until the whole story shall have been told in the form of a serial. THE CONFERENCE OPENS At two o'clock on Monday, Oct. 11, the Conference was opened by Dr. Milbank Johnson, the president, who is also chairman of the Board, California Taxpayers' Association. He introduced A. C. Hardison, president of California Taxpayers' Association, who delivered the welcoming address, pointing out the danger of abuse of the taxing power of government. While Mr. Hardison was expressing the cordial hospitality of California, a telegram came from President Coolidge, in which the Chief Executive said: "I am sorry I cannot attend the meeting of the Western States Taxpayers' Conference. Please extend to those present my greetings and best wishes for the success of your deliberations." A little later a telegram came from United States Senator Reed Smoot of Utah, chairman of the Finance Committee of the Senate, which read. "Please convey my regrets that I cannot join the Western States Taxpayers' Conference. The object of the meeting meets my hearty approval, and I hope that increase of taxes, economy in expenditure of taxes collected, and simplification of tax laws will be stressed." The Conference proceeded immediately to the program, the first paper being by Prof. M. M. Stockwell of the Department of Economics, University of California in Los Angeles, on "The Relation of Federal, State and Local Taxation.” After Charles R. Hows, tax commissioner of Arizona, had been introduced to the Conference, Judge Henry H. Rolapp, VicePresident of the Western States Taxpayers' Conference, and President of the Utah Taxpayers' Association, gave in detail the history of the formation of the Conference. SOME STATE PROGRESS REPORTS The Chairman, after appointing the committees, called on C. C. Chapman, editor of the Oregon Voter, and the member for Oregon of the Advisory Committee, who reported progress in his state during the past year. F. N. Fletcher of Nevada followed with a progress report, after which Judge Rolapp reported for Utah that every county in the state had been organized by the State Taxpayers' Association. Rupert F. Asplund reported for New Mexico; A. G. MacKenzie for C. E. Arney, Jr., for the State of Washington; Vance H. Evans for California; E. M. Sawyer for Idaho. These reports will be epitomized in later numbers. MONDAY DINNER SESSION Not even the dinner hours were wasted. At half past six o'clock, with Dr. Johnson as toastmaster, the delegates carried on the discussion around the dinner table. Mr. Hardison emphasized the vital interest of agriculture in tax matters. M. D. Lack, Vice Chairman and Tax Counsellor, California Taxpayers' Association, discussed "The Organization and Functions of Local Committees." A. E. Poulsen, president of the Sonoma County local committee, told of the research report of California Taxpayers' Association in the affairs of his county. James Egan, secretary of Kern County Committee, reviewed the work that has been done there. Charles L. Wright, president of the Pasadena local committee, gave an interesting account of the work in that city, especially referring to the Holly Street Improvement. after which Joy A. Winans, chairman of the Los Angeles City Committee, spoke. making special reference to the Los An geles Flood Control District affairs, and announcing that the directors of the Los Angeles City Committee had resolved to oppose the $26,000,000 flood control bond should have been more detailed informaissue on the Nov. 2 ballot until there tion relating thereto. The dinner session closed with an interesting statement by George G. Tunnell of Chicago. TUESDAY ACTIVITIES The delegates were at their work again Tuesday morning, Oct. 12, at eight o'clock at the breakfast table and at ten took up the regular session in the Conference Hall. The Chairman called on H. M. Richter, delegate from Texas, to report on the taxation affairs of that commonwealth, after which Marshall DeMotte of Corning, Cal., was introduced to speak on "The Relationship Between Fixed Charges, Initiative and Legislative, and Administrative Costs of Government." DeMotte was former chairman of the State Board of Control of California. Discussion followed, led by Mr. Newell of Pasadena. VICISSITUDES OF BUILDING a Great UNIVERSITY The paper by Dr. Henry Suzzallo, Presi dent, University of Washington, was read to the Conference by Dr. Frank C. Touton, Professor of Education, University of Southern California. The Chairman stated: A few days before the Conference opened the Board of Regents of the University of Washington asked Dr. Suzzallo's resignation. The Board of Regents had only lately been reconstituted, by Gov. Hartley, so as to give a majority of members who would support the Governor against Dr. Suzzallo. The controversy had arisen during the World War, when Dr. Suzzallo, as chairman of the Industrial Relations Com mittee for the state, had brought an eight hour day into the lumber camps of Washington. Gov. Hartley, who is a lumberman, bitterly opposed Dr. Suzzallo's eighthour day for the lumber camps. There were two other