The Budget and Accounting Act of 1921 was one of the most significant legislative enactments of the early 20th century. It provided guidelines for the modern budget and a framework for funding an activist state. The act required the president to submit a single, consolidated budget proposal to the Congress each year. It also established the Bureau of the Budget to provide the president with the resources necessary to produce a budget proposal and the General Accounting Office to give Congress the resources to ensure accountability. The Budget Act did more than coordinate the budget. It gave the president greater influence over how federal monies were allocated through the formulation of budget figures and priorities.
The movement toward a budget system in which the executive branch had greater control over federal spending had been building for years. It had its roots in the PROGRESSiViSM of the early 20th century. Progressive reformers sought to rationalize government through the elimination of corruptible interests and political machines. To stem the power of the political machines and challenge government corruption, especially on the municipal level, reformers placed more trust and authority in executive and administrative institutions. In doing so, they promoted the accumulation of power at the executive level.
A number of studies attempted to rationalize the budgetary process, including one conducted by President William Howard Taet’s Commission on Economy and Efficiency (1910-12). Still, the call for reform of the budgetary process did not stop with investigations. Supported by members of both parties, the creation of a regular budgetary process was a plank for the Republican presidential campaign in 1916 and 1920 and the Democratic campaign in 1920. In 1919, hearings were held in both the House and Senate to research possible changes in budgetary procedure. The legislation made it through both houses of Congress, but President WoODROW WiLSON vetoed it because of concern with the constitutionality of the bill. The next president, Warren G. Harding, signed the Budget Act in 1921. Charles Gates Dawes, who had been in charge of procurement for the American army during World War I, took over as the first budget director in that year. Dawes instituted several reforms in how government agencies kept records and accounted for revenue and expenditures. The Budget Act did more than rationalize the budgetary process. It established the foundation for the modern budget and the expansion of presidential power in the 20th century. In doing so, it helped to coordinate the modern state.
Further reading: Robert K. Murray, The Harding Era: Warren G. Harding and His Administration (Minneapolis: University of Minnesota Press, 1969).
—Steve Freund
World History
