The expenditure of the United Kingdom for the year ending March 31, 1912, amounted to 178,545,000l. The expenditure may be divided into two main groups, namely, Imperial services and Local Expenditure. (This latter must not be confused with Local Government expenditure; perhaps the term 'national local expenditure' would be better.) The Imperial Expenditure was 103,072,000l., which total was made up as follows: National Debt charges, 24,500,000l.; Army, 27,864,000l.; Navy, 42,858,000l.; Miscellaneous, 7,850,000l. The 'Local Expenditure' of the Imperial Parliament for the same year amounted to 75,473,500l., the items being : Education, 18,983,000l.; Old Age Pensions, 11,727,500l.; Payments to Local Taxation Account, 9,636,000l.; Post Office Services 20,547,000l.; Cost of collection of Customs and Excise, 3,951,000l.; Miscellaneous, 10,629,000l.

It is instructive to note the distribution of this socalled 'Local Expenditure' among the three kingdoms, the respective aggregates being as follows: England and Wales, 55,628,500l., or 73·71 per. cent.; Scotland, 8,311,500l., or 11.01 per cent.; Ireland, 11,533,500l., or 15.28 per cent. It will be observed that England contributed 83.76 per cent. of the total revenue, but her share of the local expenditure was only 73.71 per cent. Scotland contributed 10.32 per cent. of the revenue, but her share of the local expenditure amounted to 11.01 per cent. Ireland contributed only 5.92 per cent. of the revenue, but she received no less than 15 28 per cent. of the local expenditure. The official returns do not, of course, reveal the proportion of the expenditure on the army, navy, etc., disbursed in each kingdom, and it would be useful if these figures could be made available. It would also be instructive to know how it is proposed to apportion the National Debt between the three kingdoms. Ireland of course repudiates any share of the National Debt. Are Scotland and Wales to be allowed to take up a like position? The net result for the year ending March 31, 1912, was that, while England contributed 95,672,000l., or 90.9 per cent. of the cost of Imperial services, and Scotland 10,331,500l., or 9.8 per cent., Ireland had an actual deficit of 845,500l., which was provided by her two partners.

In order to determine whether Imperial taxation falls

with an equal incidence upon the taxpayers of England, Scotland and Ireland respectively, it is necessary to consider the wealth and taxable capacity of each kingdom. During the past two years I have been examining this aspect of the question, and the results of my investigation are summarised in the following tabular statements:

* Including the cross-Channel trade between Great Britain and Ireland.

The average of the above indices is 6.43 per cent. It is submitted that the average ratio in each table fairly represents the taxable capacity of the country concerned in relation to the United Kingdom as a whole.

From the data furnished above it will be observed that England, with a taxable capacity of 84.03 per cent., contributed, in 1912, 83.76 per cent. of the total revenue; Scotland, with a taxable capacity of 9.54 per cent., contributed 10.32 per cent. of the total revenue; while Ireland, with a taxable capacity of 6·43 per cent., contributed 5.92 per cent. of the revenue. These figures, therefore, show that there is a remarkably close approximation between the taxable capacity of each kingdom and the amount of revenue which it contributes-they show, in fact, the fairness of the present unitary fiscal system, so far as taxation is concerned. In the matter of expenditure, Ireland receives an amount greatly in excess of that to which she is entitled, either on the basis of her contribution to revenue or on that of her taxable capacity; but this is the result of special legislation, and may be attributed to political considerations into which we need not enter here. The difference is not due to any fundamental defect in the present unitary fiscal system.

On the whole, so far as finance is concerned, it may be fairly claimed that the present unitary system has worked well. It has enabled the people of the United Kingdom

* Including the cross Channel trade between Great Britain and Ireland,

to develop and protect the British Empire and to carry through costly schemes of social reform without imposing a crushing burden upon the taxpayers. At the same time, it has ensured that the burden of taxation should fall upon each of the three great divisions of the Kingdom with a fairness of incidence that is little short of marvellous. There is no evidence whatever to support a claim that the economic interests of Scotland, Ireland, or Wales are being prejudicially affected under the present system.

Upon what grounds, then, are the people of the United Kingdom invited to break up the fiscal unity of the realm and destroy a financial system that has served so well? The considerations urged by the protagonists of Home Rule or of Federalism are (1) political, (2) economic.

As to the first consideration, at the meeting of the British Association already referred to, Mr Herbert Samuel claimed that, while we have already adopted federal principles almost wholly in our judiciary, very largely in our executive, and to no small extent in the working of our legislature, the failure to establish more complete federal arrangements has resulted in two great disadvantages. There was first, he said, the fact that the present system was regarded with dissatisfaction by the greater part of Ireland, and with increasing discontent in Scotland and Wales. Secondly, there was the fact that the central Parliament, which had not only to deal with Imperial matters, but also with every kind of business from every part of the United Kingdom above the competency of a county council, had been found quite unable to cope singly with the task; and, although its sittings were prolonged until they covered almost all the year, and discussion was limited by methods universally admitted to be open to objection, still many matters known to be ripe for settlement were left untouched, legislation was always in arrear, and the nation had to submit to its laws being worse than they might be because their single Parliament had no time to give them better.

It is not practicable or desirable to discuss here at length political considerations; but with regard to Mr Samuel's first point it may be submitted that, if a measure of Home Rule be granted to Ireland, it will be very difficult to withhold measures of self-government from the other great divisions of the Kingdom if they in turn

demand them. It will be shown in a later part of this article that the granting of measures of Home Rule to England, Scotland, Ireland and Wales on lines similar to those proposed for Ireland would ipso facto necessitate the breaking up of the fiscal unity of the Kingdom and would prejudicially affect the economic interests of at least nine-tenths of the people of the United Kingdom. Upon these grounds, therefore, it may be urged that, apart from political and sentimental considerations, the wishes of the minority should not prevail, particularly when we consider that in the present instance the minority are not only not contributing to the cost of Imperial services, but are actually in receipt of a subvention of about 1,400,000l. per annum from the majority of the inhabitants of the Kingdom. As to Mr Samuel's second point, it may be said that there is no guarantee whatever that under a federal system there would be no congestion in the Imperial Parliament or in the State Parliaments. The experiences of other federal systems point to the conclusion that, unless the government and the governed are animated by a spirit of reasonableness and conciliation, the machinery of government, no matter what its outward form, will not run smoothly. A study of the effect of federal government in the United States, the German Empire or Austria-Hungary cannot be said to warrant the conclusion that a federal system per se is the most perfect form of government that could be devised to meet the peculiar needs of the United Kingdom. A much better case can be made out for the institution of a federal form of government for the Empire, into which federation the United Kingdom might enter as a unit.

With regard to the financial and economic objections to the existing system it may be said at once that they are weighty. There is a certain divergence between the economic interests of England and Ireland, owing to the fact that England is essentially a manufacturing country, while Ireland is in the main still an agricultural country. It may be pointed out, however, that there is a general misapprehension as to the predominance of the agricultural interest in Ireland. The gross value of the output of manufacturing industries in that country during 1907, returned under the Census of Production Act, was 66,000,0007,; the materials used cost 44,000,0007; and the