fttitamttg of fflbtrago UC-NRLF 5fi7 THE SUBVENTION IN THE STATE FINANCES OF PENNSYLVANIA A DISSERTATION SUBMITTED TO THE FACULTY OF THE GRADUATE SCHOOL OF ARTS AND LITERATURE IN CANDIDACY FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF POLITICAL ECONOMY BY FREDERIC B. CARVER GEORGE BANTA PUBLISHING COMPANY MENASHA, WISCONSIN 919 EXCHANGE 2ty* Xtrtttmttg of THE SUBVENTION IN THE STATE FINANCES OF PENNSYLVANIA A DISSERTATION SUBMITTED TO THE FACULTY OF THE GRADUATE SCHOOL OF ARTS AND LITERATURE IN CANDIDACY FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF POLITICAL ECONOMY BY FREDERIC B. CARVER OOp 01011*8*** ?"" GEORGE BANTA PUBLISHING COMPANY MENASHA, WISCONSIN 1919 TABLE OF CONTENTS CHAPTER I INTRODUCTION PAGE The Division of Functions between State and Local Governments 1 Occasions Giving Rise to Subventions 4 The Plan of this Essay 7 CHAPTER II THE DIVISION OF GOVERNMENTAL FUNCTIONS AND OF REVENUE RESOURCES IN PENNSYLVANIA The Division of Functions between the Central and the Local Governments 9 The Division of Revenue Resources 15 CHAPTER III THE BEGINNINGS OF THE SUBVENTIONS Definition and Classification of Grants and Subventions 20 The Financial Policy of Pennsylvania 22 Grants for Education 23 Grants for Charity 29 Grants in Aid for Roads and Bridges 32 Other Grants and Subventions 35 Conclusions arid Summary 35 CHAPTER IV THE BEGINNING OF PERMANENT ANNUAL GRANTS FOR EDUCATION AND FOR CHARITY The Financial Policy of the State, 1826-1843 37 Grants for Charity 43 The Establishment of the Permanent Annual Subvention to Common Schools.... 55 Permanent and Occasional Subventions to Academies, Seminaries and Colleges 72 Miscellaneous Occasional Grants 78 CHAPTER V THE HISTORY OF SUBVENTIONS FROM 1844 TO 1873 The Financial Policy of the State 80 The Grant in Aid to Common Schools 86 Subventions to Normal Schools 102 Subventions to Other Educational Institutions 110 Subventions to Private Charitable Institutions 114 Miscellaneous Subventions 137 CHAPTER VI THE RELATION OF STATE AND LOCAL FINANCES, 1874 TO 1916 The Distribution of Governmental Functions 138 The Development of State Taxes on Corporations 140 The Equalization of Revenue Resources between the State and the Localities 147 11 THE SUBVENTION IN PENNSYLVANIA CHAPTER VII THE SUBVENTIONS FOR EDUCATIONS, 1874 TO 1916 The State System of Common Schools in 1874 153 The Financing of the School System 155 Causes for the Increase of the State Subventions 161 The Distribution of the Subvention to Common Schools 163 Regulations Imposed by the State upon Districts Receiving the Subvention to Common Schools 170 State Aid to High Schools 185 The Subvention to Normal Schools; Its Abandonment for State Ownership 187 The Subventions for Higher Education 195 Miscellaneous Subventions for Education 196 Summary and Conclusions: Subventions for Education 200 CHAPTER VIII MINOR GRANTS TO LOCAL AUTHORITIES Subventions for the Encouragement of Agriculture and for the Protection of Life and Property 204 The Subvention for the Construction and Maintenance of Highways 206 CHAPTER IX SUBVENTIONS FOR CHARITY, 1874 TO 1916 The Growth of The Subventions for Charity 212 The Constitutionality of the Grants 222 The Effect of the Subvention Policy upon the Development of State Institutions. . 228 Grants for Permanent Improvements 238 State Subventions to Counties 239 Distribution of the Subvention to Charitable Institutions 241 Should the Subvention to Private Charitable Institutions be Discontinued 243 APPENDICES TABLE I Subventions for Education and to Charitable Institutions, 1826 to 1843 247 TABLE II Total of all Subventions, Classified According to the Service Aided, 1844 to 1873.. 248 TABLE III A Subventions Paid from the Pennsylvania State Treasury for Education, Classi- fied According to Purpose, 1874 to 1893 250 TABLE III B Subventions Paid from the Pennsylvania State Treasury for Education, Classi- fied According to Purpose, 1894 to 1916 251 BIBLIOGRAPHY 253 INDEX... 259 CHAPTER I INTRODUCTION THE DIVISION or FUNCTIONS BETWEEN STATE AND LOCAL GOVERNMENTS It is a fundamental principle of the distribution of powers within the several states of the federal union that local governments, such as the city, county, township and school-district, have no sphere of action that they may claim as their own and upon which the state may not encroach. Local governments are the creatures of the state. 1 Their dependence upon constitutional provisions or upon enactments of the state legislature for their very existence gives rise to wide variations in the amount of power and in the number of functions that they exercise. It also makes readjustments in the division of powers between state and locality both easy and rapid. If the legislature decides, for example, that the counties are caring inadequately for the insane it may remove the service to the realm of state administration one year and return it to the counties or school-districts the next. Or, if a new service is created, such as the provision of free industrial education, it is possible for the legislature either to require one of the subordinate governmental units to assume it or to provide for direct state administration. In short, the local governments are completely at the mercy of the state legislature with respect to the functions they may exercise. The legislature may, however, be restrained by the constitution of the state from interfering too extensively in local affairs, and it is not unusual to find in state constitutions grants of power directly to the local units. Moreover, a less tangible but equally significant restraint is exercised by political custom and by the ingrained opinions of the people as to what are "local," and what "state" affairs. Public opinion would not, in the United States, permit complete centralization, nor, on the other hand, complete decentralization. The many legal enactments that fix the limits of local government are, of course, influenced to a great extent by ideas and ideals that are the result of many hundreds of years of Anglo-American experience in local self-government. But aside from these intangible influences, which have their effects upon all governmental practices, the following factors determine more immediately the distribution of functions between central and local authorities: (1) the success or failure of the state in administer- 1 Dillon, Municipal Corporations, (5 ed.), I, Sec. 33, pp. 61 ff. t c .- - "THE SUBVENTION IN PENNSYLVANIA ing the services 2 that it undertakes; (2) the success or failure of local authorities in the administration of the services assigned them; (3) the scope of the service, whether state-wide or local in its application; (4) the desirability of state-wide uniformity or of local variations in rendering the service; 3 (5) the advantage that ruling political parties may derive from the division of power; (6) and, finally, the relative revenue resources of the state and of the local governments. The last factor mentioned as determining the division of governmen- tal functions has received scant consideration at the hands of writers on political science. This is largely due to the way in which it operates. Ordinarily, we do not find that a surplus of state revenue is set forth as a reason why a given service, say the building of highways, should be undertaken by the central rather than by the local governments. But the existence of a surplus of state revenue is an ever-present temptation to legislatures to expand existing state functions or to discover new ones. The most notable example of such results following the development of a surplus is to be found in the financial history of the United States from 1880 to 1893. No one today doubts that the origin of the present extravagant pension system and of the equally extravagant and fun- damentally less justifiable appropriations for the improvement of rivers and harbors is to be traced, in part, to the surplus national revenues of the 'eighties. Once such a service is taken up it is, of course, almost impossible for the government to abandon it, and it, therefore, con- tinues as a state, or national, or local service. In time people usually come to regard it as necessarily adapted to administration by the gov- ernmental unit that, because of its revenue resources, was able to support it, at the time demand for the service appeared. When, however, a state employs the general property tax for the support of both central and local governments, revenue resources are less likely to determine the distribution of functions. For, if the state revenues are raised by a surtax upon local assessments, there can be no 2 The term "service" will be used in this essay to include the exercise of any func- tion of government in which public authorities furnish satisfactions or wealth directly to the community. Thus education is a service; the administration of po6r relief is a service; the administration of justice is a service; so too, of course, the provision of water, lighting and drainage are services. But the work of an officer whose duties relate solely to inter-departmental affairs or of one who is concerned solely with general governmental affairs is excluded. The members of the state legislature do not provide a service in the sense in which the word will hereafter be employed. 3 In some services, notably in education, both uniformity and variation are neces- sary. THE SUBVENTION IN PENNSYLVANIA 3 surplus in the state treasury that does not accrue from the same tax that also supports local governments. Hence there can be no preference on grounds of superior revenue resources for selecting either state or locality to administer a given service. Now it not infrequently happens that the various factors enumerated at the beginning of this chapter as determining the division of functions between state and local governments are in conflict. The state govern- ment may have an exceedingly bad record in the administration of the services it undertakes to provide, while the record of the counties and cities may be good. Yet the state may have the funds to undertake new services and the localities may not. Or the localities may have little revenue and bad records in administration, but the service demanding expansion may be so intimately connected with local political life, and so heterogeneous in its nature that complete state control will not be tolerated. Again it may happen, as is the case with elementary and secondary education, that the service is one in which there is a state-wide interest, and in which a certain amount of uniformity is demanded, but in which the need for variation and local control is very great. Here local admin- istration with central control is necessary. Education is obviously not the only function of the state in which 'the necessity for central super- vision is present. The state as a governmental unit representing the larger community, needs to have some voice in the administration of roads, in general poor relief, in the care and maintenance of defectives and in sanitation. When the duality of interest just mentioned exists, the state fre- quently permits or requires the locality to provide the service and to pay the cost out of the local treasury, but the conditions under which the service is rendered, the standards that shall be maintained, and even the amount of money to be expended upon it, are fixed by legislative enact- ment. These assigned services are very common and usually include police in the narrower sense, the administration of justice, and very frequently, elementary education, road making, and poor relief. But the difficulty inherent in all assigned services is that while the central government may prescribe by law, and in great detail, the sort of service required, and may set up standards of performance, it has no effective means for controlling the local administration and of compelling observance of the law. Very often popular notions of liberty and free- 4 THE SUBVENTION IN PENNSYLVANIA dom in local government prevent the establishment of the central super- vision necessary to attain these standards. OCCASIONS GIVING RISE TO SUBVENTIONS The problem is how to attain the proper amount of central super- vision to insure adequate performance of services that seem best admin- istered by local governments. In England this problem has been solved to a considerable extent by means of grants in aid. The central authori- ties have succeeded in obtaining the right to prescribe, and to a great extent to enforce the observance of proper standards of performance in local affairs by offering substantial financial aid to those municipalities that live up to the requirements, and by refusing it to those that do not. 4 In the United States, the attempt has been made to accomplish the same result in the case of the common schools. In many states the central government pays a liberal amount toward the support of local schools only when the schools are in operation a certain number of months in each year, and when competent teachers are employed. 5 One of the powerful reasons, then, for the existence of a grant of money from a superior to an inferior authority is the opportunity such grant affords for central supervision. A second reason for the establishment of a grant from the central treasury is suggested by the relative revenue 'resources of the state and of local governments. If the state is well provided with revenue while the local governments are not, and if the services that demand expansion are those that seem likely to remain under local control, one of the easiest solutions of the difficulty is a subvention from the central government for the support of these services. Thus, in England, in 1874, the conservatives on returning to power advocated the use of a part of the surplus national revenues for the relief of local taxation. 6 The Chancellor of the Exchequer argued at this time that property subject to local direct taxation was greatly in need of relief. A grant from the national government would not only afford this relief but would also place local taxation on a more equitable foot- ing. 7 One of the purposes, therefore, of the English system of grants in 4 Webb, Grants In Aid, pp. 5-6. 6 Fairlie, Local Government, p. 220. * Grice, National and Local Finance, p. 56. 7 Idem, pp. 56-57. THE SUBVENTION IN PENNSYLVANIA 5 aid has been from the very beginning the relief of local tax payers. 8 In brief, the grants in aid have been used in England, since their inception to equalize the burden of supporting the various governmental services, and to secure central control. Two other methods of solving the problem of equalization were possible in England at the date mentioned. Either certain of the duties of local authorities might have been transferred to the national govern- ment or certain revenues might have been transferred from the national to the local governments. The former alternative was at once rejected by the ministry in 1874. 9 The latter was accepted in the main by Mr. Goschen in the reforms which he introduced while Chancellor of the Exchequer in 1889. 10 Because of the great inequality that existed hi the distribution of the grants, and because of the continual grasping of the local rate payers for additional grants, assigned revenues were sub- stituted for subventions. Certain grants, mainly in aid of elementary education and of industrial and reformatory schools, were retained. 11 In lieu of the grants the local governments were given the greater part of the revenues from excise licenses and one-half the probate duties. 12 Similarly hi the United States, it is not uncommon for the state to return to the local governments the revenues of certain taxes which are either assessed, or both assessed and collected by the state. An example of such practice is found in the Massachusetts corporation taxes and in the Iowa railroad taxes. The question may be raised at this point why either a grant in aid from the central treasury or the distribution of centrally collected revenues should be adopted. Why should the central government not relinquish certain taxes to the localities, allowing them both to administer these taxes and to receive the revenue from them? Several conditions may prevent such an arrangement. The localities may not be able successfully to administer the taxes which yield most abundantly under state control. This is true for taxes upon nearly all transportation companies, and in a less degree for corporation taxes in general. Or the tax may be like the inheritance tax, uncertain in yield Grice, p. 11. 9 Idem, p. 56. 10 Idem, p. 81. 11 Idem, p. 90. 12 Idem, p. 82. THE SUBVENTION IN PENNSYLVANIA in any given year for a small unit, but relatively steady when collected over a wider area. If the policy of distributing the proceeds of certain taxes is adopted, the question of the proper basis for such distribution is immediately raised and no satisfactory solution for this problem has as yet been discovered. A third reason for the existence of the grant in aid is that it permits an equalization of the burden of supporting a given service. The sub- vention for common schools illustrates this point. It is commonly con- ceded that every child within the state has a right to competent instruc- tion in elementary subjects. More important still, the community as a whole has an interest in seeing that he receives such instruction. But many localities do not have within their jurisdiction sufficient taxable property to permit the maintenance of good schools without the imposi- tion of oppressive taxes. Now by means of a grant from the state treasury funds collected from all the communities within the state according to ability to pay, are then distributed according to need. The richer counties are thus compelled to aid their poorer neighbors. The justification of this redistribution of the burden is to be found in the state-wide interest in education. The widespread adoption of state, subventions for common schools in the United States is an acknowledg- ment of the obligation of the state to aid in providing the children of poorer districts with an opportunity for a minimum of education. The subsidizing of local governmental authorities is not, in practice, the only type of subvention. In New York City, and in California, as in several other states, large amounts are paid from the public treasury to private, or quasi-public corporations, or to individuals that perform a service which is more or less public in its nature. A private hospital that takes charity patients performs such a service; so also does a private school that admits promising students of limited means tuition-free, or on easier terms than are required of the children of the well-to-do. And the application of the principle is not limited to schools and colleges that remit tuition, but usually applies as well to all educational institutions that are not operated as money-making ventures. Hence, colleges com- monly receive tax exemption for all or a part of their equipment. To summarize : The subvention has been used in England and in the United States to equalize revenue resources between state (central) and local governments; to equalize the burden of supporting a given service between different localities; and to gain for the central authorities power THE SUBVENTION OF PENNSYLVANIA 7 of supervision over local administration. Finally in the United States it has been used to aid semi-public institutions of an eleemosynary character. But, although the subvention has been thus employed in England, opinion there is more or less divided as to its desirability. 13 The reforms of 1889 greatly limited the number of grants. In the United States almost no systematic examination of the working of the state subventions has been published. 14 It is with a view to making such an examination that the history of the Pennsylvania system of subventions is under- taken. The reasons for selecting the Pennsylvania system rather than that of some other state are three. In the first place the aggregate amount of the subventions is large. In 1913 the grants amounted to upwards of $12,000,000, or about 40 per cent of the total payments from the state treasury. In the second place, Pennsylvania has developed exclusive state taxes upon corporate wealth to an extent not equaled in any other state that also has an important system of subventions, thus giving rise to large state revenues often surpluses that make sub- ventions possible. Finally, a great deal of criticism of the state sub- ventions to privately owned charitable institutions has appeared in the press and in papers read at the meetings of the National Conferences of Charities and Corrections. THE PLAN or THIS ESSAY The plan of this essay is first to set forth the two fundamental con- ditions that govern the development of a subvention system: (1) The distribution of powers and duties between the state and its subdivisions, and (2) the distribution of revenue resources between the state and the local governments. These two points will be treated briefly in Chapter II. The remaining and larger part of the essay will deal with changes in these two fundamental conditions, and with the historical development and the administration of the grants as they appear. The financial history of the state may be conveniently divided into five periods. The first begins with 1776 and ends with assumption of the state's debt by the federal government. The second dividing line may be drawn when the internal improvements were begun in 1826, and the third period is identical with the growth of the state system of canals and roads. The fourth period begins definitely with the financial 13 For criticism, see Webb, Chs. Ill and IV. 14 See, however, Wisconsin Tax Commission, Special Report (1911), Ch. V. 8 THE SUBVENTION OF PENNSYLVANIA crisis of 1840-1842, and concludes with the adoption of the present con- stitution in 1873. The period 1874 to 1916, while easily divisible into several shorter periods, may be treated as a unit, since there have been no radical changes in the financial policies of the state. These periods will receive consideration in separate chapters. CHAPTER II THE DIVISION OF GOVERNMENTAL FUNCTIONS AND OF REVENUE RESOURCES IN PENNSYLVANIA THE DIVISION or FUNCTIONS BETWEEN THE CENTRAL AND THE LOCAL GOVERNMENTS As was pointed out in the preceding chapter, the development of a system of subventions is conditioned by the division of functions between the central and the local governments. Unless the local governments have numerous functions to perform state aid is quite unlikely to develop. It is necessary, therefore, to ascertain the division of governmental functions in Pennsylvania before proceeding to discuss the development of the state subventions. Again, as has been pointed out, a system of subventions is not often found unless the central treasury is amply pro- vided with revenue. It is necessary, therefore, to ascertain the relative revenue resources of the state and of the local governments in Pennsyl- vania before discussing the development of the subvention system. It must not be concluded, however, that subventions never come into existence when the localities have few duties to perform and when the central governments are not in possession of overflowing treasuries. The state subventions to common schools, in the United States, are standing proofs that special levies may be made upon general property solely for the purpose of making a subvention whose chief object is to insure a certain minimum of excellence in the performance of a given service or to equalize the burden of a service between localities. This fact does not, however, obviate the necessity of studying the division of functions and revenue resources, since equalization of burdens between localities and central control to secure standards are only two of the purposes for which subventions are made. Like most American colonists the first settlers in Pennsylvania were jealous of all encroachment upon their political privileges by the pro- vincial government. Quarrels having to do with the amount and methods of raising revenue and other political matters sprang up between the popularly elected assembly and the governors or their deputies and made the people hostile to central authority. Again, in Pennsylvania to a greater extent than in any other colony, differences of language, of nationality, of religious belief, and of political tenets served to accentuate the isolation that a lack of communication and the pioneer environ- ment naturally produced. These conditions together with the feeling 9 10 THE SUBVENTION IN PENNSYLVANIA of local self-sufficiency, so common in frontier communities, tended to prevent the growth of solidarity of interests and to array one sect or one nationality against the others. Under such conditions a powerful state government could have been built up only by one party gaining complete ascendancy. To a certain extent the Quakers may be looked upon as the party in power down to the Revolution. But their frequent quarrels with the governors of the province would have prevented the develop- ment of a strong central government, even though other forces had not worked against such an eventuation. After the colonies had separated from England, the tendency for the people to look with suspicion upon governments that were distant and to regard with favor the exercise of authority by those that were near and administered by their neighbors, increased rather than diminished. 1 The relative influence which should be assigned to the spirit of local independence, in Pennsylvania, in determining the causes that resulted in the delegation of a large share of the business of government to the localities, cannot be accurately measured. Neither can we estimate the effect of this tendency in counteracting the opposing principle of state interference, which grew steadily throughout the nineteenth cen- tury. But it is one of the forces that must be kept constantly in mind in explaining fiscal and political arrangements between the state and the minor civil divisions. From the legal point of view there is no "proper," or one best division of powers between central and local authorities. There are certain func- tions of government, of which diplomatic intercourse with foreign nations is an example, that can scarcely be locally administered under any cir- cumstances. With respect to such functions as the military, the admin- istration of justice, and the management of state revenues, upon the proper performance of which the central government is dependent for its very existence, the local authorities can act only as agents of the superior power. The demand for uniformity is imperative and the localities can have little discretion. Aside from a limited number of such exceptions, however, there are no functions of government that might not be exercised by the localities; and in the following discussion it will be assumed that the terms "local services" and "state services" carry no implication of a necessary division of powers. The first source of information as to the actual division of power in any given state is the body of fundamental laws governing it. In the 1 Merriam, A History of American Political Theories, pp. 78-79. THE SUBVENTION IN PENNSYLVANIA 11 state this is the constitution, and in the province the royal charter or other fundamental agreements. The next source is, of course, the acts of the legislature establishing and giving power to local governments. In Pennsylvania, before 1776, we have to look to the charter given by Charles II to Penn, to certain subsequent documents, such as the Frames of Government, and to the acts of the Assembly for information con- cerning the political status of the localities. Now, although Pennsyl- vania was founded by a religious reformer, who belonged to a sect that advocated many specific departures from the religious practices, social customs, and political methods then existing in England, the government that he set up in the new world followed closely the English model. In many instances, the English system of local government was copied with remarkable faithfulness but in other cases the new environment made changes from the older arrangements necessary. The charter that Penn received from Charles II gave the proprietor power to establish such local authorities as the town, county, borough, and city. 2 Three important local units were actually established. The county was made the principal unit of local government, and, in the beginning, the county court was the principal administrative body. 3 The township did not become important as an administrative authority until late in the eighteenth century. 4 While Philadelphia remained for many years the only incorporated city in the province, boroughs were also incorporated and, of course, developed in greater numbers than did the cities. It is with the division of powers between the province, on the one hand, and the counties, the cities and the boroughs, on the other, that we have here to deal. 5 The governmental machinery of the province of Pennsylvania, like that of the other colonies, was very simple. As Dewey has pointed out in discussing colonial expenditures, 6 these frontier communities felt the need of government very slightly. Public offices were few; public works were undeveloped; and with the exception of poor relief of the crudest 2 Charters and Laws, 1682-1700, pp. 85-86. 3 Howard, A n Introduction to the Local Constitutional History of the United States, pp. 371 ff. 4 Idem, p. 385. 5 For a discussion of the development of the Pennsylvania county see Howard, Pt. Ill, Ch. VIII, Sec. iii, and Gould, "Local Self-Government in Pennsylvania," (Johns Hopkins University Studies, I); for Philadelphia see Allinson and Penrose, Philadelphia, 1681-1887; for the burroughs, Holcomb, "Pennsylvania Boroughs," (Johns Hopkins University Studies, IV). 6 Financial History of the United States, (1st ed.), p. 9. 12 THE SUBVENTION IN PENNSYLVANIA sort, public charity and public assistance were non-existent. Provincial authorities had chiefly to do with the more fundamental functions of government, without which organized society cannot exist, and with the provision of soldiers for Colonial and Indian wars. The military operations of Pennsylvania, Quaker colony though it was, assumed at times predominant importance in provincial finance. In the war against the French and their Indian allies, during the years 1756 to 1763, the province expended about 500,000. 7 In addition to its expenditures for war the colony paid out smaller amounts in bribes and peace-money in order to prevent Indian attacks. 8 In time of peace the provincial authorities were relatively inactive. Ordinary expenses, in 1767, in- cluded little beyond the payment of modest salaries to the governor, to the judges of the supreme court, and to the assemblymen, and a few minor payments to unimportant state officials. 9 With the war for inde- pendence came tremendous increases in military expenditures, but no important new functions were added to the central government. All important relations between the commonwealth and the localities re- mained about as they were during the colonial period. 10 As might be expected, if the province assumed no very great number of functions, the local governments were more heavily burdened. But in the localities as in the province, the need for governmental action was felt only to a slight extent. The life of the local communities was not complex, and the expenditures of the local units could not have been called "burdensome." The significance of the division of functions during the colonial period does not lie in the onerousness of the fiscal burdens imposed on the localities, but in the number and variety of functions that were assigned to them. A single illustration will serve to show the significance of these assignments. Poor relief, in colonial times, was made a matter for local control, and, before 1776, it was an important but not onerous service, the cost of which the localities were compelled to bear. In the nineteenth century, however, when public charity came to include he care and treatment of the insane in specialized institutions, the provision of homes for the aged and the physically and 7 The British government reimbursed the colony in part. Bigelow's Works of Benjamin Franklin, II, p. 414. This is Franklin's estimate given before Parliament. 8 Gordon, T. F. History of Pennsylvania, pp. 260-263. 9 Idem, p. 585. For a good outline of state and local governments, their officers and duties, see Proud, R. History of Pennsylvania, II, pp. 284-291. 10 Bolles makes the statement that in 1760 the cost of governing each person in the province "was two and one-half pence apiece." History of Pennsylvania, I, p. 395. THE SUBVENTION IN PENNSYLVANIA 13 mentally incapable, and the provision of free hospitals for injured miners, the fact that all poor relief had long been regarded as a local affair became of the greatest fiscal significance for the localities. The localities were now in danger of being charged with services that were onerous in the highest degree. The functions assigned to the local governments during the period when institutions were becoming fixed may be grouped roughly under five heads: (1) the support of local administrative, legislative, and judicial officers; (2) poor relief; (3) the prosecution and punishment of criminals; (4) local public works; and (5) miscellaneous provisions for the protection of life and property. With respect to the first class of ser- vices little need be said, except that their fiscal importance depended upon the degree of complexity of local government, and, other things remaining the same, that they tended to make larger demands for money as the community progressed from a backwoods county to an industrial or commercial center. It should also be observed that the officers of the town, county, borough, city and province were supported to some extent by fees, instead of salaries paid out of the proceeds of taxation. 11 In addition to the payment of the salaries of such officers as were not sup- ported by fees, the counties were for many years charged with the pay- ment of their representatives in the provincial assembly. 12 Pennsylvania's system of poor relief, in the beginning, followed in general the practice of the English counties. A law enacted in 1682 required the justices of the peace to care for the indigent, 13 and the principle of settlement then introduced has persisted to the present time. In 1693 the Assembly passed a bill enabling the counties to levy taxes for the support of the poor, 14 and in 1705 was enacted an elaborate law setting forth the organization of administration and the entire tech- nique of poor relief. 15 And, although these laws were amended from time to time, no definite attempt was made to relieve the localities of any part of the burden until the second quarter of the nineteenth century, unless military pensions are to be regarded as a form of public charity. 