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PROBLEMS OF EMPIRE. duty, declared by Parliament to be a war or emergency tax, should go to the Imperial exchequer. If, on the other hand, he wished to reduce the rates of duty, grants could be made from Imperial funds to the national authorities to an amount equivalent to the loss of revenue they had suffered owing to the reduction of the rates of duty. It may be admitted that the treatment of excise proposed would have a tendency to render this important branch of revenue non-elastic, and yet the advantages of the plan may be held to outweigh this disadvantage.

The problem of adjusting the financial relations between the Imperial and national authorities is one which presents many difficulties, from the peculiar features of the case. Every solution is open to objections. I believe, from the study I and others have given to the subject, that the plan suggested in this paper is open to fewer objections than any other.

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