CHAPTER III

COLONIAL FINANCE

Colonial finance differs in some important re­spects from the finances of a fully developed nation. In the first place, a colony being a sub­ordinate though distinct part of the national or­ganism, its financial system must always be adapted to this relation of dependence. Col­onies, however, cannot be assimilated to the local units of a national government because of the great diversity of conditions which prevail in the various parts of a colonial empire. In colonies, moreover, financial questions are even more closely connected with the general economic life than in independent countries ; indeed, the more highly developed a country becomes, the more distinctly can finance be treated as a matter of revenue supply. In a new region where civiliza­tion is being built up painfully and in the face of formidable obstacles, there must be a careful cal­culation of the possible effect of any act of the government upon all the incipient economic insti­tutions and relations. Thus, for instance, in col­onies, the matter of direct taxation is intimately connected with the labor supply, customs duties control the development of trade, and the impor- 6 8x