11 Urdahl, The Fee System in The United States, pp. 99, 121. In this respect Penn- sylvania was no exception to the general rule, followed in all the colonies. For a long list of "fees" that might be charged by different officers see II Statutes at Large, pp. 343 ff. 12 Act of 1724, IV Statutes at Large, p. 13. 13 Charters and Laws, 1682-1700, p. 115. Abrogated in 1693 by William and Mary and reenacted in the same year. Ibid., footnote. 14 Idem, p. 233. 15 II Statutes at Large, pp. 251-254. 14 THE SUBVENTION IN PENNSYLVANIA The free-school system, which is today one of the most expensive as well as one of the most important of the services locally administered in Pennsylvania was not introduced until 1834. Penn and the sect to which he belonged placed great stress upon education, however, and schools were established in the province as soon as the community was able to maintain them. But they were not supported by the govern- ment. The only public charge connected with education was the school- ing of paupers. 16 Acting as the agent of the province, the county was also charged with the administration of justice. During colonial times this involved the payment of the salaries of such officers as were not supported by fees, and the prosecution of criminal cases. In addition the county was re- quired to provide a jail or a house of correction not only for the punish- ment of petty criminals but also for the detention of those serving long sentences for serious offenses. 17 The principal public works constructed before 1800 were roads and bridges, or streets and bridges within the cities and the boroughs. It is not to be supposed that these improvements entailed large outlays of money : The bridges were crude and the roadways were little more than clearings through the forest. The locality was able to shift the burden of the more costly bridges by permitting private concerns to build them and to charge toll. In some instances the province constructed roads, chiefly for military purposes, through the more difficult parts of the mountains. The control of roads and bridges was vested in the governor and the council by the Frame of Government, 18 but there is no evidence that the province ever attempted systematically to control the highways, and it certainly never attempted to assume the entire burden of their maintenance. The authority exercised by the Assembly in later years over the so-called "king's highways" consisted chiefly in ordering the localities to construct designated roads. For the most part, the locali- ties were given complete control over highway construction and main- tenance. 19 Municipal improvements were also a matter of local control, and their cost was borne locally. 20 Several minor charges of little fiscal importance 16 On early educational institutions in Pennsylvania see Wickersham, History of Education in Pennsylvania, Ch. III. 17 Charters and Laws, 1682-1700, pp. 139, 208; Allinson and Penrose, p. xlix. 18 Charters and Laws, 1682-1700, pp. 95, 157, 285. 19 For example, Charters and Laws, 1682-1700, p. 285. 20 Idem, p. 276, and II Statutes at Large, pp. 65, 414; also idem, chapters 389, 41 1, 479, 636, 743, and 1394 for Philadelphia. THE SUBVENTION IN PENNSYLVANIA 15 were early delegated to the counties. These had to do chiefly with the protection of property. Thus, for example, the county was required to pay bounties for "wolf's heads" and for the destruction of crows and blackbirds. 21 Thus far no statement has been made with respect to the duties of the boroughs. Since these governments were, throughout the colonial period, subject entirely to special legislation, accurate generalizations concerning the scope of their powers cannot be made. On the whole, however, it may be said that their duties included the support of local offices, the opening and the maintenance of streets, the preservation of the public peace , and the provision of a supply of water for their inhab- itants. 22 From this very brief survey it appears that the province, by delegat- ing the larger part of the functions of government to the localities, had practically released itself from all fiscal burdens except those that at- tended military operations and the maintenance of the indispensable provincial offices. Charities and corrections, whatever education was undertaken at public expense, the building of highways, and police came to be looked upon as "local services." This division of duties was not particularly significant during the seventeenth and the eighteenth cen- turies because the time had not yet arrived for the elaboration of public charities, the extensive development of free education, or the under- taking of large public works. THE DIVISION or REVENUE RESOURCES While the distinction between state and local services was thus be- coming definitely fixed, both by legal enactment and by custom, the revenue systems of the different governmental units underwent no such crystallizing process. The provincial government of Pennsylvania, like that of the other middle colonies, depended largely upon indirect taxes for its revenues. 23 Imposts were levied upon wine, rum, beer, and cider imported into the province, 24 at an early date, and were continued at varying rates until 1789. An excise tax was established, in 1684, but, owing to its unpopularity, it remained in operation only a short time. At intervals, during the subsequent provincial history when the con- 21 II Statutes at Large, pp. 85, 166, 238. 22 Holcomb, "Pennsylvania Burroughs," (Johns Hopkins University Studies, IV), p. 175. 23 For a brief statement of the provincial tax systems of the different colonies see Bullock, "Direct Taxes and the Federal Constitution," Yale Review, X, pp. 15-18. 24 II Statutes at Large, p. 105. 16 THE SUBVENTION IN PENNSYLVANIA dition of the treasury made imperious demands the tax was again im- posed, but always in the face of strong opposition from the Assembly. 25 A licence tax was levied soon after the founding of the colony, and the scope of its application broadened as years went by; 26 but it never became a highly productive source of income. Although the provincial government relied chiefly upon indirect taxes, direct taxes upon real and personal estate and upon polls were imposed at intervals from 1693 to 1791. The earlier taxes, especially those of 1693 27 and 1696 28 seem to have been collected with great diffi- culty, and the latter required three supplementary acts in as many years to bring about its collection. 29 In spite of the popular aversion to direct taxation, and in spite of the dispute that later developed between the proprietors and the Assembly concerning the liability of the estates of the former to pay the tax, 30 direct levies were imposed many times before 1776. A description of the taxing system in 1766 shows that the province was, at that time, levying a direct tax upon estates, real and personal, a poll tax, a tax upon offices, trades, professions and businesses according to their profits, an excise upon wine, rum, and spirits, and an import duty upon negroes. 31 During the war against England the common- wealth resorted to both direct and indirect taxes, and continued both until the last decade of the century. The people, however, never came to look with favor upon the direct taxes, and their collection was always difficult and unsatisfactorily per- formed. The correspondence of the Executive Council, from 1783 to 1789. contains many letters from the commissioners of the various counties explaining the difficulties of obtaining the taxes levied within their jurisdictions and excusing their failure to remit to the treasury the amounts properly charged against them. The excuses are largely of such a character as one would expect, considering the conditions that naturally resulted from the war and the commercial depression that prevailed over a part of this decade. There was a general scarcity of money in which to pay the taxes; the owners of property, even land- 26 Egle, W. H. Pennsylvania, p. 219. 28 II Statutes at Large, p. 357. 27 Charters and Laws, 1682-1700, p. 221. Idem, p. 253. 29 Idem, pp. 263, 274, 279. 30 Concerning the details of the dispute, see Shepher, History of Proprietary Government in Pennsylvania, Ch. X. 31 Bigelow's Works of Benjamin Franklin, III, p. 409. THE SUBVENTION IN PENNSYLVANIA 17 holders, were frequently so much embarrassed financially that no taxes could be collected from them; sales of property for taxes were often im- possible either because no bidders were actually to be found or because the sympathy of the community for the "oppressed taxpayer" prevented bidding. These difficulties can readily be understood if we take into consideration the economic condition of the state for the period following the war. But there were other sources of failure that cannot be ex- plained in this manner. Not infrequently collectors were careless, or even dishonest, and, since the co-operation of local authorities was necessary in order to invoke the law against them, prosecutions were out of the question. Furthermore, it frequently happened that varying amounts were lost because of robbery or theft or embezzlement. 32 In 1796 the failure of the state to collect direct taxes was observed and commented upon by Wolcott, who states that at that tune a part of the direct tax due in 1790 remained unpaid. 33 In 1790 Governor MifHin, in addressing the lower house of the Assembly, ascribed the financial embarrassment of the state during the Confederation to the difficulties encountered in collecting revenues. 34 Whatever opinion may be formed as to the reason for the state's failure to deal successfully with the war debt, during the years of the Confederation, the evidence indicates very great opposition to the direct tax. Not only was the tax difficult to administer, but there were serious popular objections to its use. The opportunity for the abolition of this unpopular tax came, when, in 1790, the federal government agreed to assume the debts the several states had incurred for the purpose of carrying on the war for indepen- dence. Almost as soon as it was certain that the state would thus be relieved of a great part of the accumulated debt, the direc t tax was dis- continued, tentatively at first, and then permanently. 35 Later in the same year the excise taxes upon wine, rum, and brandy were abolished; 36 in 1794 the tax upon the writs of the court of common pleas was dropped, 37 and in the following year the tax on pleasure carriages, which had been imposed by the law of 1783, was also repealed. 38 Although the state was unable successfully to collect the direct tax, two events relieved the government of a major portion of the debt and 32 Pennsylvania Archives, 1st. Ser., X, pp. 75, 77, 79, 80, 92, 98, 587; vol. XI, p. 603. 33 American State Papers, Finance, I, pp. 427-428. "Jour. House of Reps., 1790-1791, p. 43. 35 Acts of 6 April, 1791 and 9 April, 1791, XIV Statutes at Large, pp. 49, 78. 36 Act 21 September, 1791, idem., p. 127. 37 Act 13 Jan., 1794, XV Statutes at Large, pp. 7-8. 38 Act 13 April, 1795, idem, p. 287. 18 THE SUBVENTION IN PENNSYLVANIA placed it in possession of a large amount of wealth. The first of these was the seizure of the proprietary estates in 1779, 39 which gave the state possession of practically all the unsettled area within its borders. The proprietors were allowed an amount in payment less than a quarter of a million pounds. As has been said, the second circumstance that caused a complete change in the financial condition of the state was the assumption of the war debt of the commonwealth by the United States. This act lifted a burden of $777,983.48 from the shoulders of Pennsylvania taxpayers. 40 How great a proportion of the total indebtedness of the state, unre- deemed paper money included, was thus taken over by the federal govern- ment cannot be accurately stated. On January 1, 1791, it appears 41 that the total obligations of the commonwealth amounted to about $2,000,000, but the amount due the proprietors, the bills of credit of 1785, and perhaps several smaller items were not eligible for subscription and could not, therefore, be shifted to the national government. Hamil- ton stated in 1792, after $675,101.33 had been subscribed, that the re- maining state debt amounted to about $500,000 ; 42 but this estimate must have been much too low if he meant to include all the liabilities of 39 Shepherd, History of Proprietary Government in Pennsylvania. Shepherd states that the Divestment Act of 27 November, 1779, provided for the payment of 130,000 to the heirs of William Penn as compensation for the lands thus seized. 40 Statement in Relation to Foreign and Domestic Debt, February 24, 1794. 41 THE STATE DEBT OF PENNSYLVANIA 1 Due Jan. 1, 1791 s d Bills of credit of 1785 50,862 8 5 Funded state debt including depreciation certificates 365,000 Unfunded depreciation debt 36,500 "Dollar Money "in circulation 5,787 15 "Shilling Money" in circulation 14,328 18 2 State-Island money 704 Due the proprietors 210,895 6 Certificates issued for interest, etc 52,217 10 11 Floating indebtedness (various sorts) 13,796 3 TOTAL INDEBTEDNESS 2 750,091 18 9 1 From the Journal of the House of Representatives (1791), Report to the House, Feb. 8, 1791, by a committee. (From records of Register General). 2 Does not include 8,000 estimated outstanding warrants of the Governor and the old Executive Council. 42 American State Papers, Finance, I, p. 150. THE SUBVENTION IN PENNSYLVANIA 19 the state. It would be more nearly correct to place the remaining debt of the state at about $1,200,000. Assumption enabled the state to drop the direct taxes, a step that would probably have been taken without assumption when the land sales began to return large revenues. But relief from over $777,000 of debt enabled the central government to put the land-sales receipts to other uses, and thus paved the way for small irregular subventions during the period before 1826. The local governmental units derived their revenues at this time chiefly from taxes on real and personal estates and from various unim- portant sources. Their expenditures were light and no extensive revenue systems were, therefore, necessary. But it is important to note that they retained possession of the tax on real and personal property, and that after the repeal of the state tax on those objects they enjoyed the ex- clusive use of it. CHAPTER III THE BEGINNINGS OF THE SUBVENTIONS DEFINITION AND CLASSIFICATION OF GRANTS AND SUBVENTIONS Before entering upon the consideration of the history of grants made before 1826, it is necessary to define several terms which will be fre- quently used in this and succeeding chapters. The term "subvention" has not been commonly used by writers on public finance; hence no accurate definition is ready at hand. Dictionaries are of little assistance in a search for the explanation of technical economic terms, but the general ideas that pervade the dictionary definitions are helpful in showing what is the non-technical or every-day meaning of words. The meaning attached by a majority of lexicographers to the word "subvention" is that of a government aid or bounty to any public enter- prise. 1 But most dictionary definitions would include subsidies to private commercial concerns, a kind of "grant" that does not fall within the scope of this essay. Hereafter when the term "subvention" is used in this essay it will be taken to mean a grant of services, wealth, or property from a superior to an inferior governmental authority, or to a quasi- public corporation, or to an individual, with respect to some service commonly regarded as public in its nature. English writers make use of the term "grant in aid" to mean a grant from a superior governmental authority to an inferior, with respect to some statutory duty imposed upon the latter. This term is obviously narrower than the term "subvention." The difference between sub- ventions and grants in aid is that the former may be made to govern- mental authorities or to corporations and individuals; while the latter is made only to governmental organizations. This difference suggests at once the first basis for a classification of subventions: the legal or political nature of the recipient. In the second place, grants may be classified according to the kind of service assisted. Thus education, poor relief, or road building would fall into different categories. These two classi- fications are fundamental in arriving at a clear understanding of the nature of subventions. 1 The Standard Dictionary defines a subvention as "a grant, as of money, in aid of something; a subsidy, especially when regarded as legitimate and proper." A subsidy is defined as "pecuniary aid directly granted by the government to an in- dividual or commercial enterprise deemed productive of public benefit." Webster defines a subvention as "a government aid or bounty; a subsidy. " 20 THE SUBVENTION IN PENNSYLVANIA 21 Two other bases of classification are also significant. Subventions may be permanent annually recurring payments, or single lump-sum grants, or payments made at irregular intervals. Finally, subventions and grants may be classified according to the amount of control over expenditures exercised by the government making the grant. Thus subventions may be unconditional, as when no check is put upon the recipient, except perhaps, the mere statement of the maker of the grant that it is intended for a certain purpose. Conditional subventions are those that cannot be obtained by potential recipients, except by com- pliance with the terms of the grant or subvention. In extreme cases, a subvention may be so strictly controlled that the recipient acts merely as an agent of the controlling authority or maker of the grant. The following schematic arrangement presents the four classifications. I. Classified according to the political and legal nature of the recipient subventions are 1. Grants in aid, or subventions to political sub-divisions of the governmental authority making the grant 2. Subventions to quasi-public corporations 3. Bounties and subsidies, or grants to individuals and corporations engaged in enterprises commonly regarded as purely private in their nature II. Classified according to the services aided subventions may be divided into as many kinds as there are services receiving aid: 1. General government (not often found) 2. Protection to life and property a. Police b. Protection against fire c. The military 2 d. Miscellaneous 2 3. Education a. Common or elementary schools b. Secondary schools c. Colleges and universities d. Technical schools of medicine, agriculture, mechanic arts, etc. e. Schools for special classes such as the deaf and the blind 2 See Chapter VIII infra. 22 THE SUBVENTION IN PENNSYLVANIA 4. Charity a. General poor relief b. The insane c. General and special hospitals d. Orphanages e. Homes for the aged f. Miscellaneous institutions, e.g., reformation of prostitutes 5. Recreation: parks, etc. III. Classified according to duration subventions are 1. Permanent 2. Temporary for a limited period of time, either one, two or more years 3. Occasional IV. Classified according to the control exercised by the authority mak- ing them, subventions are 1. Strictly controlled 2. Conditional 3. Unconditional With this classification in mind we may proceed to an examination of the development of the occasional subventions from 1776 to 1826. But before that task is undertaken it is necessary to review briefly the financial policy of the state during this period in order to get a back- ground upon which to project our picture of the subventions. THE FINANCIAL POLICY OF PENNSYLVANIA, 1776 TO 1826 The financial history of Pennsylvania from 1776 to 1826 may be roughly divided into three periods. The first, from 1776 to 1793, is characterized by heavy expenditures for war, by the creation of a large war debt, and by unsuccessful attempts on the part of the state to levy direct taxes. 3 These years are also characterized by strict economy in state affairs and by only unimportant instances of expansion of state functions. The second period extends from assumption of the state's debt by the national government to the enactment of the tax on banks in 1814. During these years the state rapidly reduced that portion of the debt for which the national government had not assumed responsibility. This was made possible by the increasing revenue from land sales and from 3 Supra, p. 16. THE SUBVENTION IN PENNSYLVANIA 23 the state's investments in banks and other enterprises. So prosperous did it become, in fact, that expenditures for other purposes were also considerably augmented. The receipts from investments amounted, in 1802, to $90,000; in 1810 to $134,868; and in 1814 to $197, 788. 4 Re- ceipts from land sales varied greatly, as might have been expected. In 1795 they amounted to about $120,000; 5 in 1802 to $44,922; 6 and in 1809 to $287,354. 7 Considerable revenue was also derived from auction duties and license taxes. This was essentially a period of prosperity for the state treasury. During the third period, 1814 to 1826, the significant features of the state's financial policy were the introduction of the bank tax in 18 14, 8 the enactment of a law taxing dealers in foreign merchandise in 182 1, 9 the act of the same year commissioning auctioneers, 10 and the heavy investments of the state in bridge, turnpike, and bank stock. In 1826 the state held $2,108,700 of stocks in various banks, and $1,835,512 in turnpike companies, $577,923 in bridge and navigation companies. 11 The dividends on these stocks amounted in that year to $132,154. 12 These subscriptions had, in part, been made from the proceeds of loans. GRANTS FOR EDUCATION, 1776 TO 1826 One of the first objects to which the State of Pennsylvania turned its attenton on emerging from the revolutionary struggle was public education. In fact, the first constitution, adopted in 1776, contained a declaration that " A school or schools shall be established in each county by the legislature, for the convenient instruction of youth, with such salaries to the masters paid by the public as may enable them to instruct youth at low prices: And all useful learning shall be duly encouraged and promoted in one or more universities. " 13 Nothing could be accom- plished, however, during the turbulent years of the war, and even after 4 Register General, Report (1802); Aud. Gen. Reports (1810), and (1814), Sum- mary Statement. B Register General, Report (1795). 6 Aud. Gen. Report (1802), Summary Statement. 7 Idem (1810), Summary Statement. 8 Act 21 Mar., 1814, Sec. X, P.L. p. 169. On the date given the act was passed over the veto of the governor. 9 Act 2 April, 1821, P.L. pp. 244-246. 10 Idem, pp. 259-261. 11 Aud. Gen. Report (1826), Appendix, p. in. 11 Thorpe's Constitutions, vol. V, p. 3091. 24 THE SUBVENTION IN PENNSYLVANIA independence was gained the load of debt resulting from the war pre- cluded any attempt on the part of the state to assist financially in building up a school system. But the state was rich in one kind of wealth, namely, land. This it could use freely in subsidizing proposed and existing institutions of learning. The first grant came in 1779 when the University of Pennsylvania was given the proceeds of certain tory estates which had been declared forfeited to the state. 14 Seven years later, 60,000 acres of land, belong- ing to the state, were set aside for the benefit of educational institutions, but no grants were specifically made from this tract to particular in- stitutions by that act. 15 In other sections of the same act Dickinson College was granted 10,000 acres of land and 500 from the state trea- sury. In the following year academies were incorporated in Pittsburgh, 16 in Washington County, 17 and in Philadelphia, 18 and each was granted a tract of land for an endowment. The acts incoporating and endowing Pittsburgh Academy (in Allegheny County) are typical of the others that were passed during the next forty years for the endowment of acad- emies and seminaries. The board of trustees was created a corporation with full power over the academy, including the right to receive, manage, and expend the proceeds of gifts and donations to the institution. They were not subject to supervision by any public authority. Vacancies in the board were to be filled by the vote of the surviving members. The acts making the grant of land were absolute and unconditional. For example, one such act simply stated "That the quantity of five thousand acres of land to be located, set out, and surveyed within the unappro- priated lands belonging to this state be, and are hereby granted to the trustees of Pittsburgh Academy, to have and to hold the same to them and their successors forever." 19 Within the next twenty-five years, grants of land were made to many other academies and colleges as is shown by the following table: "Senate Committee on Education (1822), Report, pp. 4-5. This report was printed separately and may also be found in the Senate Journal for 1821-22. 15 Act 7 April, 1786, XII Stat. At Large, pp. 221-224. 18 Act 28 Feb., 1787, XII Stat. At Large, pp. 357-359, and Act 10 Sept., 1787, idem., pp. 489-490. 17 Act 24 Sept., 1787, idem, pp. 527-531. 18 Act 29 Mar., 1787, idem, pp. 479-483. 19 Act 28 Feb., 1787, idem, pp. 357-359. THE SUBVENTION IN PENNSYLVANIA 25 ACADEMIES TO WHICH THE STATE MADE GRANTS OF LAND OR MONEY 1786-1834 1 Name of Institution Date of Incorpo- ration County Land Grants Money Grants Amount (acres) Date Amount Date Public Schools of German- town 1784 1787 1787 1787 1788 1789 1789 1790 1797 1799 (1802 41806 (1811 ( 1803 (1813 1804 1805 (1794) 1806 Philadelphia Allegheny Philadelphia Washington Berks Philadelphia Philadelphia Bucks Franklin York Crawford Beaver Montgomery Center Northampton Beaver Washington Luzerne Bucks Bucks Northum'ld Fayette Dauphin Westmoreland Somerset Adams Bedford Greene Butler 5,000 10,000 5,000 5,000 488 5,000 5,000 1787 1787 1787 1788 1818 1789 1789 $2,000 5,000 3,000 2,000 3,000 1821 1798 1797 1807 1832 *Pittsburg Academy Acad. Protestant Episcopal Church, Philadelphia *Washington Academy *Reading Academy Ger. Luth'n Charity School of Philadelphia Reform'd Cong., Philadelphia *Academy & Free School of Bucks County *Chambersburg Academy.... *York Academy 4,000 2,000 2,000 1,000 1798 1799 1798 1806 *Meadville Academy Beaver Academy 500 (a) 1803 Norristown Academy Bellefonte Academy 2,000 2,000 2,000 600 1,000 2,000 800 2,000 2,000 1,000 1,800 500 2,000 2,000 2,000 2,000 2,000 2,000 1805 1806 1805 1806 1800 1807 1806 1808 1808 1809 1818 1832 1810 1810 1810 1810 1810 1810 Easton Academy Greersburg Academy Canonsburg Academy Wilkesbarre Academy Fall Township Free School.. *Union Academy of Doyles- town . . 1807 1807 1805 1804 1808 1809 1810 1810 1810 1810 1810 1810 (*>)'" (c) (d) Northumberland Academy. Union town Academy Harrisburg Academy *Greensburg Academy *Somerset Academy *Gettysburg Academy *Bedford Academy *Greene Academy *Butler Academy (e) 26 THE SUBVENTION IN PENNSYLVANIA ACAD AMIES TO WHICH THE STATE MADE GIFTS OF LANDS OR MONEY 1786-1834 Name of Institution Date of Incorpo- ration County Land Grants Money Grants Amount (acres) Date Amount Date Chester Co. Academy 1811 1811 1811 1811 1811 1812 1812 1812 1813 1803 1813 1813 1814 1814 1815 1816 1816 1816 1811 1819 1819 1821 1822 1827 1827 1827 1827 1829 Chester Mercer Lycoming Erie Erie Montgomery Venango Wayne Wayne Philadelphia Bradford Schuylkill Lehigh Indiana Mifflin Lebanon Huntingdon Susquehanna Chester Cambria Tioga Armstrong Warren Clearfield Pike Union Lancaster McKean 2,000 2,000 2,000 2,000 2,000 2,000 1,000 1,000 1,000 5,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 1,000 2,500 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 1811 1811 1811 1820 1812 1812 1812 1813 1828 1813 1813 1813 1814 1814 1815 1816 1816 1816 1817 1834 1819 1819 1821 1832 1827 1827 1827 1827 1829 *Mercer Academy *Williamsport Academy Waterford Academy Erie Academy 500 (f) 500 (g) (h) 1811 1811 Loller Academy *Venango Academy Delaware Academy *Beachwoods Academy Bustletown Academy *Athens Academy *Orwigsburg Academy *Allentown Academy "Indiana Academy *Lewistown Academy *Lebanon Academy *Huntingdon Academy *Susquehanna Academy *Westchester Academy *Ebensburg Academy *Wellsborough Academy Kittanning Academy *Warren Academy *Clearfield Academy *Milford Academy 500 1822 Mifflinburg Academy *Lancaster Co. Academy *Smethport Academy 1 Report, of Senate Committee on Education, read in the Senate March 1, 1822, Mr. Wurts, Chairman. Wickersham's History of Education in Pennsylvania, pp. 379-380, and Pamphlet Laws for years in which appropriations were made are authorities used in construction of this table. In only one or two particulars where it has been made more complete does it vary from the data given by Wickersham. * These academies were required to admit gratis a certain number of poor students for a limited time. (a) In 1805 the academy was granted certain property formerly granted to the trustees of Center County. THE SUBVENTION IN PENNSYLVANIA 27 It is noticeable that the policy of granting lands to academies when they were chartered was practically discontinued after 1789. There- after, such subventions only amounted, as rule, to sites for buildings. Cash grants were substituted for land after about 1798. The reasons for this change of policy were two. In the first place it was quickly discovered that a grant of wild, uninhabited land was not the kind of assistance needed by a college or academy during the initial period of its existence. What was needed, was immediate financial aid. The history of Dickinson College is illustrative of this point. The grant of 10,000 acres of land and 500, which had been made in 1786, together with such support of private individuals as the college was able to command, soon proved inadequate, and the institution became heavily involved in debt. Five years after the date of incorporation, the General Assembly was again appealed to, and a grant in cash of 1,500 was made from the state treasury. 20 But four years later, the college was again financially embarrassed and another appeal to the legislature secured a further grant of $5,000 to pay the debts of the institution and to provide a small endowment. 21 In 1803, the building of the college having been destroyed by fire, the legislature loaned it $6,000 for rebuilding, the state taking a mortgage on the lands granted in 1786. In 1806 this loan was increased to $10,000, the lands again being mortgaged as security for repayment, but in 1819 the legislature author- ized the governor to cancel the existing mortgage and the college was forever discharged from payment of the loans. 22 In 1821 the legislature provided for the transfer of the remainder of the original land grant held by the college, as well as all investments of funds derived from the sale of such lands, to the state. In consideration the state agreed to (b) Also rents accruing from certain lands. See Act of 1807, P. L. pp. 91-93. (c) See Act of 1808, P. L. p. 179. (d) Also a tract of land of indefinite amount. See Act of 1814 P. L. p. 24. (e) Also a tract of land in 1813. (f) In 1811 the academy was granted 15 town lots in Waterford; in 1816, 8 more lots were granted. (g) The academy was given 15 town lots in 1811. (h) In 1823 the academy was granted 2 town lots. 20 Act 20 Sept., 1791, XIV Stal. at Large, pp. 123-124. 21 Act 1 1 April 1795, XV Slat. At Large, p. 282. For a short account of the grants to Dickinson College see Report of The Senate Committee on Education (1822), pp. 7ff. 22 Report of The Senate Committee on Education (1822), pp. 7 ff. 28 THE SUBVENTION IN PENNSYLVANIA pay the college $6,000. This act also gave the college an annual sub- vention of $2,000 to continue for five years. 23 The history of Dickinson College shows in detail for one institution the futility of the land grant policy. It also illustrates the tendency for occasional grants to become permanent. When once the state had committed itself to the support of the college by the original grant, a precedent for aiding that particular institution was established which made it easier for the college to secure assistance in later years. Also, when the state had once contributed to the endowment of the college, further contributions were necessary to prevent the loss of the original endowment. The working of this tendency is more fully illustrated in the grants to charitable institutions in recent years. The question whether cash grants to colleges and academies during this period were really effective in establishing centers of education must be deferred to the next chapter, when the policy reaches its culmination. Assistance to elementary education by the state did not develop during the period under consideration in this chapter. In fact, nothing like a state system of common schools made its appearance till the fourth decade of the nineteenth century. An attempt was, however, made to provide for the education of pauper children at public (local) expense but even this was only partially successful. Chief among the reasons for the failure of the pauper schools was the fact that all the children who were enrolled in them were classed as recipients of poor relief and the stigma of pauperism immediately attached to them and their parents. 24 These schools were, therefore, poorly attended and badly conducted. The failure of the pauper school law to provide education for the children of poor parents and the example of neighboring states that had provided for free schools very naturally caused many persons to agitate for a free common school law in Pennsylvania. In 1792 a com- mittee of the House of Representatives considered the advisability of enacting a law to provide for free common schools. The desirability of a more adequate system of elementary education was conceded with- out argument. But the adoption of any plan for such a system would have required either a direct state tax or heavy local levies for its sup- port. In the opinion of the committee neither of these expedients was advisable because of the hostility of the people toward heavier 23 Act 20 Feb., 1821, P.L. pp. 47-48. 24 Wickersham, p. 274. THE SUBVENTION IN PENNSYLVANIA 29 taxation. 