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STEPS TO IMPERIAL FEDERATION. from the special expenditure on the wars in South Africa and China, had risen to over 60,000,000l. All our expenditure for purposes of defence does not appear in the Annual Estimates. Under the Naval Works Act of 1902 no less than 27,000,000l. is to be expended on the construction of docks and naval barracks, and the protection of naval ports at Gibraltar, Devonport, Dover, Hong Kong, Simon's Bay, and Bermuda. Expenditure on defence is more likely to increase than to diminish. Owing to the large additions being made by Germany, Russia, and the United States to their navies, increased exertion on our part will be necessary if we are to retain the command of the sea. We have been passing through a period of great commercial prosperity, so that, until the imposition of the extra taxation necessitated by the war in South Africa, the increase in our national expenditure has been little felt. Prosperity cannot continue for ever. Trade moves in ever-recurring cycles of prosperity and depression, and when the depression comes, as it must come ere long, we in the mother country shall begin to feel that the burden of defending the Empire is becoming too heavy for the taxpayers of these islands alone. When Colonies are in their infancy it is the duty of the mother country to charge herself with their defence, but our Colonies are now rapidly growing from youth to manhood. Their population and their resources are year by year increasing relatively to those of the mother country (a temporary exception must be made in case of Australia, which has been suffering from a drought of unprecedented severity and duration). It is not, I think, unreasonable to expect that before many years have past the Colonial taxpayer will be both able and willing to stand shoulder to 85