including the cost of victualling estab- 
 lishments at home and abroad (in- 
 
 
 
 
 cluding an additional sum of 54,000/.) 
 
 2,682,100 
 
 731,337 
 
 3. 
 
 For medical services, including the cost 
 of medical establishments at home 
 
 
 
 
 and abroad 
 
 269,900 
 
 20,065 
 
 4. 
 
 For martial law 
 
 3,500 
 
 100 
 
 5. 
 
 For educational services .... 
 
 152,500 
 
 66,385 
 
 6. 
 
 For scientific services .... 
 
 72,000 
 
 31,789 
 
 7. 
 
 For the royal naval reserve, the royal 
 fleet reserve (including seamen pen- 
 sioner reserve), and the royal naval 
 volunteers, &c. . . * . . 
 
 
 
 
 426,700 
 
 9,732 
 
 8. 
 
 Sect. 1. For the personnel for shipbuild- 
 ing, repairs, maintenance, &c., in- 
 cluding the cost of establishments of 
 dockyards and naval yards at home 
 and abroad (including an additional 
 
 
 
 
 sum of 35,000/.) 
 
 3,528,800 
 
 22,000 
 
 (1 
 
 Sect. 2. For the materiel for shipbuild- 
 ing, repairs, maintenance, &c., in- 
 cluding the cost of establishments of 
 dockyards and naval yards at home 
 
 
 
 
 and abroad 
 
 Carried forward 
 
 5,076,800 
 
 380,300 
 
 
 19,899,300 
 
 1,436,208 
 
 324 
 
APPENDIX III 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 Brought forward 
 
 8. Sect. 3. For contract work for ship- 
 
 building, repairs, &c. (including an 
 additional sum of 611,000/.) 
 
 9. For naval armaments (including an ad- 
 
 ditional sum of 200,000/.) . 
 
 10. For works, buildings, and repairs at home 
 
 and abroad, including the cost of 
 superintendence, purchase of sites, 
 grants in aid, and other charges con- 
 nected therewith (including an addi- 
 tional sum of 30,000/.) .... 
 
 11. For various miscellaneous effective serv- 
 
 ices 
 
 12. For the Admiralty Office . . 
 
 13. For half-pay, and retired pay to officers 
 
 of the navy and marines 
 
 14. For naval and marine pensions, gratui- 
 
 ties and compassionate allowances . 
 
 15. For civil superannuation, com^^ensation 
 
 allowances, and gratuities . 
 
 £ 
 19,899,300 
 
 13,666,600 
 4,119,000 
 
 3,545,000 
 
 532,000 
 428,500 
 
 955,800 
 
 1,516,200 
 
 413,000 
 
 £ 
 1,436,208 
 
 175,000 
 145,700 
 
 32,000 
 
 13,386 
 8,850 
 
 21,412 
 
 30,926 
 
 410 
 
 Total Navy Services 
 
 45,075,400 
 
 1,863,892 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 4 
 
 ARMY 
 
 Schedule of Sums granted, and of the sums which may be applied as appro- 
 priations in aid in addition thereto, to defray the charges of the Army 
 Services herein particularly mentioned, which will come in course of 
 payment during the year ending on the 31st day of March 1913; viz.: — 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the pay, &c., of His Majesty's Army 
 
 (including Army Reserve to a number 
 not exceeding 139,000) at home and 
 abroad (exclusive of India) . 
 
 2. For the pay, &c., of the medical estab- 
 
 lishments, and for medicines, &c. . 
 
 3. For the pay, bounty, &c., of the Special 
 
 Reserve (to a number not exceeding 
 91,363, including 1300 militia and 150 
 militia reserve) and of the Officers' 
 Training Corps 
 
 4. For grants, pay, allowances, training, 
 
 and miscellaneous charges of the Ter- 
 ritorial Force (not exceeding 319,673 
 men, including 5000 Territorial Force 
 Reserve), and Channel Islands and 
 Colonial Militia, including the expense 
 of permanent staff 
 
 5. For establishments for military education 
 
 6. For quartering, transport, and remounts 
 
 7. For supplies and clothing 
 
 8. For the Ordnance Department estab- 
 
 lishments and for general stores . 
 
 9. For armaments, aviation and engineer 
 
 stores, including technical commit- 
 tees 
 
 £ 
 
 8,536,000 
 436,000 
 
 715,000 
 
 2,780,000 
 
 142,000 
 
 1,624,000 
 
 4,275,000 
 
 615,000 
 1,718,000 
 
 £ 
 
 1,354,000 
 1,700 
 
 6,600 
 
 4,800 
 
 89,100 
 
 67.000 
 
 198,500 
 
 220,000 
 325,000 
 
 Carried forward . 
 
 20,841,000 
 
 2,266,700 
 
 326 
 
APPENDIX- III 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No.' 
 
 £ 
 
 £ 
 
 Brought forward . 
 
 20,841,000 
 
 2,266,700 
 
 10. For works, buildings, and repairs, lands. 
 
 
 
 and miscellaneous engineer services. 
 
 
 
 including staff in connection therewith 
 
 2,602,000 
 
 106,900 
 
 11. For miscellaneous effective services 
 
 72,000 
 
 950 
 
 12. For the War Office 
 
 440,000 
 
 560 
 
 13. For rewards; half-pay; retired pay; 
 
 
 
 widows' pensions; and other non- 
 
 
 
 effective charges for officers . 
 
 1,843,000 
 
 515,000 
 
 14. For Chelsea and Kilmainham hospitals; 
 
 
 
 for out pensions; for rewards for dis- 
 
 
 
 tinguished services; for widows' pen- 
 
 
 
 ' sions; and for other non-effective 
 
 
 
 charges for warrant officers, non- 
 
 
 
 commissioned officers, and men, &c. . 
 
 1,917,000 
 
 524,000 
 
 17. For civil superannuation, compensation. 
 
 
 
 and additional allowances, gratuities. 
 
 
 
 injury grants, &c 
 
 145,000 
 
 55 
 
 Total Army Services 
 
 27,860,000 
 
 3,414,165 
 
 Army (Ordnance Factories). 
 
 
 
 For the ordnance factories, the cost of pro- 
 
 
 
 ductions of which is charged to the army. 
 
 
 
 navy, and Indian and Colonial Govern- 
 
 100 
 
 2,923,000 
 
 ments &c 
 
 
 
 Total Army Services (including Ord-\ 
 NANCE Factories) . . . . , 
 
 27,860,100 
 
 6,337,165 
 
 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part S 
 
 CIVIL SERVICES.— Class I 
 
 Schedule of Suus granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of 
 the several Civil Services herein partictdarly mentioned, which will 
 come in course of payment during the year ending on the 31st day of 
 March 1913; viz.: — 
 
 
 Stuns not ezceedinz 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For expenditure in respect of royal 
 
 palaces, including a grant in aid . 
 
 2. For expenditure in respect of Osborne . 
 
 3. For the royal parks and pleasure gar- 
 
 dens 
 
 4. For expenditure in respect of the Houses 
 
 of Parliament buildings 
 
 5. For expenditure in respect of miscella- 
 
 neous legal buildings. Great Britain . 
 
 6. For expenditure in respect of Art and 
 
 Science buildings, Great Britain (in- 
 cluding a supplementary sum of 
 38,350/.) 
 
 7. For expenditure in respect of diplomatic 
 
 and consular buildings, and for the 
 maintenance of certain ' cemeteries 
 abroad (including a supplementary 
 sum of 20,000/.) 
 
 8. For the Customs and Excise, Inland 
 
 Revenue, Post Office and Telegraph 
 buildings in Great Britain, and certain 
 Post Offices abroad .... 
 
 9. For Labour Exchange and Insurance 
 
 buildings. Great Britain (including a 
 supplementary sum of 135,000/.) 
 10. For expenditure in respect of sundry 
 public buildings in Great Britain not 
 provided for on other votes . 
 
 £ 
 
 71,300 
 13,000 
 
 125,700 
 
 50,800 
 
 79,200 
 
 142,650 
 
 105,800 
 
 725,800 
 350,300 
 725,500 
 
 £ 
 
 1,087 
 2,400 
 
 11,470 
 
 400 
 
 600 
 
 2,045 
 
 1,238 
 
 5,340 
 
 565 
 
 12,298 
 
 Carried forward 
 
 2,390.050 
 
 37,443 
 
 328 
 
APPENDIX III 
 
 
 
 Sums not 
 
 exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 
 £ 
 
 £ 
 
 
 Brought forward 
 
 2,390,050 
 
 37,443 
 
 11. 
 
