3. Summaries of payments and receipts.-The accounts of a governmental treasurer were originally kept to demonstrate the fact that none of the money received by him had been converted to personal uses, but that all of it had either been expended for public purposes as required by law, or that all or a part of it was still in his custody. The accounts of auditors and comptrollers were in the beginning kept primarily as a check upon the accounts of the treasurer. Summaries of the payments and receipts of the treasurer were prepared at an early date by that officer and also by the comptroller and auditor, and such summaries in their earliest form are still necessary in the administration of governmental finances. In their simplest form these summaries show the amounts of money on hand at the beginning and at the close of each fiscal period. The progress made in accounting methods, however, requires that modern governmental summaries of payments and receipts shall be something more than statements, such as those just described, and in particular that they should state separately the amount of cash at the beginning and close of the year in the principal administrative funds, such as the general funds and special funds for different purposes requiring the reservation of cash and expenditures for specified purposes only.

To be of the greatest administrative assistance, as well as of the greatest value to the general public, summaries should classify payments and receipts as described on preceding' pages, at least to the extent shown in the analysis of Tables 3 and 4 of the present report. The receipts thus summarized should include all amounts taken in by the treasurer or treasurers for any purpose and from any source, and should be classified so as to show the amounts received, respectively, from the public and from departments of the government. The amounts received from the public should be further separated so as to show those received for meeting costs of government and those received for other purposes; and the amounts received for meeting costs of government should be arranged in groups which will show the amounts obtained from specified principal sources of revenue and the amounts received from credit transactions which increase the net indebtedness of the nation, state, or municipality.

On the other side of this summary the payments including all amounts paid out or disbursed by the fiscal officers for any purpose and to any person, should be classified as described above for receipts, into those paid to the public and those paid to the departments of the government; and in turn, those paid to the public should be separated into those for meeting costs of government and those for other purposes or objects. Payments for meeting costs of government should include all amounts paid out by the preparation and delivery, or the preparation only, of audited bills or vouchers, or warrants by the comp

troller or auditor, for the principal classes of expenses, interest, and outlays, and all amounts disbursed by the treasurer under circumstances or conditions which lessen the aggregate of public indebtedness.

Such a summary will disclose at a glance the relation of correct administration to public indebtedness. The nation, state, or municipality which has an excess of revenue over all current costs of government, including expenses, interest, and outlays, is, for the time being at least, decreasing its indebtedness. Such a decrease may be the result of conservative and economical administration which uses public credit only for meeting exceptional, nonrecurring, or "extraordinary" costs of government; or it may result from the fact that the government has reached the limit of its debt-incurring power, and as debt-incurring power, and as a result of necessity, must pursue a saner administration that in some respects is along the same lines as an administration of the character just mentioned. The nation, state, or municipality, whose expenses and interest exceed or even approximate the amount of its revenue, has entered upon a course which if not changed will, even with the greatest increase in local wealth, sooner or later bring it to the limit of its borrowing power. Governmental officials and writers on public finance are not agreed as to what should be the true policy of nations, states, and municipalities with reference to public indebtedness; and at the present time definite facts relating to the amount of public indebtedness and the relation of current governmental transactions to that indebtedness are needed even more than discussion of the true policy of governmental administration. Under such circumstances, nothing can be done by governmental fiscal officers and accountants to assist in opening the way for the final determination of the true policy of governments with reference to public debt that would prove to be of as much value as the presentation of summaries such as those above described, which show clearly and exactly all the facts about revenues and costs of government as outlined, and disclose the present drift of the nation, state, or municipality with reference to public indebtedness.

To be of the greatest value, a summary of payments and receipts such as that described must be based upon accurate accounts, and be associated with promptness and dispatch in the conduct of business. The payments to be included in the summary of expenses, interest, and outlays are those represented by the audited bills or warrants drawn by the auditor or comptroller upon the treasurer. If such bills or warrants are always issued promptly after presentation of just claims, they represent the current costs of government as perfectly as the expense account of the best-managed private corporations represent current costs of operation. If, however, claims are not presented when they accrue, or are not audited and paid

by warrant promptly upon presentation, neither the accounts nor the summaries are records or statements of the current costs of government, and such accounts and summaries will continue to have a considerable margin of error until the government corrects its method of transacting business. This is far more vital than changes in methods of accounting, which are to be considered factors for good only so far as they assist in stimulating and enforcing correct methods of administering business.

