them, if by so doing they could escape being treated as the British Colonies of the Cape and Natal are now being treated.

In the early seventies' many thousands of Kaffirs walked overland from the Portuguese provinces to work at the Diamond Fields, now Kimberley-a distance of over 600 miles-without any by your leave' of the Portuguese authorities, but the whole length of the railway from Delagoa Bay to the Transvaal Border (Ressano Garcia) is only a day's walk for a Kaffir.

While the modus vivendi has intensified and prolonged the severe depression which inevitably ensued in Natal and Cape Colony after the war, it has also had the effect of making it very profitable for wealthy individuals in the Transvaal to promote the prosperity of the foreign port of Delagoa Bay, where they have acquired for small sums a large proportion of the town lands of Lourenço Marques. Where the treasure is there will the heart be also.

I can well imagine that when the High Commissioner entered into that agreement he regarded it as a temporary expedient for relief in a very difficult position-that he was misled by wrong information, and supremely desirous to save the gold mines intact, and thereby save the pockets of the British taxpayers, even at the expense of the Colonial taxpayers.

But we are now informed by cable that the Transvaal Government is entering into an agreement with the Mozambique authorities to continue the modus vivendi on present terms (that is to say, shutting out Natal and the Cape from fair competition) for another ten years at least, with the provision that it shall apply to from fifty to fifty-five per cent. of the total traffic between the Transvaal and the sea-board; thus perpetuating and extending a system which is directly and intentionally injurious to all British interests in South Africa.

All that Natal would ask for her railways (and, I think, the Cape also) is that the through rate from the sea-board to Johannesburg shall be the same as on the Delagoa Bay route-no preference to either.

The question naturally arises-If the effect of the modus vivendi is to do such serious injury to Natal and Cape Colony, and if the consideration which the Portuguese authorities give in return for the money and the preferential treatment they receive is of the flimsy and withal immoral character which I have described-why have Natal and Cape Colony submitted to it?

When I was in South Africa in 1905 that was the question which both in public and private I put straight to a number of gentlemen on whom responsibility rests. In Natal and the Cape the first answer I received was that they had protested and still protest-but they gave me an explanation of their quiescence which I do not think should be published.

To put my opinion plainly, I believe that the Governments of

Natal and Cape Colony were intentionally hoodwinked. So much for the modus vivendi.

As regards closer union, I may say that I have been an advocate for the Federation of the four States in South Africa under the British flag for many long years-and am so still-but to surrender the moulding of the destiny of South Africa' to Pretoria is another thing altogether.

Now as to the origin of the present movement, I do not for one moment believe in the pretence that it originated in South Africa, and I have every reason for thinking that it originated in suggestions from certain politicians in this country-and that the frantic haste with which the proposed Constitution is being so unconstitutionally pressed forward is for the purpose of securing acceptance of the proposal while the present Ministry in England is in office.

If, say, Canada or Australia entered into an agreement directly involving a restriction of trade by the other of them, I do not think it would be called a modus vivendi, and the British Government would have something to say about it; but I suppose I have been wrong in my belief that no legislation which sacrificed the interests of any British Colony for the benefit of a foreign State would be sanctioned by the Crown-we shall see.

However, putting aside all doubtful questions and taking into consideration only the facts as I know them, I conclude by expressing my unwelcome conviction that if a Constitution' on the main lines of that now proposed becomes law it will lead to serious trouble in South Africa, all hope of there ever being a British South Africa must be abandoned, and one chapter will be complete and ready to the hand of a future Gibbon.

The Editor of THE NINETEENTH CENTURY cannot undertake
to return unaccepted MSS.

THE Budget of 1909 is likely long to be remembered. Never before in the history of this country has there been in time of peace such a vast deficit to be faced. Never before have so many new expedients for raising revenue simultaneously been proposed. And never before, so far as a living memory goes, has a British Chancellor of the Exchequer devoted his Budget speech to platform rhetoric in place of financial exposition. In all these respects the Budget of 1909 is unprecedented, and we may sincerely hope that it will remain unparalleled.

Of the last-named characteristic of the Budget little need be said. Mr. Lloyd George has many most attractive qualities, including great parliamentary ability, and all his friends will hope that he may be able to adapt himself to the difficulties of the tremendous task he has undertaken. But for the moment it seems as if his bent of mind is unsuited to the hard facts and dull details that a Finance Minister must face and master. That is all the more unfortunate because his proposals are so elaborate and extensive that they cannot be successfully defended, or even explained, except by a man with a special aptitude for finance. Library,

VOL. LXV-No. 388

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In the discussions of the Budget which have so far taken place, in the House of Commons and in the Press, attention has been concentrated almost exclusively upon the proposals made for meeting the deficit. Scarcely a word has been said as to the causes out of which that deficit arises. Yet surely this is the primary question which ought to be discussed. Before we ask by what methods the bill is to be paid, we must first inquire how it happens that a bill of such magnitude is presented for payment.