 For the survey of the United Kingdom, 
 and for minor services connected 
 
 
 
 
 therewith 
 
 214,589 
 
 43,475 
 
 12. 
 
 For maintaining certain harbours under 
 the Board of Trade and for grants in 
 
 
 
 
 aid of harbours 
 
 75,065 
 
 2,600 
 
 13. 
 
 For constructing a new harbour of refuge 
 
 
 
 
 at Peterhead * 
 
 32,000 
 
 .. 
 
 14. 
 
 For rates and contributions in lieu of 
 rates, &c., in respect of Government 
 property, and for rates on houses occu- 
 pied by Representatives of Foreign 
 Powers, and for salaries and expenses 
 of the Rating of Government prop- 
 erty department, and for a contribu- 
 tion towards the expenses of the Lon- 
 
 
 
 
 don Fire Brigade 
 
 798,000 
 
 33,785 
 
 IS. 
 
 For the erection, repairs, and main- 
 tenance of public buildings in Ireland, 
 for the maintenance of certain parks 
 and pubUc works, and for the main- 
 tenance of drainage works on the 
 
 
 
 
 River Shannon 
 
 273,366 
 
 7,960 
 
 16. 
 
 For payments tmder the Tramways 
 and Public Companies (Ireland) Act, 
 1883, &c., the Railways (Ireland) Act, 
 1896, and the Marine Works (Ire- 
 
 
 
 
 land) Act, 1902 
 
 Total Civil Services, Class I . 
 
 48,360 
 
 •• 
 
 
 3,831,430 
 
 125,263 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 6 
 
 CIVIL SERVICES.— Class II 
 
 Schedule of Sums granted, and of the sums which may be applied as appro- 
 priations in aid in addition thereto, to defray the charges of the several 
 Civil Services herein particularly mentioned, which will come in course 
 of payment during the year ending on the 31st day of March 1913; 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 AppropriL-tions 
 in Aid. 
 
 No. 
 
 1. For the salaries and expenses of the offices 
 
 of the House of Lords .... 
 
 2. For the salaries and expenses of the 
 
 House of Commons .... 
 
 3. For the salaries and other expenses of 
 
 the department of His Majesty's 
 Treasury and subordinate depart- 
 ments, including expenses in respect 
 of advances under the Light Rail- 
 ways Act, 1896 . ... 
 
 4. For the salaries and expenses of the 
 
 office of His Majesty's Secretary of 
 State for the Home Department and 
 subordinate offices 
 
 5. For the salaries and expenses of the 
 
 department of His Majesty's Secre- 
 tary of State for Foreign Affairs . 
 
 6. For the salaries and expenses of the 
 
 department of His Majesty's Secre- 
 tary of State for the Colonies, includ- 
 ing a grant in aid of certain expenses 
 connected with Emigration . 
 
 7. For the salaries and expenses of the de- 
 
 partment of His Majesty's most Hon- 
 ourable Privy Council .... 
 
 8. For the salaries and expenses of the office 
 
 of the Committee of Privy Council for 
 Trade, and subordinate departments 
 (including a supplementary sum of 
 3750/.) 
 
 £ 
 
 28,741 
 
 302,850 
 
 114,371 
 
 258,007 
 68,420 
 
 60,075 
 10,646 
 
 365,612 
 
 £ 
 15,000 
 
 16,000 
 
 4,344 
 
 13,500 
 775 
 
 1,800 
 26,446 
 
 Carried forward 
 
 1,208,722 
 
 77,865 
 
 330 
 
APPENDIX III 
 
 Sxims not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. - ' 
 
 Brought forward 
 9. For the salaries and expenses of certain 
 services transferred from the Mercan- 
 tile Marine Fund and other services 
 connected with the Mercantile Marine 
 (including Merchant Seamen's Fund 
 Pensions) 
 
 10. For meeting the deficiency of income 
 
 from fees, &c., for the requirements 
 of the Board of Trade, under the 
 Bankruptcy Acts, 1883 and 1890 
 
 11. For the salaries and expenses of the 
 
 Board of Agriculture and Fisheries 
 and of Royal Botanic Gardens, Kew, 
 including certain grants in aid 
 
 12. For the salaries and expenses of the 
 
 Charity Commission for England and 
 Wales 
 
 13. For the Salaries and Expenses of the 
 
 Department of the Government Chem- 
 ist 
 
 14. For the salaries and expenses of the Civil 
 
 Service Commission .... 
 
 15. For the salaries and expenses of the de- 
 
 partment of the Comptroller and Audi- 
 tor-General 
 
 16. For the salaries and expenses of the Regis- 
 
 try of Friendly Societies 
 
 17. For the salaries and expenses of the Lor 
 
 cal Government Board .... 
 
 18. For the salaries and expenses of the 
 
 office of the Commissioners in Lunacy 
 in England 
 
 19. For the salaries and expenses of the Mint, 
 
 including the expenses of coinage, and 
 for the expenses of the preparation of 
 medals, dies for postage and other 
 stamps, and His Majesty's seals . , 
 
 20. For the salaries and expenses of the Na- 
 
 tional Debt Office 
 
 Carried forward 
 
 £ 
 1,208,722 
 
 109,788 
 
 253,539 
 
 30,313 
 
 20,633 
 55,134 
 
 67,760 
 
 12,122 
 
 283,374 
 
 19,830 
 
 SO 
 12,580 
 
 2,073,853 
 
 £ 
 77,865 
 
 73,400 
 
 111,291 
 
 137,580 
 
 3,124 
 
 5,580 
 962 
 
 161,000 
 3,177 
 
 573,979 
 
 331 
 
APPENDIX III 
 
 Sums not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 Brought forward . 
 
 21. For the salaries and expenses of the Pub- 
 
 lic Record Office and of the Office of 
 Land Revenue Records and Inrol- 
 ments 
 
 22. For the salaries and expenses of the 
 
 establishment under the Public Works 
 Loan Commissioners .... 
 
 23. For the salaries and expenses of the de- 
 
 partment of the Registrar-General of 
 Births, &c., in England 
 
 24. For stationery, printing, paper, binding, 
 
 and printed books for the public serv- 
 ice, for the salaries and expenses of 
 the Stationery Office, and for sundry 
 miscellaneous services, including re- 
 ports of Parliamentary Debates . 
 
 25. For the salaries and expenses in the ofl&ce 
 
 of His Majesty's Woods, Forests, and 
 Land Revenues 
 
 26. For the salaries and expenses of the 
 
 office of the Commissioners of His 
 Majesty's Works and Public Build- 
 ings 
 
 27. For His' Majesty's foreign and other 
 
 secret services 
 
 28. For the salaries and expenses of the 
 
 office of His Majesty's Secretary for 
 Scotland and subordinate, offices, ex- 
 penses under the Inebriates Acts, 1879 
 to 1900, and expenses under the 
 Private Legislation Procedure (Scot- 
 land) Act, 1899 
 
 29. For the salaries and expenses of the 
 
 Board of Agriculture for Scotland 
 
 30. For the salaries and expenses of the 
 
 Fishery Board for Scotland, and for 
 grants in aid of piers or quays 
 
 31. For the salaries and expenses of the 
 
 Board of Lunacy in Scotland 
 
 Carried forward 
 
 332 
 
 £ 
 2,073,853 
 
 25,320 
 
 34 
 
 60,405 
 
 959,751 
 21,380 
 
 136,750 
 50,000 
 
 3,584,750 
 
 £ 
 
 573,979 
 
 11,800 
 10,250 
 
 140,000 
 
 17,126 
 
 2,010 
 
 209,580 
 
 5,000 
 
 24,428 
 
 
 6,123 
 
 520 
 
 743,559 
 
APPENDIX III 
 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 
 £ 
 
 £ 
 
 
 Brought forward 
 
 3,584,750 
 
 743,559 
 
 32. 
 
 For the salaries and expenses of the 
 department of the Registrar-General 
 
 
 
 
 of Births, &c., in Scotland . 
 
 8,356 
 
 1,300 
 
 33. 
 
 For the salaries and expenses of the 
 
 
 
 
 Local Government Board for Scotland 
 
 20,418 
 
 , , 
 
 34. 
 
 For the salaries and expenses of the 
 household of the Lord-Lieutenant of 
 
 
 
 
 Ireland 
 
 4,552 
 
 ^ , 
 
 35. 
 
 For the salaries and expenses of the 
 offices of the Chief Secretary to the 
 Lord-Lieutenant of Ireland, in Dublin 
 and London, and of the Inspectors 
 of Lunatic Asylums, and expenses 
 
 
 
 
 imder the Inebriates Acts . 
 
