pared with those of local governments, the relation of the two is of great importance. It cannot be said that there is anything like a system in the actual distribution of revenue sources between the two forms of government. It must, however, be obvious that the orderly development of each requires that well-defined sources of income be assigned in such a way as to satisfy the more rapidly increasing necessities of the local governments.
A revenue system should therefore supply current needs, should increase in productiveness as those needs increase, and should moreover be regular in its returns and capable of meeting the fluctuations of financial necessities. The customs revenue is peculiarly subject to fluctuation, and a State which relies solely upon it is exposed to serious embarrassment. This is well illustrated in the financial history of the United States, and depicted in the table of receipts of the United States, given above.
Imports on which these revenues are based follow the vicissitudes of trade, and reflect the hope or fear of tariff changes. Far more regular has been the productiveness of the internal revenue taxes imposed by the United States. To meet these fluctuations of revenue from certain sources, as well as to meet fluctuations in the need for money, the financial system of every nation needs some elastic element, some tax whose productiveness can be reduced or augmented, as the case may be. The United States may be said to have such a source of revenue in the internal revenue system. When drawn upon for the increased expenditure for the war with Spain, the effect upon the revenue was rapid and considerable. But nowhere else has this element of elasticity attained the importance which it has assumed in England, where the income tax is used for this end. In the United States it has not been necessary to increase or reduce taxation frequently, since in the past thirty years there has generally been a surplus revenue which has been applied to debt reduction.
Finance, Local. As a result of the division of authority and functions between central and local governments, a distinction is coming to be clearly drawn between general and local financial operations. The extent of the latter has been treated at the beginning of this article; it is here necessary to emphasize some of the chief principles of local as distinguished from general finance.
Expenditures.—Those expenditures which result in purely local advantages are most naturally borne by the local government. Such, for example, are those which are incurred for local improvements and the costs of local administration. Besides these expenditures, there are some which are of general interest, but are best placed under the control of local bodies, so as to be more nearly under the supervision of the public. Examples of expenditures of this kind are those which are incurred in the support of primary education, and for poor relief and the administration of justice. It is these classes of expenditures which are increasing most rapidly.
Revenue.—If local government is to possess real autonomy, it must possess independent sources of revenue. Certain classes of taxation cannot be employed by local governments. Such, for example, are the income and general excise taxes; import and export duties; taxes on bequests and inheritance. These forms of taxation are difficult to collect by local authorities; and if practice is not uniform throughout the State individuals and industries will escape taxation by shifting from one locality to another. There remain taxes on real property, and on local occupations. Neither of these objects of taxation can escape the local assessor. Franchise taxes frequently afford a considerable local revenue. Further revenues may be secured through charges for special benefits, e.g., water-rates, and special assessments (q.v.) may be employed to cover the outlay for some of the more burdensome local improvements. It remains true, however, that the revenues which can be obtained from local sources are frequently insufficient to cover the expenditures which are incurred by the local government. In many countries it has become customary to supplement local revenues by grants from the central treasury. In England, up to 1887, many grants for specific purposes were made; since that year various duties, collected by the central authority, have been marked off for local uses. In the United States the most familiar application of this principle is the grant of State funds for educational purposes.
Debt.—The local government, even more than the central authority, is often compelled to incur debts to cover the cost of undertakings which are too extensive to be paid for out of current revenues. A large proportion of local expenditures are productive, and should therefore be met by loans which distribute the cost over a long period. Local authorities are, however, frequently inclined to be reckless in the expenditure of resources thus gained. For this reason the central government usually exercises close supervision over the creation of local debts. In the United States, State constitutions frequently fix a limit beyond which localities cannot go in incurring debts; in many cases debt-limitation is provided in municipal charters. In Great Britain a special act of Parliament is required in order to authorize a municipal loan; and a similar practice is followed in France and other Continental countries. In England the central government acts as an intermediary in securing loans for local bodies, thus giving to the latter the advantages of the national credit; in Belgium the national treasury keeps a fund out of which loans are made to municipalities; and in Germany the funds reserved in the public treasury for the relief of invalids are loaned in this manner. See Tax and Taxation; Municipal Government.
Bibliography. The principal comprehensive works in English are Bastable, Public Finance (New York, 1898); Henry C. Adams, Science of Finance (New York, 1898); W. M. Daniels, Elements of Public Finance (New York, 1899); and C. C. Plehn, Introduction to Public Finance (New York, 1896). See Budget; Debt, Public; Customs Duties; Internal Revenue; Tariff; Repudiation; Independent Treasury.
FINBACK, or FINNER. A whalebone whale of the genus Balænoptera, so called because of the marked development of the dorsal fin, which in most whales is either small or wanting. They are the largest of living animals, ranging from 30 feet up to the colossal dimensions of the ‘sulphur-bottom’ of the Pacific, which is sometimes more than 100 feet in length. They yield little oil and the whalebone is of poor quality, so that they are not much sought after. The most com-
