forced the reactionaries into supporting him unconditionally by simply taking the Premiership with a very small party at his back and saying: "If you don't support us, Labour is bound to throw us out." In Queensland the situation is more complex; R+P=L+P comes nearest to expressing it. Mr. Kidston is still Premier, but his Ministry is composed chiefly of Mr. Philp's former followers; the men whom he used to lead are dropping back one by one into the alliance with Labour which helped him to so many victories, and he at present has a majority of one to carry on business with. As for Tasmania, where reactionary influences have ruled so long that nothing but their extreme opposite, the radicalism of aggressive Labour, has been able to stand against them, that radicalism is the only sure thing in the new legislature; the Ministerial conglomeration has yet to discover its own mind. But Tasmania is a good deal troubled over Federal aggression just now; its ruling classes have hitherto stifled all attempts to introduce wages boards or an Arbitration Court, and the rates of pay among its working folk (except the miners) are the lowest in the Commonwealth-and now the fusionist Federal Government is adumbrating a measure which will allow a Federal body to fix wages within a State that refuses to fall into line, as far as industrial legislation is concerned, with its fellows in the Commonwealth. When that measure is actually introduced Tasmania's anti-Labour conglomeration will soon find, in their individual attitudes towards it, the dividing line between the Rs and the Ps.

These State parties are for the moment an important item in Federal politics. For-next to Defence, which will in all probability now become a non-party question-the chief Federal problems of the immediate future concern a readjustment of powers and of financial relations between the Commonwealth and the States. There is the problem concerning the proper division of Customs revenue; the problem of the consolidation of State debts; the progressive land tax, which is bound to come either under State or under Federal auspices; the organising of immigration on a large scale; and the various forms of industrial regulation, including the measure already described. In all these matters the States-Rights Party (which naturally includes most of the existing State Ministries) believe that the States should be either supreme or dominatingly influential; and the worst of it is that

many Federal members of the old Opposition (now a wing of the Fusion) have in times past pandered to the States-Rightists to get their votes against the Deakinite, or Labour supporters of Federal sovereignty. Consequently the Premiers, who last year almost brought themselves to accept a modification of Mr. Deakin's financial scheme, this year-directly the Fusion seemed at all possible-put their backs up and reverted to their previous demands, long since proved impossible of acceptance. I described these in a previous letter, and need not revert to their details. And, directly the Fusion was a fact, the Premiers clamoured for another meeting, to insist a second time within six months on those impossible demands; they took the view offered by the reactionary section of the Press, that Mr. Deakin had been "nobbled," that he must yield now to any policy forced on him by his new colleagues, that their chance had come of making their own terms with a beaten and suppliant foe. That is the spirit in which Messrs. Wade and Kidston, for instance, will come to the Premiers' Conference next month. They will be grievously disappointed, no doubt. They will find the Fusion nearly as Federal-minded as the pure Deakinite Ministry was last year. For the man who is himself administering a Department, and wants all the money he can get for it, is a very different person from last year's Opposition member, who only wanted to embarrass the office-holders and attract votes to secure his seat at the next election.

In this connection, by the bye, note two points. The view of the Premiers and the reactionary Press is largely also the view of the Labour Party. The belief that Mr. Deakin may be forced to placate the Premiers by concessions that Australia would repudiate if she got the chance is typical of Labour's motives for its present campaign of obstruction. I have good reason, I think, to be sure that in that belief Labour is wrong; but the Press which stimulates it cannot reasonably condemn its natural consequences. If you tell me that A. will murder me directly he gets out of gaol, I can hardly be blamed for doing my best to keep him inside it.

The second point is this. The Premiers, one would think, represent the majority of voters in their States. Their demands might, therefore, be supposed to be backed by majorities. And the voters in State elections (for Lower Houses) are practically

VOL. LIV

11

identical with the voters at Federal elections. How, then, can any one reasonably maintain that demands approved by the majorities in six different States will probably be repudiated by a majority-the same voters voting-in the Commonwealth? The answer is simple. Votes are conditioned nowadays by the quality of the man you vote against, rather than by that of the man you vote for. The votes in New South Wales, both of electors at the polls and of members in the Legislature, that keep Mr. Wade in power, are not so much votes for Mr. Wade as they are votes against Mr. McGowen; the votes that keep Mr. Kidston precariously balanced at Brisbane are votes against Mr. Bowman. This is the interpretation of the R + PL formula; the deliberate self-isolation of Labour gives the Moderate voter his choice between supporting Labour, which will refuse to recognise him until he signs its pledge, and supporting Reaction, whose policy he dislikes but at least has a faint hope of influencing. And he plumps for Reaction as the lesser evil. After all, his turn may come. If in New South Wales or Queensland the Progressives are submissive, in South Australia their audacity has reversed the situation, and many a vote will be reluctantly given for Mr. Peake solely in order to defeat Messrs. Coneybeer and Verran.

