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Home -> Charles Francis Bastable -> Public Finance -> Chapter III

Public Finance - Chapter III

1. Preface

2. Chapter I

3. Chapter I a

4. Chapter II

5. Chapter II a

6. Chapter III

7. Chapter IV

8. Chapter V

9. Chapter VI

10. Chapter VII

11. Chapter VII a

12. Chapter VIII

13. Chapter VIII a

14. Book II Chapter I

15. Chapter II

16. Chapter II a

17. Chapter III

18. Chapter III a

19. Chapter III b

20. Chapter IV

21. Chapter V

22. Book III Chapter I

23. Book III Chapter I a

24. Chapter II

25. Chapter III

26. Chapter III a

27. Chapter III b

28. Chapter IV

29. Chapter V

30. Chapter V a

31. Chapter VI

32. Book IV Chapter I

33. Chapter II

34. Chapter III

35. Chapter IV

36. Chapter V

37. Chapter VI

38. Chapter VI a

39. Book V Chapter I

40. Chapter II

41. Chapter III

42. Chapter IV

43. Chapter IV a

44. Chapter V

45. Chapter Va

46. Chapter VI

47. Chapter VIa

48. Chapter VII

49. Chapter VIIa

50. Chapter VIII

51. Chapter VIIIa

Justice And Security.

1. IN tracing the gradual development of state func-
tions, we found that the maintenance of internal security,
the protection of each member of the society against * the
injustice or oppression of every other member of it,' or in
more modern phrase the establishment of law and order,
was a task that was attempted in the early stages of social
evolution, and one that became more fully emphasized as
political institutions grew in strength. The necessity of
the function is admitted by all except the most advanced
anarchists. In fact the extreme urgency of the claim for
public activity in this respect, has frequently led to a com-
parative neglect of other sides of state duty. Both in its
social and economic results the establishment of security
is of the utmost importance ; but there is the danger of
limiting its range too narrowly. All institutions and legis-
lative measures that tend to increase the power and re-
sources of the State so far conduce to the preservation of
order, and this wider point of view should never be ignored,
though it is necessary to give the most prominent place to
the agencies directly employed in promoting the end.

An instance of the disposition to unduly confine the
subject is found in the Wealth of Nations. The section of
the work devoted to this topic deals solely with the ad-
ministration of justice. Adam Smith appears to have be-
lieved that the one matter of importance for the State was
to decide disputes, though his account of the introduction of law courts shows that it is just as essential to suppress
disorder. The sovereign does certainly discharge a most
useful function in settling controversies about the precise
nature of private rights and duties ; but besides the claims
of individuals, there is the whole body of public law, and
even individual rights have to be determined in respect to
their orbit and incidence by the State. The ultimate aim
is the promotion of social welfare by the establishment of
security which may be secured in two different ways,
with very dissimilar financial effects. ' The Legislature
may pass laws which give certain rights and remedies to
the persons interested, and may leave it to them to enforce
the law by taking their own proceedings, according to their
own interests, in the courts of law. In this case the courts
are the organs through which the State exercises its power.
Or, again, the Legislature may intrust the duty of enforcing
the law to an executive department which then becomes
the organ of the State for the purpose 1 .' The former
method would come under the head of 'justice' ; the latter
under that of ' police ' or ' administration,' and it is a signifi-
cant fact that it is not noticed by Adam Smith. His whole
economic system on its practical side (in this respect in
strict agreement with the Physiocratic position) was a
protest against the older paternal policy. He had no
conception of the development of administration and super-
vision for social and even economic ends, which is so
characteristic of the modern State, and consequently his
work presents a gap in regard to this important subject.