4. Summary of budgetary expenditures.-The governments of most American cities prepare more or less elaborate budgets or statements of expenditures to be met from current revenue. Some of these cities include all their costs of government in such a budget, and thus meet from revenues not only their current operating expenses but all amounts required for outlays and those to be transferred to sinking funds or employed for other specified purposes. Summaries of receipts and payments arranged as stated in the preceding section will show the relation of revenue receipts to costs of government, and the formal payments for the liquidation of indebtedness. These summaries, however, will not exhibit the relation between the revenue receipts, or revenue, and the payments other than those for current expenses and interest made specially payable from current revenue by the terms of the appropriation or revenue acts. A complete summary of revenue, or revenue receipts, and budgetary expenditures or the expenses and other charges made specifically chargeable to current revenue, is a statement of considerable administrative significance and assistance. Such statements are at the present time very frequently presented under the term 'summary of revenue and expense,' a term which is not strictly applicable to them, since the designation "expense" is not a proper one to use in referring to amounts transferred to sinking funds, disbursed for meeting the costs of outlays, or for similar purposes, even though paid from revenue. A better, because more descriptive, designation for referring to all these amounts made payable from revenue by the specific terms of the appropriations is "budgetary expenditures."

5. Summaries of revenues and expenses. A governmental summary of revenues and expenses is a statement which shows on the one side, either in a single entry or in a number of specific entries, the amount of accruing revenues for a given fiscal year, and on the other side the accruing expenses for the same period. By accruing revenues is meant the amount of revenue that is entered in the accounts to the credit of that year. In practice, it is the amount charged in revenue accounts as that which ought to be collected from various sources for governmental uses. By accruing expenses are meant those which have been approved

and audited by the proper accounting officer. In all the best managed cities the accruing expenses here mentioned are identical with the warrant payments for expenses by the comptroller or auditor. They correspond to the amounts that would be charged to expenses in any well managed corporation. With poor governmental management the warrant payments are more or less defective measures or statements of the costs of government, but no more trustworthy or accurate exhibit of such costs can be obtained by any system of accounting until or unless the business administration of the city is improved.

In theory, at least, accrued governmental revenues correspond to the accrued revenues of a private business, which are always employed to measure the current profit or loss of an enterprise. The accrued revenues of a private business always tend to increase the profit or decrease the current losses. For administrative purposes these accruals must be placed over against the accruals of expenses. In the business of governments considered as the agents of the nation, state, or municipality, accrued revenues never become factors in any important administrative problem other than that which concerns their collection, to which attention has previously been called. Appropriations are made on the basis of estimates of revenue receipts, and not revenue charged or to be charged on the books; and in this and in other ways revenue receipts and warrant expenses, and other costs of government met by warrants, become the essential factors in the important administrative problems of government. For this reason, such summaries of receipts and payments as those already described become of supreme administrative value and importance, and summaries of revenues and expenses are only statements of academic or theoretical significance notwithstanding their vital importance in private accounting.

6. Miscellaneous summaries. In addition to the foregoing summaries which, with the exception of the type last mentioned, are prepared in one form or another by most American cities, there are many other kinds of summary statements employed in connection with the financial administration of municipalities. The great majority of such statements are arranged for the purpose of summarizing data that are of special administrative significance to the city preparing them, by reason of the operation of state laws or specific local regulations. In the present connection, however, it will be sufficient to mention only two of these summaries.

In cities where general property taxes are never collected in the year when levied, or in the fiscal year on whose accounts they are carried, some account must be kept which, like a summary statement, will disclose the relation between the tax levies and the

revenue loans issued in anticipation of their collection. Such summaries may never be included in formal printed reports, but they constitute important memoranda for the guidance of fiscal officers issuing and of bankers providing governmental loans.

A summary of the same general nature is prepared by cities showing that their sinking fund assets and their method of accumulating such assets suffice to provide the funds for liquidating all loans when due.

7. Summaries of current funds and accounts.-All the summaries hitherto described are simple in form and easily understood by all. With few exceptions each, directly or indirectly, shows the relation of two classes of financial data. The most vital facts in each case may be summed up in a balance-sheet form, although some of them may be presented better in a form that approximates that of a private profit and loss account. Many cities content themselves with keeping accounts and printing separate summaries such as those already described; while others endeavor to include part or all of the data included in summaries of the types described under 1, 2, and 3, together with certain other data, in a single statement which may be called a statement of condition, corresponding in governmental business to that section of the balance sheet of a private business which includes current assets, liabilities, and proprietary interests. Such summaries are given many different names, and may best be described by calling them summaries of current funds and accounts. Such a summary will show at the beginning of a fiscal year on the debit side (1) the cash on hand, as indicated in the outline of "summaries of receipts and payments," and (2) the estimated receipts for meeting governmental costs, as described under "summaries of governmental receipts;" and on the credit side (3) the debt liabilities to be met during the current fiscal period or directly from the assets credited to that period and (4) the expenditures authorized for the fiscal period by general and special appropriation acts. The balance between the two sides, if on the credit side, represents current resources available for future appropriation or for meeting indebtedness, or for making investments; while a debit balance marks a prospective deficiency which must be met by the creation of a permanent or floating debt.