angles to the controversy. The University of Washington owns ten acres of the old campus which had been leased for 50 years to various business interests, and on which business structures had been erected by the lessees, the structures to revert to the University at the expiration of the leases. Under the terms of the leases, the University derived only about $80,000 annually in ground rentals. The land has increased enormously in value since the leases were made, being now worth many millions of dollars. Dr. Suzzallo saw in this ten acres in the heart of Seattle an asset which, preserved and treated according to the ordinary rules of business, would in time make the University self-sustaining. Pressure was brought to bear on Dr. Suzzallo to renew the leases on the old terms of rental. Dr. Suzzallo refused, and was supported by the Board of Regents. Gov. Hartley appointed enough new Regents to give him a majority, and Dr. Suzzallo's resignation was requested. The other angle to the controversy was: The University owns a large tract of timber which came into its possession as a land grant from the United States. This timber land is in one body where it has been inaccessible because of lack of transport facilities. It has therefore been of relatively low market value. However, the increasing scarcity of timber has brought the University timber lands into demand, and pressure has been brought to bear on Dr. Suzzallo to sell the lands. He and the Regents refused on the ground that the lands would still further increase in value, and the University largely profit by holding them. The lumbermen insisted. Dr. Suzzallo was adamantine on both proposals, taking the ground that the patrimony of the University was involved, and that it was his duty and the duty of the Regents and of all friends of education and of the friends of the taxpayers of the state to protect the University property. The controversy, therefore, had detained Dr. Suzzallo in Seattle, and Dr. Touton read Dr. Suzzallo's paper which had come by airmail. A DOLLAR'S WORTH OF EDUCATION In these days when tax burdens are greatly increasing, it is natural that attention should be focussed upon the largest item-education. It is always the largest item that seems to offer the largest possibility of a cut, though this by no means follows. It may be spent far more effectively than many smaller items. That is a fact to be determined. It will be determined, not by prejudice, but by judicial examination. Some Tax Associations, notably the one in California, are doing just the type of work that educationalists and taxpayers and other kinds of Americans appreciate. It is not trying to dictate American policy, or to change the fundamental American traditions, which insure free government through the fostering of intelligence. It is merely inquiring into the administration of school funds and asking if the money is well spent. There are other leagues of taxpayers which exercise no such restraint, and are more propagandistic than judicial. They are willing to wreck the school system and American democratic institutions, provided they can save a few dollars. Such efforts are futile. They can have no permanent success. They stir animosities which are slow to heal. They separate themselves in the name of economy from the schoolmasters who are striving for efficiency, when it is plain to everybody that the forces for efficiency and economy must co-operate, if the public is to get what it needs at the lowest reasonable cost. I take it that this tax conference is not inter ested in a saving of school money which would change the fundamental nature of our American institutions and our national life. Our political forebears have determined that there shall be equality of opportunity for our youth to develop its human capacities through schooling. You are not interested in the tax reducer who says that there can be too many educated and intelligent men and women; or in the fellow who fears there will be a short labor supply of the ignorant and docile kind, if schooling is too freely supplied. You want schooling, but you wish your dollar's worth of education. A DOLLAR'S WORTH OF NAILS How is a dollar's worth of education to be determined? In the same way that you know DR. HENRY SUZZALLO whether or not you are getting a dollar's worth of nails. It is strange how many fail to see the fundamental likeness, and go astray in their thinking. They think that they ought to get a perfect human product from the schools at any price they feel comfortable in paying. That economic version is not true anywhere in business where men ask and pay a price. Quality and quantity go up or down as the price paid varies. This is just as true in schooling as it is in any economic service. Hold fast to this thought and many fallacies in thinking about school expenses will disappear. A dollar's worth of nails today is different from a dollar's worth several decades ago. Science and industrial progress have improved quality and quantity in production. You may need more or less of a thing, or a better kind. The