25 Thus the earliest movement for free common schools failed to receive the support of the state and no grant in aid was made to counties or townships for the support of education during this period. In conclusion, the principal characteristics of the grants to educational institutions during this period may be summed up briefly. (1) Grants in aid to counties and townships did not develop, in part, because of the fear of the legislature to levy the direct taxes necessary for the support of a state-wide system of education, and in part, no doubt, because the people of the state were not ready for a free common school system. (2) Occasional grants were made to promote private educational institu- tions when it was believed that these institutions could command the support of individual benefactors. After individual support failed, how- ever, as in the case of Dickinson, the state was appealed to from time to time for assistance to pay debts and to rebuild buildings. (3) There was a tendency for these grants of lands for endowment to establish a claim upon the legislature for further assistance. (4) The grants were practically uncontrolled in the beginning, but as time went on, and they became more numerous, the state usually required the college or academy to admit a certain number of students, tuition free. But no audit of the accounts of these institutions nor inspection by a state officer for the purpose of ascertaining whether they lived up to the provisions of their charters and of the grants were, as a rule, provided. (5) The number and amount of the grants seem to have been affected, to a slight extent, by the financial prosperity of the state treasury. (6) Finally, there is no evidence to show what effect state support had upon the tendency of individuals to contribute to the endowment and maintenance of educa- tional institutions. GRANTS FOR CHARITY Poor relief in Pennsylvania, as has been pointed out, 26 became a local charge at the organization of Penn's government. During the century following, relief of the indigent included not only the provision of the necessities of life for those who were unable, for any reason whatever, to support themselves, but also the care and maintenance of the insane and the feeble-minded, the care of orphans, and the treatment of the indigent sick. The principle of settlement was introduced in imitation of the English poor law and each county was charged only with those who could prove residence. This provision remained very much the 25 Report of the Committee on the Establishment of Common Schools, Jour, of House of Reps. (1792), p. 177. 26 Supra, p. 12. 30 THE SUBVENTION IN PENNSYLVANIA same as in the Statute of Elizabeth. 27 The principle that the place of residence (the county) should look after the poor was firmly established when the state first took up the policy of making grants and not even at the present time has any attempt been made to relieve the localities of the primary burden of poor relief. What assistance the state has given and in recent years it has amounted to millions of dollars an- nually has been in aid of special services such as provision for the in- sane, homes for defectives and orphans, and similar institutions. But this came only with the recognition of the necessity of providing institu- tions which specialized in the treatment of these classes. There are instances reported by secondary writers of state aid for the building of almshouses, but these may be regarded as the exceptional cases in which extraordinary local conditions, coupled with influence in the legislature, obtained for the county a special concession. The first large grants for charity were made to privately owned insti- tutions. Thus the Pennsylvania Hospital, which was chartered by the provincial assembly in 1751, received aid not only from the colonial government, but also, on various occasions, from the British parlia- ment. 28 In 1793 the hospital received a peculiar grant from the state. No money was given, but the legislature conferred on it the right to receive the proceeds of certain liabilities to the state, up to the amount of $26,666.67. In addition, the commissioners in bankruptcy, appointed under the act of 1785, were required to turn over to the hospital all un- claimed sums due creditors of bankrupts. 29 The contributors to the hospital were required to assume responsibility for the repayment of these claims when the creditors appeared within the time allowed by law. The preamble of the act making this grant recited the benefits which the people of the state, and humanity in general, had received from the activity of the hospital, and asserted the claim that it had upon the generosity of the Commonwealth. But the condition of the state finances was, at that time, not such as to warrant a grant of cash directly from the treasury. So the hospital was given the right to collect some 27 Commissioners to Revise and Codify Poor Laws (1890), Report, pp. 31 ff . 28 Special Committee of the Senate to Inquire into the Propriety of Establishing a Board of State Charities, Report (1869), pp. 12-13. 29 XIV Stat. at Large, pp. 435-440. THE SUBVENTION IN PENNSYLVANIA 31 bad debts and to participate in unclaimed moneys. 30 But this assistance proved inadequate, and, in 1796, the General Assembly appropriated $25,000 to assist in completing certain buildings. This act provided that an account of the manner of expending the sum appropriated should be laid before the legislature. 31 The second charitable institution to receive state aid was The Penn- sylvania Institution for the Deaf and Dumb. Previous to 1821 an asso- ciation in Philadelphia had been conducting a school for deaf and dumb children. The parents of the pupils were charged with the cost of main- tenance and instruction whenever they were able to pay, but many char- ity cases were also received. In 1821 the General Assembly incorporated the subscribers of the institution. An appropriation of $8,000 was made to the school, and the state agreed to pay $160 annually for each "indi- gent pupil taught in said school, " but no child could remain there at the state's expense for more than three years. That part of the act obligat- ing the state to pay for the instruction of indigent pupils limited the annual expenditure for the purpose to $8,000. The duration of the annual grant was limited to four years. The corporation was required to report annually to the legislature on the finances and on the manage- ment of the institution, but no supervision, either of finance or of methods, was required. 32 These early grants to charitable institutions are significant in that they show the absence of any theory of limitation upon the power of the leg- islature to aid privately owned charitable institutions if such aid seemed desirable. Since the Pennsylvania Hospital had rendered notable assis- tance to the public, both during the Revolutionary War and during severe- epidemics, it appeared just that the people, through their representatives, should assist the hospital when it was in financial need. The grant to the school for the deaf and dumb was of a somewhat different sort, since it recognized the obligation of the state to contribute annually to the sup- port of a charitable institution which rendered a needed public service. 30 Thomas G. Morton, in his History of The Pennsylvania Hospital, makes the statement, p. 77, that the hospital received $19,000 from the estates of bankrupts, and intimates that all the $26,666.67 was collected. He also mentions, p. 66, that in 1782 the General Assembly turned over to the hospital unclaimed shares in prizes captured by American privateers during the Revolutionary War. The amount de- rived from this source was not considerable. 31 Act 4 April, 1796, XV Slot, at Large, pp. 466-467. 13 Act 8 Feb., 1821 , P.L. pp. 30-33. 32 THE SUBVENTION IN PENNSYLVANIA GRANTS IN AID FOR ROADS AND BRIDGES From the earliest times in Pennsylvania, two kinds of roads were recognized. The Assembly controlled all "King's Highways," while other roads were subject to local jurisdiction. Later this distinction seems to have been lost. During the early colonial times many "King's Highways" were laid out, but from 1776 to 1791 the government paid very little attention to road making, unless military operations demanded it. No settled policy in distributing the burden of road making was adhered to during the colonial era. Sometimes the central government authorized the construction of "King's Highways" at local expenses sometimes, especially when roads were of military importance, the colony undertook their construction. No distribution of duties between the localities and the central government was, however, worked out. On the whole, we may say that down to 1790 the roads of Pennsylvania were constructed and financed by the localities. In 1791 the state appropriated $20,000 for the construction of roads by contract; in 1792, $21,305 was added and in 1793, $38,221. 33 All these improvements were made directly by the state without assistance from the localities. There is no evidence to show that these roads were part of a contemplated system of highways, although there is every rea- son to suppose that they were the more important lines of communica- tion. In 1799 a peculiar grant was made to Bedford County. The county had long owed a debt to the state treasury. This sum the governor was authorized to collect and turn over to the county authorities to be used for the construction of certain bridges and the improvement of a state road. The occasion for this grant in aid was briefly explained in the preamble of the act, which sets forth the need for the bridges, the great burden of road improvements in that mountainous country, and the inability of the people to raise sufficient money by taxation to defray the cost of the improvements. 34 In the same year MifHin County re- ceived a grant of $800 for the improvement of roads within its borders. This money was not to be drawn from the state treasury, but was to be collected by the county from the arrearage of direct taxes due the 33 Breck, S. A Sketch of the Internal Improvements Already Made in Pennsylvania (1818), p. 4. For a detailed statement of these improvements see a description of the contracts in "Contracts to improve Roads and Rivers," found with Register General's Report (1797). 34 Act 28 Mar., 1799, XVI Slot, at Large, pp. 214-215. THE SUBVENTION IN PENNSYLVANIA 33 state. 36 Here again the law recites the difficulties of road construction and the need for improvements. Both these grants were made to the county commissioners to be expended in making improvements designa- ted by the legislature, but the manner in which the moneys were to be expended was left entirely to the discretion of the county officers. No inspection of the work, nor audit of accounts by representatives of the state was required. These payments are, therefore, to be classed as unconditional grants in aid. The peculiarity of these two grants, and of a considerable number of others made about the same time, is that the state turned over to the counties claims for taxes and other debts due from the counties themselves. But not all grants in aid of this period exhibited the peculiarity just mentioned. In 1805 an act was passed granting the commissioners of Allegheny County $500 from the state treasury to build roads. Here the act was justified on the ground that roads connecting the older sections of the state with the Ohio Valley would benefit the state at large, and that the cost of their construction was too great a burden for the county to bear unassisted. 36 The only measure of control exer- cised by the state was the withholding of the money granted until the work was completed. Audit of the accounts by the county auditors was, of course, required. 37 After 1806 the settlement of the western portion of the state went on rapidly. The demands for state aid in building roads and bridges greatly increased, and grants became more numerous. In 1809, the Auditor General reported $7,528 paid to the commissioners of various counties for aid in road building. 38 In the same year the state expended $13,548 directly in improving roads. 39 There was, at this time, apparently no settled policy of the division of the work of road construction between the state and the counties. In 1809 an act was passed authorizing the governor to appoint com- missioners to lay out a state road in Chester, Lancaster, and York coun- ties. These commissioners acted as state officers, but the act provided that both the cost of construction of the roads and the pay of the com- 86 Act 11 April, 1799, XVI Stat. At Large, p. 323. 36 Act 29 Mar., 1805, P.L. 1804-1806, p. 174-175. 37 Ibid. For other grants of a similar nature, for which no state audit or in- spection was required, see Act 28 Mar., 1806, P.L. 1804-1806, pp. 637-639, by which the commissioners of Venango, Centre, and Green counties were granted $300, $500, $200, respectively, for the constrction of specified sections of designated roads. 38 Report (1809), pp. 20-21. "Ibid. 34 THE SUBVENTION IN PENNSYLVANIA missioners should be drawn from the local treasuries. 40 Another law containing similar provisions applied to roads to be laid out in Cumberland, York and Adams counties. 41 Thus, at about the same time, we find the state pursuing three different policies in making and paying for road improvements. In some cases it made grants in aid to the counties; in others it required the counties to build and pay for cer- tain highways; in still others it made the improvements and paid for them from its own treasury. The grants to counties for road improvements continued to be im- portant items in the state budget during the years 1810 to 1820. In 1811, by a single act, twenty-two counties received grants varying from $400 to $1,400, and amounting in the aggregate to $15,400. 42 But the grants became relatively fewer after 1818. The reason can only be con- jectured. In part, this change of policy may be attributed to the increase in the number of private turnpike companies to whose stock the state subscribed liberally; in part, it was probably due to the fact that the more important roads had by that time been constructed; in part, to the fact that, with the growth of the counties in wealth and population, state aid was no longer necessary to enable them to construct highways; and, finally, with the advent of canals as the carriers of heavy traffic road-making became less important to the community as a whole. We may summarize briefly the policy of the state in making grants to aid counties in road building. In the first place the causes for the grants were: (1) the very vital interest of the entire state in the con- struction of good highways; (2) the desire to encourage local activity in road building. The occasions for making these grants were usually: (1) the superior financial resources of the state; (2) the necessity for building roads in an unsettled, difficult country, or the construction of expensive metalled roads to connect important commercial centers; and (3) the attempt to collect from the counties taxes and debts long over-due. In general the grants were conditional in that they were made for a specified purpose. But they were uncontrolled by the state, either through inspection of the service subsidized, or through inspection of accounts. No judgment can be passed upon the efficacy of the grants in achieving their purpose i.e. the encouragement of the counties in 40 Act 22 Mar., 1809, P.L. pp. 85-86. 41 Act 28 Mar., 1809, P.L. pp. 118-119. Act 2 April, 1811, P.L. pp. 259-266. THE SUBVENTION IN PENNSYLVANIA 35 road building; nor can we determine whether the funds appropriated were used efficiently. OTHER GRANTS AND SUBVENTIONS, 1776 to 1826 During colonial times it was not unheard of for the central govern- ment to assist the local governments in almost any undertaking involving the expenditure of money. But such general grants were neither large nor common and during this period grants in aid, for purposes other than roads, are found only occasionally. In 1805, for some unexplained rea- son, the General Assembly presented Indiana County with so much of the proceeds of land sales as would defray the cost of the erection of county buildings. 43 In the following year Venango County received a similar grant, limited in amount to $1,000. 44 In 1811 the Inspectors of Prisons of Philadelphia were granted $5,000 with which to complete a jail. 45 But such grants were of slight fiscal importance during this per- iod. CONCLUSIONS AND SUMMARY During the first seventeen years of this period the difficulty of col- lecting the direct tax and the burden of the war debt made the intro- duction of a subvention system on a large scale practically impossible. The occasions for making grants were, however, present. The attempts to aid colleges and academies and the report of the Committee on Com- mon Schools (1792) show this clearly enough. But since the state trea- sury was already overburdened, nothing could be accomplished. On the other hand the state was rich in lands and from these it made dona- tions in aid to academies and colleges until the futility of the policy was so clearly established that its abandonment was accepted by all. During the latter part of the period small grants of money were made to academies and to localities for road building. All these grants were temporary or occasional. Only in the subvention to the institution for the deaf and dumb does a permanent annual grant make its appearance. Another outstanding characteristic of the subventions at this time was the lack of control by the grantor. But this is not out of keeping with the more lax methods of conducting public business which prevailed in state and local governments during the period under consideration. From the data presented the conclusion must be drawn that the sub- ventions made during this period were in no sense the results of a general 43 Act 25 Mar., 1805, P.L. p. 121. " Act 26 Mar., 1806, P.L. p. 64. 46 Act 2 April, 1811, P.L. p. 266. 36 THE SUBVENTION IN PENNSYLVANIA plan. The grants were, with one exception, exceedingly haphazard, and there is no evidence now extant to show that any of them was the result of a thorough investigation or serious consideration on the part of the legislature. Many must be regarded as successful forays upon the treasury by the representatives of certain sections of the state. As such they were supported by no theory of politics or of finance except the eminently practical one that to the victor belong the spoils. Subven- tions thus obtained were not always without merit nor can we condemn them simply because political manipulation was responsible for their existence unless we are prepared to subscribe unreservedly to the doc- trine of tainted money. CHAPTER IV THE BEGINNING OF PERMANENT ANNUAL GRANTS FOR EDUCATION AND FOR CHARITY, 1826 TO 1843 THE FINANCIAL POLICY or THE STATE, 1826 TO 1843 The financial arrangements which characterized this period of the state's history were so unusual and had such important effects upon the subventions for the next half century that it is necessary to set them forth in considerable detail. In 1826 was begun the construction of the "state works." Previous to this time the state had subscribed freely to the stock of companies engaged in building roads and canals, but no important projects had been directly undertaken. About 1826, how- ever, as the result of a popular demand for more adequate transportation lines, the state began the construction of a widespread system of canals. 1 State construction and operation having been decided upon, the next question that came up for settlement was the method of financing the new ventures. Since it was confidently expected that the public works would prove exceedingly profitable in the near future, it was decided to borrow the funds for their construction on the credit of the state. As has been pointed out 2 the state had already borrowed large sums to invest in the stock of private corporations engaged in similar operations. 3 Borrowing for the construction of state works was not, therefore, regarded as an innovation. And assuming that the opinion commonly held as to the profitableness of the works was a sound one, the policy of borrowing was also sound. Practically none of the money that went into the build- ing of the canals came from taxation. Worthington has shown that until the state received the bonus for rechartering the defunct Bank of The United States as a state corporation and the deposit of the surplus revenue in 1837, the annual expenditures for the public works practically coincided with the annual amounts of the loans. 4 From 1839 to 1843 1 For a detailed account of the popular movement for direct state action in providing transportation facilities, see Bishop, TheState Works of Pennsylvania, Ch. II.pp. 167-188. 2 Supra, p. 23. 3 See Pennsylvania Archives, IV Ser. V, pp. 553 ff. 4 See diagrams at the end of his monograph. 37 38 THE SUBVENTION IN PENNSYLVANIA large loans were again the order of the day and the debt of the state increased from $25,229,003, in 1839, to $40,491,708, in 1843. 5 The interest charge upon this rapidly increasing debt constituted, throughout the entire period (1826 to 1844), the largest single item in the current expenses of the state government. Had the canals proved as successful as the public expected, a large part of the annual interest charge would have been defrayed out of the profits from operation. But the expectation of the public was not realized, for the entire available receipts from the works amounted to only $9,287,000 for the years 1826 to 1843, while the interest charge for those years amounted to $16,231,000. 6 It was necessary, therefore, to secure funds for the pay- ment of interest from other sources. The act of 1826, which authorized the first large loan for the con- struction of the canals, provided that the state treasurer should, in 1826, pay the commissioners of the internal improvement fund an amount sufficient to defray the interest charges on loans incurred during that year. This payment was to be made from the proceeds of the duties on auctions. After 1826 $30,000 of the proceeds of the auction duties, the dividends on canal, turn-pike and bridge stock, canal tolls, and the net proceeds of escheats were to be turned over to the commissioners for the payment of the interest and for the redemption of the principal of the loans. The commissioners were also authorized to receive all appro- priations by the state legislature, and donations and grants by Congress, by individuals and corporations for internal improvements and to apply them to the purposes for which they were granted. 7 The defects of the provisions for the payment of interest are so obvious and have been criticized so often that it remains only to point out that, with the excep- tion of the duty on auctions, the revenues assigned to the commissioners were all of uncertain yield, and not the type of income that a careful financier would select for meeting a fixed charge. It is not surprising, then, to find that difficulty was soon experienced in paying interest. This was principally due to the fact that the revenues were not adequate. That they were not certain, as it happened, was of minor importance. 6 Tenth Census, VII, Valuation, Taxation and Public Indebtedness, pp. 541-545. The figures include relief notes, interest certificates, domestic cfeditors' certificates, and the funded debt. They do not include the amount of the surplus revenue de- posited by the U. S. Treasury. 9 Bishop, p. 222. 7 Act 1 April, 1826, P.L. pp. 166-167. THE SUBVENTION IN PENNSYLVANIA 39 As early as 1829 short-time loans were required for making interest payments. 8 In 1831 in an effort to remedy the situation a tax was imposed upon all real estate and upon certain specified kinds of personal property. 9 The yield of this tax in 1835 was approximately $209,000. 10 The debt at that time amounted to about twenty-four and one-half millions, 11 and the interest charge at 5 per cent was something in excess of six times the yield of the tax that had been levied to aid in its pay- 8 Bishop, p. 210. 9 Eastman, Taxation for State Purposes, p. xi. 10 The yield of the various sources of state revenue for certain years is given is the following table. INCOME FROM REVENUES AND FROM LOANS FOR CERTAIN YEARS 1826 to 1842.' (in thousands of dollars) 1826 1830 1835 1842 I. All Taxes 1. Auction duties 2. Auction commissions 3. Tax on bank dividends 4. Tax on certain offices 5. Tax on writs, etc. 6. Collateral inheritance tax 7. Tax on real and personal property 8. Tax on corporation stocks 9. Tax on coal companies 10. Tax on salaries II. Licenses and Permits 1. Tavern licenses 2. Dealers in foreign mdse. 3. Pedlars 4. Retailers 5. Bonus on bank charters 6. Brokers III. Commercial Receipts 1. Land sales 2. Dividends on stocks owned 3. Miscellaneous IV. Canal Tolls, etc. V. Miscellaneous Receipts TOTAL REVENUES LOANS DURING YEAR 299.9 5,707.0 1,750.6 934.7 1 From Reports of Auditors General and State Treasurers. 11 $24,589,743, exactly. 163.6 203.5 417.6 730.2 108.8 132.2 57.2 57.4 20.7 19.5 10.9 19.9 23.3 20.1 68.5 44.9 10.8 10.0 13.8 6.3 3.0 24.7 37.7 18.7 32.2 38.7 209.0 486.6 37.1 1.3 1.6 76.1 96.6 210.9 141.9 34.6 44.3 57.8 50.3 41.5 51.6 .7 5.8 1.9 80.7 84.2 66.6 5.5 176.4 272.1 205.9 57.9 43.6 120.1 26.4 21.8 132.2 151.4 179.2 35.8 .6 .6 .3 .3 25.7 684.4 908.9 11.6 26.5 4.2 7.0 427.8 624.4 1,523.0 1,845.9 40 THE SUBVENTION IN PENNSYLVANIA ment. Furthermore, the yield of other revenues devoted to the payment of the interest did not approach by many thousands of dollars the amount needed. If the interest charge of about $1,200,000 is added to the expense of operating the state government, we have a total of over $1,800,000, which was greater by $300,000 than the total income of the state from all sources except loans. The policy tentatively adopted in 1829 of borrowing money to pay interest had, by 1831, become the con- firmed practice. This policy may be explained, if we remember that at that time scarcely anyone doubted the ultimate success of the public works; that it was a time of most reckless speculation in private business when principles of sound finance seem to have been completely ignored; 12 and that the belief was prevalent that the state should not levy direct taxes. In 1836 the legislature chartered the Bank of the United States, re- ceiving in return for the privileges granted a large bonus in cash and a loan for the internal improvement fund. 13 In the same year Congress authorized the deposit of the surplus revenue with the various states, and Pennsylvania received $2,867, 000. u The act chartering the bank repealed the tax on real and personal property, but the state soon dis- sipated the funds that were so easily obtained, and the tax was renewed with slight alterations in 1840. 15 In the meantime borrowing to pay interest was again resorted to. The table on page 39 shows that in 1842 the new tax yielded $486,600, and that the total revenue of the state canal tolls, etc., excluded was only $937,000. At this date the interest on the debt was approximately $1,666,000. Loans to pay the interest were necessary and the state was soon in serious financial difficulty. In the following year interest pay- ments were suspended. The people were now told the truth about the financial prospects of the public works, and a heavy tax was levied to pay the current and over-due interest on the state debt. The probable effect of the reckless and unsound financial policy of the state during these years upon the amount and character of the subventions cannot be readily determined. At first sight it would seem likely that the unsuccessful outcome of the venture in public ownership, and the resulting embarrassment of the treasury, would lead to parsimony 12 For a good contemporary explanation of the spirit of speculation that pre- vailed during the period, see No. Amer. Rev. for Jan. 1844, LVIII, pp. 109-157. 13 Act 18 Feb., 1836, P.L. pp. 36 ff. 14 Tenth Census, VII, Valuation, Taxation and Public Indebtedness, p. 529. 16 Eastman, Taxation for State Purposes, p. xiii. THE SUBVENTION IN PENNSYLVANIA 41 in state expenditures. Hence the time would be very unfavorable for the introduction of permanent annual subventions. On the other hand, many of the political events of the time made the period 1826 to 1844 an exceedingly favorable one for the establishment of subventions. The complete confidence of the officials, and of the public generally, in the ultimate success of the canals 16 led them to anti- cipate large profits and to increase state appropriations for practically all purposes during this period. Furthermore, the entrance of the state into the industrial field and the expenditure of large sums on the canals very naturally tended to break down existing prejudices against wider state activity and to justify other forms of public enterprise not pre- viously engaged in. The development of an adequate state tax system at this time would, of course, have made subventions possible and would, in large part, have avoided bankruptcy during the period 1842 to 1844. The failure to levy taxes was due, in part, as has been stated, to the belief that the people were either unable to bear heavy taxation, or that they were unwilling to submit to it. And the politicians, who were very much interested in the advancement of the internal improvement schemes, naturally feared to endanger the popularity of such projects by levying obnoxious direct taxes to pay interest on money borrowed for the con- struction of the improvements. Again, the state was embarrassed by its inability to collect the taxes that were levied, even when it needed them most. At no time before the tax act of 1844 was passed did the central treasury have machinery adequate for the collection of direct taxes, and even after that date, the development of such machinery required much time and many amendatory acts to put it in smooth running-order. The following quotation from the annual message of Governor Porter, in 1844, illustrates the inefficiency of collection: "The amount of taxes levied and paid into the State Treasury, under existing laws was as follows: In the year 1841, the amount levied was $416,794.85 ; there was paid into the treasury during that year $33,292.77. In 1842, the tax levied was $659,512.47; the amount paid in the same year was $486,635.85. In 1843, the amount levied cannot be ascertained with accuracy, in consequence of failures on the part of county commissioners in several counties to make returns to the proper office; but making an estimate from the best data that can be obtained, it will not fall short of 16 For expressions of such belief see messages of governors : Governor Wolf, 1833, Pennsylvania Archives, IV Ser. VI, 125; Governor Ritner, 1836, idem, p. 309. For a less sanguine view see message of Governor Porter, 1840, idem. p. 594. 42 THE SUBVENTION IN PENNSYLVANIA $945,000,00. The tax paid into the treasury the past year was $553,911.38. " 17 The governor also explained that he had no means of enforcing the execution of the tax laws in those counties where local negligence or local opposition resulted in inadequate collection. 18 Without attempting to pass judgment upon the causes of the unfav- orable outcome of the Pennsylvania experiment in government owner- ship of the means of transportation, we may yet characterize the financial policy of the state for the period 1826 to 1844. In the first place the period was marked by a great increase in the activities of the state gov- ernment. Expenditures for the canals, as compared with previous outlays by the state, were enormous; payments for general government also grew rapidly; and a spirit of optimism and of liberality pervaded the legislature and other branches of government. How important was the influence of the large expenditures for the public works in accustoming the people to more liberal appropriations for other departments cannot, of course, be determined, but it is safe to say that when millions were paid out annually for canals, less attention would be given to smaller payments, even though they were characterized by extravagance and by inadequate control. The second characteristic of the period was the method employed to raise funds to meet these increasing expenditures. The role of the direct taxes was still a minor one, and the state depended for its receipts upon loans, upon bonuses paid by the Bank of the United States, and upon the surplus deposited with the commonwealth by the federal gov- ernment. The people were not made to feel, by heavy direct taxation, the effect of large expenditures. The principal check upon extravagance known to public finance was thus absent. In the third place the spirit of optimism and financial irresponsibility that seemed to pervade the entire community led in public as well as in private finance, to a growing disregard for the principles of sound account- ing and of commonsense business practice. It is evident that in so far as the financial policy of the state involved indiscriminate appropriations the way was open for both permanent and occasional grants. Furthermore, the aversion of the people to local direct taxation would naturally lead those who sought to introduce new local services, or to develop existing ones, to appeal to the more liberal state government for aid. And finally the lack of responsibility in state 17 Pennsylvania Archives, IV Ser. VI, p. 994. 