Now the reasons which induce an elector to vote for Mr. Wade as against Mr. McGowen-thereby to escape the greater evil of a McGowen régime, accepting the lesser evil of a Wade States-Rights programme-do not hold good in the Federal sphere where the choice between States-Rightists and Federalists does not involve a Labour Ministry as one of its alternatives (and, if it did, would not involve so great a danger, seeing how far better men the Federal Labour members are than their State confrères). Consequently the paradox of six State majorities only providing a Federal minority is quite possible in fact. And note this further, that the State majorities, being expressions of hate rather than of love, are not real majorities at all. They are deplorable results of the "two-party" fetish, which completely misrepresents genuine popular feeling, aided by Labour's in every way condemnable resolve to make just such another fetish of its pledge.

Of course similar conditions prevail more or less in any Parliamentarily governed country. I should not wonder if you

could find analogies to the Australian situation at Westminster itself. But the English reader who is interested in politics knows of these and makes allowance for them; of the Australian compromises and misrepresentations he knows nothing definite, and is inclined to assume unjustifiably that things here are exactly what they seem. That way lies the deadliest misunderstanding. Similarly it would be easy to acquire absolutely topsy-turvy ideas about Australian politics by merely interpreting the commonest political names-Liberal, Conservative, Socialist in their European sense. It is done out here, as a partisan trick: thus Mr. George Reid yesterday taunted certain members with inconsistency-"Liberals?" said he, "well, if they went to England and talked their politics, they would have to consort with the Tories ?" Out here nobody is hurt, because everybody understands the truth. (An Australian Labour member who visited England not many years ago assured me that the only politicians with whom he could converse comfortably and intelligibly were the younger Unionists). But an Englishman who identified the Australian "Liberals"-who may be anything, being self-styled-or "Conservatives"-which is the name each party applies to its opponents-with the British parties of similar name would be hopelessly confused; and the confusion between British Socialists-who seem to be Collectivists -and the Australian "Socialist" Labour Party is already working harm. For the latter comprises a majority of men who are only advocates of the use of State mechanism to protect the small man against the big, without the slightest wish to make either of them a State employee; and there exists alongside them a genuinely Collectivist organisation, which runs its own candidates at Federal elections and denounces the Labour men as "half-hearted" and "traitors," and even "would-be fat men, term of gross abuse in the Labour vocabulary.

All this, however, is by the way. Returning to the problem of State-Rights, the matters in controversy are of two kinds. In one section-of which the financial question is the most important -the contention of Federalists is that the Federal Parliament is the fit authority to have certain powers, because of the nature of the powers; in the other section the contention is only that the State legislatures have botched their job and the Federal Parliament would probably do better. This is the case, for instance

with reference to the land-tax. If the State Parliaments would each pass a progressive land-tax, capable of "bursting up" the big areas of fertile and accessible land which certain owners hold unused, in the hope of getting a bigger price later on, I doubt whether any politician would suggest handing the matter over to the Commonwealth. The demand of labour-and of many Australians who are by no means Labourites-for a Federal tax is due to their belief that State legislatures will not pass a measure of the requisite severity, because their Councils are dominated by the large landowners. If only the present New South Wales Ministry would follow the example of its Victorian friends, and introduce a definite "bursting up" tax, Labour's coming Federal election campaign would have half the sting taken out of it. On the other hand, the demand that the various State debts should be consolidated, and the collateral demand that the bulk of the customs revenue in future years should be at the Federal Parliament's disposal-the States raising fresh revenue, if they really need it, from new forms of direct taxation-is quite independent of the merits or demerits of State administration. The consolidation of State debts under a Federal board, say its advocates, will enable Australia to borrow on better terms; the right of the Commonwealth to the bulk of the revenue its officials collect rests on the belief that its duties, on which that revenue must be expended, are more nationally important than those of the State Governments.

That point is perhaps worth enlarging on. The financial situation is in one respect simplicity itself. The total revenue at present raised by Federal and State authorities is inadequate to meet the total expenditure which, nemine contradicente, must be incurred by those authorities in the near future. In 1911 it will be competent for the Federal Parliament to redistribute a large part of this total revenue. Shall it do so on the principle of adequately financing Federal needs, handing the surplus Federal revenue to the States, and putting on their shoulders the burden of increasing taxation for their purposes-or shall it consider the States' needs first, and so reverse the process just mentioned?

I will not attempt to discuss the question in detail. But note the chief items of expenditure. The Federal Treasury has to pay for National Defence, the Post Office (handed over by the States in a disgraceful condition, and starved ever since by