dollar is not the same dollar. Its purchasing power has changed. All these factors have to be kept in mind in school costs, yet they are not. Educational science and psychology can now give us a better educational product than before, and we want it. Our standard of living has raised here is elsewhere. It is the privilege of a democratic people to have better schools, just as it is theirs to prefer an automobile to a horse and wagon. A MORAL PROBLEM The problem of getting people to want something else than they do is another problem. Perhaps they have the wrong values and are spending too much money in one place. But this is a problem in the moral, social and spiritual reconstruction of men and women. It is not a problem in economics. They may be spending more than their income. This is serious, but it is primarily a question of morality, though it has terrific economic effects. The only way to know whether you are getting your dollar's worth in education is by comparative study. What is the other fellow getting for his dollar? How does he educate more people in a better way by spending less money? What is his method of administration? How is spending organized? What is the training of the spenders? How far, finally, may we apply his methods to our differing conditions? The last question will keep us sane. There are two domains in which we may watch the uses of a dollar. The first is in the domain of administration, and the second in the domain of teaching. We are more at home in the first field than in the second. Here is where taxpay ers' associations have done their chief work. Locating schools, building and bonding, purchas ing supplies, hiring and distributing teachers have been the chief factors taken into account. Improving the effectiveness in turning out more and better human product is still a mysterious field to the layman, but the educationalist is beginning to understand it through the new science in education. Taxpayers must be concerned with it. In the field of administration there are certain obvious comparisons of methods which give aid. We can give education cheaper and better through the consolidation of schools and the transportation of pupils, through sending students to another school district with one district paying another, where these devices are applicable to the particular case. LARGER UNITS Larger units of school management than the little country district will help. County or community units of management may be given some larger use than now, without destroying local selfgovernment, an essential feature in American life not to be lightly put aside. There is no more delicate problem than to determine which school functions shall be centralized and which decentralized. Only experience will tell what is right. The present passion for centralizing everything to get financial efficiency is dangerous. It is stressing consideration of one factor and losing sight of others. You may save money and get a centralized and standardized bureaucracy, inject politics into your schools and make them easy victims of propaganda. The representative of a new league of taxpayers' associations in one state proposes that all the schools be under control of one central state board and that all teachers be appointed by this board of laymen with professional advice. Such a board might well determine minimum standards of training and certification, but the hiring of teachers should be left with some authority nearer the parents of the children they teach. Anglo-Saxon civilization, of which America is a part, is more broadly common sensed by its experience than it is narrowly and relentlessly logical in pursuing a single object. The locating of different types of schools may, in these days of local pride, be a great source of waste. Four years of high school may be maintained where there should be only two years. Junior colleges may be maintained at home where the expense would be less than if students are sent away. Large units of management on the higher ranges of schooling make for economy. Fortunately the new articulations of the school system will aid local adjustment. Where once we had just elementary schools, high schools and colleges, we now have respectable and effective units including elementary schools of six years, junior high schools of three years, senior high schools of three years, and junior colleges of two years. Meager attendance is sometimes unavoidable. When it is, we must pay the bill. But it is more often avoidable, with modern transportation, to saturate a school unit to the point of high working efficiency and economy; that is, to a thrifty point of organization. CENTRAL PURCHASING Central purchasing instead of district purchasing is an advantage clearly demonstrated by every study made. One specialized office can do better than eighty school boards of laymen who do not make buying a major business. But experience opposes the purchasing for a school system being merged with a bureau of the general political government. School systems should be given a certain autonomy, like the