18 Ibid. THE SUBVENTION IN PENNSYLVANIA 43 finances would permit the establishment of such subventions as were introduced without the application of central audit or control. GRANTS FOR CHARITY, 1826 TO 1844 The first local service to receive aid from the state treasury, during this period, was that of charitable relief. But it must not be supposed that the state contributed to the support of common paupers. The charities first aided were those that were engaged in assisting special classes of indigents. The education of the children of poor parents in Pennsylvania, during the colonial and early state history was generally looked upon as a form of poor relief. The constitution of 1790 required the legislature to provide schools wherein the "poor may be taught gratis"; and the law of 1809 and its amendments placed such education as was provided in the category of charitable assistance. The child who attended local schools and had his tuition paid in accordance with such laws was as much a recipient of poor relief in the eyes of the law as was the indigent who sought aid of the directors of the poor. At no time did the state offer direct assistance to the localities in the education of the poor under this system, and an examination of the policy pursued under it, finds no place in a discussion of subventions. When the state first undertook to aid the localities in the provision of free education, one of the modifications made* in the existing system was the removal of the stigma of "poor relief" from the schools by opening them to all children of school age, rich and poor alike. In order to present concretely the subject matter of this section and to limit the field of investigation, use will be made of a schematic classi- fication of indigents requiring public assistance. Indigent persons may be classified as follows: 19 I. Indigent Defectives 1. Deaf mutes 2. The blind 3. The insane 4. The idiotic and feeble-minded 5. Epileptics 19 Adapted from a classification given by Henderson, Modern Methods of Charily, p. 396. Mr. Henderson did not include 1.8, but there is no good reason for including the inebriate and excluding the indigent who, because of some incurable disease has become a charge upon society, and who is now usually cared for in institutions adapted for the purpose. In the original, there are no sub-classes under III. 44 THE SUBVENTION IN PENNSYLVANIA 6. Inebriates 7. Consumptives 8. Other indigent persons incapacitated by illness II. Neglected and abused children III. Mentally and physically normal adults in extreme indigence 1. Those requiring occasional relief, chiefly outdoor relief 2. The inmates of almshouses 3. The aged poor At the present time there is no clear line of demarcation between "education" and "charity" in the case of expenditures for teaching the blind and the deaf-mutes. If, as is commonly asserted, the state is under obligation to provide for industrial education in the larger cities for the instruction of a special class in particular localities it seems equal- ly clear that it is also under obligation to provide special facilities for the training of those who happen to be without sight or the powers of hearing and speech. In both cases the principal argument for the estab- lishment of special schools is that the class to be benefited cannot gain proper training in the general system of common schools and that with- out this training they will become inefficient members of society. The expenditures for the education of the blind and of the deaf-mutes might well be classed with payments for common schools at the present time. When schools for these special classes were first established in Penn- sylvania, all pupils whose parents could afford the expense were charged for tuition and maintenance; but the state, and charitably inclined individuals, undertook to provide for the education of those whose parents were unable to pay. Hence it seems better to treat subsidies for the support of such schools as payments for charity. In Pennsylvania during this period the deaf and dumb and the blind were the only classes of indigents that consistently received assistance from the state. Public opinion had not progressed far enough to permit of the provision of free treatment for such classes as the indigent sick (common hospital cases) or consumptives. It must not be inferred, however, that no provision was made for taking care of other sorts of charity cases, such as the sick, orphans, the insane, and the adult blind and deaf and dumb. Sometimes they were taken care of by private institutions, and that failing they were, in practically all communities, herded together indiscriminately in the common almshouse. As was pointed out in Chapter III, the first attempt on the part of the state to provide special treatment for defectives resulted in the THE SUBVENTION IN PENNSYLVANIA 45 establishment of the Institution for the Deaf and Dumb. This school was established at Philadelphia, with state aid, in 182 1. 20 The policy inaugurated in dealing with it was continued throughout the period 1826 to 1844. The Institution for the Instruction of the Blind, which was incor- porated in 1834, 21 was, with respect to its general purpose, modeled after the Institution for the Deaf and Dumb. The former school had its beginning in the work of a German, Julius R. Friedlander, who with the support of local philanthropy had begun to instruct the blind in Phila- delphia as early as 1832. 22 The school was aided by many people of that city, and in 1834 the state agreed to contribute to its support. As in the case of the earlier institution for defectives, the school for the blind probably gained much financial support by being largely education- al in character. The fact that it was situated in the only large city of the state and had the approval of the charitably inclined of that city must have contributed to its success in obtaining aid from the legislature. But more potent than any of these facts was the offer of individuals to contribute to its permanent support. The policy of assisting academies and colleges was well established; and in appropriating money for the aid of a school that was assisted by contributions from individuals the leg- islature was not making an entirely new departure. Then too, the grant to the Institution for the Deaf and Dumb, established in 1821, constituted a precedent had one been needed. The Institution for the Blind was liberally dealt with when the sub- subscribers were incorporated in 1834. An unconditional grant of $10,000 was made to the corporation to aid in constructing a permanent home; and a further payment of $10,000 was to be made from the state treasury if the managers were able to raise in cash, by private subscrip- tion, $20,000 for an endowment. The state also agreed to pay annually $160 for the training of each indigent pupil who was a resident of Penn- sylvania. Three conditions were placed upon this annual subsidy: the total payment by the state was not to exceed $9,000 annually; no pupil could remain in the school at state expense for a longer period than six years; and the duration of the subsidy was limited to six years. The last provision may have been inserted to indicate that after that period, the institution should be compelled to depend upon private benefactions. It is more likely, however, that it was intended to prevent the appro- 21 Act 27 January, 1834, P.L. pp. 16-18. 22 Wickersham, p. 444. 46 THE SUBVENTION IN PENNSYLVANIA priation from becoming permanent without further legislative action. The limitation of the subsidy to $9,000 annually was obviously for the purpose of fixing an upper limit to the state's responsibility; while the provision concerning the length of time a pupil might remain at the school at state expense, indicates clearly the educational character of the institution; it was not to become a state home for the blind. Table I in the Appendix shows the trend of the grants to the Insti- tution for the Blind and to the school for the deaf and dumb. The amount appropriated by the Assembly did not, of course, fluctuate so much over short periods as the table indicates, since the statistics are for actual payments, and the irregularity of the state treasurer in making annual payments sometimes caused a part of the legislative appropria- tion for one year to appear in the receipts of the institution with that for the following year. The annual state subsidy to the institution for the deaf-mutes re- mained throughout this period at $160 for each indigent child main- tained at the school. The same amount was granted to the Institution for the Blind when it was established. In 1836, however, on the repre- sentation of the managers of the school that the annual cost of educating a blind child was greater than that of educating of a deaf-mute, 23 the legislature increased the subsidy to $200. 24 Increases in the subsidy paid each school must therefore have been due to an increasing number of state pupils or to occasional grants for permanent outlays or for the liquidation of indebtedness. The history of the grant to the older institution is quite uneventful for the years 1826 to 1834. In the latter year, however, a distinct up- ward trend that culminates in the extravagant years of 1837-38 sets in. The usual appropriation was then more than doubled. These augmented payments were utilized to extend the scope of the school and to pay off accumulated indebtedness. The amount of the subsidy paid to the Institution for the Blind shows the same general trend as that paid to the school for deaf-mutes. In the same year that the annual payment for state pupils in the former was increased to $200, the conditions for maintaining children at state expense were made less exacting in both schools. The age of admission for deaf-mutes was fixed at ten years, but none could remain after his twentieth year; the number of years that a pupil might be educated at 23 See Institution for the Blind, Annual Report (1838), p. 24, for reiteration of this argument. '< Act 31 March, 1836, P.L. p. 328. THE SUBVENTION IN PENNSYLVANIA 47 state expense was increased from five to six years, and the limitation of a maximum subsidy of $9,000 annually was removed. 25 At the same session of the General Assembly, the maximum period during which any indigent child might be educated at state expense in the school for the blind was increased to eight years. 26 This liberalizing of the conditions, under which the state grant might be claimed, was due, no doubt, to the prosperity of the treasury at that time, and in part to the success of the schools in achieving the objects for which they were organized. The relative share of the state in the cost of operating the two schools is shown by the table on the following page. From all appearances 27 the older institution had been more liberally dealt with than had the institution for the blind. Whether it had received a larger subsidy in proportion to its needs, or in proportion to its actual achievement, cannot be determined. The table on page 48 shows clearly that in the case of the older institution the relative contribution of the state to the total annual revenue increased steadily during the years 1825 to 1844. In the latter year practically no assistance was received from private bequests and donations, the revenue of the school being derived from the state subsidy, from pay pupils, and from payments of other states for their indigent children educated in the school. In fact, the institution seems to have assumed a commercial role and to have bid openly for the patronage of other states, charging the same amount as was paid by Pennsylvania, for her indigent scholars. 28 The managers of this school recognized that they had been deserted by the charitable people of their own city. An urgent "APPEAL" for donations and bequests, published in their Annual Report for 1842, 2 * deplores the lack of interest in their work exhibited by the public gen- erally. Whether or not the decline of private giving was caused by the increasing liberality of the state cannot be definitely determined. The statistics of receipts would seem to indicate that such was the case; but the failure of the school to attract any considerable number of important bequests might well be due to causes entirely independent of the feeling that there was no need for the support of individuals. 28 Act 4 April, 1838, P.L. p. 265. 29 Act 14 April, 1838, P.L. p. 398. "See Table I, Appendix. 28 Institution for the Deaf and Dumb, Annual Report (1842), p. 9. 89 Idem, p. 12. 48 THE SUBVENTION IN PENNSYLVANIA RECEIPTS OF THE INSTITUTION FOR THE DEAF A ND DUMB FROM THE STATE TREASURY AND FROM OTHER SOURCES, FOR CERTAIN YEARS, 1825-1844* Receipts 1825 1840 1842 1844 From the state $7954 $0990 $11285 $11 000 Pay pupils of other states 906 3 124 3 206 3 563 Other pay pupils 1,558 2 633 2 580 2240 Donations and income from investments Subscriptions and gifts 2,123 2,263 148 78 436 300 34 Miscellaneous 993 906 377 229 Total $15,797 $16,879 $ 17,884 $17,366 RECEIPTS OF THE INSTITUTION FOR THE BLIND FROM THE STATE TREASURY AND FROM OTHER SOURCES, FOR CERTAIN YEARS, 1835-1844 Receipts 1835 1838 1841 1844 From the state For maintenance $ 666 $ 5 421 $4 104 Sll 042 For buildings 10,000 10000 Pay pupils and from other states 307 400 2 778 1 492 Donations . . 10449 558 Annual subscriptions 663 330 184 Interest on investments 307 751 238 8 516 IVIiscellaneous 1 183 358 1 167 1 737 Total $13,126 $27 379 $9 175 $22 971 1 These statistics are taken from the Annual Reports of the institutions to the legislature. Receipts from loans and from the sale of property have been excluded. The composition of "miscellaneous" is: doubtful items, sale of manufactured articles, and labor of inmates. The data in the original report are so badly confused and so meagre that only the roughest kind of comparisons can be made. The receipts from the state do not agree with the amounts given in Table I, Appendix, chiefly because the fiscal years of the institutions were different from that of the state. THE SUBVENTION IN PENNSYLVANIA 49 In the case of the Institution for the Blind, as can be seen from the table on page 48, the tendency of private giving was just the opposite. As the school grew older and the state appropriation increased, the in- come from legacies and from donations also increased, both absolutely and proportionately. A large part of this income was, however, derived from the benefactions of a single man, 30 and the benevolent interest of one wealthy patron is by no means so significant as the growth of indifference on the part of the general public. The conclusion that may be drawn from the experiences of both schools relative to the effect of state support upon private giving is, therefore, a negative one. As far as the evidence goes it does not show that private giving was greatly discouraged by the introduction of state aid. The state did not have a share in the management of either institu- tion commensurate with its contributions. The managers and the officers of both were elected or appointed by the subscribers, and no state administrative officer had, during this early period, any voice in the management. This statement applies not only to the methods of instruction employed, but also to financial arrangements and to the selection of the personnel of the official staffs. Both institutions were required to make an annual report to the legislature, but so meager was this document that it cannot be regarded as furnishing that body with satisfactory information as to actual administration. It consisted of only a few pages devoted to a financial statement and a brief outline of the instructional policy of the school, together with a list of the pupils and numerous self-laudatory passages for the consumption of the mem- bers of the General Assembly. Not only was state control quite lacking with regard to the educa- tional policy of both schools, but formal audit of their accounts by a representative of the state was also absent. The central government not only expended money for services, the standards of which it could not control, but it also contributed that money for the support of the schools under such defective arrangements that misapplication could not have been prevented. Despite this lack of audit by authorities representing the state, there seems to be no evidence that these funds were not faithfully applied for the benefit of the indigent state pupils and to serve such other purposes as the legislature designated. Relief of the second class of indigents, neglected and abused children, was carried on during this period, for the most part, without contribu- 30 See Annual Report (1841), p. 5. 50 THE SUBVENTION IN PENNSYLVANIA tion from the state. There were two excepions to this general policy. In 1838, after the General Assembly had become recklessly extravagant in expending the revenue derived from the chartering of the Bank of the United States and from the deposit of the surplus federal revenue, an act was passed granting to the president and managers of the Orphan Asylum Society of Pittsburg and Allegheny, $1,000 annually for ten years. 31 This amount was to be paid out of the dividends on stock owned by the state in the Allegheny Bridge Company. At the same session the Orphan Asylum of Lancaster received a grant similar in amount and duration. 32 These subsidies were practically unconditional grants with- out audit or control. Both grants were discontinued when financial disaster overtook the state. Had the treasury continued prosperous, it is probable that a considerable number of such subsidies would have arisen at this early date. This conjecture is supported by an act passed by the legislature in 1838, which authorized a subsidy of $25,000 to the Western Pennsylvania Hospital Society (of Pittsburg), on condition that a similar amount should be subscribed by the people of Pittsburg. 33 Another type of local service receiving aid from the state during this period, while not strictly a form of charitable relief, had also to do with the provision of proper environment and training for neglected children. Investigations about 1824 had shown that the local jails and prisons contained many juvenile offenders and incorrigible children, who, instead of receiving elementary education and training in a trade, were in many cases becoming professional criminals. In response to a local demand the legislature in 1826 incorporated subscribers to establish an institu- tion in Philadelphia for the reformation of juvenile delinquents. 34 The purpose of the institution was to provide moral training, instruction in 31 Act 14 Feb., 1838, P.L. p. 12. 32 Act 4 April, 1838, P.L. pp. 264-265. This was another section of the act which provided for the incorporation of the Lancaster orphanage. 33 Idem, pp. 263-264. The Hospital was to be governed by a board of nine mana- gers, three of whom were to be elected by the stockholders, three appointed by the mayor and common council of Pittsburg, and three by the governor of the state. The hospital was designed to serve the "destitute, sick and insane of Western Pennsyl- vania. " No record of any payment to this society can be discovered in the reports of the Auditor General, and since the grant was not repealed, it may be assumed that the local subscription failed to materialize. 3 Act 23 March, 1826, P.L. p. 134. THE SUBVENTION IN PENNSYLVANIA 51 elementary branches, and knowledge of a trade or occupation for such children as were committed to its care. 35 In 1827 the subscribers succeeded in convincing the legislature that the service they were rendering was of sufficient public interest to justify assistance from the central treasury, and a grant of $10,000, payable in installments within three years, was made for their benefit. 36 After this amount had been paid, the state made no further subsidies until 1832, when an annual grant of $5,000 was authorized to continue until 1835. 37 It seems quite clear from the language of the law making the original grant that the intention of the legislature was to assist the managers of the institution in acquiring a permanent plant, rather than to create an annual subsidy. At the time the state agreed to contribute to the original establish- ment, the City and County of Philadelphia was required to pay $10,000 to the corporation within two years and $5,000 annually thereafter. 38 One reason for requiring Phildadelphia to assist in establishing and maintaining the House of Refuge is clear, if we remember that a majority of the inmates of the institution were likely to come from her jails and almshouses. Again, the institution was located in that city, and the local contribution may have been necessary to overcome the objections of members of the legislature from other counties. Children committed from counties other than Philadelphia were required to be maintained "at the public expense of the proper county." 39 The payment by Phila- delphia was increased by the act of 1830 to $10,000. 40 Two years later 35 For a good exposition of the purposes for which the House was conducted see the opinion of the court in Ex parte Grouse, 4 Wharton 11, (1839), a case in which a writ of habeas corpus was denied although the person for whose benefit the action was brought had not been convicted of any offense in court, before being committed to the House. On the whole, since the children dealt with were placed in the institution, not be- cause they were in need of education but because they either already were, or were in danger of becoming criminals, the service performed by the corporation controlling the House should be regarded as reformatory, rather than educational. The same argument would serve to show that the service was not strictly charitable; although there is an element of both education and charity contained in it. 38 Act 2 March, 1827, P.L. pp. 76-79. 37 Act 30 March, 1832, P.L. pp. 224-225. 38 Sees. II & III, Act 2 March, 1827, P.L. pp. 77-78. 39 Sec. IV, Act 2 March, 1827, P.L. p. 78. "House of Refuge, Report (1830), Treasurer's Report; also Act 27 March, 1830, P.I. p. 134. 52 THE SUBVENTION IN PENNSYLVANIA the state agreed to contribute $5,000 annually until 1835. This grant was continued from time to time and from 1832 to 1844 the amount appro- priated annually was $5,000. In the latter year only $4,000 was actually paid because of the depleted condition of the state treasury. Thus the grant to this institution developed from an occasional subvention for buildings into a subvention for current expenses for a limited period of years, and finally into an annual permanent subven- tion for maintenance. The progress of the grant through these three stages indicates the changing attitude of the assembly toward this particular charity. At first it was regarded as a worthy private charity of sufficient public interest to warrant the state in assisting iri its estab- lishment; but the assembly was not ready to assume financial respon- sibility for its continuance. In the next stage the assembly made a grant for maintenance to assist the institution during a temporary finan- cial embarrassment; and in the last stage the central government assumed partial responsibility for the continuance of the charity. This development was brought about by several causes. In the first place the institution had demonstrated that it was better fitted to care for and to reform unruly children than were the common prisons. In the second place the spirit of extravagance, which pervaded the state appropriations during this period, led to greater and greater liberality; and in the third place, once the state had invested in the building of the institution it was financially committed to support it in a time of need, in order that the original investment might not be lost. 41 The last statement merely puts concretely the general principle that if govern- ments begin to make occasional appropriations for a given service a claim is likely to be established for permanent support. The original incorporation act provided for the management of the institution by a board of twenty-one managers, elected by the subscrib- ers, who in turn chose the officers of administration and of instruction. 42 But in 1832, after the annual payment by the City and County of Phila- delphia had been increased and the state subsidy renewed, the court of quarter sessions of the county in which the institution was located was authorized to appoint three additional managers, and the mayor of the city of Philadelphia two. 13 Thus local administrative bodies were given the power to appoint five out of the twenty-six directors of the corporation. In any matter involving the conduct of business they 41 House of Refuge, Report (1830), Treasurer's Statement. Act 23 March, 1826, P.L. p. 134. Act 30 March, 1832, P.L. pp. 224-225. THE SUBVENTION IN PENNSYLVANIA 53 would have been hopelessly out-voted by the directors elected by the subscribers, and it must be concluded that their function was to provide the proper authorities with information rather than to control the management of the institution. The act of 1826 required a report each year to the state legislature, 44 but, as was the case with the schools for defectives, the reports were too meagre to afford that body much real information. So brief are the financial statements contained in the annual reports that it is difficult to draw conclusions concerning the effect of the state subvention upon the finances of the institution. During the three years 1827 to 1829 inclusive while building was going on, the state contributed about 22 per cent of all receipts, loans excluded and the city and county of Philadelphia contributed 33 per cent. Subscriptions and donations from individuals made up the remainder. 45 During the years 1835 to 1844 the amount contributed by the state remained at $5,000 annually. Since the total receipts of the institution increased about 50 per cent during these years, the proportion paid by the state declined from 34 per cent in the former year to 23 per cent in the latter. The amount contributed by Philadelphia increased from $5,000 to $9,000 or from 34 per cent to 42 per cent. The contributions of individuals varied greatly from year to year, while the income from permanent investments, though never large, increased slowly. Receipts from the labor of the boys detained in the home declined as the institution became more educational and less penal in character. 46 As in the case of the institutions for the training of the blind and the deaf-mutes, the data that are now extant do not permit drawing definite conclusions as to the effect of the subvention upon individual donations. It is possible to state, however, that the amount contributed by indivi- duals was proportionately more important during the years when the home was beginning than it was from 1835 to 1844. 47 But the contribu- tions of individuals would naturally be larger during those years when the corporation was greatly in need of funds for building purposes. On Sec. VII, Act of 1S26, P.L. p. 135. 46 House of Refuge, Report (1830), Treasurer's Statement. 4 From the Annual Reports of the House of Refuge, 1835 to 1844. Chiefly from the summary statement of the treasurer of the corporation. In several instances the data given by the treasurer are at variance with the statements of the Auditor General of the state with reference to the amount of the subvention paid in given years. 47 Ibid. 54 THE SUBVENTION IN PENNSYLVANIA the whole, there is no evidence to show that contributions on the part of the state discouraged individual interest. The reasons for state participation seem not to have been those which have been so potent in bringing about subventions to common schools in recent years. There was no mention of the effect of such contributions upon the equalization of tax burdens. Nor is there evidence to show that the state provided a subvention for the purpose of obtaining a voice in the government of the institution. In fact, the indications are that no such reason was entertained, since only the mildest sort of supervision was imposed. It is fairly clear that the state assisted the schools for the blind and the deaf-mutes, and the home for wayward children because all three were new departures in the matter of charitable relief, and because all three were performing services that commanded public approval. The sub- ventions were small and no elaborate reasons in addition to those just advanced were necessary to justify the appropriations. It may be asked at this point why the state did not establish the institutions and take full charge of the services they provided. Several considera- tions prevented such action. In the first place the teaching of the blind was at that time still in the experimental stage, and a wider range of experimentation was possible in a private than in a public institution. As a rule it is not advisable for the state to take over a branch of chari- table relief until at least tentative standards have been established in private institutions. A further reason for the failure of the state to develop institutions is that such action would probably not have been supported by the people of the state. Free common schools and state asylums for the insane both came later. It should also be pointed out that all the grants to charity during this period were only slightly controlled; some were conditional, while others were almost in the nature of unrestricted gifts. In the case of the schools for defectives, the annual grant was limited in amount and the appropriation was based upon the quantity (number of indigent children received) of service rendered the public. Finally, the establish- ment of these subventions cannot be regarded as the result of a definite policy on the part of the state. Their growth was more or less acciden- tal, the result of a number of minor influences, and not the product of a definite plan to commit the state either to the continuance or to the en- largement of its appropriations. THE SUBVENTION IN PENNSYLVANIA THE ESTABLISHMENT OF THE PERMANENT ANNUAL SUBVENTION TO COMMON SCHOOLS The first great movement for free schools in Pennsylvania came at the time of the Revolution. The influence of the forces then at work caused the legislature to pass the land-grant act of 1786 and was responsi- ble for that clause in the state constitution of 1790 which provided for the free education of the children of the poor. In 1792, and in 1794, legislative committees were appointed to devise means for a more wide- spread and more effective school system. But as has already been pointed out, little was accomplished. After about 1795, the movement seemed to lose force and the only important results accomplished during the next twenty years were the pauper school law of 1809 and the occa- sional subsidies to academies and colleges. 48 But while Pennsylvania was merely marking time, neighboring states had established elementary schools, which were, in part at least, "free" in the modern sense of the term. Massachusetts and Connecticut had permitted local taxation for the support of education as early as the seventeenth century, 49 and before 1800 these two states, together with New York, made local taxation compulsory. 50 But the two New Eng- land states permitted "rate bills" until 1827 and 1868 respectively. 51 Even in those progressive communities there seems to have been much hesitation about compelling the people to pay taxes for the support of free schools. Furthermore, over the country as a whole there was no settled conviction of the desirability of free common schools. As Pro- fessor Swift has pointed out, " Public sentiment respecting the establish- ment and maintenance of free schools ranged all the way from indif- ference, disbelief, and contempt to open hostility. " 52 In the New West the attitude of the people was one of indifference in spite of the encouragement for the establishment of schools given by the federal government in the form of land grants. In the South free schools were looked upon as a form of poor relief, and the stigma of pauperism attached to those who attended them. 53 In Massachusetts 48 For an explanation of the failure of the friends of education to secure more significant results at this time, see Wickersham, Ch. XIII. 49 Swift, A History of Public Permanent Common School Funds in the United States, 1795-1905, p. 29. 80 Idem, pp. 29-30. 61 A rate bill was a kind of fee imposed upon the parents or guardians of children for the purpose of defraying the cost of the schools. 52 Swift, p. 161. 53 Idem, p. 162. 56 THE SUBVENTION IN PENNSYLVANIA the presence of numerous academies and private schools gave evidence that the more democratic public institution was not regarded as wholly satisfactory by the entire community. The progress of public education supported by taxation was everywhere very slow. One of the first steps toward the establishment of free schools through- out the country was the provision of permanent school funds. These funds consisted, as a rule, of a capital sum derived from various sources and productively invested, the annual income of which was used for the support of education. Permanent common school funds had their origin in the newer states in the lands granted by Congress, and in the older states in a variety of revenues and accidental sources of income. The policy was virtually forced upon the public land states, but by 1834 a majority of the older states had voluntarily adopted it. 54 Although little in the way of constructive legislation for the advance- ment of free schools was accomplished in Pennsylvania during the first quarter of the nineteenth century, it would be a mistake to suppose that interest in the subject had died out after the passage of the pauper school law of 1809. Agitation outside the legislature for a more liberal policy with respect to public schools had continued in a desultory fashion from the last decade of the eighteenth century; and as early as 1810 the governor suggested legislation of a more liberal character. These recommendations, which were couched in terms sufficiently vague to permit the governor to advocate almost any kind of system, continued intermittently down to 1834. 55 In 1824 the legislature passed a law "to provide more effectually for the education of the poor gratis, and for laying the foundation of a general system of education throughout the commonwealth." Local school boards were to be elected, whose duty it was to provide and to supervise schools for the poor. Section X of the act also permitted the citizens of the several townships, wards, and boroughs to decide by popular vote whether or not they would tax themselves for the education of all children between the ages of six and fourteen. Adoption of taxation was purely optional, and there was no attempt, so far as can now be 64 Swift, p. 96. 65 These gubernatorial recommendations must not be taken as indicating a general public demand for free schools. To a certain extent they were probably of a political nature. A member of the constitutional convention of 1837-38 in commenting on them said: "The governor never had failed to put into his message a passage recom- mending education. At last it came to be regarded in the same light as the religious allusions, as a a matter of ornament. " Thus Clarke of Indiana County, Proceedings & Debates, V, p. 222. THE SUBVENTION IN PENNSYLVANIA 57 ascertained, to coerce any community; furthermore, since each township, ward, or borough could decide for itself there was no possibility of the more populous and poorer sections of counties and cities taxing the richer communities. But the people were not then in a mood to accept a system that carried with it even permissive taxation; and the law " . . . met with violent oppositon, was repealed in 1826 and the law of 1809 re- stored. . . ' )56 This law of 1824 had been the result of numerous committee reports and petitions to the legislature asking better provision for the education of the youth of the state. In 1822 a committee had reported at length, condemning alike the pauper schools established under the act of 1809 and the policy of the state in endowing numerous academies. 57 In 1824 Governor Shulze in addressing the legislature wrote, "I would respect- fully suggest whether an annual sum, specially appropriated for that purpose [the endowment of educational institutions] would not in a few years raise a fund equal to the universal diffusion of the elements of education among the children of the republic. " 58 But this suggestion of a "fund" did not apparently meet with a favorable reception at the hands of the lawmakers, and no action was taken. Various voluntary organizations had, meanwhile, been agitating a more liberal provision for education at state expense. 59 In 1830 Governor Wolf suggested that the various counties be per- mitted to establish local permanent funds for the endowment of public elementary schools. He believed that a plan which should provide for the levy of a small additional county rate, the proceeds of which might be invested in the internal improvement stock of the state, would in a short time produce an annual revenue large enough to aid materially in establishing public schools. 