The amounts to be included in a summary such as is here outlined for any date subsequent to the opening of the fiscal year will be for (1) and (3), respectively, the cash in the treasury and the outstanding liabilities at the date of the summary. The corresponding amounts to be included under (2) will be those of the original estimated receipts less the cash obtained from sources that have not created a liability to be included under (3); and the amounts to be similarly included under (4) will be those of the original appropriations less the expenditures previously made

in consonance with the terms of the appropriation

acts.

Such a summary is not a statement of a business employing proprietorship accounts, but of one employing fiduciary accounts. It shows on the one side the cash intrusted to the government for governmental uses, and the amounts which the government is expected to realize from specified sources for those uses, or the failure to realize, which it is expected to explain. It exhibits on the other side the debts and expenditures to be met or authorized to be met from the amounts first mentioned, and thus the specific uses to which the amounts first mentioned are applied. Such a summary, therefore, brings into one statement an exhibit of the current administrative problems of the executive officers, including the fiscal and other officials.

On previous pages mention has been made of the fact that in recent years some American cities have installed proprietorship accounts to take the place of the earlier fiduciary accounts. The great majority of accountants who are engaged in installing these accounts insist that in such a scheme it is improper to include in a summary of condition such as the one here referred to any such exhibit as that mentioned under (2). These accountants contend that from the standpoint of proprietorship it is inadmissible to include in the summary any revenues that have not accrued and become charges against definite persons. If this contention is sound in theory and law, as it appears to be, these accounts should show in the summary of current funds and accounts only the revenues which have actually accrued. The summary as thus prepared would show a greatly fluctuating proprietary interest through the year, as if the city credit or basis of credit were fluctuating with the formal levying of taxes and the collection of revenue. As stated on previous pages, the test of all accounts is in the administrative assistance which they render the officials responsible for good government, and time alone can decide which of the two systems of accounts is more desirable -those first described, whose summaries show each month what the executive officers are authorized to do and the resources on which the authorizations are based, or those of the latter type, whose summaries disclose not what is to be done and how it is to be done, but what has been formally charged as amounts owed by or owed to the city.

8. Summary of investments, properties, and accumulations.-The summaries heretofore described are primarily exhibits of official responsibility and public obligations to be met and the resources provided or expended for meeting them during a limited fiscal period, principally in the future; but governmental accounts should not only look to the future but be records of the past. They should summarize the outcome of past transactions so far as their results provide

properties and public improvements for the use of the present and future, or lay burdens of debt and taxation upon the present and future. The accounts in which these records are kept may be made an essential part of the circle of accounts from which are obtained the data for the summary last described, or they may be recorded in an independent circle of accounts, as may seem most convenient.

A governmental summary which will provide the information outlined above must show on the one side (1) all funds with investments which are held for governmental uses, such as sinking funds, public trust funds for governmental uses, and general investment funds, and (2) all governmental properties-productive and nonproductive and public improvements; and on the other side (3) the fixed or funded debts incurred in the past; (4) the amounts of the funds and properties acquired as the result of free contribution from the public, either with or without specified conditions, and those set aside for specified purposes; and (5) the amounts acquired from compulsory revenues. All amounts included under (4) and (5) constitute revenue accumulations for the more or less permanent uses of the government, and correspond to the proprietary interests of an enterprise conducted for profit and employing proprietorship accounts. Of these amounts, those included under (4) correspond to those amounts which, in the case of a private enterprise, are reserved or constitute its surplus reserves.

9. General governmental summaries.-A few governmental accountants and governmental officers are giving thought to the preparation of general summaries of governmental financial condition. They would include in such summaries all data presented in the summaries outlined under (7) and (8). No summary

along this line has yet been prepared that has been satisfactory to more than a limited number of those interested, since it has either been so complex as to be readily understood by only a few, or it has omitted some facts of administrative importance, and thus has been an imperfect and often misleading exhibit. Until or unless some more simple method of summarizing all the financial data of administrative importance is devised than has yet been presented to the public, the average city official and the average private citizen will find far more of interest and of administrative value in the summaries previously described than in the one here referred to.