 27,296 
 
 307 
 
 36. 
 
 For the salaries and expenses of the 
 department of agriculture and other 
 industries, and technical instruction 
 for Ireland, and of the services admin- 
 istered by that department, including 
 
 
 
 
 sundry grants in aid . 
 
 136,314 
 
 57,481 
 
 37. 
 
 For the salaries and expenses of the 
 office of the Commissioners of Char- 
 itable Donations and Bequests for 
 
 
 
 
 Ireland 
 
 2,052 
 
 34 
 
 38. 
 
 For the Congested Districts Board for 
 
 
 
 
 Ireland (Grants-tn-Aid) 
 
 169,750 
 
 
 39. 
 
 For the salaries and expenses of the 
 Local Government Board in Ireland, 
 
 
 
 
 including sundry grants in aid . 
 
 111,688 
 
 13,000 
 
 40. 
 
 For the salaries and expenses of the 
 Public Record Office in Ireland and of 
 
 
 • 
 
 
 the Keeper of State Papers in Dublin 
 
 7,446 
 
 
 41. 
 
 For the salaries and expenses of the 
 
 
 
 
 Office of Public Works in Ireland 
 
 46,969 
 
 3,000 
 
 42. 
 
 For the salaries and expenses of the 
 department of the Registrar-General 
 of Births, &c., and for the expenses 
 of collecting emigration statistics in 
 
 
 
 
 Ireland 
 
 Carried forward 
 
 20,258 
 
 800 
 
 
 4,139,849 
 
 819,481 
 
 333 
 
APPENDIX III 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 in Aid. 
 
 No. 
 
 Brought forward . 
 
 43. For the salaries and expenses of the 
 general valuation and boundary survey 
 of Ireland 
 
 £ 
 
 4,139,849 
 42,295 
 
 £ 
 819,481 
 
 9,000 
 
 Total Civil Services, Class II. 
 
 4,182,144 
 
 828,481 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 7 
 
 CIVIL SERVICES— Class III 
 
 ScHEDXJLE OF SuMS granted, and of the sums which may be applied as appro- 
 priations in aid in addition thereto, to defray the charges of the several 
 Civil Services herein particularly mentioned, which will come in course 
 of payment during the year ending on the 31st day of March 1913; 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. ^ 
 
 1. For the salaries of the law oflBcers de- 
 
 partment, the salaries and expenses of 
 the department of the Solicitor for 
 the affairs of His Majesty's Treasury 
 and King's Proctor, and the depart- 
 ment of Director of Public Prosecu- 
 tions, for the costs of prosecutions, of 
 other legal proceedings, and of Par- 
 liamentary Agency .... 
 
 2. For certain miscellaneous legal expenses, 
 
 including grants in aid of the expenses 
 of the Incorporated Law Societies of 
 England and Ireland .... 
 
 3. For such of the salaries and expenses of 
 
 the Supreme Court of Judicature and 
 Court of Criminal Appeal as are not 
 charged on the Consolidated Fund 
 
 4. For the salaries and expenses of the 
 
 of&ce of Land Registry .... 
 
 5. For the salaries and expenses of the 
 
 oflSce of Public Trustee 
 
 6. For the salaries and expenses connected 
 
 with the County Courts 
 
 £ 
 
 83,812 
 
 50,194 
 
 330,632 
 
 36,471 
 
 10 
 
 5 
 
 £ 
 
 19,000 
 
 12,731 
 
 51,700 
 
 29,990 
 499,352 
 
 Carried forward 
 
 501,124 
 
 612,773 
 
 335 
 
APPENDIX III 
 
 Sums not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 Brought forward 
 
 7. For the salaries of the Coirmissioner 
 
 and Assistant Commissioners of the 
 Metropolitan Police, and of the Re- 
 ceiver for the Metropolitan Police 
 District, the contribution towards 
 the expenses of the Metropolitan 
 Police, and the salaries and expenses 
 of the Inspectors of Constabulary . 
 
 8. For the expenses of the prisons in Eng- 
 
 land, Wales, and the Colonies 
 
 9. For the salaries and expenses of the 
 
 office of the Inspector of Reforma- 
 tories and for the maintenance of 
 juvenile offenders in reformatory, in- 
 dustrial, and day industrial schools 
 and in places of detention under the 
 Children Act, in Great Britain . 
 
 10. For the maintenance of criminal lunatics 
 
 in the Criminal Lunatic Asylums at 
 Broadmoor and Rampton, including 
 the furnishing and equipment of 
 Rampton Asylum 
 
 11. For the salaries and expenses of the Lord 
 
 Advocate's department knd other law 
 charges, and the salaries and expenses 
 of^the Courts of Law and Justice in 
 Scotland 
 
 12. For the salaries and expenses of the ofiBce 
 
 of the Scottish Land Court . 
 
 13. For the salaries and expenses of the offices 
 
 in His Majesty's General Register 
 House, Edinburgh 
 
 14. For the salaries and expenses of the 
 
 Prison Commissioners for Scotland, 
 and of the prisons under their con- 
 trol, including the maintenance of 
 criminal lunatics and inmates of the 
 State inebriate reformatory, and the 
 preparation of judicial statistics . 
 
 £ 
 501,124 
 
 612,773 
 
 Carried forward 
 
 336 
 
 126,998 
 
 77 
 
 776,550 
 
 25,000 
 
 277,474 
 
 25,000 
 
 83,154 
 
 1,216 
 
 87,373 
 
 49,300 
 
 11,600 
 
 •• 
 
 43,966 
 
 •• 
 
 101,776 
 
 5,800 
 
 2,010,015 
 
 719.166 
 
APPENDIX III 
 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 
 £ 
 
 £ 
 
 
 fought forward 
 
 2,010,015 
 
 719,166 
 
 IS. 
 
 For criminal prosecutions and other law 
 charges in Ireland, including a Grant 
 in relief of certain expenses payable 
 
 
 
 
 by statute out of local rates 
 
 65,410 
 
 490 
 
 16. 
 
 For such of the salaries and expenses of 
 the Supreme Court of Judicature and 
 of certain other legal departments in 
 Ireland as are not charged on the Con- 
 
 
 
 
 solidated Fund 
 
 113,135 
 
 3,900 
 
 17. 
 
 For the salaries and expenses of the ofSce 
 
 
 
 
 of the Irish Land Commission . 
 
 616,147 
 
 24,500 
 
 18. 
 
 For the salaries, allowances, and expenses 
 of various county court officers, and 
 of magistrates in Ireland, and the ex- 
 
 
 
 
 penses of revision 
 
 111,145 
 
 5,200 
 
 19. 
 
 For the salaries and expenses of the Com- 
 missioner of Police, the police courts 
 and the metropolitan police establish- 
 
 
 
 
 ment of Dublin 
 
 96,466 
 
 56,715 
 
 20. 
 
 For the expenses of the Royal Irish Con- 
 
 
 
 
 stabulary . 
 
 1,377,389 
 
 35,680 
 
 21. 
 
 For the expenses of the General Prisons 
 Board in Ireland, and of the estabUsh- 
 ments under their control; the regis- 
 tration of habitual criminals and the 
 maintenance of criminal lunatics con- 
 
 
 
 
 fined in district lunatic asylums . 
 
 112,439 
 
 3,500 
 
 22. 
 
 For the expenses of reformatory and in- 
 
 
 
 
 dustrial schools in Ireland . 
 
 111,912 
 
 1,950 
 
 23. 
 
 For the maintenance of criminal lunatics 
 in the Dundrum Criminal Lunatic 
 
 
 
 
 Asylum, Ireland 
 
 'Total Civil Services, Class III. . 
 
 7,477 
 
 
 
 4,621,535 
 
 851,101 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 8 
 
 CIVIL SERVICES.— Class IV 
 
 Schedule of Sums granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of the 
 several Civil Services herein particularly mentioned, which will come 
 in course of payment during the year ending on the 31st day of March 
 1913; viz.:— ' 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the salaries and expenses of the Board 
 
 of Education, and of the various es- 
 tablishments connected therewith, in- 
 cluding sundry grants in aid (includ- 
 ing a supplementary sum of 15,000/.) . 
 
