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

Public Finance - Chapter V

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

Education. Religion.

1. THE recognition of education as one of the tasks of
the State was a natural result of the decline of the influence
of the Church. The innumerable religious institutions and
endowments of the Middle Ages had provided instruction
for youth as they had provided sustenance for those in need,
and when their endowments were in great part seized by the
different European sovereigns some provision in their place
or by their diversion to the supply of education was ob-
viously suggested. Even the theorists of the eighteenth
century hesitated to exclude the duty of assisting educa-
tion from the sphere of state operations. The Physiocrats
and Adam Smith agreed in recommending state aid to edu-
cation, but only under such conditions as would encourage
efficiency in the teachers with industry and application in
their pupils x . Since their time the tendency has been towards
the extension of public effort in all the departments of
education. The question presents itself in connexion with
each of the three forms of teaching, primary, secondary or
intermediate, and university.

2. In respect to primary education we may note the
distinct expression of opinion by Adam Smith in favour of state facilities for this form of teaching. The success of
the Scotch parish schools had evidently impressed him, and
he contends with great force that the increased division of
labour due to economic progress tends to weaken the facul-
ties of the workman and that this evil can only be counter-
acted by education. The State has, moreover, he thinks, a
direct interest in the education of the bulk of the people in
order to secure political tranquillity 1 . A mild form of
compulsion is even allowable, since he suggests that passing
an examination should be a necessary preliminary to entry
into a trade. Adam Smith does not advocate free education,
but his reason is curious, viz. that the teacher's diligence is
stimulated by the receipt of fees, an aim that would be
otherwise reached through the present result-fees' system.

During the present century the state-guided system of
primary instruction has become definitively established, as
an examination of the details of expenditure will most
clearly show. The development of this system has brought
out the existence of several difficulties imperfectly recog-
nised at its commencement. Among those are: (i) The
problem of religious teaching ; denominational schools, are
offensive to one section, undenominational ones to another ;
and both the amount and application of state funds is hotly
contested by the different parties. (2) Distinct from the
foregoing, but connected with it is the relation of state to
voluntary schools. If no fees are charged, the private
schools, in competition with the public ones, complain of
the unfairness, which indeed is manifest. On the other hand,
fees especially if education is compulsory press heavily on
the poorer parents. (3) When, to avoid some of the fore-
going puzzles, payment by results is made, there is a danger
of superficial preparation, and yet without some test of the
kind, efficiency cannot easily be measured. The only com-
plete escape from such difficulties would be the abandon-
ment of instruction to voluntary effort, a solution which is forbidden by the importance of education both socially
and economically, as also by the practical impossibility of
securing it without state aid in the case of the very poor.

3. Secondary education is in a very different position.
The older economists would abandon it to the action of
individual and family interest. There is, it would appear,
no pressing ground for state exertion in order to supply
instruction superior to that enjoyed by the whole popula-
tion. It may, therefore, reasonably be left to private initia-
tive or to voluntary effort, more particularly in the form
too often disregarded by economic and financial theorists
of endowments by gift or bequest. The modern tendency
is here, too, in favour of an extension of state action, gener-
ally directed rather to supervision and readjustment of
existing resources than to the supply of additional funds.
In some instances special agencies for testing the quality of
secondary education, either by inspection or examination,
have been created 1 . From the financial point of view it
must be said that outlay of this kind is not to be placed in
the same rank with that in aid of the primary instruction of
a country. At best it belongs to the class of useful outlay,
and is very likely to be supplied by private funds. It,
moreover, is open to the objection of benefiting but one,
and that the most independent, section of the population.
Against these weaknesses it may claim to be of a moderate
character, and not likely to seriously affect national finance.

4. Universities or, more generally, institutions for
higher education have to be judged on special grounds so
far as their claims for state aid are concerned. It is quite
true, as Adam Smith shows, that the higher education in
many cases is not a necessity but rather a luxury or orna-
ment that may very well be paid for by the wealthy, if
they desire it for themselves or their families. In most of
the remaining instances it is a legitimate investment in
immaterial or personal capital, a point of view that predominates in the minds of the professional and commercial
classes, so that on either supposition there is no call for
public intervention. State or other endowments have,
besides, the injurious effect of checking the easy remodel-
ling of the system of higher instruction in accordance with
the inevitable changes in scientific and literary studies 1 .
There is unfortunately a tendency on the part of highly
paid permanent teachers to take their work in a mechan-
ical manner, and expend their energies in other directions.
The result of such considerations leads to the suggestion of
thorough reform in the mode of higher education rather
than complete surrender on the part of the State of its
regulating functions, more especially when some less
obvious parts of the working of Universities are taken into

The modern University has very different elements and
may be looked at from different points of view. In the
first place it is a grouping of professional schools, and
here the tendency towards extended administrative action
almost compels the State to form closer relations with
the larger teaching bodies. The increase in the number of
professions, entry into which is granted only on supposed
proof of competence as evidenced by examinations and
courses of study obtainable solely by means of attendance
at a University College, affords a strong reason for offering
facilities towards getting the necessary instruction. When
the State imposes on candidates for various offices or pro-
fessions the obligation of having a University Degree or
something similar, it is in fairness bound to supply them
with reasonable opportunities for acquiring that needful
badge. Moreover, many parts of administrative work could hardly be carried on without the aid of the scientific
skill maintained by the teaching bodies.