60 But the legislature did not at that time act favorably upon the plan. The scheme was, nevertheless, very suggestive, combining as it did the permanent fund, which would obviate the necessity of heavy direct taxation, with a scheme for securing money for the construction of the canals. 58 Wickersham, p. 270. His statement is inexact, for the law of 1824 did not repeal the act of 1809; it merely superseded it in certain respects in those cases where the local unit chose to put the law of 1824 into effect. 57 Wickersham notes several other committee reports from 1822 to 1831, pp. 274- 275. 68 Pennsylvania Archives, IV, Ser. V, p. 550. 59 Mathew Carey was of the opinion that these societies accomplished very little. See his Public Charities of Philadelphia, p. 33. 60 Pennsylvania Archives, IV Ser. V, p. 885. 58 THE SUBVENTION IN PENNSYLVANIA In the following year (1831) the legislature established the "school fund. " 61 Section I of the act provided that all receipts from the land office, including land sales and fees, and all revenues accruing from the Act of March 25th, of the same year, which had increased the county rates and levies for the benefit of the state, should be set apart as a com- mon-school fund. Section III required that all revenues accruing to the fund should be invested at 5 per cent compound interest until the princi- pal of the fund was large enough to yield $100,000 annually, when, pre- sumable, the annual income was to be used for the support of elementary education. In accordance with the provisions of other acts, the fund was to be invested in the internal improvement stock of the state. 62 In securing this legislation the advocates of better schools had cleverly taken advantage of the popularity of the internal improvement policy. Ostensibly the revenue that would accrue for the benefit of schools would not come out of the pockets of the taxpayers. One of the strongest motives for the establishment of permanent school funds in all the states that provided such endowments was the desire to avoid heavy direct taxes, 63 and it was in the belief that the state could thus encourage education without taxing the people that the fund was established in Pennsylvania. As a book account, the fund continued to grow during the following years, and even as early as 1833 Governor Wolf ventured to predict that, judging from the flattering indications already given by the public works, there was "reason to believe that, from the redundant and pro- gressively increasing revenue which may [might] with great certainty be expected to flow into the treasury from that source [the works] much aid may [might] at no distant day, be derived" for the support of educa- tional institutions. 64 The history of the Pennsylvania school fund is difficult to trace. After 1836 it received additions from the bonus paid by the Bank of the United States and from similar sources, 65 and it was expected that by 1843 the annual interest on the fund would amount to $100,000. 66 When the common schools were established in 1834, $75,000 was appro- priated from the fund for their support until the annual income from the 61 Act 2 April, 1831, P.L. pp. 385-386. 2 Act 22 April, 1829, P.L. p. 254. 63 Swift, p. 165. 64 Pennsylvania Archives, IV Ser. VI, p. 125. 65 Supt. of Common Schools, Report (1844), p. 11. 66 Pennsylvania Archives, IV Ser. VI p. 127. THE SUBVENTION IN PENNSYLVANIA 59 fund should amount to $100,000. In subsequent appropriation acts, however, the legislature seems to have paid very little attention to the amount actually to be derived from that source. And it is probable that by 1837, when $500,000 of the state's share in the surplus revenue of the federal government was appropriated for the assistance of the school districts, the fund idea was no longer important. Finally, in 1841, the fund was practically abolished by merging the income that should accrue from it, in excess of a specific sum appropriated for the schools by the legislature, with the general receipts of the state treasury. 67 Thus the law of 1831 was practically repealed. In 1849 the state Superinten- dent wrote, " Pennsylvania has no fund for school purposes. " 68 But before the repeal of the act creating the fund the common school system had been established and a revenue provided for its sup- port. In 1834 the legislature passed an act which provided for a "gen- eral system of education by common schools." 69 This act was clearly intended to supersede the pauper school law of 1809, but since there was much opposition the latter law was not repealed. By highly com- plicated arrangements each county and each school district was per- mitted to decide whether it would come under the new law and establish free education for all children, or whether it would continue to provide schools only for the poor. 70 But the state did more than establish a permissive system. In order to induce localities to accept the new plan, $75,000 was appropriated 7 Act 4 May, 1841, P.L. p. 312. 68 Report (1849), p. 12. 69 Act 1 April, 1834, P.L. pp. 170 ff. 70 Each township, each borough, and each ward of a city was created a school dis- trict, and in each district, at the next general election following the passage of the act, the people were required to elect school directors, who in turn were required to select one of their number as a delegate to a county convention that was to decide whether the county as a political unit would levy taxes for the support of free common schools. This convention was composed of the delegates elected by the directors of the various districts within the county and the county commissioners. If the convention "ac- cepted" the new system, it was required to levy a county tax for the support of schools; and in that case the people not the directors of the various districts might levy additional taxes if a majority of the voters consented to such a policy. On the other hand if the county convention decided not to levy any tax for the support of schools, and thus rejected the new plan, the people of the several districts were permitted to put the scheme into operation in spite of the action of the larger unit. It should be borne in mind in this connection that the term "district" is generally used in the Penn- sylvania laws and reports to mean a township, ward, or borough, and not the com- munity immediately surrounding, and tributary to, a particular school or schoolhouse. 60 THE SUBVENTION IN PENNSYLVANIA from the school fund in aid of the local districts. This amount was to be distributed among the several counties of the state in proportion to the number of taxable inhabitants in each. The financial officers of the county were then required to redistribute the amount received from the state, together with the proceeds of such school taxes as had been levied by the county, among the districts in accordance with the number of taxable inhabitants in each district. This was the normal procedure in the accepting county. Any district within an accepting county that refused to put the scheme into operation received no state aid and the amount of the state subvention that would have fallen to it went to the other districts. In a non-accepting county the accepting districts received the entire amount of the state subvention to which the county as a whole was entitled. The effect of this pro- vision in case only one district within a populous county decided to ac- cept the new plan is obvious. Furthermore, non-accepting counties were required to provide for the poor under the pauper school law of 1809, and the accepting districts within the county received such a proportion of the revenue from taxes levied for that purpose as they would have received had they not accepted the newer scheme. The law offered in these two ways a very liberal inducement to accepting districts within non-accepting counties to set a better example before their neighbors. Nor were these the only inducements offered. In order that a county might receive state aid, it was required to raise by taxation an amount at least three times as great as its proportion of the state subvention; but the accepting district within the non-accepting county was required to raise an amount no larger than if the county had accepted as a unit. Thus it was possible for the state subvention to such a district to exceed the local tax several times over. The intervention of the county, both as a unit for distribution of the state subvention and for voting on the acceptance of the system was one of the parts of the scheme that had to be discarded two years later. By the Act of 1836, which completely superseded the Act of 1834, the districts accepted or rejected the sytem A district, in Pennsylvania, usually contained several schoolhouses. It is difficult to understand why the county convention was included in the machinery of the new system. The commissioners, who were elected from the townships to administer the various services of the county, were, it is true, the principal local taxing authority outside of the cities and boroughs, and it might have been on this account that they were included. But the convention without their presence would have been an un- necessary encumbrance, since districts were not bound by its action. THE SUBVENTION IN PENNSYLVANIA 61 as individuals, and the failure of a majority of the districts within a county to accept did not affect either the tax requirement (for the dis- tricts) or the quota of state aid for the minority. By another clumsy and complex provision of the law of 1834, the local administration of the schools was divided among three bodies. 71 The state administration was closely centralized, on the other hand, in the Secretary of the Commonwealth who was made State Superin- tendent of Common Schools. The duties of the new office, which were added to those he already carried, consisted chiefly in apportioning the state subvention to the various counties, in receiving reports from the local officers, in preparing a condensed report for the legislature, and in deciding disputes concerning doubtful points in the school law. He was chiefly a ministerial officer and had no discretionary power with respect either to paying or withholding the subvention or with respect to local administration. He could not coerce or remove a single local officer; nor could he refuse to pay to the localities the subvention, if the minimum tax had been levied and proper reports submitted. The act of 1834 was passed without much opposition, probably be- cause inadequate means of communication prevented those who were later to become so bitterly opposed to its operation from learning de- finitely of its provisions in time to bring pressure to bear upon the mem- bers of the General Assembly. But in the next session a determined 71 The directors elected by the people were chargeable with locating schools, build- ing schoolhouses, employing teachers, admitting pupils, selecting books and equipment, and with visitation of the schools in their charge. The township supervisor in the townships, and the town councils in the boroughs were alone capable of consenting to the sale or purchase of property used in conducting the schools. The third official group was two inspectors, appointed for each district by the court of quarter sessions, who were required to examine teachers and grant certificates, to visit and inspect the schools, and to report to the state superintendent of common schools concerning the progress of scholars, the number and the qualifications of the teachers employed, the number of scholars taught, the length of the school term, the cost of buildings, the financial receipts from all sources, and the expenditures classified by purpose. It seems to have been supposed that the appointees to this office would be the best educated men in the community, and owing to the source of their appointment, independent of the local prejudices that might be expected to influence the elected directors. Un- fortunately the law neglected to provide for payment for the performance of the many duties placed upon the inspectors, and, consequently, the provision concerning them was a dead letter (Wickersham, p. 322). In the act of 1836, they were dropped, their duties being transferred to the directors. 62 THE SUBVENTION IN PENNSYLVANIA attack was made upon the new system. 72 After the failure of this at- tempt to repeal the law the legislature turned its attention to perfecting the system. The intervention of the county convention was abolished in 1836, and the districts were given the right to decide directly upon the accept- ance of the system and the levy of taxes. 73 The sections of the law that dealt with local taxation were altered in important particulars. Dis- tricts (instead of counties) were now required to levy only as great a tax as their share of the state subvention in 1836, 74 and the maximum local levy by the directors was limited to double the share of the district in the state appropriation. 75 The conditions prerequisite for receiving state aid were the same as under the law of 1834, but the failure of many districts to furnish the state superintendent with reports on the condi- tions obtaining in their schools caused the legislature in 1842 to add that no district should be paid until it had submitted the reports required by law. 76 There was no material change in the powers and duties of the state superintendent, and that officer continued to perform purely ministerial duties. As was the case with the subsidies for charity, the subvention for com- mon schools varied in amount according to the prosperity of the state treasury. Table I shows a marked increase in the amount of the sub- vention after 1836. The augmentation of the grant could not, of course, have come from the growing revenue of the school fund of 1831, since the revenue from land sales declined after 1835. The large grants to common schools during the years 1838 to 1840 were due to sudden accessions to the state treasury of incidental revenue in extraordinary amounts. 72 On the fight which was made in that session to repeal the law of 1834 and to destroy the system before it could become firmly rooted, and for an excellent ac- count of the proceedings of the legislature and an explanation of the determined opp- osition to the system, see Wickersham, ch. xvi. 73 Act 13 June, 1836, P.L. pp. 525 ff . 74 It was afterwards decided by the state superintendent that the wording of the law made the requirement in this respect permanent. No matter how large or how small was the state subvention in subsequent years, the accepting district was obliged to levy a tax equal only to its share of the subvention of 1836. The provision that made this absurd situation possible is Sec. 10, Par. Ill, P.L. p. 529. See also Superintendent of Common Schools, Report (1844), pp. 12-13. 71 The districts could by a popular vote increase this amount as in 1834. 7 Act 18 March, 1842, P.L. p. 124. THE SUBVENTION IN PENNSYLVANIA 63 In 1836 the state chartered the Bank of the United States, providing that in addition to the other payments to the state treasury " the further sum of one hundred thousand dollars on the first day of June next, and like sums of one hundred thousand dollars, on each succeeding first Mon- day of June, for nineteen years thereafter, to [shall] be added to and paid over with the annual appropriation provided by the Commonwealth for school purposes and be distributed according to the several laws of the Commonwealth regulating the distribution of such appropriations. " 77 That the bank bonus, or a part of it, should thus be used for the benefit of the schools was quite in harmony with the policy of other states of providing for free education out of non-tax income. In the following year (1837), the schools received additional aid from other incidental sources. The legislature decided that the surplus reve- nue, which the federal government turned over to Pennsylvania, should be deposited with banks at 6 per cent interest, and the proceeds devoted to the schools. 78 The interest on this deposit would have meant an annual accretion of more than $170,000 had it been permitted to remain invested for the benefit of education; but the legislature soon appropriated the principal and thus wiped out that source of school income. But, as it happened, the schools received a liberal share of the surplus in a different way. A most serious difficulty encountered during the first years of the school system had been the lack of schoolhouses. In some localities the districts had been able to utilize buildings previously con- structed for the education of pauper children. In other instances they were able to rent or to purchase the buildings that had been used for parochial or private schools. But in a majority of cases the districts were obliged to construct buildings before they could put the schools into operation. Since the terms of the subvention did not require the districts receiving the grant to maintain schools for any specified length of time, it was possible to expend the state money, as well as the proceeds of local taxation, in the construction of buildings. But this meant that while the district was paying for buildings it would be obliged to economize severely in other directions. Hence, for the first few years the school system was a "system of taxation" and not of edu- cation. 79 The effect of this situation upon the acceptance of the common schools was anything but favorable, and in 1836 Governor Ritner recom- " Act 18 February, 1836, P.L. pp. 42-43. 79 Act 27 February, 1837, P.L. pp. 24-25. 79 Superintendent of Common Schools, Report (1838), p. 9. 64 THE SUBVENTION IN PENNSYLVANIA mended that $500,000 of the surplus revenue deposited by the federal government be appropriated to the districts for the erection of school- houses. 80 That the burden of building houses was a relatively large item in the expenses of the schools during the first few years is shown by the fact that in the districts outside of Philadelphia, from 1836 to 1842 inclusive, almost one-third as much was paid for building purposes as for instruction, fuel and other maintenance costs. 81 In order to relieve the localities of a part of the cost of construction and to hasten the time when the schools should be fully in operation, the legislature followed the recommendation of the governor and appro- priated for the construction of schoolhouses $500,000 of the surplus revenue, In case any district already had a suitable building, it was permitted to utilize its share of the grant, which was distributed in the usual way, for the maintenance of schools. 82 The amount actually paid to all accepting districts 83 during the year 1837 was $553,300,^ the highwater mark of the subvention for more than thirty years. The circumstances surrounding this grant of a round half-million of dollars for the building of schoolhouses support the gen- eral principle that a treasury suddenly become prosperous by reason of unusual productiveness of the taxes or by reason of the unexpected appearance of large incidental revenues, supplies a very favorable oppor- tunity for the establishment of new grants or the extension of old ones. In 1838 the legislature, seeking to provide permanently for the school system, enacted that the amount of the state subvention should, in the future, be one dollar for each taxable inhabitant within the several 80 Pennsylvania Archives, IV Ser. VI, p. 295. 81 See table, page 65 infra. * 2 Act 3 April, 1837, P.L. p. 405. How large a proportion of the money thus appropriated was actually used in building is not indicated by the table on page 65, and the inadequacy of the reports of the time make anything but a conjectural esti- mate impossible. It is significant, however, to note that in the year when the special grant of $500,000 was made, the average length of the school term, as given by the reports of the state superintendent, increased from four months and three days to six months, (Report (1844), p. 8) and at no time afterwards did so short an average term as five months prevail. 83 The wide variations between the amounts appropriated and the amounts actual- ly paid over, as reported by the Auditor General, are principally due to the presence of the non-accepting districts, whose share remained in the state treasury. 84 This included, in addition to the proportion of the $500,000 for building pur- poses paid to accepting districts, the annual subvention for the maintenance of the schools. THE SUBVENTION IN PENNSYLVANIA 65 districts. 85 This act was, of course, not binding upon subsequent legis- latures and very little attention seems to have been paid to it in the following sessions. The effect of the law, had it been observed, would have been to cause the subvention to increase automatically with every triennial enumeration of taxables, and in this way, assuming that the amount of one dollar per taxable was adequate, the increase of the grant would have kept pace with the needs of the system. In this con- nection it should be noted that the legislature, in providing for the one- dollar-per-taxable subvention, did not alter that provision of the law of 1836 which fixed the minimum tax requirement for the districts receiving the subvention at an amount equal to the quota due each district from the subvention of that year. It would thus have been possible, had the law of 1838 been observed, for the districts to continue to draw triennially a larger state subsidy and yet to levy the same local tax. It can hardly be supposed, however, that this failure to repeal the provision of the earlier law was the result of neglect or an oversight; for it was only after repeated urging from the state superintendent during several years that the repeal was actually accomplished. THE FINANCES OF THE PUBLIC COMMON SCHOOLS OF PENNSYLVANIA OUTSIDE OF PHILADELPHIA, 1836 to 1844 (in thousands of dollars)* Year State Subvention Local Tax Levied Expenditure for Buildings Expenditure for Instruction and Incidentals 1836 98.7 207.1 111.8 194.0 1837 463.7 231.5 "202.2 493.1 1838 . 323.8 385.8 149.1 560.4 1839 276.8 382.5 161.4 579.2 1840 264.5 395.9 161.4 580.3 1841 249.4 397.9 123.0 524.3 1842 250.1 398.8 119.0 489.9 1843 272.7 419.3 92.7 484.4 1844 264.5 391.3 75.9 470.2 * These data are from the Report of the Superintendent of Common Schools for 1855, p. 346. The reports of the superintendent did not at this time contain complete data for the Philadelphia schools, since they were not required to report to him. In- quiry at the office of the State Superintendent of Public Instruction and at the offices of the school authorities in Philadelphia failed to discover the financial statements of the Philadelphia schools for this period. 85 Act 12 April, 1838, P.L. pp. 332-333. 66 THE SUBVENTION IN PENNSYLVANIA In later appropriations the rule of one dollar for each taxable was not followed. In 1841, $330,000 was granted, 86 but in the following year the appropriation was measurably reduced. 87 In 1843 it was again raised to $250,000 88 and then reduced again to $200,000 in 1844. 89 In the disastrous year of 1843 attempts were made to curtail state expenditure wherever such a course was possible. The salaries of state officers were reduced, and the less necessary items of expense were dropped from departmental budgets. 90 It was but natural that at such a time there should be some questioning of the subvention to common schools, and it was proposed to suspend the payment of the subvention for a period of years until the finances of the state were in a more secure position. 91 In support of this plan it was argued that, while the grant might have been justified when the finances of the state were prosperous, it should not be continued at a time when heavy taxes and the severest economy were necessary for the payment of interest on the public debt. It was asserted that it was inequitable to permit certain counties to draw from the state treasury an amount equal to, or in excess of their contribu- tion to state expenses; that the payment of the debt was the first obliga- tion of the state, and that all expenditures that stood in the way of its fulfillment should be eliminated. 92 The state superintendent met these and other similar arguments for withholding the subvention with the simple statement that a withdrawal of state aid at that time might easily cause the abandonment of the free common schools started at so great an expense to both the state and the localities. 93 The outcome of the demand for economy was the reduction of the appropriation to $200,000, an amount about equal to 50 cents per taxable. What would have been the effect upon the school system had the grant been withheld at this time, can be best determined by a comparison of the relative shares contributed by the state and by the localities. From the table on page 65, it appears that in 1837, outside of Philadel- phia, the state paid about twice as much for the support of the common 88 Sec. 14, Act 4 March, 1841, P.L. p. 312. 87 Jt. Res. of 4 April, 1842 , P.L. p. 485. 88 Sec. 1, Act 29 September, 1843, P.L. of 1844, p. 6. 89 Sec. 1, Act 31 May, 1844, P.L. p. 583. 90 Act 4 April, 1843, P.L. p. 324. 91 Superintendent of Common Schools, Report (1844), p. 16. 92 For example "A Letter to the Pennsylvania Legislature on the subject of the state debt, by Publius, " a pamphlet published in 1844. 93 Report (1844), p. 6. THE SUBVENTION IN PENNSYLVANIA 67 schools as did the districts. In 1840 the subvention was slightly more than two-thirds as large as the levy of taxes by the districts, and in 1844 it was again slightly in excess of two-thirds of the local levy. In Philadel- phia, where taxation for the support of public schools had been in opera- tion for a much longer time than in the rural counties, the state subvention was, in 1840, about 28 per cent of the amount contributed by the county. 94 For the districts outside of that city, therefore, the withdrawal of state aid would have been, in 1844, a great hardship, and would almost cer- tainly have caused the law to become inoperative in many localities. Whether or not the localities were at this time so heavily burdened with other taxes as to have been unable to make up the $200,000 which a loss of the subvention would have required, or whether their failure to levy larger taxes was simply a result of indifference or hostility to the system, cannot be determined. It is certain, however, that at this time, even with the assistance of the state, local taxation was insufficient adequately to maintain the common schools. The proof of this state- ment is to be found, in part, in the assertions of the various state officers (already cited), that the one great need of the system was a larger state subvention. 95 In the second place this opinion is borne out by the fact that many districts were compelled to resort to voluntary subscriptions to extend the short terms that the public schools provided. 96 Further evidence of the inadequacy of taxes plus the reduced state aid to provide proper schools, is found in the introduction of " rate- bills," which permitted the directors to impose a fee charge of not more than one dollar for each child attending school, to be paid by the parent, guardian, or master of the child. 97 This method of supporting the schools, partly by taxation and partly by a fee payment, stands halfway between voluntary contributions and taxation for the entire support of 94 Superintendent of Common Schools, Report (1841), p. 12. 95 See also Superintendent of Common Schools, Report (1838), p. 19. 96 /ra. 120 THE SUBVENTION IN PENNSYLVANIA The growth of the old subventions and the development of the new re- sulted in an increase of the total subventions paid to charitable in- stitutions from $153,827, in 1860, to $804,280, in 1873, or a gain of 423 per cent. The total expenditures of the state increased between the years 1861 and 1873 from $5,842,000 to $6,734,000, or a gain of 15 per cent. But the large military expenditures of the year 1861 bias these figures somewhat. If the war expenditures are elimina- ted from the total in each case, we find that the increase was from $3,483,000, in 1861, to $6,648,000, in 1873, or 91 per cent. Whichever set of totals is selected, the subventions to charitable agencies increased much more rapidly than the total of all state expenditures. Comparison of the subvention to charities with that to educational institutions is also significant. The total of the grants in aid to common schools, to normal schools, for the support of the office of County Super- intendent, to the Farmer's High School, and to the Schools of Design was, in 1860, $280,368. In 1873, it was $785,038. The increase was thus about 180 per cent, or much less than the increase in the subvention to charitable institutions. The grant to charities showed the greatest increase proportionately of any subvention during this period, as is shown by Table II in the Appendix. The item of expenditure chiefly responsible, after 1865, for the growth of the subvention to charitable institutions, is the grant to Soldiers' Orphans' Schools. If we eliminate this grant from our calculations, we find that, from 1860 to 1873, the increase in the subvention to all other charitable institutions was about 120 per cent; and inspection of the table on page 121 shows that appropriations to hospitals for the care of the indigent sick and to the two institutions for the reformation of incorrigible children were chiefly responsible for this increase. The grants to the institutions for the training of the blind and the deaf mutes increased 45 per cent and 108 per cent, respectively, while the appropria- tions to houses of refuge increased 290 per cent. The subvention to hospitals for the care of the indigent sick, origina- ting in 1863, was increased steadily until, in 1873, it amounted to $90,000. Grants to institutions that cared for orphans, which amounted to only $4,400 in 1860, reached a maximum in 1865 and thereafter declined. The establishment of the Soldiers' Orphans' Schools provided for the greatest need and, therefore, smaller amounts were granted to other con- cerns. Of course, many of the institutions that cared for this special class of children were privately owned and privately managed. 8 8 ' 3 S S o S fill 5 5' O O np-i >^ ff ?i' o* 52. ! I 1 OO OO OO OO OO OO OO OO OO OO OO OO GO OO ^I^I^J-^J^J^C^lOJKJi 'i l 'H fS OOOOCnOOOOOi O Ni CfiCn O O 3 ^. W Kj 3 O C n II I. 19 boOONi-*CnC/i NJOOC/iO'OO c/i ^p c/i ^5 ^/* O O O O O ? 0)| 122 THE SUBVENTION IN PENNSYLVANIA The causes for the increase of charitable expenditures may be divided into those which affected all expenditures and those which produced a disproportionate augmentation of appropriations for charity. Among the causes operative to produce a general increase of appropriations were the growth of population, the extension of the sphere of state action, and the fall in the purchasing power of money due to the inflation of the currency by the green backs. 132 First among the special causes for the increase of expenditures for charity was the Civil War. 133 During the war thousands of men were made invalids by wounds or by the ravages of disease. In so far as these men were unable to maintain themselves they became public charges and the augmentation of the subvention for the indigent sick during the years 1863 to 1865 is largely due to the necessity of caring for them. The war gave rise to another class of dependents whose maintenance cost the state more than all others combined. These were the orphans of the men who served in the Pennsylvania regiments. At first the state sought to provide for them by making larger appropriations to orphan- ages, but their numbers were so great, and their claim upon the generosity of the state was so patent that special provision was soon made in their behalf. The earliest provision for this class of dependents was made in 1864 when the governor of the state was authorized to receive and to expend the sum of $50,000, which the Pennsylvania Railroad had given for their care and education. 134 In 1865 the legislature appro- priated $75,000 from the public treasury 135 and by 1873 the annual expenditure for this purpose amounted to nearly $500,000. Only a part of the funds expended for this purpose should be classed as subventions. Unfortunately the accounts are not explicit enough to enable a separation of the amounts directly expended by the state from amounts granted to individuals and to private corporations that cared for the children. Special boarding schools under the control of the state were established and the managers were paid a stipulated amount for each child that was cared for. Grants were also made on 132 The rise in the cost of living was made an excuse for asking increased appro- priations to charitable institutions. See Board of Public Charities, Report (1870), p. 129. 133 This was recognized and commented upon at the time. See the statement of Mr. Harry White, in the Senate, in 1869, Legislative Record (1869), p. 1366. 134 Act 6 May, 1864, P.L. p. 869. Act 23 March, 1865, P.L. p. 40. THE SUBVENTION IN PENNSYLVANIA 123 the same basis to general orphanages that received the children of the soldiers. Lump-sum appropriations also were not uncommonly made to these latter institutions. During the nine-year period, 1865 to 1873 inclusive, the legislature appropriated $3,882,298 for the support of these children. 136 The rate of increase of the appropriation was much more rapid than that of the number of children supported at state expense. In 1866, when -there were 2,681 children in these schools, 137 the state paid $250,000 for their maintenance. In 1873, when the number of children was 3,167, 138 the payment was $465,348. In other words, an increase of 18 per cent in the number of children was accompanied by an increase of 86 per cent in the appropriation paid. Three reasons can be assigned for the dis- proportionate increase in expenditures for this purpose. First, as the age of the children increased the per capita cost of maintenance became higher; second, as the service developed better accommodations were provided ; and, third, as the service expanded, inefficiency, extravagance, and graft also developed. 