Correspondence

A LETTER FROM SOLTTII AFRICA. [To the Editor of the SPECTATOR.] Sin,—South Africa has just received the highly gratifying intelligence that her national housekeeping accounts, which have just closed, show a realized surplus of /1,250,000. More than that, so roseate are the economic prospects for the coming year that the Minister of Finance is budgeting for a further surplus of 1210,000, and is remitting taxation to the extent of /215,000, a small concession but grateful as an earnest of better tidings. The national expenditure of the Union for the year 1926-7 was 127,350,000, and .the revenue 128,500,000. When the final returns are complete they will disclose the handsome balance mentioned.

As fluent and eloquent in English as he is in his Afrikaani mother tongue, Mr. N. C. Havenga, the youthful Minister of Finance, impressed a vigilant House by his clear and concise exposition of the nation's financial and industrial position in his Budget speech. Since the present Govern- ment took office it has been the practice to present the Budget statement in English and Afrikaans in alternate years. Mr. Havenga, therefore, spoke in Dutch. He had a cheerful story to tell, though unmarked by any touch of colour, without frills or thrills—a plain unvarnished tale of sound conservative progress, of steadily growing revenue, expanoing industry, decreasing unemployment and reduced cost of living. The Government has had more than an ordinary share of good luck since it took office. Each year Mr. Havenga has budgeted for a deficit ; each year he produces a surplus. The Government naturally hails the result as a tribute to the soundness of its financial policy. The Minister did claim this year's Budget as a vindication of what, by comparison with Australia and Canada, he termed the" moderate protection "policy introduced two years ago.

It may please British manufacturers to know that he does not propose at the present juncture to increase the dose, though the Government has been powerfully pressed to do so. Its critics point to the swollen expenditure and the huge increase in the Union's debt since the Pact came into power. There is undoubtedly keen disappointment that in face of an overflowing Treasury and buoyant trade no effort has been made to ease the burden of taxation other than by the proposed slight Customs adjustments and the remission of Income Tax on mutual insurance companies. The Minister cannot always count on a fortuitous Customs windfall, and the diamond production from the alluvial diggings is an unreliable source on which to base current expenditure.

These were the main factors in swelling this year's revenue. Much can also be made of the growth of the public debt by 38 millions sterling in three years. This now stands ai 1228,760,000, against which there are 171 millions sterling the sinking funds. Hitherto these have depended to a lame extent on the uncertain contingency of a surplus, but Mgt year the present Government introduced a Bill providing for an annual contribution from revenue of 1650,000 towards the extinction of debt ; and the whole of this year's surplus is being appropriated for the same purpose. The Minister rightly replies' that You cannot administer a young, vigorous and expanding country without increasing your ordinary expenditure and borrowing capital for development. So long as adequate provision is made for debt redemption, as has been done; financial policy is perfectly sound. It is not easy to counter this argument., • Mr. Jagger, the Government's ablest financial critic and a stern stickler for economy, and his frienda, Are finding it a difficult and invidious task to pick holes in the present year's accounts. Less satisfactory , are the figures of the railways and harbours administration. This • great State enterprise now rivals the main Budget in the globular amounts with which it deals. Its expenditure in the year just closed was £28,210,706, and the revenue 128,064,282. The deficit of 2146,424 is almost entirely due to the loss of a million tons of traffic owing to the failure of the maize crop, an illustriition of the increasing importance of agri- culture in the economic fabric of South Africa's life, com- pared with the gold and diamonds. The deficit, however,

s almost negligible compared with the huge sum involved, aid when it is remembered that 12,154,155 has been sur- atlered in revenue in the form of reduced rates and fares, ligher pay and better pensions for the railway and harbour mployees.

Apart from questions of finance, which are always with s. the two great political problems exercising the minds if the people at the present time are the Native Bills and he national flag. General Hertzog, in his capacity of linister of Native Affairs, introduced his native legislation, mbodied in four Bills, a few days ago. These were read ormally a first time, and have now been referred to a Select ommittee. No more will be heard of them during the 'resent session, as it is not expected the Select Committee ill be able to digest these measures, one of which, the Land

Jill. is of a formidable detailed character, take 'evidence and lraft a report in the two months that now remain before he prorogation.. This fact was the foundation of the only

lebate on the subject that has taken place in the House of ;senility since the Prime Minister first enunciated his policy t Smithfield nearly two years ago.

It was the desire of the country (and still is) to keep the iseassion of this grave problem out of the vortex of party rife. So far, however, General Hertzog has been unsue- ssful in securing the co-operation of the Opposition. lie In been in correspondence with General Smuts since last ear's recess, but the two statesmen have been unable to ad a basis of agreement. The Opposition leader, in his tthlished memorandum. on the Bills, proposed referring the latter to a sort of minor National Convention. Differences inmediately arose in the Prime Minister's mind as to the nstitution of such a Convention, whether natives should e members of it, and whether its report would be binding. he Union Parliament, as the supreme body in South Africa, nil responsible for the good government and safety of the 'Mon, could hardly be expected to assent to the last-named roposa I.

A non-party solution of the question can hardly be hoped ir flow, and there is every prospect that the Bills, when ley emerge from Committee in their amended form, will ome the issue for the electors. An interest& constitu- mal point raised by General Smuts—whether the Govern- ent's procedure was in conflict with the provision of gion 35 of the Act of Union, which entrenches the rights

f the natives—was disposed of by Mr. Speaker in favour the Government.

Ey the time this reaches you, a decision one way or another ill have been taken on the national flag question. At the anent of writing hopes are rising for a settlement by consent. lie Commission appointed by Dr. Malan to examine three amsand odd competitive designs and select one for embodi- ent in the Flag Bill recommended three designs, none of hieh, in accordance with the Minister's instructions, lbodied the Union Jack. Before finally adopting any 'ign• the Government made a further effort to secure tional agreement. It invited the National Vigilance mnittee, a self-appointed body comprising representatives the English-speaking population in the Transvaal, Cape d Natal, to appoint six delegates to meet six members the Flag Commission, nominated by the Government, to wilss and recommend designs without restriction, let or mirance.

The Commission is expected to report shortly. Its work handieaPPed by the fact that the discussion of the flag 'Nem has become so involved in politics that impartial Isideration is practically impossible. The English-speaking pulation; in the coast towns especially, have proved extra- '"1Y Sensitive sensitive about • it. Well-meant suggestions for

sohition have been turned down, regardless of their

merits. Even the advice of the Spectator, subsequently sponsored officially by the Prime Minister on his return from London, to embody the Royal Standard on the doniestic flag, was rejected with scant courtesy. Mr. Thomas Marlowe, late editor of the London Daily Mail, who was visiting South Africa, tendered useful advice, and was promptly rapped over the knuckles in the South African Press for his temerity. Mr. Philip Kerr, after this, wisely decided not to " butt in." The bulk of the English people in the coastal provinces will have the Union Jack or nothing. In such a temper an amicable settlement is not easy, and the task of the new Commission is far from enviable.—I am, Sir, tte.,

YOUR SOUTH AFRICAN CoRRESPONDENT.

Cape Town, March 31st.