The modern student of Finance is, however, compelled
to take the different elements of justice and administrative
police into account when seeking to estimate the cost in-
curred in guarding the rights of private persons, and the
security of the community which is an essential condition
precedent to the former object. The growth of expenditure
in this direction has been very large, and presents some
serious financial problems. 2. Though many of the details of legal development
are as yet obscure, its broad outlines have been sufficiently
elucidated by the labours of the historical jurists 1 m In the
primitive community custom is binding ; violations of its
prescriptions are offences, but any disputes as to the fact
of a breach of the customary rule have to be decided by
the opinions of the tribal or village assembly. As soon as
the chief comes into existence the decision of controversies
becomes one of his tasks or privileges, the submission of
the parties is, notwithstanding, voluntary, at least in appear-
ance, and the Judge is entitled to a 'fee' for his services 2 .
Under such conditions, justice is a matter of special bargain.
The chief as judge or arbitrator, gives his time and attention
to the decision of disputes, and like any labourer is 'worthy
of his hire.' Very many legal systems afford evidence of
the existence of this dealing out of the commodity, justice,
and of the slow process by which voluntary submission
became compulsory.

At a far later stage of growth and even when the coer-
cive power of the sovereign State was fully established, this
idea of * service for service ' was retained. The financial
significance of such a view is apparent. As long as the
suitors paid fees for the services of judges there was no
need for including the item in the public expenditure.
Even if entered it would only be a matter of account, the
receipts balancing the outlay 3 .

First appearances are in favour of this arrangement.
The public revenue is exempted from charge ; the persons,
who are supposed to gain, have to pay for a service rendered,
and judges are stimulated to diligence by the hope of re-
ward. The operation of individual interest has produced
a satisfactory result. So plausible is the view that it was
maintained by Adam Smith. But before his time the
practical weakness of the system was so apparent that the
abolition of all law charges was advocated, and Bentham
had little difficulty in showing the mistake of the older view.
It based its case on a series of false comparisons. The
judge and every judicial official is indeed a labourer dis-
charging a most useful service even in a strictly economic
estimation ; but his toil is for the interests of the society at
large, and he ought to be paid out of the fund created
indirectly through his work, that is, the increased wealth of
the society owing to an exact administration of justice and
the consequent increase of security. If lawsuits always
arose from mistakes there might be something to be said
for compelling the parties in fault to pay for the correction ;
such is not a usual case ; far more often they arise from
intentional wrong-doing by one party, or in many instances
through the difficulty of knowing the law. The innocent
suitor is not a special gainer by the action of law : he is in
rather a worse position than those who, by the restraining
effect of justice have been saved the necessity of asserting
their rights. The great advantage that a legal system sus-
tained by fees gives to the rich is an additional argument
against it, as is also the tendency of payment by fees to
foster judicial corruption. A court supported by charges
on suits would be likely to work so as to increase those
charges, and might not be strictly scrupulous in the methods

The theory besides is only applicable to civil courts.
Suppose the criminal courts are to be sustained by the
parties one of those parties is the State, and it must draw
its contribution from the public revenue. A possible source
of revenue may be suggested in the penalties inflicted on
wrong-doers. Unfortunately this, which so far as it goes
is very suitable, proves insufficient. In many cases there
is not enough to compensate the individual sufferers. The
offender either civil or criminal may have no available
property, and we therefore find ourselves forced to the
conclusion that the cost of justice should be defrayed by
the State. Nor so long as due care is observed in scruti-
nizing the outlay is there any form of public expense that
is more amply justified. On the due administration of
justice depends in a great degree the prosperity of a country.
The outlay incurred for it ought not to be regarded as a
deduction from a definite and pre-determined fund ; it is
more correctly a percentage levied on wealth, that but for it
would never have existed l .

3. In regard to justice as to defence it is possible to
adopt different methods of supplying the state require-
ments consisting in this case chiefly of services. As Ger-
many has given the world the greatest example of forced
military duty, affording a model that has been widely
imitated, so has England supplied the most striking and
impressive instance of compulsory civic service. The jury
system of the United Kingdom, though it does not enter
into the national accounts, is, notwithstanding, a heavy tax
on those who are subject to it, and should be taken into
account in estimating the national burdens.

Continental legal systems economize in another direction.
By placing judicial salaries at a lower scale the work is
done by an inferior class of men 2 , but then they are en-
abled to employ a larger staff and can secure a quicker
disposal of cases. In this they are aided by the superiority
in form of their laws. A less skilled judge can deal
successfully with the definite rules of a Code, when he
would fail under the English method of case-law.