139 The second reason for the increase of the subvention to charity during this period was the elaboration of the treatment of defectives, the sick, and incorrigible children. A good example of this elaboration was the development of the house of refuge at Philadelphia during the earlier period. In the years 1860 to 1873 the establishment of a special institution for the treatment and education of feeble-minded children is another example. There was a tendency to differentiate classes among the inmates of the local almshouses. The insane were being sent more frequently to specialized hospitals to receive the benefit of expert medical knowledge and of trained attendants; children who were blind or deaf and dumb were sent to the institutions especially provided for them; and the incorrigible were no longer committed to the local jails, but were placed in one of the two houses of refuge. As long as these special classes remained in the local almshouses or, as was often the case with the blind and the deaf mutes, in the homes of their parents or their 136 Exec. Docs. (1873), Annual Report of the Superintendent of Soldiers' Orphans' Schools, p. 5 . This includes subventions and amounts expended directly by the state. 137 Exec. Docs. (1866), Annual Report of the Superintendent of Soldiers' Orphans' Schools, pp. 9-10. 138 Exec. Docs. (1873), Annual Report of the Superintendent of Soldiers' Orpahns' Schools, p. 4. 139 Exec. Docs. (1873), Annual Report of the Superintendent of Soldiers' Orphans' Schools, p. 3. 124 THE SUBVENTION IN PENNSYLVANIA relatives, the state incurred no financial liability. But as soon as special institutions for their treatment were developed the state was asked to contribute to the revenues of these concerns. A third cause for the disproportionate increase of the subvention to charitable institutions during this period was the opportunities that they offered for political manipulation. This was especially important in the case of hospitals and orphanages. These institutions could be estab- lished on a small scale at many different points within the state, and consequently many charitable and religious organizations began to demand that local representatives in the legislature procure for them a share in the state's bounty. The large increase of the subventions to charitable institutions, which took place during the years 1860 to 1873, did not, of course, occur without occasioning a great deal of comment and some opposition in the legisla- ture. This opposition gathered sufficient strength in the Senate, in 1863, to result in the appointment of a committee to investigate the conduct of the various institutions that received state aid and to recom- mend a proper policy of the state toward them. 140 In their report this committee recommended that state grants to local charitable institu- tions be very much restricted. It was their opinion that general hospi- tals, orphanages, and homes for the aged should not receive subventions in cases where it could be demonstrated that they were of a purely local character. 141 Local charities, they believed, should be supported by local taxation and not by taxes imposed upon the entire state. 142 Such were the theoretical conclusions of the committee, but their practical recommendations were surprisingly mild. They advised that no appropriation should be made to an institution that had not previously received state aid, unless a committee of the legislature should investigate it and report favorably. 143 They also recommended that the subvention to the two houses of refuge be discontinued and the cost of their main- tenance be made a charge upon the counties from which the children were committed, 144 and that no further grants be made to the Penn Asylum for Widows and Indigent Single Women. 145 It is noticeable that the 140 Resolution of 6 April, 1863, Sen. Jour. (1863), p. 566. 141 Report of the Committee, Sen. Jour. (1864), p. 265. 142 Idem, pp. 261 and 265. This report was made before the state tax on real estate was repealed. 143 Idem, p. 266. 144 Idem, p. 265. 146 Idem, p. 263. THE SUBVENTION IN PENNSYLVANIA 125 report of the committee deals very gently with the subject of grants to orphanages and general hospitals. As a matter of fact the state had not at that time begun to make annual appropriations to hospitals and the subventions to orphanages were unimportant. 146 The committee was scarcely consistent, however, in classing the institutions for the reforma- tion of delinquent children among the "local" charities. It seems to have mattered little what the committee recommended, for the legislature, in 1864, 1865, and in 1866, made larger grants to charities than ever before. This was especially true of the subvention to the two houses of refuge, the payments to which amounted to over $91,000 in 1866. 147 But the movement to restrict the subvention for charities to institutions of state-wide interest was not dead. In 1865, Governor Curtin advised the legislature that the practice of making donations to charities was fast running into a great abuse. " Houses of refuge, and insane, blind and deaf asylums, appear to be proper sub- jects of State bounty, because their objects are of public importance, and to be useful, and well and economically managed, it seems to be necessary that they should be more extensive than would be required for the wants of a particular county. But in our system, ordinary local charities are left to the care of the respective localities, and to give the public money for their support is really to tax the inhabitants of all the counties for the benefit of one. " 148 This argument that a subvention to a local charitable institution was an unjust discrimination against those parts of the state that received no such grant was repeated many times during the next ten years. Obviously, it is strongest when the subven- tion is made to a few localities and when the funds for making it are derived from direct taxation upon the entire state. The legislature did not, however, respect the Governor's advice any more than they did the recommendations of the Senate committee of 1863. Grants were multiplied and increased in amount the very year that the governor sent his warning message. Nor does it appear that the governor believed sufficiently in the necessity of restricting these grants to cause him to use his veto to discourage the legislature from making them. And in the meantime the amount of the subventions continued to increase rapidly. The people who favored larger appropriations to charities had suf- ficient influence at their command to secure increases in the annual 148 See table on page 121. 147 See table on page 121. "'Pennsylvania Archives, IV Ser. VIII, pp. 646-647. 126 THE SUBVENTION IN PENNSYLVANIA appropriations, but not to prevent discussion and investigation by the legislature. In 1868 another committee of investigation was appointed in the Senate. The report, which they made in 1869, reiterated, in the main, the recommendations of the committee of 1863. In their opinion the state should not contribute to the support of purely local charities. The penitentiaries, the two houses of refuge, the asylums for the insane, the schools for the blind, the deaf mutes and feeble-minded children had valid claims upon the state because of the nature of the services they performed. 149 And because of the peculiar obligation of the state to the veterans of the Civil War, they believed that soldiers' orphans should also be educated and cared for at state expense. 160 This committee laid down four practical rules for the guidance of the legislature in determining what charitable and correctional institutions should be supported by the state rather than by local governments or private philanthropy: (I). The state should undertake services that it could perform at less expense than other agencies. 151 (II). The state should do what it could do better than other agencies. Thus, while it was highly desirable to leave a large amount of charitable relief to the localities, because of the well-known tendency of the state government toward extravagance, certain services could not be economi- cally provided by the smaller governmental agencies. These services were proper objects for state aid. 152 (III). The state should do what belonged to the state as a whole to do. The duty of the state to care for such classes as indigent defectives, the indigent sick, and orphans, who had no legal residence was obvious. 153 (IV). The state should do what it had incurred an obligation to do. Thus, the care of soldiers' orphans was an obligation that rested upon the state as a whole, since it was in the service of the state that the fathers of these children had lost their lives. 154 One of the principal objections to the subventions to charity, as they existed in 1868-69, was the planless, capricious manner in which they were made. Certain institutions had received a single grant; others had been encouraged for a number of years and then summarily cut off. 149 Sen. Jour. (1869), pp. 156-157. f/MI. Idem, p. 155. Ibid. Idem, p. 156. THE SUBVENTION IN PENNSYLVANIA 127 Some institutions had received aid for a period of years, had then been denied appropriations for a time, for no apparent good reason, and had again been reinstated in favor for a third period. Flagrant discrimina- tion existed between institutions that were equally deserving, some receiving liberal appropriations each year, while others were completely neglected. In short, the subventions had been increased and diminished, granted and refused, in good measure from personal considerations. 155 The committee probably did not intend to apply this statement to all the subventions, for some were made in accordance with fixed rules. Thus the annual grants to the institutions for the blind, the deaf mutes, and feeble-minded children were made on the basis of the number of indigent children they received. On the other hand, the strongest terms that the committee could have employed would have been justified in characterizing the grants to hospitals, to the asylum for the insane, to the house of refuge, and to orphanages. It is practically impossible to discover the method em- ployed by the legislature to determine the amounts to be appropriated for such institutions. Reports were required from the larger concerns,, but these documents are nearly unintelligible from an accounting stand- point and the information they contain is meagre in the extreme. 156> Of course, very little aid in making scientific appropriations could have been derived from these reports ; and the admission of one member of the General Assembly that, " we put them in our desks, and in the hurry of business (sic) we never look at them again, " 157 was probably typical of the attitude of a majority of the legislature. An impartial observer would say that the reports received all the atten- tion they deserved. Sometimes the officers of the institutions appeared before the legislature to explain their needs. 158 There is little doubt that the total amount of the subventions and the distribution in any year were largely determined in committee according to the well-known methods of politics; but no echo of these proceedings, as a rule, reached the newspapers or was recorded in the official journals. 168 Report of the Committee, Sen Jour. (1869), p. 154. 158 The accounts abound in such entries as, "to cash received from the Birch legacy," (capital or income?), "to cash Harrisburg and Lancaster Railroad," or "interest, contribution, etc. " 157 Mr. Everett, in the Senate, 18 March, 1869, Legislative Record, p. 1339, col. 1. 168 See, for example, a statement in the Annual Report (1849) of The Institution for the Blind, pp. 7-8. 128 THE SUBVENTION IN PENNSYLVANIA Those who urged reform of the appropriations to charities, in 1869, seem to have concentrated their efforts in an attempt to compel the legis- lature to observe some sort of plan in making the subventions. The four rules laid down by the Senate committee were but a part of the program for accomplishing that reform. In accordance with the resolu- tion which provided for their appointment 159 the committee considered the advisability of creating a state board that should inspect or investi- gate the applicants for state aid and report the result of their findings to the legislature. After some time they proposed a board of five to be appointed by the Governor. The members were to serve without pay. The board was to be empowered to employ a general agent who should devote all his time to the investigation of the various institutions that received state aid and prepare systematic reports for the information of the legislature. The bill drawn by the committee was adopted with slight modifications by the General Assembly. 166 The act creating the board made it specifically their (or their agent's) duty to visit all subsidized institutions and to " ascertain whether the moneys appropriated for their aid are [were] or have [had] been eco- noiru\caUy and judiciously expended; whether the object of the several institutions are [were] accomplished; whether the laws in relation to them are [were] fully complied with; whether all parts of the state are [were] equally benefited by them. . . ," 161 The board was given power to call witnesses and to compel the production of books, accounts, and papers. 162 Finally, the act made it the duty of the general agent to receive requests for state aid from the various institutions and to transmit them with his recommendations to the legislature. 163 It is obvious that the board was not created to exercise administra- tive powers. No institutions were placed under its control; it could not coerce those that failed to comply with the law; and it had no actual authority over the amount of the subvention going to any institution. Its chief duties were those of inspection and publication. It was devised to secure information for the guidance of the legislature, but even for that purpose the act creating the board was faulty. Members who re- 159 The committee was composed of the Superintendent of Common Schools and two senators. 180 Act 24 April, 1869, P.L. p. 90. U1 ldem, p. 91. Idem, p. 90. **Idem, p. 92. THE SUBVENTION IN PENNSYLVANIA 129 ceived no pay could not have been expected to devote much time to their duties. It followed, therefore, that the greater part of the work of inspection fell upon the general agent. But it is inconceivable that one man could, with the limited office force provided, have inspected effi- ciently the accounts and the quality of service of the various institutions that received state aid. Very little was actually accomplished by the board before 1873, but the attitude of the agent was generally favorable to larger appropriations for charity. His report for 1872, which urged larger appropriations from the state treasury, contains an elaborate discussion of the problem of caring for destitute and neglected children. 164 In his opinion there were three possible methods of caring for these dependents. In the first place, the state might provide large institutions in which the children would be fed, housed and educated. But this method was rejected with the statement that " Large establishments cannot be managed so as to embrace all the benefits of family influence, which are regarded as pecu- liarly important to the successful education and training of children." 165 The second possible method, that of requiring the counties to provide for the children, was dismissed with brief consideration. 166 A third possibility was the establishment of small local institutions by philanthropic organizations with state aid. These homes, which the agent regarded as among the most useful institutions in the common- wealth were, in his opinion, the proper establishments to have the care and training of neglected children. 167 They provided the home life necessary for the proper education of the child, and, since they were supported in part by private contributions, it was less costly for the state to aid them than to establish homes under its own control. 168 This analysis of the problem seems to have been accepted for many years following the general agent's report, and the arguments in favor of the third scheme have been used to justify and to defend the grants to private institutions even to the present time. His analysis of the prob- lem, therefore, deserves examination. The argument that state institu- tions cannot bring to bear upon the child the same home influences exerted by small private institutions is based upon the tacit assumption that if the state takes over the work, it must of necessity assemble the 194 Board of Public Charities, Report (1872), p. 5. 167 Ibid. 130 THE SUBVENTION IN PENNSYLVANIA children in a few very large homes. This assumption is not, however, a valid one. There is no reason why the state institutions should not be small enough to secure, so far as the question of numbers is concerned, all the benefits of the private institution. Furthermore, since each state home could be constructed upon the plan found to be most desirable, there is good ground for believing that such public institutions would not only provide better physical environment, but also better education and better moral surroundings than would heterogeneous private or- phanages. On the other hand, it must be admitted that the state cannot hope to secure the same quality of service from its employees that is sometimes given by those who devote their lives to the training of friend- less children in private institutions. The agent's summary rejection of the local governments as the proper agencies for caring for orphans was also based upon an unwar- ranted assumption. At the time his report was written destitute children were usually committed to the county almshouses. Their education and moral instruction were frequently neglected and the association with adult paupers was not such as might be expected to inculcate habits of industry and morality. But the agent did not, in his published report, sufficiently consider the possibility of providing separate and distinct homes for destitute children. Of course, there is no evidence to show that all, or even a majority of the counties could have been induced at that time to undertake the expense of constructing and maintaining separate institutions. But it is probable that if the state had stood ready to aid them as liberally as it did the private institutions, a majority would have been willing to provide suitable orphanages. Furthermore, his argument that it was cheaper to aid private institu- tions receiving donations from individuals, was based on the assumption that these donations either would not be forthcoming, or could not be efficiently applied unless the state aided the institutions to which they were given. The possibility of state and private homes or orphanages serving the same need in the same community received no consideration. Yet the experience of many states, in which private and public charity have been kept almost entirely separate, shows that hospitals and or- phanages as well as other agencies of philanthropy will be established, if there is need, by private benefactions even though the state maintains similar institutions. Finally the argument ignored the saving that might come from cen- tralized administration of the service. If the state had taken over the relief of these dependents it could have assembled them in institutions THE SUBVENTION IN PENNSYLVANIA 131 of the most desirable size. Supplies could have been purchased at reduced rates and other economies not available to private institutions could have been introduced. It has never been proved that the state saved a dollar by aiding private institutions that also received donations from individuals. Having presented the positive arguments in favor of the subventions, the agent then proceeded to the current objection that the relief of destitute children was a local service and should be supported by local taxation. In the first place, he correctly observed that many of the private institutions were not strictly local in the scope of their services since they received children from relatively wide areas. 169 Secondly, he observed that although the poor law required each locality to assume the responsibility for its orphans, that legal principle should not be allowed to obscure the fact that such children were the wards of the state, and the state was responsible for their proper care and education. 170 Here, of course, the word "state" was used in two senses and the argu- ment is question-begging. In the third place, the care of destitute children and the reformation of wayward children was clearly not a mat- ter of purely local interest. Children that grew up in ignorance and immorality in one county were, he argued, very likely to migrate to other counties and there become criminals or paupers. The neglect of one county would thus impose burdens upon other communities. 171 A fourth argument for the subvention to local charities was derived from the analogy of the grant in aid to common schools. The latter was justified on the ground that the schools were necessary for the pro- tection of republican institutions, and, in the same way, the subvetion to charities might be justified. 172 Finally, the agent pointed out, the common objection that the institutions receiving subsidies were located in large cities and that the effect of the subvention was to favor these cities and that the effect of the subvention was to favor these cities at the expense of the country districts, was not a valid one. In the first place, the denser population of the cities caused a large number of cases neces- sitating relief to occur in those cities; and, in the second place, many of the people who received aid within the cities had but recently come from the smaller towns and the rural parts of the state. 173 W8 Board of Public Charities, Report (1872), p. 6. 170 Idem, pp. 6-7. 171 Idem, pp. 7-8. 172 Ibid. 178 Idem, p. 8. 132 THE SUBVENTION IN PENNSYLVANIA It is evident that all the arguments advanced by the general agent in favor of subventions to privately owned and managed institutions are beside the point, saving only the fallacious argument that the state should care for the wards of the state. Everyone would probably concede that wherever private benevolence fails properly to care for orphaned children, the public authorities should come to their assistance. The next question is whether the commonwealth or one of the local gov- ernmental agencies should undertake the work. This the agent failed to discuss in any adequate manner. He merely assumed that the locali- ties could not be induced properly to perform the service. It may be granted, for the sake of the argument, that the common- wealth should assume responsibility for the service. But it by no means follows that if it does assume this responsibility, the best method of administration of the service is to turn it over to self-appointed in- dividuals and voluntary organizations, whose expenses are in part defrayed out of the public treasury. Two other methods of administra- tion were open: The state might have maintained its own institutions or it might have aided those established by the counties or towns. By passing quickly over the question of the method of administration and by laying much stress upon the obligation of the state to protect and educate needy children, the agent made it appear that the state was under high moral obligation to assist private orphanages. The influence of the board at this time was decidedly in favor of augmenting the sub- ventions to private charitable institutions. Although the legislature had failed to limit and to systematize the appropriations to private institutions, and although the board of chari- ties became the advocate of more liberal subventions, opposition to the state's policy in this regard continued to grow. Precisely what was the source of this opposition has not been determined, but it was represented by a group of vigorous and able men in the convention that met in 1872 to revise the constitution of the state. Among the reforms expected of this convention was the limitation of the power of the General Assem- bly. The limitations expected were of two sorts: limitation of the power to pass special legislation relative to local government, and limitation of the power to spend money. In this connection we shall discuss only those sections of the new constitution that dealt with appropriations to private institutions. The first restrictive section 174 provided that no appropriations except 174 Art. Ill, Sec. 15. See Thorpe's Federal and State Constitutions, V., p. 3128. THE SUBVENTION IN PENNSYLVANIA 133 for the expenses of the legislative, executive, and judicial departments, for the common schools, and for the interest on the public debt should be included in the general appropriation bill. The object of this sec- tion was, undoubtedly, to prevent the inclusion of small appropriations of doubtful merit in the same bill with the important appropriations for the support of the state government. During the period after the Civil War small grants to charities were sometimes passed in that manner. Section 15, Article III, has effectually eliminated this evil. Another section of the same article 175 dealt more directly with the question of subventions. It provided that "No appropriation shall be made to any charitable or educational institution not under absolute control of the Commonwealth, other than normal schools established by law for the professional training of teachers for the public schools of the state, except by a vote of two-thirds of all the members elected to each House." This section does not apply to the subvention to common schools since the schools were under the control of the local governments, which is equivalent as far as this provision is concerned, to state control. It is obvious that this section, which is in force at the present time, requires any appropriation bill that makes a subvention to a private charitable or educational institution to secure a vote of two- thirds of the membership of each house in the General Assembly. It was undoubtedly supposed that only the more meritorious institutions could command so large a majority, and, therefore, that the total amount of the grants would be reduced and that only institutions of state-wide importance would receive appropriations. It was also believed that to require so large a majority would prevent log-rolling and corrupt practices in the passage of these appropriation bills. The debate on this section brings out these points very clearly. Statements of the delegates not only prove the intention of the conven- tion, but also throw considerable light on the opinions then prevalent as to the manner in which the grants were obtained. One delegate stated very frankly that in the past the treasury had been at the mercy of combinations of local interests and that he favored the section as a means for making such combinations ineffectual. 176 Charges of corruption were frequent. One member said, "It is necessary to stop this corrup- tion at Harrisburg in granting these appropriations to hospitals and 175 Sec. 17, Art. III. 176 Thus Mr. H. G. Smith, Convention to Amend the Constitution (1872-73), Debates, U,p.645, col 1. 134 THE SUBVENTION IN PENNSYLVANIA sectarian schools." 177 Another delegate in speaking of the Marine Hospital (at Erie), which was located in his own county, said, "It was not because an institution of that kind was specially wanted there, but because we were then represented in the legislature by one who cared more for carrying out his own opinions than serving the best interests of his constituents. And in this instance it happened that a friend in Erie made some money and cheap glory out of it. ... " 178 It was also alleged that some of these institutions were "got up only to make positions for somebody and to make a splurge in the world. " 179 It is, of course, not certain what the delegate who charged that " cor- tuption" was used to obtain the appropriations, had in mind. But others were more specific. One member of the convention asserted that agents had been hired to go to Harrisburg to lobby for the subven- tion bills; 180 while another said that to his knowledge money had been used directly to "engineer" at least one appropriation bill of this sort. 181 On the other hand, Ex-Governor Curtin vehemently denied that bribery had played an important part hi securing the appropriations. 182 The apparent willingness of many members to vote for all the subventions, good and bad alike, was, of course, not due to their having been corrupted by money payments. Many of the subventions were too small to be divided in this way and it is scarcely conceivable that a majority of the legislature could have been bribed to vote for so many bills. The best explanation of the support given bills of this sort was set forth by Mr. McCandless in the Senate in 1864. A bill making an appropriation to a privately owned asylum, which was located in Mr. McCandless' district, was before the Senate. In the course of debate, that gentleman de- clared that he would willingly vote against the measure if the Senate would adhere to a resolution not to make any more appropriations to local chartity . But on the other hand, if they would not make and adhere to such a resolution, he could not oppose an appropriation to an institu- 177 Mr. W. H. Smith, Convention to Amend the Constitution ( 1872-73), Debates, II, p. 681, col. 1. 178 Mr. Walker, of Erie County, idem, II, p. 647, col. 2. 179 Mr. Lilly, idem, II, p. 637, col. 2. 180 Mr Lilly, idem, II, p. 638, col. 1. 181 Mr. W. H. Smith, Idem, II, p. 638, col. 2, and p. 639, col. 1. l **Idem, II, p. 660, col. 1. For a statement in regard to the political morality of the legislature during the sixties, see A. K. McClure's account of the manner in which an appropriation of half a million dollars for the relief of persons who had suf- fered from the border raids of the confederates, was secured. Old Time Notes of Pennsylvania, II, p. 178. THE SUBVENTION IN PENNSYLVANIA 135 tion within his own district. 183 As long as the constitution permitted the subventions and the people expected their representatives to "get something'* for their districts, it was well-nigh impossible to eliminate appropriations to undeserving institutions. Undoubtedly it was general- ly assumed by those not well versed in the ways of the politician that section 17 would make it possible for the more scrupulous majority of the legislature to put an end to improper and undeserved grants. Section 18 of Article III imposed further restrictions upon the power of the legislature to make subventions to privately owned and managed institutions. 184 This section reads, "No appropriation, except for pen- sions or gratuities for military services, shall be made for charitable, educational, or benevolent purposes, to any person or community, nor to any denomination or sectarian institution, corporation, or associa- tion." On the face of it, this section would seem absolutely to prohibit subventions or grants to an institution controlled by a religious organiza- tion engaged in charitable, educational, or benevolent undertakings. Debate on this section showed that the proponents of the prohibition had chiefly in mind grants to orphanages and hospitals controlled by the church. 185 One delegate stated specifically that the state subventions to religious charities were bringing the churches into politics, and that the result was extravagance in appropriations, since attempts were natur- ally made to satisfy the demands of all denominations and sects. 186 A further reason advanced for the support of this section was that the state subvention was discouraging private contributions to charitable institutions. It was alleged that private philanthropists no longer felt that there was a distinct and separate field for their activities and that private institutions came to rely more and more upon state support. 187 Sections 17 and 18 did not, of course, pass the convention without opposition. Very few of the delegates ventured to deny that many abuses existed, that apropriations were frequently misused, and that the legislature should be more careful in making the subventions, but the sections were opposed by those averse to limiting too closely the powers 183 Legislative Record, p. 817. 184 Thorpe's Constitutions, V, p. 3128. 186 See general statements by Mr. Bartholemew, Convention to Amend the Con- stitution (1872-1873), Debates, II, p. 676, col. 1; by Mr. Dallas, idem, II, p. 686, col- 1 ; and by Mr. Newlin, idem, II, p. 686, col. 2. 186 Mr. D. N. White, idem, II, p. 688, col. 1. 187 Mr. D. N. White, idem, II, p. 688, col. 1; and Mr. Bartholemew, idem, II, p. 676, cols, land 2. 136 THE SUBVENTION IN PENNSYLVANIA of the General Assembly. 188 It was also denied that the subventions were chiefly of local benefit, for, although the institutions were located in the large cities, they received people from much wider areas. 189 Final- ly, it was denied that the subventions tended to discourage private bene- volence. 190 On this last point no evidence of a substantial character was introduced either by the opponents or advocates of the subventions. And, although there has been much discussion of the subject in recent years, no comprehensive investigation of the accounts of a large number of institutions, which would prove or disprove the assertion, has ever been made. Section 19, Article III, deals briefly with appropriations for the support of soldiers' widows and orphans. 191 It permits grants to private institutions that assist either of these special classes, but the moneys so appropriated must be used directly for the support of such beneficiaries and not for the general purposes of the institutions. The period 1844 to 1873 witnessed only a very slight development of the subvention to charitable institutions before the year 1860. Be- cause of the necessity for economy in state finance there was no oppor- tunity to make large appropriations for charity. With the Civil War, however, came a great increase in the number and amount of these sub- ventions. The causes contributing to this increase were the needs arising out of the war, the increase of state revenue, the elaboration of govern- ment, the development of political interests that found the subventions useful for accomplishing their purposes, and the growth of a public opinion which demanded appropriations for local purposes. For the most part the subventions were made in a haphazard manner without serious attempts on the part of the legislature to determine the total amount or its distribution in accordance with rational principles. State audit and control of the amounts appropriated were almost entirely absent. Although a majority of the legislature was favorable to the increase of the subventions, many members regarded the growth of these appropriations as undesirable in its effects upon state finance, upon some of the institutions subsidized, and upon the distribution of the burden of taxation among the communities of the state. The opposition to the subventions resulted in the insertion of certain prohibitions into the 188 Mr. Wayne MacVeagh, idem, II, p. 636, col. 2; and Mr. Hunsicker, idem, II, p. 661, col. 1. 189 Mr. Darlington, idem, II, p. 638, cols. 1 and 2. 