 2. For the salaries and other expenses of 
 
 the British Museum, and of the Nat- 
 ural History Museum, including cer- 
 tain grants in aid 
 
 3. For the salaries and expenses of the 
 
 National Gallery, and of the National 
 Gallery of British Art, Millbank, in- 
 cluding a grant in aid for the pur- 
 chase of pictures 
 
 4. For the salaries and expenses of the 
 
 National Portrait Gallery, including 
 a grant in aid for the purchase of por- 
 traits 
 
 5. For the salaries and expenses of the Wal- 
 
 lace Collection 
 
 6 For sundry grants in aid of scientific In- 
 vestigation, &c., and other grants 
 
 7. For grants in aid of the expenses of cer- 
 tain Universities and Colleges in Great 
 Britain and of the expenses under the 
 Welsh Intermediate Education Act, 
 1889 
 
 £ 
 
 14,519,765 
 204,071 
 
 14,445 
 
 5,681 
 
 8,511 
 
 125,523 
 
 314,200 
 
 £ 
 
 10,100 
 16,019 
 
 2,500 
 660 
 
 Carried forward 
 
 15,192,196 
 
 29,279 
 
 338 
 
APPENDIX III 
 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 
 £ 
 
 £. 
 
 
 Brought forward 
 
 15,192,196 
 
 29,279 
 
 8. 
 
 For public education in Scotland, and 
 for Science and Art in Scotland, in- 
 
 
 
 
 cluding a grant in aid . . 
 
 2,489,425 
 
 , , 
 
 9. 
 
 For the salaries and expenses of the 
 National Gallery, the Scottish Na- 
 
 
 
 
 tional Portrait Gallery, and the Mu- 
 
 
 
 
 seum of Antiquities, including certain 
 
 
 
 
 grants in aid 
 
 6^98 
 
 • * 
 
 10. 
 
 For the expenses of the Commissioners- 
 of National Education in Ireland, in- 
 cluding a grant in aid of the Teachers 
 Pension Fund, Ireland (including a 
 supplementary sum of 10,000Z. for 
 
 
 
 
 expenses of scholarships tenable by 
 
 
 - - ■■ — 
 
 
 pupils from primary schools in Ire- 
 
 
 
 
 land) . 
 
 1,744,554 , 
 
 150 
 
 11. 
 
 For the expenses of the Office of the 
 Commissioners for managing certain 
 
 
 
 
 school endowments in Ireland 
 
 935 
 
 • ■ 
 
 12. 
 
 For the salaries and expenses of the 
 National Gallery of Ireland, includ- 
 ing a grant in aid for the purchase of 
 
 
 
 
 pictures . . 
 
 3,155 
 
 .. 
 
 13. 
 
 For the salaries and expenses of the 
 Institutions of Science and Art in 
 Dublin, and of the Geological Sur- 
 vey of Ireland, and Annual Grants 
 to Schools and Classes of Science and 
 Art and Technical Instruction, includ- 
 ing sundry Grants in Aid, adminis- 
 tered by the Department of Agricul- 
 ture and Technical Instruction for 
 
 
 
 
 Ireland 
 
 138,591 
 
 1,345 
 
 14. 
 
 For grants under the Irish Universities 
 
 
 
 
 Act, 1908 
 
 Total Civn, Services, Class IV. . 
 
 130,000 
 
 
 
 19,705,454 
 
 30,774 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 9 
 
 CIVIL SERVICES.— Class V 
 
 Schedule of Sums granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of the 
 several CrviL Services herein particularly mentioned, which will come 
 in course of payment during the year ending on the 31st day of 
 Mardi 1913; viz.:— 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the expenses in connection with 
 
 His Majesty's embassies, missions, 
 and consular establishments abroad, 
 and other expenditure chargeable to 
 the Constdar Vote 
 
 2. For simdry colonial services, including 
 
 certain grants in aid (including a 
 supplementary sum of S03,000A) 
 
 3. For the subsidies to certain Telegraph 
 
 Companies, and a grant in aid of the 
 annual expenses of the Pacific Cable . 
 
 4. For a grant in aid of the Revenue of the 
 
 Island of Cyprus 
 
 689,040 
 
 1,363,754 
 
 39,974 
 50,000 
 
 £ 
 101,820 
 
 36,546 
 
 Total Civil Services, Class V. 
 
 2,142,768 
 
 138.366 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 10 
 
 CIVIL SERVICES.— Class VI 
 
 Schedule of Sums granted, and of the sums which may tie applied as 
 appropriations in aid in addition thereto, to defray the charges of the 
 several Civil Services herein particularly mentipnedj which will 
 come in course of payment during the year ending on the 31st day of 
 March 1913; viz.: — 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Api>ropriations 
 in Aid. 
 
 No. 
 
 1. For superannuation, compensation, com- 
 
 passionate, and additional allowances, 
 and gratuities imder sundry Statutes, 
 for compassionate allowances and grat- 
 uities awarded by the Treasury; and 
 for the salaries of medical referees . 
 
 2. For certain miscellaneous charitable and 
 
 other allowances, Great Britain . 
 
 3. For hospitals and infirmaries and certain 
 
 miscellaneous charitable and other al- 
 lowances in Ireland, including sundry 
 grants in aid 
 
 4. For making good the deficiency on the 
 
 Income Account of the Fund for 
 Friendly Societies . . 
 
 5. For Old Age Pensions in the United King- 
 
 dom, and for certain administrative 
 expenses in connection therewith 
 
 6. For compensation to the Registrar and 
 
 Staff at Stationers' Hall on the aboli- 
 tion of the office of Registrar 
 
 £ 
 
 778,253 
 1,439 
 
 16,883 
 
 14,426 
 
 12,200,000 
 
 3,563 
 
 £ 
 
 Total Civil Services, Class VI. . 
 
 13,014,564 
 
 •• 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 11 
 
 CIVIL SERVICES.— Class VII 
 
 Schedule of Sums granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of the 
 several Civil Services herein particularly mentioned, which will come 
 in 'Course of payment during the year ending on the 31st day of 
 March 1913; viz.: — 
 
 
 Sums not exceeding 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the salaries and other expenses of 
 
 temporary commissions, committees, 
 and speciafl inquiries 
 
 2. For certain ■miscellaneous expenses 
 
 3. For making good certain sums written 
 
 off from the assets of the Local Loans 
 Fund . 
 
 4. For the Ireland Development Grant 
 
 (Grant in Aid) 
 
 5. For a grant in aid of the Government 
 
 Hospitality Fund 
 
 6. For expenditure in connection with the 
 
 International Exhibition at Ghent in 
 1913 
 
 7. For the repayment to the Civil Con- 
 
 tingencies IFund of certain miscellane- 
 ous advances 
 
 8. For contributions in aid of expenses un- 
 
 der the Unemployed Workmen Act, 
 1905 
 
 £ 
 
 33,000 
 13,742 
 
 3,418 
 
 185,000 
 
 10,000 
 
 30,000 
 
 5,539 
 
 100,000 
 
 £ 
 
 7,250 
 
 Total Civil Services, Class VII. . 
 
 380,699 
 
 7,250 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 12 
 
 CIVIL SERVICES.— Class VIII 
 
 Schedule of Sums granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of 
 the several Civil Services herein particularly mentioned, which will 
 come in course of payment during the year ending on the 31st day of 
 March 1913; viz.:— 
 
 
 Sums not exceeding 
 
 ) 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the salaries and expenses of the 
 
 National Health Insurance Joint Com- 
 mittee 
 
 2. For the salaries and expenses of the In- 
 
 surance Commission (England), for 
 contributions under Part I. of the 
 National Insurance Act, 1911, and 
 for grants in aid of expenditure in- 
 curred out of the National Health 
 Insurance Fund in respect of benefits 
 and expenses of administration under 
 that Part of that Act (including cer- 
 tain special grants towards the ex- 
 penses of Insurance Committees) (in- 
 cluding a supplementary sum of 
 iZ,500l.) 
 
 3. For the salaries and expenses of the In- 
 
 surance Commission (Wales), for con- 
 tributions under "Part I. of the Na- 
 tional Insurance Act, 1911, and for 
 grants in aid of expenditure incurred 
 out of the Welsh National Health In- 
 surance Fund in respect of benefits and 
 expenses of administration under that 
 Part of that Act (including certain 
 special grants towards the expenses of 
 Insurance Committees) (including a 
 supplementary sum of 28,350^) . 
 
 £ 
 
 37,570 
 
 1,560,145 
 129,510 
 
 • • 
 
 Carried forward 
 
 1,727,225 
 
 • • ' 
 
 343 
 
APPENDIX III 
 
 Sums not exceeding 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 Brought forward 
 
 4. For the salaries and expenses of the 
 
 Insurance Commission (Scotland), for 
 contributions under Part I. of the 
 National Insurance Act, 1911, and for 
 grants in aid of expenditure incurred 
 out of the Scottish National Health 
 Insurance Fund in respect of benefits 
 and of expenses of administration 
 under that Part of that Act (including 
 certain special grants towards the 
 expenses of Insurance Committees) 
 (including a supplementary sum of 
 10,000/.) . . . . 
 