Whatever mode be adopted the total cost of the legal
system is not light as the figures show, and it tends to in-
crease with the growth of population and industrial inter-
course 3 .
ance of judicial work. As England has a volunteer army
so she possesses a volunteer judiciary in the unpaid justices
who discharge the lower tasks of courts of first instance
and are rewarded by the consideration that attaches to
their office, and by the reflection that they have ' done their

The Germans, and Gneist in particular, place great
weight on the advantages of * Self-government ' as it exists
in England and is being gradually introduced into Prussia.
It is nevertheless of doubtful efficiency ('justices' justice'
has long been a byword), and from the financial point of
view the gain is not great. At all events, the system of
unpaid magistrates is only suited for thinly peopled districts,
where small offences are comparatively few in number, and
where the administrators command respect by their social
position. Civil cases, above the lowest, have to be referred
to a paid official the county-court judge ; and the criminal
jurisdiction over large cities is given to well-trained and
salaried magistrates, since the work would be beyond the
power of volunteer service.

Thus self-help, or rather free public service, turns out to
be a valuable aid, but impracticable as a sole or even a
chief resource.

5. Next to the cost of law, the outlay on ' police '
requires notice. The general term ' police ' has been used
in a wide sense 1 ; we may, however, limit it to its modern
meaning. In this application it is of very recent growth.
Formerly each citizen was in some degree prepared to
defend himself, or belonged to some body or group that
would protect him more or less effectually against aggres-
sion. All difficulties finally came to the tribunals. Now
the State is held bound to have a force on hand to suppress
disorder and bring criminals to justice. The absence of
a police force from any scene of disturbance is regarded
as a grievance, the support of order being supposed to
concern it solely. A series of causes has tended to
produce this remarkable change in public feeling ; they
are: (i) The increase of population and its great density
in certain areas affording naturally a greater facility for
escape to offenders ; (2) the alteration in manners that has
abolished the custom of carrying arms ; (3) the modern
industrial system with the consequent accumulation of
valuable commodities, many of them incapable of being
identified ; (4) the development of agencies for locomotion
and the facilities for escape thereby obtained, while pursuit
though difficult to an individual is still easy for an organ-
ized body. The financial outcome of these normal forces
has been a great increase both in central and local expendi-
ture for the purpose of maintaining police forces engaged in
supporting and facilitating the action of courts of justice as

^also in preventing outbursts of disorder 1 .

\ 6. The penal system stands on the borderland between
* police ' and administration. When the judge and police-
men have dealt with the criminal, he is handed over to
the jailor, and in this department of state outlay also there
has been a noticeable change during the last century.
Ancient societies treated offenders in a summary way.
They were executed or reduced to slavery, so that the
problems of prison expenditure or management did not
arise. The mediaeval idea was quite as barbarous though
not so efficient. Criminals who escaped death were the
objects of great cruelty as well as at times of undue
lenity 2 .

The more humane spirit of the eighteenth century
brought about a salutary change. Under the influence of
the teachings and practical work of Beccaria, Bentham, and
Howard, continued by their many followers in their various
lines of exertion, the whole system of criminal legislation
and penalties was remodelled. Punishment, instead of
being regarded as the vengeance of the State or the
individual, was transformed into an agency for prevention
and reformation. Executions became few in number, and
prisons, from being purely places for confinement, were
used for purposes of discipline and instruction.

The necessary financial result has been a considerable
increase of expenditure. Prisons and convict stations are
formed on an elaborate scale, with careful -provision for
the health of the inmates. The comparative leniency of
sentences has further tended to perpetuate the class known
as ' habitual criminals.' This small body for such it really
is in all civilized countries is yet responsible for the
greater part of the outlay on * crime and police.' Any
effectual method of dealing with proven * habituals ' would
be a financial as well as a social benefit. Even under the
present arrangements the outlay on the * penal system ' is
in the strictest sense productive or at least preservative of

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