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MASS. EXPERIMENT STATION BULLETIN 256 



The significance of the preceding discussion may be shown by reducing all 

 expenditures to simple figures. In 1926 total expenditures were .$2.92 for every 

 dollar spent in 1910, and $2.34 per person for each dollar per person spent in 

 1910. In terms of purchasing power, allowing for higher prices, $1.93 was 

 spent in 1926 for every dollar spent in 1910, and $1..5.5 per person was spent for 

 every dollar per person in 1910. 



If the cost of government service followed wholesale prices exactly, the 

 figures would indicate that the amount of government service per person has 

 increased 55 per cent since 1910. However, it was previously pointed out that 

 government costs follow retail prices more closely than wholesale prices. If 

 expenditures per person be deflated by the Federal Reserve Board Index^ of 

 the general price level, it appears that the net increase in amount of govern- 

 ment service per person from 1910 to 1926 was 37 per cent. In the opinion 

 of the authors, this is a fair estimate, and nearer the true situation than the 

 55 per cent shown above. 



Interest and Debt 



The payment of interest and annual payments on the principal of borrowed 

 funds either to sinking funds or to redeem outstanding serial bonds are impor- 

 tant fixed costs of government. Table 7 shows that one-eighth of the total 

 annual expenditures is for these purposes, and that the percentage has been 

 decreasing. In 1910, payments on account of debt were the largest" group of 

 Cfxpenses; while by 1926 the cost was less than any of the more important 

 groups of services. 



Table 9. — Expenditures for Interest and Debt, by Jurisdictions, 

 1910-1926. 



(Thousands of dollars) 



* Payments on debt not included. 



Table 9 shows the cost of interest and debt for the various civil units. 

 Cities pay three-fourths of the total, towns over 5,000 pay only one-eighth, and 

 the State pays about one-twelfth. Counties and small towns spend less than 



* This index number includes retail prices, wages, and the cost of living. 