 5. For the salaries and expenses of the 
 
 Insurance Commission (Ireland), for 
 contributions under Part I. of the 
 National Insurance Act, 1911, and for 
 grants in aid of expenditure incurred 
 out of the Irish National Health In- 
 surance Fund in respect of benefits 
 and of expenses of administration 
 under that Part of that Act (including 
 certain special grants towards the 
 expenses of Insurance Committees) 
 (including a supplementary sum of 
 18,100/.) 
 
 6. For the salaries of the staff and other 
 
 expenses of Labour Exchanges, in- 
 cluding the contribution to the Unem- 
 ployment Insurance Fund . 
 
 7. For the salaries and expenses of the 
 
 Audit Staff under Part I. of the Na- 
 tional Insurance Act, 1911 . 
 
 8. For grants to Friendly Societies, &c., in 
 
 aid of the expenses of preparing 
 schemes under section 72 of the Na- 
 tional Insurance Act, 1911 . 
 
 Total Civil Services, Class VIII . 
 
 344 
 
 £ 
 1,727,225 
 
 244,510 
 
 168,140 
 
 804,037 
 
 51,757 
 
 47,000 
 
 202,500 
 
 3,042,669 
 
 202,500 
 
APPENDIX III 
 
 SCHEDULE (B.)— Part 13 
 
 REVENUE DEPARTMENTS, &c. 
 
 Schedule of Sums granted, and of the sums which may be applied as 
 appropriations in aid in addition thereto, to defray the charges of 
 the several Revenue Departments, &c., herein particularly men- 
 tioned, which wiU come in course of payment during the year ending 
 on the 31st day of March 1913; viz.: — 
 
 9 
 
 Sums not exceeding- 
 
 
 Supply Grants. 
 
 Appropriations 
 in Aid. 
 
 No. 
 
 1. For the salaries and expenses of the 
 
 Customs and Excise Department 
 
 2. For the salaries and expenses of the In- 
 
 land Revenue Department . 
 
 3. For the salaries and expenses of the Post 
 
 Office, including Telegraphs and Tele- 
 phones 
 
 £ 
 
 2,357,900 
 1,895,830 
 
 23,808,950 
 
 £ 
 
 93,770 
 10,000 
 
 631,193 
 
 Total Revenue Departments . 
 
 28,062,680 
 
 734,963 
 
APPENDIX III 
 
 SCHEDULE (C.) 
 
 No. of 
 Vote. 
 
 Navy Services, 1910-11. 
 Votes. 
 
 Surpluses. 
 
 Deficits made good 
 from Surpluses. 
 
 
 
 £ s. 
 
 d. 
 
 £ s. d. 
 
 1 
 
 Wages, &c., of officers, seamen, 
 and boys, Coastguard, and 
 
 
 
 
 
 Royal Marines 
 
 31,281 10 11 
 
 , , 
 
 2 
 
 Victualling afid clothing for the 
 Navy 
 
 
 
 18,204 15 6 
 
 3 
 
 Medical establishments and serv- 
 
 
 
 
 
 ices 
 
 11,644 IS 
 
 7 
 
 , , 
 
 4 
 
 Martial law .... 
 
 1,766 6 
 
 1 
 
 , , 
 
 S 
 
 Educational services . 
 
 6,486 4 
 
 1 
 
 .. 
 
 6 
 
 Scientific services 
 
 
 
 1,080 15 4 
 
 7 
 
 Royal Naval Reserves 
 
 
 
 9,597 12 6 
 
 8 
 
 Shipbuilding, repairs, mainte- 
 nance, &c.: 
 
 
 
 
 
 I. Personnel 
 
 6,858 5 
 
 5 
 
 , , 
 
 
 II. Materiel 
 
 139,306 5 
 
 8 
 
 ., 
 
 
 III. Contract work 
 
 99,824 17 
 
 8 
 
 , . 
 
 9 
 
 Naval armaments 
 
 
 
 36,512 7 6 
 
 10 
 
 Works, buildings, and repairs, 
 at home and abroad 
 
 
 
 18,260 14 9 
 
 11 
 
 Miscellaneous effective services 
 
 
 
 63,485 6 2 
 
 12 
 
 Admiralty Office 
 
 . . 
 
 
 4,946 13 
 
 13 
 
 Half-pay and retired pay . 
 
 17,735 19 
 
 7 
 
 
 14 
 
 Naval and marine pensions, 
 gratuities, and compassionate 
 
 
 
 
 
 allowances .... 
 
 8,528 3 
 
 9 
 
 
 IS 
 
 Civil superannuation, compen- 
 sation allowances, and gratu- 
 
 
 
 
 
 ities 
 
 14,292 4 
 
 2 
 
 , , 
 
 • • 
 
 Amount written off as irrecov- 
 
 
 
 
 
 erable 
 
 Total .... 
 
 •• 
 
 
 1,272 6 1 
 
 
 337,724 12 
 
 11 
 
 153,360 10 10 
 
 
 Add Excess Vote 
 Net Surplus 
 
 100 
 
 
 
 
 
 337,824 12 
 
 11 
 
 153,360 10 10 
 
 
 y 
 
 £184,464 2 1 
 
APPENDIX III 
 
 SCHEDULE (C.) 
 
 No. of 
 Vote. 
 
 Aemy Services, 1910-11. 
 ' Votes. 
 
 Surpluses. 
 
 Deficits made good 
 from Surpluses. 
 
 7 
 8 
 
 9 
 
 10 
 11 
 12 
 13 
 
 14 
 
 15 
 
 Pay, &c., of the Army 
 
 Medical establishment: Pay, 
 &c. 
 
 Special Reserves 
 
 Territorial Force 
 
 Establishments for military ed- 
 ucation 
 
 Quartering, transport, and re- 
 mounts 
 
 Supplies and clothing 
 
 Ordnance department establish- 
 ments and general stores 
 
 Armaments and engineer stores 
 
 Works and buildings ... 
 
 Miscellaneous effective services 
 
 War Office 
 
 Non-effective charges for offi- 
 cers, &c 
 
 Non-effective charges for men, 
 &c. . . . . 
 
 Civil superannuation, compenr 
 sation, and gratuities . 
 
 Balances irrecoverable and 
 claims abandoned . 
 
 Total .... 
 
 - -N-ET Surplus . 
 
 £ s. d. 
 
 10,528 18 8 
 
 4,415 17 10 
 
 26,477 6 8 
 
 109,200 6 11 
 
 2,089 1 9 
 
 12,470 5 1 
 
 69,570 11 11 
 
 80,948 1 2 
 
 5,190 7 8 
 
 3,502 1 
 
 3,281 2 3 
 
 2,060 18 11 
 
 £ s. d. 
 
 98,235 4 8 
 13,879 18 3 
 
 3,231 10 2 
 
 3,779 IS 7 
 
 329,734 19 10 119,126 8 8 
 
 £210,608 ,11 2 
 
APPENDIX IV 1 
 
 FORMS AUTHORISING AND GRANTING CREDITS AND EX- 
 CHEQUER ISSUES 
 
 Form No. 1 
 
 Tkeasury Requisition authorising Credits for Consolidated 
 Pond Services 
 
 Consolidated Fund Services 
 
 Quarter to 19. . . 
 
 By virtue of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. 13) : We authorise and require you to grant to the Lords Com- 
 missioners of His Majesty's Treasury for the time being on account of the 
 
 charge of the Consolidated Fund for the Quarter ended 19 ... , 
 
 remaining tmpaid at that date, Credits on the Accounts of his Majesty's 
 Exchequer at the Bank of England and Bank of Ireland, or on the growing 
 Balances thereof, for the following sums, viz.: — 
 
 At the Bank of England ... £ 
 At the Bank of Ireland . . . £ 
 
 To be signed by Two Lords of 
 the Treasury. 
 
 Treasury Chambers, Whitehall, 
 
 «... } 
 
 To the Comptroller and Auditor General. 
 
 ', aro to 
 
 > The fomiB, arranged in a different order, aro to be found in Anson, £001 and Customs <fSu 
 Constitution, 4th ed., vol. i. pp. 316-333. 
 
APPENDIX IV 
 
 Form No. 2 
 
 Grant of Credit by tKe Comptroller and Auditor General for Services 
 payable out of tlie Consolidated Fund 
 
 Credit for Consolidated Fund Services 
 
 Quarter to 19. . . 
 
