The scope of the combined state and local government services, though fluctuating considerably over the period 1860 to 1900, kept pace with the expansion of private-enterprise activity and was far more extensive than the scope of corresponding government activity in most of the other advanced countries of the time. In fact, the scope of state and local activity in this country was altogether unique and can be understood only in the light of the peculiar development of the American pioneer economy. Its characterization by such ideological clichés, borrowed from past European political and economic thinking, as "laissez-faire" or, contrariwise, as "government interference" was scarcely proper.
Although the states were forced by conservative public opinion not to engage in internal improvements or lend their credit to private enterprise which engaged therein, they gave ample powers to their subdivisions to carry on such improvements on a local scale and to aid private enterprise in their organization. The states also gave their local communities vast powers to organize essential educational and other social services. At the same time, the states continued to maintain and improve the educational and social-welfare services which they had organized during the preceding half a century. They also extended their regulation of business in order to ensure fair competition and protect consumers and labor against possible abuse and exploitation.
State Expenditures . The development of state finance from 1860 to 1900 can be divided into three periods-the sixties, the seventies, and the last two decades. During the sixties state expenditures were intimately affected by the Civil War and its aftermath and rose sharply. The states made large outlays for bounties to volunteers and afterward for aid to veterans and their survivors and borrowed heavily to that end, with the result that they had large interest charges and debt payments to meet in subsequent years. Their costs of operation were also sharply increased by the rise in wage and price levels. During the seventies state expenditures decreased or at best only kept pace with the growth of population, for the states were paying off their debts and consequently had to pay less for debt interest. At the same time the sharp drop in wage and price levels enabled them to economize. During the period 1880 to 1900, however, state expenditures began again to rise. The states began to extend moderately their regulative services, their care of the poor and mentally ill, their cor-