ments (except those destined for the sinking funds), sums received from other corporations toward the cost of permanent improvements, and the like. In short, “taxes and other income * represent the actual revenue of the City. The following are the formulae derived for income and expenditure: Formula for Total Income : Formula for Tawes and Other Income : Formula for Income from Loans. – Determined by the difference between the formula for total income and that for taxes, etc. : Formula for Total Eagenditure : As would be expected, the curves for total income and for total expenditure are nearly coincident, that for total income being slightly higher from the fact that in the twenty-five years considered in the computations the aggregate of total income exceeded that of total expenditure by Ho of 1 per cent. Net Debt. — For ten or twelve years following 1874 the net debt of Boston remained practically stationary. It then rose slowly until 1892, from which date it increased at a remarkably rapid rate. In 1892 the net debt was about $30,000,000. In 1900 it exceeded $58,000,000, an increase of $28,000,000 or nearly 100 per cent. in eight years. Were the net debt to continue to increase at this astounding rate it is easily seen that it would be only a question of time when the finances of Boston would reach a serious condition. The net debt has been studied in two ways, considering (a) the whole period covered by the data, and (b) that of the eight years in which most of the increase has taken place. First Formula for Net Debt. —Determined by the actual debt in each year from 1874 to 1900, inclusive : - Second Formula for Net Debt. —Determined by the actual debt in each year from 1892 to 1900, inclusive: It must not be assumed that the growth of income, expenditure, and debt can be predicted with as great a degree of accuracy as the growth of population, polls, or valuation; the conditions governing the former group being more complex and not readily reduced to mathematical terms. It is believed, however, that the formulae here given may at least serve as guides to the future. The total income and total expenditure of the City, while liable to yearly fluctuations, are likely to continue to increase at a fairly uniform rate, as they have done in the past, and it is thought that the formulae for these quantities will give approximately true predictions for the next few years. Owing to an increase, in 1900, in the allowable tax rate, it will henceforth be possible to raise a greater proportion of the total income by taxation, reducing correspondingly that proportion of the running expenses of the City formerly met by loans. For this reason, future “taxes and other income” are likely to be somewhat higher, and future “income from loans.” usually less, than the formulae would indicate. Analysis of the net debt, to determine its character and the provisions for its redemption, has not been attempted in this investigation. The formulae for net debt here presented are not intended for use in predicting future debt, but rather to indicate the alarming tendency to growth in this direction. RESULTS OF THE INVESTIGATION. The approximate rate of yearly increase just prior to 1900, along the various lines considered, is given herewith. Approximate rate of Population . go to te * 2+ per cent. In general it may be said that the valuation of the City is increasing at a slightly faster rate than the population, but that the rate of increase in expenditure was then about twice, and that of net debt about three times, the rate of increase in valuation. As a guide to what may be expected in the future, certain results predicted by the formulae have been computed, and are given in the table on page 13. The actual values for 1900 are also shown in the table. Assuming the conditions existing in the past to continue to operate in the future, twenty-five years hence the expenditures and consequent necessary income would be, per capita, about double what they are to-day. In the matter of net debt the most startling results are to be found. In 1900 the actual net debt was 5 per cent. of the total valuation of the City. Were the average rate of increase from 1874 to 1900, or, what is worse, that from 1892 to 1900, to continue for fifty years, we should expect at the end of that period to find the net debt amounting to about 20 per cent. Of the total City valuation — an increase per inhabitant from $104 in 1900 to about $500 in 1950. Since the formulae for net debt were computed, the net debt on January 31, 1901, has been obtained from the Auditor's report for 1900–01 and found to be $51,385,763.44, a decrease of $6,947,574.15 from the met Actual Population . . . . . . ........... * * * * * * is a e e s to o & s a te is a e o so to to to so to e o e e s e 560,892 560,020 622,400 687,900 903,000 1,323,000 Polls . . . . . . . . . . . . . . . . . . ........... : . . . . . . . . . . . . . . . . . . . . . . . . . . 166,449 163,270 183,200 204,400 275,500 419,600 Actual met debt . . . . . . . . . . . .................................. 58,333,338 Net debt by first formula................................... [................ 55,394,000 75,900,000 101,500,000 209,000,000 490,000,000 NOTE. — Data of actual income and expenditure in 1900–01, furnished by Statistics Department. debt of the previous year. Of this reduction $5,000,000 was money received from the State in payment for City water-works taken for State use by the Metropolitan Water Board. The balance, $1,947,574.15, was paid from ordinary revenue. During the year 1900–01 only $3,163,550 was received from loans, an amount far below the usual figure. If in that year, a loan order amounting to several millions had not failed to pass, it is probable that the net debt would have continued to increase except for the payment by the State. Considering the numerous municipal improvements already projected and likely to be adopted, it is thought that the net debt will tend to increase in the future. If the rate of increase existing from 1892 to 1900 were continued from 1901, the net debt would reach $90,960,000 in 1908, an amount greater than that predicted by the first formula. While it is hoped that such a rapid increase will be avoided, it is apparent that it is easily possible for the results predicted by the net debt formulae to come approximately true. Reference to the above table shows that in 1900–01 the actual total income and total expenditure were less than the predictions by the formulae. The income from taxes, etc., was $1,350,000 above the estimated amount ; the increase, as before stated, being due to a higher allowable tax limit. The income from loans being only one-third the estimated figure, the total income was considerably below the prediction and nearly two millions less than the actual expenditure for the year. The latter was 9% per cent. lower than the prediction, a part of this saving being accounted for by the failure of the before mentioned loan order. As the figures for population, polls, and valuation in 1900 were used in the computations, no returns are yet available by which the predictions of these formulae can be tested. CONCLUSION. It has been said that it is a function of the municipality to spend money, and to a proper exercise of economy in expenditure is due, to a considerable degree, the success or failure of municipal government. But |