 By virtue of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. 13), and of a requisition from the Lords Commissioners of His 
 Majesty's Treasury, authorising the same: I hereby grant a Credit to the 
 Lords Commissioners of His Majesty's Treasury for the time being, on the 
 
 account of His Majesty's Exchequer at the Bank of , or on the 
 
 growing Balance thereof, to the amount of on account of the 
 
 charge of the Consolidated Fund in Great Britain {or Ireland, as the case 
 
 may be), for the Quarter ended 19.., remaining unpaid at 
 
 that date. 
 
 ...19... / 
 
 Exchequer and Audit Department, 
 
 Comptroller ahd Auditor General. 
 
 To the Governor and Company! 
 of the Bank of / 
 
 Form No. 3 
 
 Treasury Requisition authorising Credits for Consolidated Fund 
 Services, payable out of the Growing Produce 
 
 Consolidated Fund Services 
 
 Growing Produce 
 
 By virtue of the Exchequer and Auait Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. 13): We authorise and require you to grant to the Lords Com- 
 missioners of His Majesty's Treasury for the time being, a Credit on the 
 
 Account of His Majesty's Exchequer at the Bank of. , for 
 
 the sum of £ to provide .for Issues required for the following 
 
 349 
 
APPENDIX IV 
 
 Services, payable out of the Growing Produce of the Consolidated Fund, in 
 the current Quarter ending 19 . . : — 
 
 Service. 
 
 Amount. 
 
 To he signed by Two Lords of the 
 Treasury. 
 
 Treasury Chambers, Whitehall 
 
 .19... 
 
 •} 
 
 To the Comptroller and Auditor General. 
 
 Form No. 4 
 
 Grant of Credit by the Comptroller and Auditor General for Services 
 payable out of the Growing Produce of the Consolidated Fund 
 
 Credit for Consolidated Fund Services 
 
 Growing Produce 
 
 By virtue of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. 13), and of a Requisition from the Lords Commissioners of 
 His Majesty's Treasury, authorising the same: I hereby grant a Credit to 
 the Lords Commissioners of His Majesty's Treasury for the time being, on 
 
 the Account of His Majesty's Exchequer at the Bulk of or 
 
 on the growing Balance thereof, to the Amount of , to provide 
 
 for Services payable out of the Growing Produce of the Consolidated Fund 
 in Great Britain (or Ireland, as the case may be) in the current Quarter 
 ending 19 . . . 
 
 Exchequer and Audit Department, \ 
 
 19... / 
 
 Comptroller and Auditor General. 
 To the Governor and Company 1 
 of the Bank of J 
 
 3SO 
 
APPENDIX IV 
 
 Form No. 5 
 
 Tkeashry Order for Issues from the Exchequer Account for Ck>Nsou- 
 DATED Fund Services 
 
 Consolidated Fund Services 
 
 Quarter to 19. , . 
 
 Treasury, Whitehall, 
 
 19... 
 
 Gentlemen, 
 
 Under the authority of the Exchequer and Audit Departments Act, 
 1866 (29 & 30 Vict. c. 39, s. 13), and of the Credit granted to the Lords Com- 
 missioners of His Majesty's Treasury, by the Comptroller and Auditor 
 
 General on the Account of His Majesty 's Exchequer at the Bank of 
 
 under the provisions of the said Act: I am commanded by the Lords Com- 
 missioners of His Majesty's Treasury to request that you will transfer the 
 following sums, on the . . instant, from the said Account to the "Supply 
 Account" of [His Majesty's Paymaster General'] in your books, on account 
 of the charge of the Consolidated Fund in [Great Britain*] for the above- 
 mentioned Quarter. 
 
 Service. 
 
 Amount. 
 
 I am to request that when these sums have been transferred accordingly, 
 you will transmit this authority to the Comptroller and Auditor General. 
 
 I am, &c. 
 
 To he signed by one of the] 
 Secretaries of the Treasury. / 
 
 To the Governor and Company 1 
 of the Bank of / 
 
 < lor o{ such other Principal Accountants as the case may require.) 
 * [or Ireland.] 
 
 351 
 
APPENDIX IV 
 
 FoKM No. 6 
 
 Royal Order for Public Supply Services 
 (For His Majesty's Royal Sign Manual) 
 
 Royal Order 
 
 Supply Services 
 
 Whereas the several sums mentioned in the Schedule hereunto annexed 
 have been granted to Us (by Act, or by Resolution of the House of Commons, 
 as the case may be) to defray the expenses of the Public Supply Services therein 
 specified, which will come in course of payment in the year ending the 31st 
 March 19 . . : Our will and Pleasure is, that you do, from time to time, 
 authorise the Governor and Company of the Bank of England, or the Governor 
 and Company of the Bank of Ireland, to issue or transfer from the Account 
 of our Exchequer at the said Banks to the Accounts of the persons charged 
 with the payment of the said Services, such sums as may be required, from 
 time to time, for the payment of the same, not exceeding the amoimts re- 
 spectively stated in the said annexed Schedule. 
 
 Provided that such issues or transfers shall be made out of the Credits 
 granted or to be granted to you, from time to time, on the Accoimt of Our 
 Exchequer at the said Banks, by the Comptroller and Auditor General, under 
 the authority of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. IS), and shall not exceed in the whole the amount of the Credits 
 so granted out of the Ways and Means appropriated by Parliament to the 
 Service of the said year. • 
 
 Given at Our Court at ; . . .this day 
 
 of 19... 
 
 By His Majesty's Command, 
 
 To be countersigned by Two J 
 Lords of the Treasury. 1 
 
 To the Commissioners of Our Treasury. 
 
 Schedule. 
 
 Supply Service for which Valued or Granted. 
 
 Amount. 
 £ s. d. 
 
 352 
 
APPENDIX IV 
 
 Form No. 7 
 
 Treasury Requisition authorising Credits for Suppltt 
 Services 
 
 Supply Services 
 
 Year 19... 
 
 By virtue of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. 15): — ^We authorise and require you to grant to the Lords Com- 
 missioners of His Majesty's Treasury for the time being, on accoimt of the 
 Ways and Means granted for the service of the year ending 31st March 19 . . , 
 Credit on the Account of His Majesty's Exchequer at the Bank of England 
 and Bank of Ireland, or on the growing Balances thereof, for the following 
 sums; viz.: — 
 
 At the Bank of England ... £ 
 At the Bank of Ireland ... £ 
 Treasury Chambers, Whitehall, 
 19. 
 
 "•} 
 
 To be signed by Two Lords 
 of the Treasury. 
 
 To the Comptroller and Auditor General. 
 
 Form No. 8 
 
 Grant of Credit by the Comptroller and Auditor General for Supply 
 
 Services 
 
 Credit for Supply Services 
 
 Year 19... 
 
 By virtue of the Exchequer and Audit Departments Act, 1866 (29 & 30 
 Vict. c. 39, s. IS), and of a Requisition from the Lords Commissioners of 
 His Majesty's Treasury authorising the same: I hereby grant a Credit to 
 the Lords Commissioners of His Majesty's Treasury for the time being, on 
 
 the Account of His Majesty's Exchequer at the Bank of , or 
 
 on the growing Balance thereof, to the Amount of 
 
 353 
 
APPENDIX IV 
 
 on account of the Ways and Means granted for the Service of the year 
 ending 31st March 19. . . 
 
 Exchequer and Audit Department, 1 
 
 19... / 
 
 Comptroller and Auditor General. 
 
 To the Governor and Company of \ 
 the Bank of J 
 
 FoKH No. 9 
 
 Treasury Order for Issues from the Exchequer Accoxjnt for Supply 
 
 Services 
 
 Supply Services 
 
 Year 19... 
 
 Treasury, Whitehall, 
 19... 
 
 Gentlemen, 
 
 Under the authority of the Exchequer and Audit Departments Act, 
 1866 (29 & 30 Vict. c. 39, s. IS), and of the Credit granted to the Lords Com- 
 missioners of His Majesty's Treasury, by the Comptroller and Auditor 
 
 General, on the Account of His Majesty's Exchequer at the Bank of 
 
 under the provisions of the said Act: I am commanded by the Lords Com- 
 missioners of His Majesty's Treasury to request that you will transfer the 
 
 following sums, on the instant, from the said Account to the 
 
 "Supply Account" of [His Majesty's Paymaster General'] in your books, 
 on account of the Supply Services under-mentioned: — 
 
 Supply Services. 
 
 Amount. 
 