190 Mr. Darlington, ibid. 191 Thorpe's Constitutions, V, p. 3128. THE SUBVENTION IN PENNSYLVANIA 137 new constitution in 1873, which, it was hoped, would eliminate all but the least objectionable of these grants. MISCELLANEOUS SUBVENTIONS, 1844 to 1873 Subventions during this period for purposes other than those of educa- tion and charity were of no significance, and Table II, Appendix, shows that only small amounts were expended for other services. These appropriations were chiefly for the benefit of the State Agricultural Society and the Colonization Society and for the assistance of the grow- ers of silk worms. But so small were they in amount that it cannot be said that the state pursued any definite policy toward the organizations receiving them. The amount paid to them is to be regarded as inciden- tal and unavoidable leakage from the state treasury. CHAPTER VI THE RELATION OF STATE AND LOCAL FINANCES, 1874 TO 1916 THE DISTRIBUTION OF GOVERNMENTAL FUNCTIONS Changes in the number and importance of the services performed by the state and local governments during this period were of three sorts. Old functions of both state and local governments were elaborated and made more efficient. New types of service were devised, which were sometimes added to the functions of the state and sometimes to those of the localities. Finally, certain duties were transferred from the local to the state government. A contemporary account of the functions of local governments, pub- lished in 1885, points out that while the services performed by the locali- ties were few and simple they were, on the other hand, relatively onerous. To the townships were committed the care of roads and bridges, the maintenance of schools, and the support of the poor. 1 But, under certain conditions, the county was obliged to assist the townships in building bridges, 2 and in a few cases the county and not the township assumed the burden of poor relief. Moreover, the state shared with the localities (township or county) the burden of caring for indigent defectives. 3 The counties, at this time, were charged with the support of the courts, except that the state paid the salaries of all judges learned in the law but apparently not the salaries of lay judges, nor of police magis- trates. The cost of maintaining prisons and workhouses for the deten- tion of persons convicted of minor offenses was also a county or municipal charge. In addition, each county was required to pay the expense of maintaining all criminals committed to the state penitentiaries from within its borders. The state paid only the overhead expense of main- taining the prisons. Other functions of the county government were the assessment and collection of local taxes and of certain state taxes, and the supervision of general and local elections. It should also be noted that 1 James, E. J. The Public Economy of the Commonwealth of Pennsylvania, Wharton School Annals of Political Science, No. 1. (1885), p. 58. 2 Idem, p. 59. /&#. 138 THE SUBVENTION IN PENNSYLVANIA 139 the state required the localities to bear the expense of maintaining their indigent insane in the state hospitals. 4 In 1885, therefore, the greater part of the most burdensome functions of government was borne by the localities. Professor James, in the article cited, pointed out that the total state expenditure for general purposes was, in 1882, about $5,000,000, 5 while in the same year the counties levied a tax of $15,000,000 and the school districts one of $6,000,000. These figures did not include township levies for purposes other than the support of the schools. Roughly estimated, total local expenditures must have amounted to more than $25,000,000. 6 The principal financial obligations of the state at this time arose from its performance of the following functions: (1) the establishment and maintenance of prisons and asylums; (2) the maintenance of the general governmental functions performed by the governor, the legislature, the auditor general, etc.; (3) the administration of justice; (4) the military. Since 1885 the tendency has been for the state to take over certain services performed by the localities. Thus the recent reports of the Auditor General show large expenditures for state hospitals for injured miners, for state dispensaries and sanitoria, for uniform primary elec- tions, for the state police system, and for the construction and main- tenance of state highways. 7 In addition to these important charges the state has undertaken a number of minor services. 8 Apparently the localities have thus been relieved of a part of the services which they regularly performed in 1885. But it must not be inferred that the real burden of local government was less in 1916 than in 1885; for the ser- vices which the state has taken over are mostly developments of the last thirty years. Furthermore, such services as education, road building and maintenance, sanitation, charitable relief, recreation, and police have undergone tremendous elaboration within the same period, and the state has by no means taken on the responsibility for all these additions. 4 James, E. J. The Public Economy of the Commonwealth of Pennsylvania, Whartan School Annals of Political Science, No. 1, (1885), p. 60. 6 Idem, p. 67. 6 Idem, pp. 67-68. It is not clear whether the writer intended to include in this estimate expenditures of the cities and the boroughs. 7 This list is intended to include only those services which the state administers directly. The uniform primaries are jointly administered by state and locality, hence they are partly state and partly local, but no separation can, of course, be made. Compare the "Summary of Payments," in the Reports of the Auditors General for the years 1885 and 1916. 140 THE SUBVENTION IN PENNSYLVANIA THE DEVELOPMENT OF STATE TAXES ON CORPORATIONS The basis of the present system of state taxes in Pennsylvania is found in the act of 1844. 9 This act included or added to all the earlier taxes for state purposes and gave the state a system of taxes upon real and personal estate, upon the stock of corporations, on bank dividends, on collateral inheritances, and on county, municipal, and other local government loans. During the sixteen years following 1844, no impor- tant new taxes were added to the state revenue system. Such changes as were made in the rates of existing taxes or in the manner of their assessment were intended either to increase state revenue or to accom- plish a more equitable distribution of the burden of government among taxpayers. The changes in the revenue system between 1861 and 1874 involved the introduction of several new and important taxes, and the repeal of the state tax on real estate. Among the new duties, which were either corporation or special business taxes, were the tax on the gross receipts of private bankers, 10 the tax on the gross receipts of transportation com- panies, 11 the tax on the net earnings of practically all corporations doing business with the state, transportation companies excepted, 12 the tax on traffic carried by transportation companies, 13 the tax on loans of private corporations, 14 and the tax on the premiums of foreign insurance com- panies. 15 While the state was thus enriching its treasury by the invention of tax burdens to be applied to corporate wealth and income, the localities were left with about the same revenue resources as in 1844. No new local 9 As was pointed out in Chapter IV, the first special tax on corporations was that imposed upon banks by the act of 1814 (Act 21 May, 1814, P.L p. 169). In 1840 a tax was imposed upon the capital stock of corporations and jointstock companies (Act 11 June, 1840, P.L. pp. 612-614). The provisions of this act were changed in some particulars by the act of 1843 (Act 31 March, 1843, P.L. p. 121). It should also be noted that a state tax was imposed upon personal property in 1831 (Act 25 March, 1831, P.L. pp. 206 ff.). An inheritance tax for state purposes had also been in opera- tion for more than a decade in 1840. 10 Act 16 May, 1861, P.L. p. 708. 11 Act 23 February, 1866, P.L. p. 82. Sec. 2, Act 30 April, 1864, P.L. pp. 218-219. 13 Act 30 April, 1864, P.L. p. 218. 14 Act 30 April, 1864, P.L. p. 219. This tax was new in the method of assessment. The expedient of stoppage at the source was substituted for assessment by local asses- sors. See Eastman, Taxation in Pennsylvania, II, pp. 686-687. 14 Sec. 10. Act 4 April, 1873, P.L. p. 26. THE SUBVENTION IN PENNSYLVANIA 141 taxes were introduced. In one important respect, however, the locali- ties suffered a gradual diminution of their revenue resources. When the state imposed its taxes upon corporate wealth and income, it fre- quently exempted the property of the corporation in whole or in part from local taxation. 16 In 1844, when a state-wide tax was levied upon real estate owned either by natural persons or by corporations, the holdings of neither class of owners were exempted from local levies. But the gradual exemption of a great part of corporate wealth from local taxation in later years caused the burdens of supporting local government to bear heavily upon real estate in the hands of natural persons, and land owners began to protest against these arrangements and to demand a readjustment of the burden of taxation. In 1857 the Board of Revenue Commissioners reported that real estate was paying a disproportionate share of the cost of state and local government. 17 The Commission to Revise the Revenue Laws reported in 1863 that in certain townships state and local levies combined amounted to three per cent on the assessed value of the real estate. 18 Reports of the Board and of the Commission also contained much evidence of gross inequality in the assessment of the state tax on real and personal property. The Commission proposed that the state increase corporation taxes and repeal the state tax on real estate. These proposals were designed to increase the revenue resources of the local governments, and to bring about a more equitable division of revenue resources between the state and the localities. Furthermore, the abolition of the state tax on real estate was advocated because of the gross inequalities that prevailed in its apportionment among the counties. 19 These arguments seem to have carried weight with the General Assembly for, in 1866, the state tax on real estate was repealed. 20 16 As early as 1874 at least one state official had pointed out the effect of separation of sources. At that time about two-third of the state revenue was derived from the corporation taxes. "But it should be kept in mind that by far the larger amount of corporate wealth is not taxed at all for county, city, school, road, or poor taxes. The large state tax they [the corporations] pay is not even a full equivalent for their escape from nearly all local taxation. " Bureau of Statistics, Second Annual Report (1873-74), p. 155. 17 Leg. Docs., (1857), Report of the Board of Revenue Commissioners, p. 613. 18 Leg. Docs. (1863), Report of the Commissioners to Revise the Revenue Laws, p. 500. 19 Ibid. 20 Act 23 February, 1866, P.L. p. 83. 142 THE SUBVENTION IN PENNSYLVANIA The demands of the agricultural interests had now been satisfied and for nearly two decades no serious complaints of a lack of revenue for local purposes reached the legislature. It is pertinent to inquire at this point whether at any time during the period 1844 to 1866, land was actual- ly overburdened, or whether the movement which began during the latter 'fifties and which resulted in the repeal of the state tax in 1866, was merely the successful attempt of one industrial class to escape a part of its just share of taxation. The real motives that determine the action of deliberative bodies are always difficult to discover. Moreover, the motives and causes of action paraded before the public are often fictitious. We are, therefore > justified in inquiring as to the real reason for the act of 1866. Unfor- tunately, complete evidence upon which to base a history of the bill during its passage through the legislature is not available. But the state- ment of the Commission to Revise the Revenue Laws is the best at hand and that evidence is clearly to the effect that the distribution of taxation, as it existed in 1863, was unjust to the owners of real estate. During the years 1868 to 1879, the tendency was to lighten the tax burdens of the corporations. 21 The table on page 143 which has been compiled from the reports of the Auditors General shows the receipts by the state from corporation taxes for the eleven years 1868 to 1879, inclusive. The table emphasizes the points made by the Auditor General. In 1873 the total yield of the taxes upon corporations was $4,901,600, while in 1879 it was but $3,282,400. On the other hand, it must not be concluded that the repeal of some provisions of the tax law and the modification of others was solely responsible for this decline in produc- tivity. The great industrial depression which followed the crisis of 1873, and which reduced the earnings of many corporations and forced others into bankruptcy, doubtless caused some falling off in receipts from these taxes. The decline in the yield of the tax on capital stock from 1876 to 1879 is, however, attributable to modifications made by the law of 1877. 22 During the years 1880 to 1889 the yield of the various taxes upon corporations increased, but such augmentation as occurred scarcely brought it back to the level it had reached during the years 1871 to 1873. 21 In 1878, the Auditor General was of the opinion that, with the exception of the coal and insurance companies, corporations were, in general, less heavily taxed than in the years prior to 1868. Report (1878), p. 4. 22 Aud. Gen. Report (1879), p. 3. 1 I 1 en Coal Companies National Bank Stock Commutation of Tonnage Tax Premiums on Charters of Corporat Tax on Premiums and Licenses of eign Insurance Agencies Bank Stock Bank Dividends Gross Premiums of Domestic Insui Cos.... 1 1 B 1 & 8 ?i&l |1 r| : HH ' ': & : i O ' 2 en : : : i : : Co to Co to i Co Co 4> : to ON ON > ' NO O OO 4^ to O Cn ON to - i 4i. Cn O ' : ON <^ ^^ *vj NO Co H^ ^^ : : ks ^ O to ON O NO NO to "0 Jo Co S S i Co 1 bo to to Co : to 4> Co Co OO-J- CnON: CnO^OvO Co NO "NO O O : Ko Cn O to to "to Cn Co 00 o | Mi to Co Co : H- ' ^J Co Oo ON : ON to Co to Cn O : Co Cn vO NO to O i OO 4* ^ Co N-t QS VO ^ Cn 4^ ON Cn H-k 00 Cn NO to Co i-k Co ON Cn ^^ ON isgfeii s to Co O 4^ ON O fc \O I-* O '^ O I* 1 ON Cn to Co to : 00 Cn ON Co OO Co OO O : H- In Co O Co Co ^J 4> Co OO NO 4=>- ON Cn Cn ON 4x 4*. to Co Cn 4- OO H- H- Cn Co ON 00 Co Co lo Cn ON O NO Cn NC : Cn to ON O ON Co ^I 00 10 O NO NO si I : H-k OO Cn O ^r NO to to O i Co OO Cn 4^. ON Cn ON ON O Cn >-* tO tO tO ON H* t-k H- Cn to 4> Co 4^ Cn OO Cn Cn : ^I Cn O O J io : O 4^ Co ON : 10 ON Cn O Cn to j JO ^S OO i : -4 NO h- O O : to NO CO *> bo ; NO ^^ to ON 4- O ! Cn O : Co NO to O fe ^4, to H* to Cn OO Cn Co ON to ON Co oo J>J ON : to to 4^ Jj : Cn to to C g 4^ Co "Co 00 00 4^- to to Co O to p. ON 10 Co Co fe to -- 4- i 3 Cn Cn i 1 -4 00 : H- *4 H-* O : O Cn 00 '-v| s ' 5 H I w o c/3 1 1 S 144 THE SUBVENTION IN PENNSYLVANIA The variations in the yield of the principal taxes paid by corporations during this decade are set forth in the table on page 145. The decade 1880 to 1890 was not marked by important tax legislation until near its close. But about the middle of the period an agitation for heavier taxes upon corporations sprang up. In 1885, in his biennial message to the legislature, Governor Pattison asserted that real estate was paying too great a proportion of the total cost of supporting state, county and local governments. 23 The inequity arose out of the almost complete exemption of corporate wealth from local taxation. Corpora- tions paid the greater part of the state taxes, but local taxation upon real estate, especially farm real estate, was, the governor believed, four tunes as burdensome as the state taxes upon corporations. 24 The gover- nor recommended that the personal property tax and certain license taxes levied by the state be turned back to the localities and that the state raise all its revenues from the corporation taxes. 25 In 1887 Governor Pattison reiterated the recommendations made in his message two years earlier. 26 In the message of 1887 the governor referred to the insistent agitation of the agricultural interest for a more equitable adjustment of taxation and advised that heavier taxes be imposed upon corporations and that real estate be further relieved of the burden of supporting local government. 27 The result of the demand for readjustment of tax burdens was the ser- ies of laws passed during the years 1889 to 1893, which increased the taxes paid to the state by corporations and by personal property. These laws also provided for the return of a part of the revenue from the per- sonal property tax to the localities in which it originated and for the transfer of the proceeds of certain retail liquor licenses to the local authorities. 28 The effect of these laws was greatly to increase the yield of the corporation taxes as is shown by the table on page 146. 23 Pennsylvania Archives, IV Ser. X, pp. 233 ff. "Idem, p. 234. 25 Idem, p. 235. * Idem, pp. 488-490. a7 Idem, p. 490. "See Sec. 16, Act 1 June, 1889, P. L. p. 426; Act. 9 June, 1S91, P. L. pp. 248-249; Act 8 June, 1891, P. L. pp. 229-243; Aud. Gen. Report (1891), p iii. * - fofi^L ^ o n o ^ o o 3 p g 3 J| P ** ** p> H w S ? ? 3- ? P 1 1 1 s 1 S o 8 r I ' 1 ^ 4k GO tO t- Go On Go Go * 00 oo ^ o ^ 1 H O J- i- to NO b ^J *^J *^4 Q>0 UO hfk to H 3 fr H ^0 ^ B J>i H^ S. M i * ^ Go to i- Go ON On O NO On On r * OO On ON GO On H- ' Go h- k g fe ON ON On ^ b O H* ON J- NO J-k Go S" S Ki c* 3 fc> & Ki ^ >j > k ^N a &' a g O Go to Go I 00 OO ON ON Go On >- ON OO * GO O Ji' On b bo NO ON ^ N* >c s n o * to i. ? ! Go ON O 00 On to bo to to 4k : NO "o O> : i- ON Go O : Go Go J O : Go bo ON i Cn g ^< H-] 4k 1- H* C/3 ^J 4k Oo H* 4k ^tO ^ I ^^ *2 1 - ; ! \o : to NO NO >- S i- ON to O O 00 - NO b ON '- o b 1 mC\ H p X D On j\ 4k GO 1 4^ Go -I 4> h- to -mCh.VII. THE SUBVENTION IN PENNSYLVANIA 237 pay the greater part of the state taxes are contributing more or less than should in justice be demanded of them. If, however, it be assumed that the expenditure for some of the various services now supported by the state could not be reduced without serious impairment of those services, it is still true that the revenues of the state should be devoted to those uses which are, from the point of view of the state as a whole, most important. One of the principal objections to the grants to privately managed hospitals is that the service they render is purely local in character and that the state, therefore, should not contribute to their support." As was pointed out in Chapter II, there is no sharp distinction between local and state services. But it is safe to say that when a service can be efficiently performed by local governments, when the units of equip- ment are of necessity able to serve only a restricted area, and when neglect in performance affects chiefly the people in the district where such neglect occurs, that service should be locally supported and ad- ministered. The service performed by free hospitals for the sick and the injured is largely of the kind described. There is, at the present time, little reason to believe that a system of state hospitals would be more efficient than a large number of locally administered hospitals. And there is less reason to suppose that the present haphazard method of subsidizing hospitals conduces to anything like efficiency. In the second place, it cannot be denied that an ordinary hospital serves a very restric- ted area. The insane, the deaf-mutes, the blind and the feeble-minded can be gathered together from large areas into state institutions. But the injured and those suffering from infectious and malignant diseases cannot in a majority of cases be so assembled. Finally, if a local com- munity neglects to provide adequate accommodation for the indigent sick, the remainder of the state is not very directly affected. No doubt the lessening of the productive power of the people and the dispersion of families which may result from the neglect of this type of charitable relief is far-reaching in its effects, but these effects are less controllable than are those resulting from neglect of education, of treatment for the insane, and of custodial care for defectives. We may conclude, therefore, that the care of the insane and of the defective classes is a function that the state should perform before it undertakes to establish or to aid ordinary hospitals. In Pennsylvania 99 See for example Board of Public Charities, Report (1902), Report of the Com- mittee on Lunacy, p. 8. No objection was so frequently mentioned to the writer by people in the various parts of the state with whom he disrussed the subsidy system. 238 THE SUBVENTION IN PENNSYLVANIA the legislature has seen fit to spend very large sums for the support of such hospitals when it is the opinion of the Committee on Lunacy, 100 and of an independent expert that present provision for the insane is inadequate. Only in this sense have grants to privately managed chari- ties caused neglect of state institutions. But there can be little doubt that the influence of the grants to hospitals has been to restrict the appropriations for services that are peculiarly adapted to performance by the state and that are state-wide in importance. GRANTS FOR PERMANENT IMPROVEMENTS A relatively large proportion of the amounts appropriated to aid private charities has been devoted to making permanent improvements. This has been especially true in the case of hospitals. The objections to this sort of grant are as serious as they are obvious, unless the state takes measures to secure reimbursement if the property is converted to non-charitable uses. To put a concrete case : Suppose that the General Assembly should appropriate $10,000 to a private hospital or orphanage for the purpose of constructing or aiding in the construction of a new building. Now the funds thus received cannot properly be used except to provide free treatment for those unable to pay. 101 But it is a difficult matter in many cases to determine whether a hospital, which has re- ceived large amounts to assist it in building and in purchasing euqipment, is rendering an equivalent service. Formerly it was possible for an institution that had received aid in making permanent improvements to refuse to take charity patients in subsequent years. 102 State appropriations could thus be converted to private uses. In 1911, however, an act was passed which made all appropriations for structures or other permanent improvements liens upon the structure and the real estate upon which the improvements were erected. No interest was to be charged by the state, but if the institution sold the real estate or converted the property to purely private uses the state was entitled by the act to collect the amount of the appropriation. 103 This was also the policy followed in the case of the normal schools until the state came to hold a large equity in their property. 100 See their Report, in the Report of the Board of Public Charities for 1914, pp. 265-266. 101 An exception would, of course, be an appropriation to aid in the clinical \vork of a medical college. 102 Board of Public Charities, Report (1900), p. 3. 103 Act 9 June, 1911, P.L. p. 736. THE SUBVENTION IN PENNSYLVANIA 239 The act of 1911 interfered, however, with the improvement of in- stitutions because the lien of the state made it difficult to secure loans by giving mortgage bonds. So, in 1915, another act was passed which made the lien of mortgagees who might lend the institution money for improvements superior to that of the state. The act provided that the consent of the Auditor General and of the State Board of Public Charities must be obtained before any such mortgage could be given. 104 The interest of the state is thus fairly well safeguarded against direct and open conversion to private uses of property purchased with public funds. STATE SUBVENTIONS TO COUNTIES The state now assists the counties in the maintenance of charitable relief with respect to two classes of dependents: (1) the insane, and (2) indigent widows and abandoned wives who have dependent children. State aid to counties for the purpose of assisting them in the maintenance of asylums for the insane is carried out under the authority of an act of 1897. 105 Under this act 21 counties now care for the insane, receiving $2.00 per week for each indigent patient. In 1915 there were about 8,000 insane persons in these local asylums while the population of the state institutions was 10,876. 106 On the whole the county care system has not worked well in Penn- sylvania. 107 In theory the State Board of Public Charities is given power to compel the localities to provide equipment and treatment that shall in its judgment be adequate. The penalty that the board may inflict for refusal to comply is the revocation of the license of the local institu- tion to conduct an asylum. Such revocation would automatically cause the withdrawal of state aid. How ineffectual this check has proved to be has been shown in Dr. Haviland's report. By an act of 1913 the state undertook to provide a pension for in- digent widows and abandoned mothers. 108 The act provided for a board of from five to seven women in each county to act as commissioners or trustees for the administration of the provisions of the law. In order to make application for a pension it was required that the applicant 104 Act 29 April, 1915, P.L. pp. 200-202. 108 Act 25 May, 1897, P.L. pp. 83-84. See also an earlier act of 26 June, 1895, P.L. p. 231. See also acts amending the act of 1897 as follows: Act 13 May, 1909, P.L. p. 535 and Act 25 July, 1913, P.L. p. 1355. 106 Board of Public Charities, Report (1915), pp. 262-273. 107 See supra, pp. 233 ff. 108 Act 29 April, 1913, P.L. p. 18. 240 THE SUBVENTION IN PENNSYLVANIA should "be worthy in every way," and that she should show that the pension was necessary to enable her to keep her children in her own home. The pension varied from $12.00 per month, when the mother had only one dependent child, to $26.00 when she had three, and five dollars for each additional child above three. The administration of the law was left entirely in the hands of the local trustees who served without pay but who were allowed compensation only for expenses. The state agreed to pay one-half of the amount expended in any county that accepted the scheme. The amount to be disbursed from the state treasury was limi- ted, however, to $200,000 for the two years 1913-15. Accepting counties, were required to pay one-half of the amount necessary to meet the cost of the pensions. By 1915 the plan had been accepted in some counties but only a part of the #200,000 had been disbursed. The law was amended in that year, the most important change in the act providing for the appointment by the governor of a woman qualified by training and experience to act as State Supervisor of the system. 109 The evident purpose of the legis- lature hi providing for this official was to secure more control over the local boards of trustees and to encourage the acceptance of the plan by a larger number of counties. The supervisor is both the organizer and the administrative head of the system. She is required to travel from county to county to inspect the work of the boards and to make uniform rules for their guidance. She is also required to report annually to the State Board of Education. The law of 1915 changed the method of distributing the subvention. By the act of 1913 the share of each county was determined by its population. But the act of 1915 created six classes of counties, accord- ing to population, and divided the funds available among them in ar- bitrary percentages. 110 How this scheme will work out in practice cannot, of course, be ascertained at the present time. 109 Act 18 June, 1915, P.L. pp. 1038-1044. 110 Class I, counties having a population of over 1,000,000; Class II, over 200,000 and less than 1,000,000; Class III, over 100,000 and less than 200,000; Class IV, over 50,000 and less than 100,000; Class V, over 25,000 and less than 50,000; Class VI, under 25,000. Counties in Class I are entitled to equal parts of 30% of the total appropri- ation; those in Class II to equal parts of 15%; those in Class III equal parts of 30%; those in class IV to equal parts of 15%; those in Class V to equal parts of 7%; those in Class VI, to equal parts of 3%. THE SUBVENTION IN PENNSYLVANIA 241 DISTRIBUTION OF THE SUBVENTION TO CHARITABLE INSTITUTIONS The distribution of the subvention to private charitable institutions is not made, at the present time, according to any rule or predetermined scheme, except in the case of the appropirations to the various semi- state institutions. The amount any hospital, home, or organization shall receive rests primarily with the finance committees. 111 Some of the forces that determine how such an institution shall receive have been mentioned. As near as can be ascertained the following are the principal factors effective in fixing the grants obtained by various homes and hospitals: 1) the amount of the grant in previous years; 2) the requests of the managers of the various organizations; 3) the apparent need for these institutions in the communities where they are located; 4) political influence both of the members of the General Assembly and of other influential citizens in the communities; 5) the desire of party leaders to win or retain the support of the people within the locali- ties; and 6) the recommendations of the Board of Public Charities. How important relatively each of these factors is in any given case cannot be determined. There is, however, no evidence to show that appropriations are made according to any definite rules. That such procedure in appropriating public funds is uneconomical and undesirable in many other ways goes without saying. No doubt a great many people recognize this fact but as yet no workable substitute has been found. One reason that it has not been found is that many political leaders are well satisfied with things as they are. For several years the Board of Public Charities has prepared a report which shows for each institution the number of free hospital days, the percentage of free treatment, the total cost of free treatment, and the amount received from the state for maintenance. These data are derived from the books and reports of the various hospitals which did not (in 1914) keep uniform accounts. 112 According to the report about one-half of the cost of the total free days is borne by the state. 113 But in some institutions the state pays practically the entire cost of free treatment, in others it pays less than 15 per cent, while a few hospitals, which have a large number of free beds, receive no state aid whatever. This discrepancy may, of course, be due in some cases to the ability of institutions receiving little aid to take care of themselves. Wherever 111 See supra, pp. 217 S. 112 Statistics Compiled by The Board of Public Charities, 1914. 113 Idem, pp. 39-40. 242 THE SUBVENTION IN PENNSYLVANIA this is the case the legislature is justified in refraining from giving them large sums. The present procedure in making the grants permits much flexibility, and enables the state to give liberally where the need is greatest and to withhold its aid where it is less. Hence a hard-and-fast rule in making appropriations would, from many points of view, be less desirable in theory than the plan which leaves the legislature free to make exceptions. On the other hand, no one has ventured to assert that the comparisons and recommendations in the report of the Board of Public Charities are quite accurate. The board does not have a sufficiently numerous staff to inspect with the greatest care the numerous institutions that receive state aid. In 1915 there were eleven members of the board, including the general agent and secretary. The other ten members are not expected to devote a large amount of their time to the work. The general agent and four assistants and the special agent performed the major part of the inspection work. As has been pointed out 114 the committees do not follow the recom- mendation of the board. Because of this tendency proposals have been made for a system of appropriations based upon the number of free hospital days furnished in each institution. To accompany this plan there is usually a proposal for uniform accounting and closer inspection of the hospitals. Undoubtedly the innovations would tend to prevent extravagance where it now exists and would eliminate many of the evil effects of the present procedure. Another method for determining the amount of the subvention to each institution is also frequently suggested. Since a considerable degree of flexibility is desirable, a maximum payment per patient-day might be determined upon. But in case the hospital did not require that much, in case private philanthropy and generosity largely provided for free accommodations, the payment could be reduced. Now, of course, the committees would be unable to obtain accurate data upon which to base a judgment in this matter unless the Board of Public Charities should be armed with the power to prescribe and to enforce a uniform system of accounting. In 1913 the board was given power to require uniform accounts of all institutions receiving state aid. 115 The same act also gave the board the authority to employ such experts and clerks as might be necessary. 116 But the penalty attached to the refusal of See supra, p. 217. 116 Act 1 May, 1913, P.L. p. 153. Idem, p. 151. THE SUBVENTION IN PENNSYLVANIA . 243 any institution to follow the requirements of the board in the matter of accounts is not all that could be desired, for the law merely states that in such a case the board shall not recommend any aid. But the legislature could still make the appropriation. Perhaps a self-denying ordinance will follow later. The application of this scheme to homes for the aged, for the blind, and for other destitute classes and to orphanages would, of course, be much less difficult than to hospitals. In the former cases the population is more permanent and the service rendered is simpler, and, therefore, the determination of costs is much easier than in the case of hospitals. SHOULD THE SUBVENTION TO PRIVATE CHARITABLE INSTITUTIONS BE DISCONTINUED? As was shown in the first section of this chapter, the last twenty -five years has witnessed a steady growth of the subvention to private charitable institutions. Along with the increase in the total has also come in- creasing complexity. New kinds of institutions have been added. The latest addition is a special subsidy for hospitals that have or shall have psychopathic wards. 117 It might appear, therefore, that any discussion of the advisability of discontinuing these grants was purely academic. Protests against the policy have, however, appeared from time to time both in the utterances and reports of state officials and in the pub- lications and propaganda of voluntary organizations. In 1897 the Auditor General protested against the entire subvention system as leading to waste and irresponsible expenditure. 