Names of governmental summaries.-The average commercial accountant knows of but two business summaries the one which he calls "balance sheet" and the one called "revenue and expense" or "profit and loss" account. When he is called in as an expert to arrange governmental accounts, he applies these names with but little discrimination to governmental statements, and hence we find American cities referring to all the summaries mentioned, respectively, under (1), (2), (3), (7), (8), and (9) as balance sheets, or trial balances, although no one city applies the designation mentioned to more than one of these statements. None of these governmental summaries above referred to, and none of the others which have been described, is a true balance sheet in the sense in which that term is employed in private business for gain. They are all governmental statements, and should be given designations which are as little as possible associated with summaries of private enterprises for gain, in the same way that those summaries are distinct in name and in form from those for private fiduciary accounting.

More or less complete information regarding the sanitary and economic supervision of milk supplies during the year 1907 is presented in Table 56 for all of the 158 cities covered by this report. In addition, milk ordinances from about 65 cities have been carefully examined by the writer and are considered in the latter part of this discussion.

Need and underlying principles of milk supervision.Adequate public supervision of milk supplies is yet so relatively recent in origin as well as infrequent, as is eloquently witnessed by the blanks and by the many low standards shown in Table 56, that a statement of the underlying principles seems desirable.

First of all, it may be noted in passing that no other article of food or drink, except water, has so vital a relation to health as milk and that few have greater significance in domestic or family economics. The economic importance of milk and the evils of robbing it of its nutritive value by skimming or by diluting it with water were recognized long ago and laws against adulteration, in this early and limited sense, have been on the statute books of many states for years; but public enforcement of these laws has generally been very lax in character and inadequate in extent. Such attempts at public control of the milk supply as have been made, although generally classed as sanitary measures, have been economic in character, while really vital sanitary regulations of the milk supply have, until quite recently, been almost entirely overlooked.

There is nothing unhealthful or dangerous in skimmed or watered milk, in and of itself. Such adulteration is a matter of economics and fraud, except in so far as by deceiving the ignorant or uninformed it robs infants, children, and invalids of their chief or only source of nutrition. From the viewpoint of health, the real and very grave dangers in milk lie in its possible and unfortunately too common dirtiness, and in its possible infection by the germs of specific diseases, particularly typhoid fever, tuberculosis, scarlet fever, and diphtheria. Dirt is not only a frequent carrier (not originator) of disease germs, but it is also, when combined with high temperatures, a sure cause of rapid increase of fermentative bacteria

in milk. These bacteria are liable to produce stomach and intestinal troubles, and particularly the summer diarrhea and other illnesses so common and so fatal to infants and young children.

Typhoid and scarlet fever and diphtheria do not get into milk through the cows, but are introduced by milkers or by handlers of milk or milk containers or other dairy utensils. Typhoid fever is frequently introduced into milk by the use of polluted well water or other water used in washing milk cans or bottles. Tuberculosis infection, alone of the four diseases mentioned, may come from the cows which give the milk, as well as from the milkers who draw it or the persons who prepare it for market or who wash or otherwise handle milk cans and bottles.

Cattle diseases other than tuberculosis sometimes spread through milk to man, but it is believed that this happens only rarely. Various disturbances of the normal conditions of milch cows, particularly if they cause fever, may give rise to injurious substances in milk.

Brief as is the foregoing statement of the principles underlying the sanitary and economic supervision of milk supplies, it will suffice to show the great importance of a continuous, efficient public supervision of everything pertaining to the production of milk, its preparation for market, and its transportation, storage, sale, and delivery to the consumer. This includes. public oversight of the health, food, care, and shelter of the cow; the health and carefulness of all milkers and handlers of milk and milk containers; the temperature of the milk and the general cleanliness of its handling from the time it is drawn from the cow until it reaches the consumer; and finally, the bacterial and nutritive contents of the milk.

What Table 56 aims to show.-On turning to the headings of Table 56, it will be seen that they deal, first of all, with the number of inspections of various sorts made by each city in 1907. These include, following their order in the table: (1) Inspections of cows, stables, and dairy houses, or inspections at the source of the milk supply; (2) inspections of milk depots and stores, or centers of distribution and sale; (3) inspections of milk in order to determine the