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effects of Government finance on the character of the people generally, observing that whatever conclusions we may arrive at apply in a stronger measure to State employees.

As the Government is naturally expected to be an example of wisdom and probity in all its actions, every payment it makes has an influence, great or small, on the financial spirit of the times. It is not necessary that this influence should be exerted directly on every individual in order to produce its full effects. It is sufficient if it modifies, consciously or unconsciously, the manner of thinking of that section who understand and note its action. They will in turn affect those with whom they come in contact; and, in this way, no part of the commercial community is untouched.

Nor can the line be drawn at commerce, for every department of social ethics is susceptible to a like modification. That the social mind is eminently sensible to financial influences can be clearly seen if we regard the interchange of duties between social units as receipts and expenditure on the part of each. In so doing, we are not merely drawing an analogy, for, whilst the subject is the same, the objects differ only in that, whereas in one case we have to deal with things capable of accurate measurement, in the other exactitude is unattainable. But the ethical process is identical, and the mind follows the same reasoning bias in the one as in the other; just or unjust, careful or careless, in both cases alike. With healthy surroundings the healthy mind will be prompted to give a liberal return, whether in actual exchange of industry and wealth or in social and public activities, for benefits received, and will be content if the other side of the account is fairly just.

If this same mind is thrown into the midst of a corrupt society, the result is not necessarily to share in the corruption, but to give a greater and greater proportion of energy to the income to the neglect of the expenditure side of the account. Hence, without going so far as to hold that man for man the citizens of such a state are not morally inferior to the inhabitants of our own islands, it may be pointed out that the existence of extensive corruption in certain countries does not warrant the common opinion that the inhabitants are radically incapable of reaching to our standard of public morality. Nor is there any sound basis for the equally popular notion that we must undergo a long course of racial degeneration before corruption can obtain a firm foothold in our midst.

These ideas are formed by looking solely at the grosser

manifestations of the disease. In reality the loss to a state through actual dishonesty in the governing class is insignificant when compared to the more general and constant, though less obvious, action of the malady; which may be described as the exclusive attention, of each individual to his own profit, grasping all he cannot be prevented from taking, and paying only what the law compels. When such is the general condition of a society, can we wonder that the magistrate fails to administer justice amongst an unjust people; that the politician aims no higher than his own and his friends' aggrandisement; that the capitalist grinds down his employees who in turn scamp their work; and that the soldier, furnished with power to defend his brother citizens against their enemies, and finding not brothers behind him but a struggling horde as ready to jostle him as one another, turns round and crushes all? And, seeing what the ultimate results of financial looseness are, can we attach too much importance to the discontinuance of a system under which it takes £112 to pay off each £100 of debt?

How closely the general condition of the people is bound up with the question of public finance can be judged by a comparison with any of the more civilised nations. It will be found that, due allowance being made for natural advantages, the higher the place a nation occupies in respect of general well-being the better are its finances administered; that is to say, the closer it follows the principle of wasting nothing. It will further be found that the improvement or deterioration in financial policy is antecedent to or contemporary with the corresponding social change, but never subsequent. Italy and Germany form strikingly contrasted examples of the truth of this law. In the one case the people have been taxed to the last penny-nothing that could be squeezed out of the nation has been spared in the endeavour to maintain the dignity of a Great Power. And yet, unharmed by enemies, it has brought about its own collapse. On the other hand we have a people, spending only when convinced that a distinct advantage is to be gained, attaining the highest position as a military power and yearly becoming more formidable in their commercial rivalry with this country, and that despite their disadvantages in regard to mineral wealth, sea-board, and immunity from foreign menace. Could anything show more. clearly than do these two examples the paramount necessity for good reason to be shown for every act of public expenditure, and how fraught with danger is the policy that attempts to No. 33.-VOL. IX.

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counterbalance such outlay?

an omission by increasing the total

To recapitulate :-A sound system of finance connotes soundness in respect of every item of expense. For, if the strict rule is violated in respect of any one item, a like course will be pursued with any other so soon as expediency suggests it. Since it is natural to avoid unnecessary trouble, the standard of all transactions will be set by whatever approved example satisfies the fewest and most easily fulfilled conditions. The financial tone of the governing powers is consequently lowered; and their laxity is multiplied throughout the whole range of administrative officials. The efficiency of the public service depends entirely upon the strength of the sentiment that urges towards a full return for value received. The same principle is the foundation of commercial morality, and, though the fact is somewhat disguised, is the guiding rule of all social intercourse. Consequently, the pernicious effects of the violation of this principle are not confined to the loss of a million or two annually through the operations of reducing the national debt and investing the money of the savings banks depositors.

One of the great impediments to progress in financial method is the impossibility of fully tracing the effects of error except in very rare and very gross cases. No matter how serious may be the blunders which a financier is driven to commit, there comes a time when his supporters are able to turn upon his critics and confidently demand to be shown the evils the latter have prophesied. Yet it will be seen from the above that incalculable mischief may have been done without its being possible to lay one's finger upon any particular result, whose direct connection with the original cause can be demonstrated. This is owing to the great complexity of social life and also because, in order to reach the worst effects, we must pierce the medium of a metaphysical stratum, in passing through which the causal line that we are following becomes blended with others and its individuality is lost. But on this very account its action becomes more widespread and irresistible. Bad finance is capable of making its influence felt in almost every phase of human life; whilst its agency is generally unrecognisable. This knowledge of its insidious character strengthens the already sufficient reasons for combating it on every occasion where its existence can be detected. But, when it can be shown that it is part of our permanent policy, in dealing with a considerable proportion of

the money entrusted to Government, to disregard the first principles of sound finance; then, though it may appear to be sounding too alarmist a note to suggest the fate of Italy or Spain as likely to become our own, it must be admitted that we have no means of resisting pressure in that direction until we revert to the common-sense system of giving measure for measure. DOUGAL RENTON

PROTECTIVE TARIFFS IN AUSTRALIA AND NEW

ZEALAND.

Of the seven colonies of Australasia all but one have customs tariffs of a more or less deliberately Protective character. The exception-New South Wales-is indeed the oldest, most populous, and most important of the seven. But complete Free Trade in New South Wales is a thing of yesterday, and is still opposed by a strong minority of her colonists. It is therefore within the mark to say that Protective tariffs have had for many years the support of a considerable majority throughout Australasia. This is the more noteworthy inasmuch as the duties, in so far as they have been Protectionist, have been mainly imposed to check the competition of England—a country against which the colonists have no national feeling of antagonism such as has helped to build up Protectionist tariffs in America and on the Continent. Moreover, the seven colonies only began to acquire self-government in the fifties, some years after the doctrine of Free Trade had been finally accepted in the mother country. Most of the colonists were themselves emigrants from the stronghold of Free Trade, and but few of them belonged to the landowning class or the Protectionist minority which lingered on in the United Kingdom. In their new home they remained readers of English literature and newspapers, and any economic doctrine they studied in this way was pretty sure to reflect the teachings of the Cobden school. Their almost universal drift into Protection in the face of the object lesson furnished by the amazing prosperity of England under Free Trade1 may therefore deserve the term "remarkable."

Nothing is more common throughout Australasia than to meet men who frankly admit that they have changed their economic The course of agricultural depression in the United Kingdom has, however, been closely watched by the colonists, themselves mainly dependent on farming and grazing.

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