FINALE (Ital. for “end”), a term in music for the concluding movement in an instrumental composition, whether symphony, concerto or sonata, and, in dramatic music, the concerted piece which ends each act. Of instrumental finales, the great choral finale to Beethoven’s 9th symphony, and of operatic finales, that of Mozart’s Nozze di Figaro, to the second act, and to the last act of Verdi’s Falstaff may be mentioned. In the Wagnerian opera the finale has no place.
FINANCE. The term “finance,” which comes into English through French, in its original meaning denoted a payment (finatio). In the later middle ages, especially in Germany, it acquired the sense of usurious or oppressive dealing with money and capital. The specialized use of the word as equivalent to the management of the public expenditure and receipts first became prominent in France during the 16th century and quickly spread to other countries. The plural form (Les Finances) was particularly reserved for this application, while the singular came to denote business activity in respect to monetary dealings (as in the expression la haute finance). For the Germans the phrase “science of finance” (Finanzwissenschaft) refers exclusively to the economy of the state. English and American writers are less definite in their employment of the term, which varies with the convenience of the author.
A work on “finance” may deal with the Money Market or the Stock Exchange; it may treat of banking and credit organization, or it may be devoted to state revenue and expenditure, which is on the whole the prevailing sense. The expressions “science of finance” and “public finance” have been suggested as suitable to delimit the last mentioned application. At all events, the broad sense is quite intelligible. “Financial” means what is concerned with business, and the idea of a balance between effort and return is also prominent. In the present article attention will be directed to “public finance”; for the other aspects of the subject reference may be made (inter alia) to the following:—[Banks and Banking]; [Company]; [Exchange]; [Market]; [Stock Exchange]. See also [English Finance], and the sections on finance under headings of countries.
Finance, regarded as state house-keeping, or “political economy” (see [Economics]) in the older sense of the term, deals with (1) the expenditure of the state; (2) state revenues; (3) the balance between expenditure and receipts; (4) the organization which collects and applies the public funds. Each of these large divisions presents a series of problems of which the practical treatment is illustrated in the financial history of the great nations of the world. Thus the amount and character of public expenditure necessarily depends on the functions that the state undertakes to perform—national defence, the maintenance of internal order, and the efficient equipment of the state organization; such are the tasks that all governments have to discharge, and for their cost due provision has to be made. The widening sphere of state activity, so marked a characteristic of modern civilization, involves outlay for what may be best described as “developmental” services. Education, relief of distress, regulation of labour and trade, are duties now in great part performed by public agencies, and their increasing prominence involves augmented expense. The first problem on this side of expenditure is the due balancing of outlay by income. The financier has to “cover” his outlay. There is, further, the duty of establishing a proper proportion between the several forms of expenditure. Not only has there to be a strict control over the total national expense; supervision has to be carried into each department of the state. No one branch of public activity is entitled to make unlimited calls on the state’s revenue. The claims of the “expert” require to be carefully scrutinized. The great financiers have made their reputation quite as much by rigorous control over extravagance in expenditure as by dexterity in devising new forms of revenue. Unfortunately they have not been able to reduce their methods to rule. As yet no more definite principle has been discovered than the somewhat obvious one of measuring the proposed items of outlay (1) against each other, (2) against the sacrifice that additional taxation involves. Of almost equal importance is the rule that the utmost return is to be obtained for the given outlay. The canon of economy is as fundamental in regard to public expenditure as it will appear, later, to be in respect to revenue. Just application of the outlay of the state, so that no class receives undue advantage, and the use of public funds for “reproductive,” in preference to “unproductive” objects, are evident general principles whose difficulty lies in their application to the circumstances of each particular case.
Far greater progress has been made in the formulation of general canons as to the nature, growth and treatment of the public revenues. Historically, there is, first, the tendency towards increase in state income to balance the advance in outlay. A second general feature is the relative decline of the receipts from state property and industries in contrast to the expansion of taxation. Regarded as an organized system, the body of receipts has to be made conformable to certain general conditions. Thus there should be revenue sufficient to meet the public requirements. Otherwise the financial organization has failed in one of its essential purposes. In order continuously to attain this end, the revenue must be flexible, or, as is often said, elastic enough to vary in response to pressure. Frequently recurring deficits are, in themselves, a condemnation of the methods under which they are found. Again, the rule of “economy” in raising revenue, or, in other words, taking as little as possible from the contributors over and above what the state receives, holds good for the whole and for each part of public revenue. In like manner the principle of formal justice has the same claim in respect to revenue as to expenditure. No class of person should bear more than his or its proper share. In fact the special maxims usually placed under the head of taxation have really a wider scope as governing the whole financial system. The recognition of even the most elementary rules has been a very slow process, as the course of financial history abundantly proves. Until the 18th century no scientific treatment of financial problems was attained, though there had been great advances on the administrative side.
A brief description of the historical evolution of the earlier financial forms will be the most effective illustration of this statement. The theory of well-organized public finance is also discussed under [Taxation] and [National Debt].
The earliest forms of public revenue are those obtained from the property of the chief or ruler. Land, cattle and slaves are the principal kinds of wealth, and they are all constituents of the king’s revenue; enforced work contributed by members of the community, and the furnishing commodities on requisition, further aid in the maintenance of the primitive state. Financial organization makes its earliest appearance in the great Eastern monarchies, in which tribute was regularly collected and the oldest and most general form of taxation—that levied on the produce of land—was established. In its normal shape this impost consisted in a given proportion of the yield, or of certain portions of the yield, of the soil; one-fourth as in India, one-fifth as in Egypt, or two separate levies of a tenth as in Palestine, are examples of what may from the last instance be called the “tithe” system. Dues of various kinds were gradually added to the land revenue, until, as in the later Egyptian monarchy, the forms of revenue reached a bewildering complexity. But no Eastern state advanced beyond the condition generally characterized as the “patrimonial,” i.e. an organization on the model of the household. The part played by money economy was small, and it is noticeable that the revenues were collected by the monarch’s servants, the farming out of taxes being completely unknown. Tribute, however, was paid by subject communities as a whole, and was collected by them for transmission to the conquerors.
A much higher stage was reached in the financial methods of the Greek states, or more correctly speaking of Athens, the best-known specimen of the class. Instead of the comparatively simple expedients of the barbarian Ancient Greek. monarchies, as indicated above, the Athenian city state by degrees developed a rather complex revenue system. Some of the older forms are retained. The city owned public land which was let on lease and the rents were farmed out by auction. A specially valuable property of Athens was the possession of the silver mines at Laurium, which were worked on lease by slave labour. The produce, at first distributed amongst the citizens, was later a part of the state income, and forms the subject of some of the suggestions respecting the revenue in the treatise formerly ascribed to Xenophon. The reverence that attached to the precious metals caused undue exaltation of the services rendered by this property.