| Between 1877 and 1920, the priorities of American state government shifted from social responsibility to economic development. From the 1870s to the 1890s, Massachusetts, New York, and California devoted most public expenditures to social programs designed to provide a minimum standard of health care and education for their citizens. Beginning in the 1890s, states began to spend increasing amounts on economic development projects such as highway construction. Simultaneously, the most important source of revenue for state government shifted from property taxation to corporate taxation. That shift intensified state officials' concern with economic development by creating a vested interest on the part of the states in maintaining the profitability of taxed industries.;Social responsibility and economic development were not mutually exclusive alternatives. In fact, after 1910 the states continued and even expanded social programs. But the new economic development projects were so much more expensive that their share of state expenditures dramatically overshadowed that of the states' older social responsibilities.;Four factors contributed to the transition from social responsibility to economic development. First, professionals gained increasing authority within state government. On their recommendations, legislatures undertook expensive projects, such as state care of the insane. Second, rising state expenditures prompted officials to turn to alternate sources of revenue, such as corporate taxation. Third, corporate taxation made states more concerned about maintaining profitable business environments. Finally, constitutional provisions requiring popular referenda for debt issues had the ironic effect of increasing transportation expenditures. The nonpartisanship of the largest bond referenda campaigns facilitated much larger expenditures than partisan competition had heretofore allowed.;The transition from social responsibility to economic development between 1877 and 1920 was only one phase in a longer cycle. The function of state government in American society has alternated between social responsibility and economic development since about 1815. Expenditures for education and health care have grown steadily, while spending on economic development has fluctuated in long cycles. The superimposition of periodic surges of spending for economic development on continuous social expenditures thus appears in the long run as a cyclic swing between social responsibility and economic development. |