118 Men of the medical profession have at times freely criticised the system. 119 The committee of the National Conference of Charities and Corrections on State Supervision and Administration has reported against the system. 120 The principal arguments against the present procedure are as fol- lows: 1) that the funds appropriated are often wasted or misapplied; 2) that unwise appropriations have multiplied institutions unnecessarily; 3) that the state should not appropriate funds to persons or corporations when it does not have control over the application of such funds; 4) that 117 Act 9 June, 1911, P.L. p. 855. 118 Report (1897), pp. xxi-xxii. 119 See Statements of Dr. H. W. Cattell in Pennsylvania Medical Journal, Vol. XIII, (1910), pp. 276-277; also of Dr. W. L. Estes, idem, pp. 273-274; also the paper read by Dr. J. B. Roberts at a meeting of the Pennsylvania Medical Association, entitled, State Appropriations to Hospitals not under State Control. What Penn- sylvania is Doing. Idem, pp. 253 ff. 120 30th Annual Conference (1903), p. 365. 244 THE SUBVENTION IN PENNSYLVANIA institutions for the insane, the feeble-minded and for criminals have been neglected in favor of the politically more useful subsidies; 5) that the grants are used for political purposes of an undesirable kind; 6) that the subsidy system discourages private giving; 7) that money obtained from the state by the hospitals and other institutions is not so carefully guarded as funds derived from private contributions and, therefore, many who are able to pay are treated without charge; 8) that the hospitals, orphanages, and homes supply local needs and should, therefore, be locally supported. Now it is obvious that the first five of these objections apply to the subventions as they are administered in Pennsylvania at the present time. If the state should put its budget into scientific form and should arm the Board of Public Charities with greater power these evils could be eliminated. The sixth objection that the subsidies discourage pri- vate giving has not been sufficiently substantiated by facts to warrant its consideration at the present time. The last two objections, however, apply to all subventions to pri- vately managed institutions of the types subsidized, no matter how well administered. To a certain extent the pauperizing effect of the subven- tions could be done away with by more careful supervision, but the fact would still remain that funds derived from the state would be less care- fully safeguarded against bogus charity cases. The last objection, when elaborated, develops into the general proposition that money collected by taxation from the entire state should not be expended for the benefit of particular localities. This general statement may be subdivided into two more specific objections. In the first place it is said to be inequitable to favor certain localities by making large grants for their benefit while other communities receive little of the benefit of the state's liberality. The homes, the free hospitals, and the various organizations for social reform are most num- erous in the populous industrial centers, while the farming communities, which have fewer types of classes requiring public assistance and in which these classes are not concentrated, have very few such institutions. . This objection is not wholly sound since many lines of state activity benefit particular classes and communities more than they do the whole body of the population within the commonwealth. This is true of agri- cultural schools and of experimental stations. It is true of commissions to regulate the services and charges of gas, electric lighting, and water companies, of the navy, and of municipal fire departments. But the principle that the state in our system of government should confine its activities to services of state-wide benefit and interest is a sound one. THE SUBVENTION IN PENNSYLVANIA 245 The second minor proposition is that local governments or local voluntary organizations can best administer purely local affairs. But if the state aids in supporting local projects, it must have some control over them. This may be undesirable in some respects, but it is fiscally necessary. Hence subventions to local services should be avoided. But a difficult problem is encountered when the localities do not have suf- ficient revenues to finance all the services that are commonly deemed necessary. The solution of this problem arrived at in Pennsylvania is the subvention. Now, if it is true that the local tax payers, who are chiefly owners of real estate, are already contributing more than their share to the support of the government, it would hardly be equitable to require them to bear additional burdens. But this would necessarily follow if the subsidies should be withdrawn. The persons who pay local taxes have for many years protested against the exemption of corporation securities from local duties and against the exemption of all the property used by transportation com- panies from local taxes. But the vexed question whether the payers of state or of local taxes are more heavily burdened has never been settled. Nor is it likely to be, until a permanent non-partisan tax commission is given an opportunity to study the facts carefully for a period of years. A certain number of people desire to see all subsidies to privately managed institutions discontinued, without substitution of local assis- tance. They assert that the larger cities have municipal hospitals and that all counties maintain almshouses in which the aged poor and other paupers can be cared for. Moreover, it is asserted that if state aid should be withdrawn, private giving would supply the funds to continue as much free service as is desirable. The examples of Illinois, Massa- chusetts and Ohio are cited to show that state aid is unnecessary. This argument from example is indeed a strong one, but it is not conclusive because the reply is easily made that Pennsylvania makes better pro- vision for her dependants than do these states. Here again we have only assertion and counter-assertion with insufficient data upon which to base conclusions. It must be conceded, however, that the subsidy system as adminis- tered in Pennsylvania has many undesirable aspects and the first five objections cited seem to be well substantiated by fact. The first step, therefore, in the program of reform is to remove the evils that are admitted not to be inherent in the system. The program which might profitably be followed was indicated many years ago by Warner after a study of the subsidies of the District of Columbia. "At its best," he wrote, "the 246 THE SUBVENTION IN PENNSYLVANIA government must attend to three things. First, on behalf of the poor as well as the taxpayers, it must provide for thorough inspection of sub- sidized institutions, and the systematic auditing of these accounts. This work cannot be done by grand juries, or legislative committees, or ex- officio inspectors, who may from time to time thrust their inexperienced noses into matters which they know nothing about. The work of in- spection must be done by some thoroughly experienced and otherwise suitable administrative officer, who is definitely responsible for the thoroughness of his work. Second, the state must keep in the hands of its own officers the right of deciding what persons shall be admitted to the benefits for which it pays, and how long each person may continue to receive those benefits. If it pays for beds in a hospital one of its own officers should have entire control of admitting and discharging the patients cared for. This is necessary in order that there may be some gauge of indigency, and some assurance that the gauge will be used. Third, subsidies should only be granted on the principle of specific pay- ments for specific work. When any one of these three conditions is lacking, the policy of subsidy granting is necessarily pernicious." 121 In short, the first and most necessary step is to bring about better control, and after that has been accomplished and after investigations have been made to settle controverted points, it will be possible to secure data upon which to decide the advisability of discontinuing the grants. 121 American Charities, 1st. ed. p. 353. APPENDIX TABLE I SUBVENTIONS FOR EDUCATION AND TO CHARITABLE INSTITUTIONS, 1826 TO 1843' (in thousands of dollars) Year 2 Education Charitable Institutions Common Schools Academies and Seminaries Colleges Deaf-mutes The Blind House of Refuge Orphanages 1826 1827 1828 1829 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 1843 2.0 7.0 3.0 2.0 2.0 6.0 13.3 8.4 8.4 5.8 5.5 3.0 17.0 10.5 8.5 14.0 8.0 8.0 7.5 6.3 5.4 5.3 2.3 4.8 9.9 7.7 3.9 26.7 20.9 9.8 10.0 10.3 11.3 11.4 5.0 2.5 2.5 29.5 3 146.3 553.3 363.4 316.4 328.9 295.3 247.6 272.7 3.0 3.0 .5 .5 .5 20.04 49.0 39.4 50.0 46.1 48.3 5.0 10.7 11.3 3.2 14.3 10.6 8.1 4.1 8.1 8.4 7.2 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 1 These data are taken from the Reports of the Auditors General and of the State Treasurers. No total is given in the table, since the data are not accurate and because the amount of the grants to local governments for buildings, for highways, etc. cannot be ascertained. 2 The fiscal year began Nov. 1 until 1840 when the date was changed to Dec. 1. 3 This figure, which is taken from the report of the Auditor General, is probably inexact. 4 From 1838 to 1843 the subvention to academies and seminaries includes the subvention to colleges. 247 B I 9 I PP CJ js ^ p Ed 1 a S o 5 c^ Q - til u " ^ .2 3 S3 CN 8 S S So S O CN TH CN TH CS O CN ON O o o * cs f* cs IO O O PC CN O O cs 10 O f- 'O rj* r VO^ CN^ rj^ -r-^ 00^ CS^ O^ cs" PC" r}^ PC" PC" CN" PC~ 00 CN PC <* CS CS CN r-5 vO >O t^ OO * CS ON CS t^- O 00 O ON O CS TH" oo" T-T of O" & * ^ * IO O IO 1>- VOCSCST-llOvOOOOCNOOlOOlO-tOO CS'i-HOOOOCSVOCNCNvO'^OOt^vO'-ilO TfPCCSPCVO^-PCPCiOO' T *'ONVOOOCSt^ ** cT T-H^ T^T T^T \o~ T-T c* Tt CN O f=K^S^2o^ a s CNNONOcotoCNCOON-iiO CO ** NO NO NO ^ CO CN to oO CNCNCNCNCNCNCNCO CO ON CN 1-1 T-H O I"* tO IO OO NOONCNOOtOOONCNONOOO ON t^* NO CO OO ^H CO CN ^ IO i* OO^ ^ Tj^ CO^ NO^ ON^ T^ Tj^ CN^ OO^ OO^ CO_ OO" Op" CN IO O ^f C^T ON *"*" I-H* co" ^ ^ iNOiOt->-t-Or-NOCNONTfON Tf^iONOoOOO' 'rfCNTjlO Ot^-OOONO' ICNCO OO OO OO OO OO OO OO OO 3 1 s .2 ii I ? a 3 * 1 T 00~ 2 I -s C/J Q : - <^ OQ 1 .s s I I 4 1 1 OJ T3 5 i s s 2 I * ON 15 23 *o - S *- ei 0.9*9 i! S t! is - s J3 C CJ <*> M II II S 8 ig S _J . 3 2 -s-g I s / s /-^ a ^H ^ a" I I til 313 I -*>*? 250 THE SUBVENTION IN PENNSYLVANIA TABLE III A SUBVENTIONS PAID FROM THE PENNSYLVANIA STATE TREASURY FOR EDUCATION, CLASSIFIED ACCORDING TO PURPOSE, 1874 TO 1893 1 Year 2 Total payments Common Schools Salary of County Superin- tendents Normal Schools Colleges 3 All Other 4 1874 $ 838,082 $ 656,894 $ 76,661 $102,182 $2,345 1875 755,896 605,073 75,092 71,731 4,000 1876 1,114,424 986,598 71,600 52,226 4,000 1877 907,320 734,074 73,300 92,946 7,000 1878 789,262 551,846 76,978 152,938 7,500 1879 547,331 422,946 80,687 38,198 5,500 1880 1,710,264 1,399,940 81,925 185,899 $ 40,000 2,500 1881 1,737,617 1,474,925 81,709 132,483 40,000 8,500 1882 1,089,025 907,099 81,814 94,612 5,500 1883 1,081,810 919,100 81,897 75,313 5,500 1884 1,171,495 984,830 83,517 97,648 5,500 1885 1,191,868 1,005,598 85,803 94,967 5,500 1886 1,151,633 956,993 86,297 102,843 5,500 1887 1,190,997 959,089 89,610 119,048 17,750 5,500 1888 1,674,382 1,379,111 89,599 140,672 59,500 5,500 1889 2,129,611 1,642,764 88,522 237,635 138,940 21,750 1890 2,452,496 2,004,186 99,996 243,782 57,782 46,750 1891 2,359,988 1,980,461 96,916 207,615 24,996 50,000 1892 5,513,634 4,981,486 93,834 300,801 97,463 40,050 1893 5,016,598 4,391,507 100,613 370,388 91,965 62,125 1 From Reports of the Auditors General. 2 Fiscal year ending November 30. 3 Includes University of Pennsylvania, State Agricultural College, Philadelphia Polclynic and College 4 Includes School Journal, Schools of Design, Pennsylvania Museum and School of Industrial Art, Academy of Natural Sciences, Nautical School Ship, Spring Garden Institution. THE SUBVENTION IN PENNSYLVANIA 251 TABLE III B SUBVENTIONS PAID FROM THE PENNSYLVANIA STATE TREASURY FOR EDUCATION, CLASSIFIED ACCORDING TO PURPOSE, 1894 TO 19 16 1 Year 2 Total Payments Common Schools Salary of County Superin- tendents 3 High Schools 4 Normal Schools 5 Colleges and Univer- sities 6 All Other 7 1894 ! 6,010,437 $5,172,826 $ 78,131 $517,895 $ 214,692 $26,893 1895 6,322^147 5,761,140 119,428 236,394 179,537 25,648 1896 3,896,827 3,553,766 103,745 213,690 3,125 22,501 1897 5,066,043 4,547,664 109,821 261,815 82,851 63,892 1898 6,409,217 5,673,779 108,006 241,798 337,639 47,995 1899 6,442,378 5,871,580 106,657 245,253 105,263 113,625 1900 6,661,669 6,297,292 109,572 184,983 40,322 29,500 1901 7,086,524 6,776,140 106,395 130,642 36,972 36,375 1902 5,387,392 4,744,035 105,572 $ 24,750 399,588 63,947 49,500 1903 5,760,704 5,047,259 140,716 23,698 371,104 121,466 56,461 1904 4,766,465 3,993,095 124,462 1,476 395,805 129,308 122,319 1905 8,725,340 7,832,553 100,642 47,640 420,648 221,750 102,107 1906 6,096,495 5,052,560 134,284 149,260 389,629 153,637 217,125 1907 6,487,951 5,410,919 125,147 100,000 533,132 213,016 105,737 1908 7,969,848 6,910,429 163,484 25,710 469,305 250,314 150,606 1909 8,433,791 6,810,156 112,256 199,508 549,407 518,147 244,317 1910 8,510,220 6,764,593 174,702 297,109 445,914 694,489 133,413 1911 7,560,369 5,652,439 151,953 239,647 503,125 868,937 144,268 1912 9,640,523 7,487,146 161,745 286,910 489,773 1,026,071 188,878 1913 8,915,282 6,878,394 161,447 295,586 439,882 1,031,183 108,790 1914 9,060,096 6,653,348 175,878 252,878 408,134 1,498,119 71,739 1915 7,516,708 4,799,857 s 200,447 274,48 522,267 1,550,127 169,529 10 1916 11,247,884 8,663,175* 281,170 273,23 502,963 1,363,177 164,162 l 1 From the Reports of the Auditors General for the years given. 2 For fiscal years ending November 30. 3 Includes payments for publishing the call for a convention to elect the county superintendents. 4 Included the subvention for both borough and township high schools and, after 1911, the payment of the tuition of children attending high schools in districts other than those in which they reside. 6 Includes payments to students attending normal schools and direct appropria- tions to the normal schools. ' Includes all payments made to colleges and universities; in many cases probably amounts granted for the maintenance of hospitals in connection with medical schools. 7 Includes subvention to such institutions as the Pennsylvania Museums and 252 THE SUBVENTION IN PENNSYLVANIA Schools of Industrial Art and other unclassified educational organizations. 8 Thus in the Reports of the Auditors General. The years 1915 and 1916 should be considered together. 9 Contains amounts paid to normal schools taken over by the state. 10 Contains the amounts paid by the state for the assistance of vocational schools. BIBLIOGRAPHY I. BOOKS AND MAGAZINE ARTICLES ALLINSON, EDWARD PEASE AND PENROSE, BOIES. Philadelphia, 1681-1887. Johns Hopkins University Studies in Historical and Political Science, Extra Vol. II, 1887. Philadelphia, 1887. BIGELOW, JOHN (Editor). The Complete Works oj Benjamin Franklin. 10 vols. New York, 1887-1888. BISHOP, AVARD LONGLEY. The State Works oj Pennsylvania. New Haven, 1907. BOLLES, ALBERT SIDNEY. Pennsylvania, Province and State; A History Jrom 1690-1790. 2 vols. Philadelphia and New York, 1899. BRECK, SAMUEL. Sketch of The Internal Improvements Already made in Pennsylvania. Philadelphia, 1818. BULLOCK, CHARLES J. Direct Taxes and The Federal Constitution. Yale Review, Vol. DC, (1900-01), pp. 429-449; Vol. X, (1901-02), pp. 6-29, 144-158. CAREY, MATHEW. Brie] View oj the System oj Internal Improvements in Pennsylvania. Philadelphia, 1831. Miscellaneous Essays. (No. 9. Essay on the Public Charities of Philadelphia.) Philadelphia, 1830. CUBBERLY, ELLWOOD P. School Funds and Their Apportionment. New York, 1905. DEWEY, DAVIS RICH. Financial History of The United States. New York, 1903. DILLON, JOHN F. Commentaries on The Law of Municipal Corporations. 5 ed. 5 vols. Boston, 1911. EASTMAN, FRANK M. Taxation} or State Purposes in Pennsylvania. Philadelphia, 1898. The Law oj Taxation in Pennsylvania. 2 vols. Newark, N. J. 1909. EGLE, WILLIAM H. Pennsylvania. Harrisburg, 1876. FAIRLIE, JOHN A. Local Government in Counties, Towns, and Villages. New York, 1914. FLEISHER, ALEXANDER. Pennsylvania's Appropriations to Privately Managed Charitable Institutions. Political Science Quarterly, Vol. XXX, (1915), pp. 14-36. State Money and Privately Managed Charities. The Survey, Vol. XXXIII, (1914-15), pp. 110-112. 253 254 THE SUBVENTION IN PENNSYLVANIA FLEXNER, ABRAHAM. Medical Education in The United States And Canada. New York, 1916. GORDON, THOMAS F. History oj Pennsylvania from Its Discovery by Europeans to The Declaration oj Independence. Philadelphia, 1829. GOULD, E. R. L. Local Government in Pennsylvania. Johns Hopkins University Studies in His- torical And Political Science, Vol. I, No. 2, Baltimore, 1883. GRICE, J. WATSON. National and Local Finance. London, 1910. HARLEY,L. R. A History oj The Public Education Association of Philadelphia. Philadelphia, 1896. HASKLNS, C. H. and HULL, W. J. History of Higher Education in Pennsylvania. (United States Bureau of Educa- tion, Circular of Information No. 4, 1902.) Washington, 1902. HAVILAND, C. FLOYD. The Treatment and Care of The Insane in Pennsylvania. Philadelphia, 1915. HEFFNER, WILLIAM CLINTON. History of Poor Relief Legislation in Pennsylvania, 1862-1913. Cleona, Pa. 1913. HENDERSON, CHARLES RICHMOND. Modern Methods of Charity. New York, 1907 . HOLCOMB, WILLIAM P. Pennsylvania Boroughs. Johns Hopkins University Studies in Historical and Political Science. Vol. IV, pp. 129-179. Baltimore, 1886. HOWARD, GEORGE E. An Introduction to The Local Constitutional History of the United States. Johns Hopkins University Studies in Historical and Political Science, Extra Vol. IV. Baltimore 1889. JAMES, E. J. The Public Economy of The Commonwealth of Pennsylvania. The Wharton School Annals of Political Science, No. 1. (1885). (The title of this publication was later changed to Publications of The University of Pennsylvania. Political Economy and Public Law.} Philadelphia, 1885. McCLURE, ALEXANDER K. Old Time Notes of Pennsylvania. 2 vols. Philadelphia, 1905. McCoRMicK, HORACE G. Advantages of The Pennsylvania System. Pennsylvania Medical Journal. Vol. XIII (1910). MAYO, A. D. The American Common Schools in New York, New Jersey, and Pennsylvania During The First Half Century of The Republic. (Report of The [United States] Commissioner of Education for 1895-6, Vol. I, pp. 219-266). Washington, 1896. MERRIAM, CHARLES E. A History of American Political Theories. New York, 1903. MORTON, THOMAS G. assisted by WOODBURY, FRANK. The History of The Pennsylvania Hospital. Philadelphia, 1885. THE SUBVENTION IN PENNSYLVANIA 255 PAUL, J. L. Pennsylvania's Soldiers' Orphan Schools. Harrisburg, 1877. PENNSYLVANIA STATE EDUCATIONAL ASSOCIATION. Report on Rural Schools. Harris burg, 1914. Pennsylvania Tax Conference of 1892. Report. Philadelphia, 1892. PRICE, ELI K. Some Objections to The Proposed Constitution. Philadelphia, 1873. PROUD, ROBERT. History of Pennsylvania. 2 vols. Philadelphia 1797-98. [PUBLIUS] Letter to The Members of The Pennsylvania Legislature on The Subject of The Slate Debt. By Publius. Philadelphia, 1844. ROBERTS, J. B. State Appropriations to Hospitals not under State Control. What Pennsylvania is Doing. Pennsylvania Medical Journal, Vol. XIII (1910) . SHEPHERD, WILLIAM ROBERT. History of Proprietary Government in Pennsylvania. New York 18%. "State Debts." North American Review, January, 1844. Vol. LVIII, pp. 109-157. STRAYER, GEORGE D. and THORNDIKE, EDWARD L. Educational Administration. New York, 1913. "Subsidies." A Report by the Committee on The Division of Work between Public and Private Charities. Proceedings of The National Conference of Charities and Corrections, 1901. SWIFT, FLETCHER HARPER. A History of Public Permanent Common School Funds in The United States, 1795- 1905. New York, 1911. THORPE, FRANCIS NEWTON. The Federal and State Constitutions, Colonial Charters, and Other Organic Laws of The States and Territories. 7 vols. Washington, 1909. TROTTER, ALEXANDER. Observations on The Financial Position and Credit of Such States of The American Union As Have Contracted Public Debts. London, 1839. URDAHL, THOMAS KLINGENBERG. The Fee System in The United Stales. Madison, 1898. WARNER, AMOS G. American Charities. Revised edition, New York, 1908. WEBB, SIDNEY. Grants in Aid: A Criticism And A Proposal. London, 1911. WHITE, THOMAS RAEBURN. Commentaries on The Constitution of Pennsylvania. Philadelphia, 1907. WlCKERSHAM, JAMES PYLE. A History of Education in Pennsylvania. Lancaster, 1886. WISCONSIN TAX COMMISSION. Special Report on The Finances of The State Government. Madison, 1911. 256 THE SUBVENTION IN PENNSYLVANIA WORTHINGTON, T. K. Historical Sketch of The Finances of Pennsylvania. Publications of The Ameri- can Economic Association, Vol. II, No. 2. YETTER, J. M. The Educational System of Pennsylvania. New York, 1909. II. PENNSYLVANIA PUBLIC DOCUMENTS Auditor General. Annual Reports on Finances, 1809- Board of Commissioners of Public Charities. Annual Reports, 1869- Bureau of Statistics. Annual Reports, 1-2. 1872-3, 1873-4. Charitable Institutions of Pennsylvania Which Have Received State Aid in 1897 and 1898, Embracing Their History and The Amount of State Appropriations Which They Re- ceived. Compiled under an act of the General Assembly approved July 27, 1897, by A. K. Pedrick . . . direction of A. H. Mylin, Auditor General. Harrisburg, 1898. Charitable Institutions. Report of Investigations, Findings and Recommendations of the Legislative Commission to Investigate the Various Charitable Institutions of the State of Pennsylvania. Harrisburg, 1907. Compendium And Brief History of Taxation in Pennsylvania. Compiled by W. P. Snyder, Auditor General. Harrisburg, 1906. Constitutional Convention of 1837-38. Proceedings and Debates of The Convention of The Commonwealth of Pennsylvania, to Propose Amendments to the Constitution, (1837-38), 14 vols. Reported by John Agg, stenographer to the Convention. Harris- burg 1837-1839. Constitutional Convention of 1872-73. Debates of The Convention to Amend the Con- stitution of Pennsylvania, (1872-73). 9 vols. Harrisburg, 1873. Corporation and Revenue Laws. Report of The Joint Committee of The Senate and House of Representatives of The Commonwealth of Pennsylvania to Consider and Report Upon a Revision of The Corporation and Revenue Laws of The Common- wealth. Harrisburg, (1913?) Education. Report on The Subject of Education In the Senate. (Committee of 1822) Harrisburg, 1822. Education. Report of The Joint Committee of The Two Houses of The Pennsylvania Legislature, on the Subject of A System of General Education. Harrisburg, 1834. Executive Documents, 1843- 1885-6. House of Refuge. Annual Reports of The Board of Managers, 1828-. House of Representatives. Journal of The House of Representatives, 1790-. Insane. Report of the Commission to Inquire Into Conditions of the Insane Within Hospitals. Harrisburg (1902?) Legislative Documents, 1854-1885-6. (Official reports made to the legislature.) Legislative Journal, 1854-. (A detailed and usually stenographic report of the pro- ceedings and debates of the two houses of the legislature. Title varies.) Official Documents, 1886-7. Pennsylvania Archives. First Series, 12 vols. Colonial Records. Harrisburg, 1852-56. . Fourth Series, 12 vols. (Papers of the Governors, 1681-1902). Edited by George Edward Reed under the direction of W. W. Griest, Secretary of The Commonwealth. Harrisburg 1900-1902. Pennsylvania Dependents. Report and Recommendations of The State Dependents Com- mission. Harrisburg, 1915. THE SUBVENTION IN PENNSYLVANIA 257 Pennsylvania Institution for The Instruction of The Blind. Reports, 1834-. Pennsylvania Institution for the Deaf and Dumb. Reports, 1822-. Pennsylvania Training School for Feeble-Minded Children. Reports of Directors and Superintendent, 1853-. Poor Laws. General Report of The Commissioners Appointed to Revise And Codify The Laws Relating to The Relief, Care and Maintenance of The Poor in The Common- wealth of Pennsylvania. Harrisburg, 1890. Association of Directors of The Poor of Pennsylvania. Reports, 1878-. Register General. Reports, 1790-1808. Revenue Commission Appointed by Act of the Legislature of Pennsylvania, Mar. 25, 1889. Report. Harrisburg, 1890. Senate. Journal of The Senate, 1790-. State Board of Education, Department of Public Instruction, Bureau of Vocational Education. The Pennsylvania Child Labor Act and Continuation Schools. Har- risburg, 1915. State College. Reports, 1869-. State Highway Department. Reports, 1906-. State Treasurer. Annual Reports, 179 1-. Supreme Executive Council. Minutes of The Supreme Executive Council, 1777-1790. Published in Pennsylvania Colonial Records, vols. 11 to 15 inclusive. Harrisburg, 1852-1853. Superintendent of Common Schools. Annual Reports, 1835-1874. Superintendent of Public Instruction. Department of Public Instruction. Annual Reports, 1875-. III. PENNSYLVANIA LAWS Charter to William Penn, and Laws of The Province of Pennsylvania, 1682-1700. Harrisburg, 1879. Statutes At Large of Pennsylvania from 1682-1801, Compiled under The Authority of An Act of May 19, 1887. Session Laws 1801-1825. Acts of the General Assembly of the Commonwealth of Pennsylvania 1801-1825. (Published by authority by different printers. Cited in this essay as P.L.) Laws of Pennsylvania, 1825-. (Cited as P.L.) IV. UNITED STATES PUBLIC DOCUMENTS American State Papers. Finance, Vol. I. Secretary Wolcott's Report on Direct Taxes. Pp. 415-463. Statement in Relation To Foreign and Domestic Debt. Feb. 24, 1794. (By The Secre- tary of The Treasury.) Tenth Census. Report on Valuation, Taxation, and Public Indebtedness in The United States as Returned at the Tenth Census. Washington, 1884. Thirteenth Census. Wealth, Debt and Taxation, (1913), 2 vols. Washington, 1915. V. MAGAZINES AND NEWSPAPERS CITED WITHOUT REFERENCE TO AUTHOR Hazard's Register of Pennsylvania, Vols. I-XVI, 1828-1835. Philadelphia, 1828-1835. Lancaster Morning News. Lancaster, Pennsylvania. Pennsylvania Grange News. Chambersburg, 1904-1908, 1909-, Huntingdon, 1908-1909, Pittsburgh Dispatch, 258 THE SUBVENTION IN PENNSYLVANIA Philadelphia Inquirer. The [Philadelphia] North American. Philadelphia Record. The [Philadelphia] Press. The [Philadelphia] Public Ledger. INDEX Academies and seminaries, amounts granted to, 72, 76,247; control by state, 77; failure of subvention to, 73-74; land grants to, 24-27, 73; subvention of 1838 to, 74-75. Agriculture, subventions for, 204, 248. Assessed value of property and tax rates, 180. Audit and inspection of accounts, of school officers, 69, 93-96, 184; of county officers, 33, 34. Bank of the United States, bonus received from chartering, 40, 63. Board of Public Charities, act creating, 128-129; opinion of general agent of on subventions, 129-132. Budget, need for, 202, 216, 236. Canals, finances of, 37-43, 80-81. Charitable and reformatory institutions of the state, 213, 218. Civil War, effect of on subventions for charity, 119, 136. Colleges and universities, subsidized by the state, 24 ff., 75,77-78, 195-196; subsidy to criticised, 202. Compulsory school attendance laws, 183- 184. Common schools, amount of subvention to 1835-1844, 65-66, 247; 1844-18, 73, 88, 248-249; 1874-1916, 156, 159, 250- 251; attempts to establish, 55-57; atti- tude of people toward, in 1834, 61, 69-72; about 1845, 90; in 1914, 168- 169; causes of increase of subvention to, 161-163; control by state officers, 68-69, 87-88, 153-154; defects of, 154; distribution of subvention to, 60, 62, 64, 90, 98-101, 163-170; effect of sub- vention on acceptance of, 63, 66-72; finances of, 88-91; 92-93, 155-161; progress of 1874-1916, 156, 159; regula- tion of districts receiving subvention to, 60, 62, 87, 91, 96, 170; state sys- tem of established in 1834, 59-61; waste of subvention to, 173-175. Constitution of 1873, effect of restrictive clauses of, on appropriations, 223-234; encourages extra vagent appropriations, 216; interpretation of restrictive clauses of 225-228; provisions of concerning appropriations to private institutions, 222-223. Control of subsidized institutions by the state, 29, 31, 34, 48, 52, 54, 68, 75-77, 97, 110, 179-185, 191. Corporation taxes, development of 1844- 1916, 140-146; receipts from 1868- 1895, 143-146. County care system for insane, estab- lished 239; Dr. Haviland's report on, 234-236. County superintendent of schools, ac- countability of local officers increased by 95; establishment of office of, 110; functions of 111, 154; recent legislation, 197-198. Counties, functions of in colonial times, 12-14; in 1885, 138-140; subventions to, 32-36, 212. Defective classes, reasons for slow devel- opment of institutions for, 54. Dickinson College, state subvention to, 24, 27-28. Education, legislation relative to in 1824, 56-57; lack of correlation of subven- tions for, 200-201; miscellaneous sub- ventions for, 113; 196-197; provisions for, in constitution of 1776, 23; in con- stitution of 1790, 43; state subventions for, 1776-1826, 23-29; 1826-1843, 248; 1873-1916, 250-251; summary of conclusions on subvention for, 200-203. Farmer's High School, see State Agricul- tural College. Feeble minded, institution for subsidized by state, 115-116. Financial history of Pennsylvania, periods in, 7-8. 259 260 THE SUBVENTION IN PENNSYLVANIA Financial policy of the state, 1776-1826, 16-19; 22-23; 1826-1844, 37-43; 1844-1873, 80-86, 1874-1916, ch. vi. Flexner, A. Comment on subsidies to hospitals, 221. Grant in Aid, definition of, 20. Governmental functions, division of between state and localities in Penn- sylvania, 10-15; effect of division of, on subventions, 9; factors affecting division of, 1-4. Haviland, Dr. C. F. report on treatment and care of insane in Pennsylvania, 234 ff. High schools, established in Philadelphia, 75; in other districts, 185; subvention to, 75, 185-186. Homes for the aged, subvention to, 117. Hospitals, subvention to, see subvention to private charitable institutions. House of Refuge, subvention to, at Philadelphia, 52-53, 117, 125; at Pittsburgh, 117, 125. Indigent persons, classification of, 43-44. Insane, county asylums for, 212, 234-236; state asylums for, 232-233; subvention to private asylum for, 115. Institutions for the blind, control by the state, 49; established, 45; finances of, 48; subventions for, 45-49, 117, 213, 231-233; 247. Institution for the deaf and dumb, control by state, 49; finance so of, 48; incor- porated, 31; subvention to, 31, 40-45, 117, 213, 231-232. Local governments, functions of, see governmental functions; revenues of, 149-152. Miscellaneous subventions, 35, 78-79, 137, 196-197, 204-205. National Conference of Charities and Corrections, adverse report of on sub- ventions to charitable institutions, 243. Normal schools, academies and colleges not substitutes for, 102; act author- izing, 103; amount of state subvention to before 1898, 188; conditional aid to students in, 106, 189, 194; constitu- tional restrictions on state aid to, 194-195; advantages of subvention to, 189; distribution of subvention to, 108, 189; establishment of subvention to, 104; reasons for state purchase of, 187, 193; waste of subvention to, 107-108. Orphanages, early subvention to, 50, 247; effect of Civil War on subventions to, 119-120; public and private compared, 129-131; recent subventions to, 213. Pauper schools, 28. Pennsylvania Hospital, early grant to, 30. Pennsylvania School Journal, 111. Poor relief, a local function in Pennsyl- vania, 29-30. Public lands of the state, grants of to academies and colleges, 24-26; portion of set aside for benefit of education, 24. Rate bills, 67-68. Real estate, state tax on repealed, 141. Revenue Commission (of 1889), appoint- ment and report, 148. Revenue resources, changes in division of state and local, 1844-1873, 141; effect of separation of state and local, 147-148; division of between state and local governments in colonial times, 15; in 1776, 16, 19; in 1885, 140-144; equalization of between state and localities by means of subvention, 147- 152, 162-163, 181; sources of local 147. Roads and bridges, state subvention for, see highways, School funds, purpose of, 56. School fund in Pennsylvania, of 1831, 58-59; of 1911, 199. School term, effect of subvention on length of, 89. Soldiers' Orphans, schools for, 122-123. State agricultural college, incorporated 111; subvention to, 112, 196. State Board of Charities, act creating, 128-129; favorable attitude of general agent of toward subventions, 129-132; functions of at present time, 217-219. THE SUBVENTION IN PENNSYLVANIA 261 State debt, amount of in 1791, 18; in 1844, 81; effect of on expenditures, 1844-1873, 86; assumption of by United States, 17-19; history of 1844- 1873, 81-84. State Grange, advocated subventions, 151, 162. State institutions, expenditures for, 215; how affected by subventions, 228-234; superior service rendered by, 234-237. State revenues, 1826-1842, 39; amounts for certain years, 82-85; development of state system of, 86. State superintendent of common schools, control exercised by, 153; duties of, 61. Subventions, classification of 20-22; in California, 6; in England, 4, 7; in New York City, 6; occasions giving rise to, 4-7. Subventions to private charitable institu- tions, amount of 1826-1843, 247; 1844-1873, 118-121, 248; 1874-1916, 212-214; attitude of people toward, 222; causes for growth of, 122-124, 136, 214-219; charges of corruption in obtaining, 133-135; criticism of, 124- 127; 132, 237, 243-246; early instance of, 30; effect of Civil War on, 119; effect on private contributions, 47, 49, 53; distribution of, 136, 241-243; for permanent improvements, 238-239; improper methods of obtaining, 218- 221; reform of considered, 243-246. Surplus revenue of the United States, Pennsylvania's share of, 40; used to aid common schools, 63-64. Taxation, burden of state, 91; state revenue from for certain years, 85; state system established, 84-85. Taxes, direct unpopular, 17, 41; devel- opment of on corporations, 140-146. Teachers, attempts to provide for train- ing of in academies a failure, 102; lack of competent hi 1838, 102; minimum salary for required by law, 177-179; wages of, 173-177. University of Pennsylvania, early sub- vention to, 24. Vocational education, state subvention for, 199-200. Widows' pensions, administration of, 239-241 ; sources of funds for payment of, 240. THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO 5O CENTS ON THE FOURTH DAY AND TO $1.OO ON THE SEVENTH DAY OVERDUE. OCT 2 1933 LD 21-100m-7,'33 YC 07071 405935 HJ a^Q-s" UNIVERSITY OF CALIFORNIA LIBRARY