 
 £ f. d. 
 
 > [or of such other Principal Accountants as the case may require.] 
 
 354 
 
APPENDIX IV 
 
 I am to request that when these sums shall have been transferred accord- 
 ingly, you will transmit this authority to the Comptroller and Auditor 
 General. 
 
 I am, &c. 
 To be signed by one of the\ 
 Secretaries of the Treasury. J 
 
 To the Governor and Company of the"! 
 Bank of J 
 
INDEX 
 
 Accounting officers, review acts 
 of Paymaster General, 150; de- 
 partmental, are not paymasters, 
 156; one for each vote, 156; 
 dignity of office, 158; financial 
 control exercised by, 159; 
 Treasury Minute on duties of, 
 160; responsibility to Treasury, 
 161; personal liability of, 162; 
 not bonded, 163 
 
 Adams, H. C, "Science of 
 Finance," 26n 
 
 Appropriation Accounts, sum- 
 iftary for civil services and rev- 
 enue departments, 248-252 
 
 Appropriation acts, must be ini- 
 tiated by or have approval of 
 Crown, 38 ; prepared only after 
 discussion and decision on au- 
 thorization of expenditures, 
 125 ; English and American 
 practice, 125 ; two general bills 
 prepared and enacted, 128 
 
 Appropriation heads, facts of im- 
 portance, 81 ; subheads, 82-90 
 
 Appropriations, forms of acts 
 of, 18; itemization of, 27-28; 
 historical development of, 28- 
 30; powers of Parliament 
 over, 37-39; distinction be- 
 tween permanent and annual, 
 40-41 ; for Consolidated Fund 
 Services, 42-43 ; continuing 
 criticism of, 43-4S ; made only 
 in pursuance of formal esti- 
 mates, 47-48; heads under 
 which made, 74-81 ; significance 
 of transfers permitted, 82-83; 
 subheads classified by objects, 
 
 87; subheads, illustration of, 
 88-90; supporting details, 90- 
 92; American system of reim- 
 bursable, 112; control over by 
 House of Commons, 129; by 
 "Votes," 129; expenditures of, 
 not mandatory, 165 
 
 Appropriations in aid, 35; theory 
 of, 100-103; 3. "token," 101-102; 
 arguments for, 103-106; first 
 applied to Army and Navy, 
 104; gradually adopted for civil 
 services, 105; policy of, fre- 
 quently reviewed and con- 
 
 ' firmed, 105 ; Treasury Minute 
 on, 106; not consistent with 
 budgetary principles, 107; does 
 not promote efficiency, 108; 
 fundamental objection to, 108- 
 109; departures from, 109; Mr. 
 Cox's criticism of, iio-iii; 
 contrast with American system 
 of reimbursable appropriations, 
 112 
 
 Army, estimates, character and 
 number of votes, 74-75 
 
 Bank of England, custodian of 
 funds, 37 
 
 Bank of Ireland, custodian of 
 funds, 37 
 
 Bowles, Thomas Gibson, origin 
 of Exchequer, 36-37; attack on 
 system of transfers, 83-84; 
 criticism of system of appro- 
 priations in aid, 11411; func- 
 tions of Standing Committee 
 on Public Accounts, 228 
 I Budget, revenue as part of, 2; 
 
 357 
 
INDEX 
 
 collection and records, 2 ; stand- 
 ards, 2-8; audit and reports, 3; 
 custody, 3; expenditures, 3; 
 preparation of estimates, 3-4; 
 nature of, 5-8; definition, 7-8; 
 Economy and Efficiency Com- 
 mission recommendations, 8- 
 10; problem of control, 10-23; 
 preparation of estimates, 13-14; 
 review of estimates, 14; hear- 
 ings, 15; procedure, 16-17; 
 itemization, extent of, 18; ad- 
 ministrative control through 
 Finance Department, 19; dif- 
 ference between English and 
 American systems, 19-20; esti- 
 mates only part of, 72; mean- 
 ing of, 255-256; summary state- 
 ment by Chancellor of Excheq- 
 uer, 256-264; budget speech, 
 265; deals primarily with rev- 
 enues as variable factor, 266- 
 267; consolidation of proposals, 
 268; principles applicable to 
 American financial administra- 
 tion, 269-270; principles applied 
 in British system, 271-275; 
 contrast of English and Ameri- 
 can practice in financial admin- 
 istration, 276-280 
 Bureau of Municipal Research, 
 reports on budget procedure, 
 270-272 
 
 Chalmers, Sir Robert, testimony 
 on Treasury control over de- 
 partmental estimates, 62 ; duties 
 of permanent Secretary of 
 Treasury, 173-174; duties of 
 estimate clerks, 174 
 
 Civil list, evolution of, 31-33; 
 definition of, 34» 
 
 Civil services, 73-74; estimates, 
 character and number of votes, 
 76-81 
 
 Cleveland, Frederick A., Editor's 
 
 note, v-vii; contributions to 
 budget discussion, 270-272 
 
 Commission on Economy and 
 Efficiency, President Taft's, 
 work of, 270-272 
 
 Comptroller and Auditor General, 
 functions of, 144-145 ; status of, 
 216-218; no power of disallow- 
 ance, 222 ; no interference with 
 executive responsibility, 222- 
 223; duty to secure economy, 
 224-226; relation to Standing 
 Committee on Public Accounts, 
 229 
 
 Comptroller of United States 
 Treasury, power to prescribe 
 manner of keeping and render- 
 ing accounts, 20 
 
 Consolidated Fund, importance 
 of, 34-35; (No. i) Bill (1912), 
 text of, 314-315; (Appropria- 
 tion) Act (1912), text of, 316- 
 
 347 
 
 Consolidated Fund Services, char- 
 acteristics of, 41 ; items of, 42 
 
 Construction of public buildings, 
 progress reports on, 55 
 
 Cox, Harold, criticism of continu- 
 ing appropriations, 43-45; ob- 
 jections to system of appropria- 
 tions in aid, iio-iii 
 
 "Credits" to Treasury, 146 
 
 Economy and Efficiency, recom- 
 mendations of Taft Commis- 
 sion, on, 8-10 
 Estimate clerks, duties of, 174 
 Estimates, recommendations of 
 Taft Commission on, 9; prep- 
 aration of, 13-14; legislative 
 review, 14; central executive 
 review, 14; review by depart- 
 ment heads, 14; distinguished 
 from appropriations, 14; orig- 
 inate with executive, 47-48 ; act 
 of Ministry, 48; Treasury 
 
 358 
 
INDEX 
 
 agent of Ministry in prepara- 
 tion and submission of, 49 ; re- 
 viewed by Treasury, 49-50; 
 Army and Navy, procedure for, 
 50-51; forms of, prescribed by 
 Treasury, 51; preparation and 
 submission, 52; Treasury cir- 
 cular, 52-59; regulations to be 
 observed in preparation, 52-59; 
 date of rendering, 53; explana- 
 tion of, 54; form of, explana- 
 tion of increases and decreases, 
 59-60; Treasury control, 61; 
 summation of prior decisions, 
 62; supplementary data, 62-63; 
 personnel, list of, included in, 
 63; incidental expenses, details 
 of, 63; comparative data pre- 
 pared by Treasury, 63-64 ; data 
 filled in by department, 64; 
 preparation of, within depart- 
 ments, 65-67; responsibility for 
 departmental review placed on 
 permanent accounting oflScer, 
 66-67 >■ Treasury examination 
 of, 67-69; transmission of, to 
 House of Commons, 69-70; 
 supplementary, 70 ; character 
 and form, 73-99; classification 
 oi, 73-74; general summaries, 
 how assembled, 93-100; details, 
 how presented, 93 ; explanatory 
 memorandum, 94; abstracts of, 
 95; comparison with expendi- 
 tures, 95 ; criticism of character 
 and form, 99; procedure in Par- 
 liament, 115-143; Select Com- 
 mittee on (1912), 134-140; 
 recommendations of Select 
 Committee on National Ex- 
 penditure (1902), 135; com- 
 ments of E. Hilton Young, 
 142 ; approval of, does not sanc- 
 tion expenditure, 167 
 Excess votes. Civil Contingency 
 Fund, 128; investigation by 
 
 Public Accounts Committee, 
 128 
 
 Exchequer, origin of, 36-37; is- 
 sue of money to principal ac- 
 countants, 147 
 
 Exchequer and Audit 'Depart- 
 ments Act (1866), 146; text 
 of, 283-307; Treasury Minute 
 on (1867), 307-313 
 