Apparently this question is unpopular in the present House of Commons. If, by chance, allusion is made to it, immediately one side of the House shouts 'Dreadnoughts' and the other side responds with the cry of 'Social reform.' Neither side cares to reduce the sum total of expenditure, because each is committed to vast demands, and attaches more importance to the realisation of those demands than to the diminution of the burden of taxation. Indeed, it is doubtful whether either party any longer holds the opinion, once common to both political parties, that taxation is an evil. The Tariff Reformers, who have taken possession of what once was a Conservative Party, apparently believe that the prosperity of a country can be even increased by judicious taxation; the Liberals, forgetting their old Liberalism in order to dally with a new Socialism, appear to welcome taxation as a means of transferring the wealth of the rich to the pockets of the poor. It is only the man who has to pay who regards taxation as an evil, and unless he is vocal no politician will befriend him.

Unfortunately, the taxpayer, qua taxpayer, has for the past dozen or fifteen years been almost silent. The reasons are not far to seek. Previously to the war the wealth of the country was increasing far more rapidly than the burden of taxation, so that there was little occasion for grumbling. During the war, the majority of taxpayers were too patriotic to grumble even at taxes which hit them hard. They hoped that the new taxation would cease when the war was over, and there can be little doubt that the continuance of the war taxes after the war was one of the causes of the defeat of the Balfour Administration in 1906. Since the Liberals have been in office some little relief has been given to the taxpayer-enough to keep him quiet and this patient acquiescence in the present heavy scale of taxation has evidently inspired Mr. Lloyd George with the belief that the taxpayer will submit to an indefinite addition to his burdens. That is the fundamental mistake of the present Chancellor of the Exchequer, and a similar mistake is contemplated by his opponents. They, too, imagine that the taxpayer will cheerfully bear new burdens, if only they are framed in accordance with a particular prescription. They, too, will be disillusioned if ever they obtain the chance of trying to extract more money out of the taxpayer's pocket under whatever pretext. And therefore, though for the moment both parties neglect

the problem of expenditure, that is the root problem which both parties will have to face.

In the present financial year the sum which the taxpayer is asked to provide is 162,102,000l. Last year the sum expended was 152,292,000l. Ten years previously-namely, the last year before the war-the corresponding sum was 117,671,000l. Going back another ten years, to the year ending the 31st of March 1889, we find that the expenditure (including the payment to local taxation accounts) was 89,084,000l. Thus in twenty years, from 1888-89 to 1908-9, the expenditure of the country has increased by the huge sum of 63,000,000l. a year, and another 10,000,000l. is added to the Estimates for the current year.

The full significance of this tremendous increase will be better appreciated when it is compared with the increase in the previous twenty years. In 1868-69 the expenditure was 75,491,000l., and if we deduct this sum from the expenditure already given for the year 1888-89 we find that the increase in that period of twenty years was only 13,593,000l. In other words, our annual expenditure in the past twenty years has increased nearly five times as fast as in the previous twenty years. Moreover, the pace is still being accelerated. Not only are the Estimates for the current year 10,000,000l. in excess of those for the year just concluded, but next year a further increase is contemplated and provision for it is being made in advance in the Budget of the present year.

Then

To these and similar facts Socialists and semi-Socialists are fond of replying that the wealth of the country has also increased enormously. That statement is happily indisputable; but if the wealth of the country had increased at the same rate as our public expenditure there would have been no need to impose additional taxation. The increased yield of the old taxes would have supplied all the new revenue required. Yet we find that, apart from the proposals of the present Budget, the country is already called upon to pay greatly increased taxes as compared with the period before the war. the income tax was 8d. in the pound for everybody whose income was over 7001., with deductions for incomes below that figure. The present tax, without the proposed increase, is a penny more all along the line in the case of earned incomes, and 4d. more in the case of unearned incomes. Then the tax on tea was 4d. a pound; now it is 5d. Then there was no sugar duty; now every purchaser of a pound of sugar has to pay a farthing to the public exchequer. The tobacco duty, the spirit duty, the beer duty, and the death duties all are higher to-day than they were before the war, apart from the further increases now proposed. At the same time there has been an enormous increase in local taxation. Therefore, although it is true that the wealth of the country has increased, it is also true that a larger proportion of each citizen's private means is being taken from him for so-called public