Secondly, the importance of scientific research in its
effects on the production of wealth and in dealing with
many social problems is now abundantly recognised. Even
literary and historical inquiries are found in many cases to
be of practical service and to powerfully aid in the advance
of culture. The ' endowment of research ' is a matter, if
not of practical politics, at least of discussion. A Uni-
versity, however, is, or at least ought to be, the home of
research, and its support by the State may be claimed on
the ground that it discharges this most valuable function.
Possessing these two departments which may reasonably
expect aid from public funds a University naturally adds
to them a third in supplying to the richer members of
the society the ornamental education or ' culture ' that they
demand and are willing to pay for. By this combination
it is further possible to stimulate the teachers by fees that
will largely depend on the reputation and credit of the
institution where they are placed.

5. The question of ' technical ' as opposed to general
education presents itself in all the stages of instruction and
in each it raises the same problems. The evident economic
advantage that a nation obtains through the skill of its
producers is &prima facie ground for state aid being given
towards the attainment of suitable training. Expenditure
for such an object is productive even in a financial point
of view, and it may be further argued that individual or
family interest will not suffice to accomplish the end
desired. On the other hand the sturdier individualists urge
that self-interest, if good for anything, should surely be
good for inciting men to learn in the most efficient manner
the trades or occupations by which they have to earn a
livelihood. The same general result is reached here as
elsewhere, viz. that the true test is experience, and it shows
that public outlay may be of advantage in promoting
industrial training though it is subject to the inevitable drawback of all state interference in its tendency to reduce
private exertion, and in the difficulty of duly regulating
the supply of skilled labour called out by its action. The
acquisition of training for unprofitable employments is no
slight evil and under the rigid system of regulation insepar-
able from official management it is not unlikely to occur.
Even general education may produce a surmenage scolaire,
as the example of France shows.

6. Under the same head the cost of museums, libraries,
picture galleries, and institutions for promoting science
and art generally should be placed. They come in to
supplement the more directly educational agencies and are
often quite as effective in promoting the ends aimed at.
The modern development in this domain is remarkable (es-
pecially in England and the United States). Central and
local authorities have both made considerable efforts
in the direction of meeting the wants of the popula-
tion for opportunities of acquiring information and culture.
Few large towns are without appliances that were un-
known a century ago or confined to national capitals.
We have to add this expenditure to the cost of schools and
colleges before we can say what is the total sacrifice in-
curred by a nation in its public capacity for the object of

7. Voluntary action may be expected to relieve the
revenues of the State from a great deal of this charge. Not
only are the expenses-of education largely met by the normal
economic process of payment for advantages obtained ; the
donations and bequests of the wealthy have supplied, and
we may hope will continue to supply, a good many of the
less profitable fields of instruction and research with suffi-
cient endowment. The splendid example set by American
millionaires may produce good effect in Europe by attract-
ing attention to the benefits of supporting the educational
and investigating bodies to which civilization owes so
In any case it must be said that no modern State
is likely to suffer financial embarrassment through its
outlay in promoting education and culture. Measured
against the cost of war and preparation for war, this
form of expenditure is modest and inconspicuous in the
total amount, and taken with its probable advantages
it is the least questionable of the many secondary heads
N^of charge.

8. The relations of Church and State have been at
different periods the principal problem of rulers. The
earlier sentiment rather included the State in the Church
than the Church in the State. Modern societies are
practically agreed in reversing this position. Excluding
the polemical sides of the subject we can see that for
the financier the religious wants of the community need
the supply of particular forms of services and commodities,
and the question arises whether the public authority should
provide these needed objects or leave them to private
effort. Historical conditions have determined the actual
solution in each country, while the prevalent theoretical
view is derived from the doctrines of the last century.
Adam Smith, who approached the subject under the in-
fluence of Hume l y regards the clergy as a particular form of
police attending to spiritual interests. His ideal is complete
non-intervention on the part of the State. The probable
result would be ' a great multitude of religious sects ' whose
fanaticism might be kept in check by -the two remedies of:
(a) ' the study of science and philosophy,' and (b) ' the
frequency and gaiety of public diversions/ Where, how-
ever, there is one predominant religion the State ought, he
thinks, to regulate and control or, to use his significant
term, to ' manage ' it a process that is best carried out
by the skilful use of the power of bestowing prefer-
ment. Religious endowments are regarded as a part of state wealth withdrawn from the more pressing end of
defence 1 .

The circumstances of the case have, it need hardly be
said, been profoundly altered since 1776. The United
States now afford a remarkable example of the actual
working of the policy of laissez faire in respect to re-
ligion 2 , and they are imitated by the English colonies.
Continental nations show a different set of changes :
the 'Established Churches' with their numerous inde-
pendent and private funds have given place to bodies
directly chargeable on the state revenues. The * en-
lightened absolutism ' of the eighteenth century commenced
the work of disendowment, which was further carried out
by the revolutionary movements since 1789. Later reaction
has made the clergy pensioners of the State. As regards
the United Kingdom, the American example has for special
reasons been followed in Ireland and seems likely to be
extended to Gre^at Britain.

Viewing the question as one of Finance it appears that
the expenditure on religion, though not large, can be easily
supplied by voluntary contributions, and therefore is not
an urgent call on public resources which can be better
used for other objects. When the State for political
motives undertakes the supervision of religion and its
supply, concurrent endowment is a necessity in modern
societies, as otherwise an evident injustice would be in-
flicted on the non-endowed sects. Such is the policy of
most States at present, but it is more expensive owing to
the greater number of ministers, buildings, &c., that have
to be provided.

The provision for religious teaching has a rather close
affinity to that for education proper. Modern budgets often combine the two charges under a single head. There
is also an historical connexion between them, and it is
noticeable that in countries, such as the United States and
the English colonies, where state endowment of religion is
given up, educational bodies take the vacant place. Public
expenditure for denominational education is a near approxi-
mation to State aid to religion.

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