Many of the developments I have mentioned came with the Second World War and the Great Depression that preceded it. World War II left a large residue of federal government activities and expenditures when hostilities ceased. Even before Korea, the federal budget had swelled beyond its prewar size with the costs of larger military forces, veterans' benefits and services, interest on the public debt, heavy expenditures on international affairs and assistance, and the activities needed to manage and finance these. And we cannot forget the many expansions in government activity that came during the momentous days of the middle 1930's.
Yet, important as they were, we should not overestimate the role of these major events in the growth of government. What was true of World War II and its aftermath was in some degree true also of World War I; as Slade Kendrick shows in his review of federal expenditures since the formation of the Union, some part of the expansion was retained after all major wars.
As for the depression of the 1930's, it was unique in the speed with which proposals for government action were put into effect. But it was not unique among depressions in starting movements for expanded government action and control. Nor did all of these come to nought or wait upon the climate of the 1930's for adoption. Before the next serious depression had developed the collapse of 1920-1921 had put some measures for the support of farm prices and farm credit on the federal statute books; the contraction of 1907-1908 stimulated the proposal that eventually changed our banking system; the economic troubles of the 1870's and 1880's led eventually to national legislation to regulate the railroads, curb monopolies, and tax incomes—and the state legislation of those days responded more quickly.
As we look back over the past half century we find signs of growth in government through most of the period. These signs appear in the figures on employment: in every decade government employment mounted more rapidly than private employment. They are visible also in the figures on capital and expenditures. They are found in the details of the history of bureaus and functions at all levels of government—national, state, local. The growth was uneven, and occasionally some activities of government were brought to a close by repeal, constitutional conflict, obsolescence, or neglect. . . . But significant elements of the present situation cropped up in every period. What we see, in other words, is a trend of long duration.
The factors that underlie this trend are surely many and complex. Income rose and brought with it increased demand for services, including those that are conventionally provided by government in this country, such as education, public health, mail, park, and road; and provided the means to pay for them. Along with the rise in income came further urbanization of the population, with increased needs for municipal services of all sorts. Urbanized life exposed, and in the eyes of many contributed to, disease, crime, and poverty; at any rate, these were revealed by improved statistical and other information, and advances in the social sciences led to a revised judgment of their causes. The way was opened, and sooner or
later followed, to public assistance programs, government investments in health and hospitals, improvements in correction methods and processes, and governmental responsibility for economic stabilization. Rise in income and urbanization reflect a basic process of industrialization; industrailization brought with it also large-scale production, problems of labormanagement relations, dangers of monopoly, and a more serious unemployment problem during depressions, among other things. These sweeping changes in economic life affected people's views on trade-unions and on government's role as factory inspector, provider of relief, stabilizer of employment, and guardian of fair competition. Industrialization meant technological change, and this in turn intensified—or appeared to intensify— problems of obsolescence of skills and capital, and thus altered attitudes toward government support of sick industries. The rise of large-scale production and the accompanying development of methods of internal control weakened objections to government production on the ground of inefficiency. Needs appeared for action in areas which private enterprise could not be expected to enter or seemed to be ignoring—conservation, flood control, agricultural finance; and government took on the responsibility.
The process was cumulative also because one step in the direction of government action favored another. Old-age and survivors' insurance could not be limited to one group; regulation of railroads generated pressures for regulation of motor carriers. Also, government action taken on one ground paved the way toward government action on other grounds. As in England, bits of humanitarian legislation limited to the hours of women and children in factories and supported by conservatives as well as radicals helped establish the principle that the regulation of labor generally is the proper concern of government and lent prestige to beliefs that government action is desirable in various areas of economic life. In this way, too, one piece of legislation led to another; and this breeding process had its special characteristics in a country made up of forty-eight sovereign states. Still another factor contributed to the process: the benefits of legislation designed to help a worthy section of the population are generally clear and visible, and its supporters have every incentive to press for passage; the costs, however, are spread among many groups, they are frequently indirect and slow to appear, and as a result opposition tends to be weak.
This brief sketch of the process by which government has come to occupy so large a place in our economy lists factors which may not be ignored in a scientific examination of the process. Such an investigation would encounter great difficulties, in part because political and other noneconomic aspects of our institutions and history are involved, as well as economic. Indeed, it is doubtful whether we shall ever reach a fully conclusive explanation. But the question is of basic importance and every insight and bit of objective evidence that economics can contribute would be valuable.