courts. Their immense budgets are a constant temptation to politicians who would use their buying and hiring as patronage. We have largely fought our way to independence of politics. Why retreat to ancient evils of which we are largely rid? Careful budgetting is of high advantage. But the budget officer who recommends cuts and reductions should be more than an accountant dealing with figures representing dollars. He should know something about function. All efficiency is related to educational function. In many cases the budgetting political officer is hopelessly ignorant. The budget is a splendid tool in the hands of a competent mind, and a stupid instrument when it is not. Budget forms must be made up with more regard for interpreting tasks to be performed than is the case at present. In the domain of teaching we have just begun to study economy and efficiency in a scientific manner. This is a wholly psychological problem which the ordinary layman does not and probably will not understand. Here reliance on the professional expert must be had. Segregation, and different speed of mastery among groups of pupils is an economy. The bright will go faster and save school years. The slower will move ahead at their own pace without tripping and charging repeated years to the taxpayer. Another illustration is provided in the lay opposition to supervisors. Good supervisors of ordinary teachers double the effective service of the teachers under them. It is all a matter of when and where and how they are used. a problem in educational adjustment. On the budget they look like extra help and are readily lopped off. Better increase the size of classes and provide good supervision than do without it. "TRIMMINGS" Another fallacy is the talk about "trimmings, fads and frills" in the course of study. With so many kinds of human nature to be served, what is a frill to one student is a need to another. The chief reason these subjects have not been eliminated is because the different parents could not agree. Therefore it is left to the schoolmasters where it may better be left. The science of their own profession will take care of the matter. There is another economy fallacy that lurks in this field. To maintain some of these modern subjects does not add their total budget cost to the taxpayer. The child has to be taught something. If it is not one subject, it is another. You merely add the differential in cost if there is one, not the whole budgetary amount. If a student making progress in a subject that costs ten per cent more is compelled to take a subject of lower cost where he makes no progress and has had to repeat, the state loses ten-tenths where the thought was to save one-tenth. Money expenditure is related to performance of function. America as compared with other industrial countries has a much heavier capitalization, but it pays higher wages and gets a mass production that lowers prices. There is a thought there for educational production. Educational research and new scientific procedure promise most for efficiency and economy in the domain of teaching. The intelligence tests as aids to diagnosis, standard achievement tests, the comprehensive examinations, comparative study of teaching processes all promise to give the taxpayer more for his dollar in school, just as science and scientific technology have given more and better nails for a dollar than before. new THREE ADDRESSES Charles A. Rudel, tax expert, PacificSouthwest Trust & Savings Bank, then read a paper on "Analyzing Bond Proposals." Prof. Rolland A Vandegrift's paper on "Costs and Methods of Financing Public Improvements" followed. COSTS AND METHODS OF FINANCING PUBLIC IMPROVEMENTS Montesquieu, the French philosopher, as early as the eighteenth century made the observation that liberty invariably increases taxes. The increase of taxes in the states established since this great thinker gave expression to this thought, has demonstrated the truth of the statement. The increase of taxes has been necessary be cause of an increased disbursement by govern ment largely due to an expansion of the functions of government. Under the monarchies and other forms of personal rule, the bulk of expenditures went to support the person of the ruler and his establishment. The public treasury was, in effect, his personal purse, and was used to gratify his pleasure or extend his power. The demands were almost limitless and imposed a burden only in itself limited by the physical ability of the subjects to contribute, or the power of the ruler to extract, without destroying the source of revenue. The use of public funds, primarily for the benefit of the ruling class, and the obnoxious methods of the royal tax collectors in imposing taxes which took from the producer a larger and larger share of his earnings, finally resulted in revolutions which overthrew the absolute govern ments. These revolutions were not necessarily brought about by the monarch's impoverishing the nation, but because the expenditures were made in the interests of the ruling minority. The taxpayers, who were now