 Executive, lack of responsibility 
 in U. S., 20; responsibility for 
 expenditure of money, 38; for 
 organization and personnel, 169 
 
 Expenditures, control over, by 
 Treasury, 20-22; control over, 
 by department heads, 20-21 ; 
 made only in pursuance of ap- 
 propriations by Parliament, 26- 
 28; Parliamentary control over, 
 27 ; limitation of, under Charles 
 II, 29-30; for royal household, 
 32-33; comparison of, in esti- 
 mates, 62-63; report of Select 
 Committee on National Expen- 
 diture, quoted, 65-69; classified 
 by services, 73; statement for 
 series of years, 98; distinction 
 between authorization and ap- 
 propriation of funds, 124; pro- 
 cedure with respect to author- 
 ization, 124; Select Committee 
 on National Expenditure, es- 
 tablished (1902), 134-135; ap- 
 propriations not mandatory, 
 165; Treasury must authorize, 
 166; comparative summary of, 
 252-254 
 
 "Finance accounts," two reports 
 to Parliament, 235; annual re- 
 port since 1802, 236; two basic 
 tables, promptly rendered, sum- 
 marize financial transactions, 
 237 ; summary of, 238-241 ; cash 
 assets only listed, 242; debt 
 , statement, 243 ; do not summar- 
 
 359 
 
INDEX 
 
 ize operations for series of 
 years, 246; appropriation ac- 
 counts, analysis in summary, 
 247; no report of audited re- 
 ceipts and expenditures, 253- 
 
 254 
 Financial Secretary, staff of, 173 
 Financial system, contrast with 
 
 American practice, 39-40 
 Fiscal year, United States, 24; 
 
 England, 24 
 
 Goodnow, Frank J., Foreword, 
 ix ; financial administration, 
 
 27I» 
 
 Hamilton, Sir Edward, power of 
 transfer between appropriations 
 desirable, 86; defense of ap- 
 propriations in aid, 114W 
 
 Higgs, Henry, "The Financial 
 System of the United King- 
 dom," 34; financial control of 
 House of Commons, 131 ; forms 
 used by Treasury, 148M 
 
 Home Office, subheads of appro- 
 priation, 88-90; supporting de- 
 tails, 90-92 
 
 House of Commons, exclusive 
 financial power of, 115; Parlia- 
 ment Act of 191 1, 116; stand- 
 ing orders on financial business, 
 1 19-124; control exercised over 
 appropriations, 129; control 
 limited to review, criticism, 
 approval or disapproval, 130; 
 facilities for discussion and 
 criticism of finances, 131 
 
 House of Lords, divested of pow- 
 ers over money bills, 116 
 
 Itemization of appropriations, ex- 
 tent of, 27-28 
 
 Lowell, A. Lawrence, Introduc- 
 tion, xi-xii ; financial discussion 
 
 in House of Commons, 131- 
 132; evolution of Treasury, 
 172; Financial Secretary, staff 
 of, 173; English financial ad- 
 ministration, 27IM 
 
 Maitland, F. W., sources of pub- 
 lic income, 28; tax levies, 29; 
 grants to crown, 30 
 
 National Debt, statement, 243. 
 
 See "Finance Accounts" 
 Navy, estimates, character and 
 
 number of votes, 75-76 
 
 Office of Works and Public Build- 
 ings, furnishes supplies for 
 offices and buildings, 194; evo- 
 lution of supply work, 194-195; 
 powers to control expenditures, 
 196. See Public Works 
 
 Parliament, origin of control over 
 expenditures, 28-30; powers 
 over appropriations, 37-38 
 
 Paymaster General, chief, pays 
 all obligations, 149; centralized 
 office, 150 
 
 Personnel, list of, in estimates, 
 
 63 
 
 Public accounts, theory of, 24-26; 
 accrual basis, 25-26; advan- 
 tages and disadvantages of 
 cash basis, 25-26; audit of, 
 209; early methods of audit, 
 210; development of present 
 system of control, 211 
 
 Public Accounts Committee, ex- 
 tra receipts report, 103-104; 
 House of Commons establishes 
 by standing order (1866), 216; 
 Exchequer and Audit Depart- 
 ments Act (1866), 216; meth- 
 ods of keeping and rendering 
 accounts prescribed by Treas- 
 ury, 218; procedure audit of. 
 
 360 
 
INDEX 
 
 219; reports of, rendered to 
 Comptroller and Auditor Gen- 
 eral, 220-221 ; audit continuous, 
 221 ; instrument of control in 
 hands of Opposition, 228; 
 Comptroller and Auditor Gen- 
 eral, staff agent of, 229; re- 
 views Treasury administration, 
 230; value of, 231; reports 
 findings to Treasury, 232; re- 
 lies on publicity, 233; does not 
 interfere with responsibility of 
 Treasury, 234. See "Finance 
 Accounts" 
 
 Public documents, printing and 
 distribution of, 207 
 
 Public funds, custody of, 23 
 
 Public Moneys, Committee on 
 (1856-57), report on consolida- 
 tion of Paymaster ofifices, 150- 
 151 i recommendations on finan- 
 cial control, 213-215 
 
 Public works, distinction between 
 construction of, for public use 
 and for government, 183-184; 
 executive responsibility for, 
 avoids "pork barrel" methods, 
 185; centralized control, 186; 
 functions of Office of Works 
 and Public Buildings, 186-187; 
 voting funds for, 188; long- 
 term plans for, 189; policy of 
 contracts, 191; rentals and re- 
 pairs of buildings, 192. See 
 Office of Works and Public 
 Buildings 
 
 Revenue services, 73-74 
 
 Stationery Office, stationery and 
 printing, supply service, 198; 
 estimates for all departments, 
 199; estimates with supporting 
 details, 199-201 ; allotment of 
 appropriations by, 202; Treas- 
 ury Minutes (1912) on expen- 
 
 diture for, 202-203; procedure 
 in purchase and issue of sup- 
 plies, 204-206; control of ex- 
 penditures, 208 
 Stourm, Rene, "Le Budget," 26n 
 Supply Services, 41-42; charac- 
 teristics of, 41-45 
 
 Taft, William H., President's 
 Commission on Economy and 
 Efficiency, 270 ; American finan- 
 cial methods, 271W 
 
 Transfers of appropriations, rea- 
 sons for, 82-83; defects in pro- 
 cedure, 84; procedure and ad- 
 vantages of, 85-86; safeguards 
 against abuses, 86 
 
 Treasury, submits estimates, 49- 
 50; estimates circular, 52-59; 
 control over estimates exer-' 
 cised before submission, 61 ; 
 power to review any item of 
 expenditure, 64-65 ; Estimate 
 Clerk, duties of, 67-69; exam- 
 ination of estimates, 67-69; 
 review of estimates by Finan- 
 cial Secretary, 69 ; credits, 146 ; 
 funds, 146; sanctions expendi- 
 tures, 167; independent control 
 of, over expending depart- 
 ments, 168; exercises control 
 as agent of chief executive, 
 169; control over salaries, 170; 
 control over expenditures for 
 supplies, 171 ; organization of, 
 for financial control, 171-172; 
 Chancellor of Exchequer re- 
 sponsible head, 172; permanent 
 Secretary of, 173-174; commit- 
 tees of investigation, 175-177; 
 as organ of administrative con- 
 trol, 178; continuous supervi- 
 sion of, 179; not a public serv- 
 ice department, 180; responsi- 
 ble for general efficiency of 
 governmental business, 181- 
 
 361 
 
INDEX 
 
 182; prescribes methods of 
 keeping and rendering public 
 accounts, 218; forms, authoriz- 
 ing and granting credits and 
 Exchequer issues, 348-355 
 Treasury System, official descrip- 
 tion of, by Chancellor of Ex- 
 chequer (1885), 152-155 
 
 United States, lack of central 
 executive control, 20 
 
 Virement, power of, 82 
 
 "Votes," distingfuished from sub- 
 heads, 82; character and num- 
 ber of, 74-81 ; subheads, illus- 
 tration of, 88-90; subheads, 
 supporting details of, 90-92 
 
 Votes of credit, to meet emergen- 
 cies, 128 
 
 Votes on Account, 55; embodied 
 in Consolidated Fund (No. i) 
 Act, 126; restricted to services 
 authorized, 126 
 
 Welby, Lord, memorandum on 
 audit, 211-213; memorandum 
 on financial accounts, 236 
 
 Willoughby, W. F., budget con- 
 trol, 2in 
 
 Young, E. Hilton, System of Na- 
 tional Finance, viin; views on 
 Select Committee on Esti- 
 mates, 142-143 
 
 (I)