developing learning, could not see that they were getting a return from the heavy exactions. The revolt and the establishment of popular or representative government brought, as a matter of course, the condition that public disbursement should be for the general benefit rather than for the few. It was but natural that once the people enjoyed public service at the expense of the general treasury there should be an indefinitely expansive demand for such service to satisfy them. As a result, expenditures began to expand, until the former outlay of monarchies became insignificant in comparison. The people, now, through the vote, encouraged too frequently by the tax spenders, make expenditures. At the same time, as popular government expands, public activities multiply both in extent and number. Old functions are extended to embrace more, and new functions are taken over. Public expenditures have, as a consequence, increased faster than population and wealth. The danger, however, does not lie in the amount of taxes, so much as whether expenditures are wise, proper functions of government, and are being efficiently and economically administered in the interests of all the people of the community. The demonstration that "liberty invariably increases taxes" is more emphatically seen in the United States than in any other country. The functions and activities of government here have expanded to almost countless numbers, all presumably in response to public demands, and all of which, under the immutable law of compensation, must be paid for out of the pockets of the taxpayers. Federal, state, county and municipal governments all carry on activities, the lists of which are almost limitless and which frequently overlap and duplicate. Many of these activities contribute to the benefit of the general public, and others apparently only assist a special group and indirectly the public interest. The constantly increasing taxation and expanding of public expenditures in all these divisions of government are largely the results of ever expanding, intensively and extensively, of the services and activities performed. It is undesirable to eliminate entirely or unnecessarily restrict these services in an expanding society, but there is a pressing need that constant vigilance be exercised to prevent expenditures from expanding beyond ability to pay. Therefore, accurate information of the growth in extent and cost, nature and spread of benefit, and constant guard for their wise, economical and efficient administration are needed. so that the fullest return can be made for the tax burden imposed. SOME FACTS According to figures prepared by the National Industrial Conference Board and carried to the year 1925, the latest available, the total volume of taxation collected in the United States in 1924 was $7,907,000,000, compared with $7,766,000,000 in 1923, and $2,194,000,000 in 1913. The increase of $141,000,000 in 1924 was 2 per cent over 1923. and the total was more than three and one-half times as large as in 1913. The per capita total for 1924 was $70.99, compared with $70.21 in 1923, and $22.73 in 1913. The average burden per person gainfully employed was $182.94 in 1924, $184.05 in 1923, and $59.25 in 1913. Per family, the total taxes amounted to $304.23 in 1924, against $303.58 for 1923, and $102.12 for 1913. There is no mistaking the effect of such an increase of the tax burden. It cannot continue at such a rate and our prosperity endure. Happily there appears to be a realization of the dangers and an intelligent move to find a remedy, the Federal Government pointing the way in repeated tax reductions and internal economies. Even now. only a few months after the last Federal tax reduction, we are looking forward to another pos sible reduction by the next Congress. The Federal Government collected $3,095,000,000 in 1924, compared with $3,220,000,000 in 1923, a decrease of 3.9 per cent, but the states took up all but $6,000,000 of this savings by increasing taxes from $945,000,000 in 1923 to $1,064,000,000 in 1924, an increase of 12.6 per cent. Local governments increased their taxes by 4.1 per cent, or from $3,601,000,000 in 1923 to $3,748,000,000 for 1924. The Federal Government took in 1924 approximately 40 per cent and local governments 60 per cent of the total tax bill collected. Reducing the situation to terms of the 1913 dollar, so as to take into consideration the decrease in the purchasing power of the dollar, the total tax bill in 1924 was almost two and one-half times as high as in 1913. WHEN BONDS ENTER THE EQUATION Much more was expended by all governments in the years noted than was raised in taxes. Total expenditures, as given by the National Industrial Conference Board for 1924, amounted to $10,252,000,000, compared with $10,145,000,000 in 1923, and $2,919,000,000 in 1913. This is an expenditure for 1924 of about three and one-half times the 1913 figure. This was in spite of a 10.6 per cent decrease in the cost of the Federal Government for 1924 under 1923, and was due to the fact that expenditures by state governments |