FEDERALISM: FAILURE AND SUCCESS

Also by Ursula K. Hicks

DEVELOPMENT FROM BELOW

THE FINANCE OF BRITISH GOVERNMENT rg2o-rgg8
PUBLIC FINANCE
PUBLIC FINANCE SURVEY OF INDIAN FINANCE
REPORT OF THE EAST CARIBBEAN FISCAL COMMISSIONER
DEVELOPMENT FINANCE, PLANNING AND CONTROL
THE LARGE CITY: A WORLD PROBLEM
Federalism:
Failure and Success
A Comparative Study

Ursula K. Hicks
 © Ursula K. Hicks 1978
Softcover reprint of the hardcover 1st edition 1978 978-0-333-24262-9
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First published 1978 by

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Hicks, Ursula Kathleen, Lody

Federalism
1. Federal government
I. Title
]C355
ISBN 978-1-349-04008-7 ISBN 978-1-349-04006-3 (eBook)
DOI 10.1007/978-1-349-04006-3

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Contents
Preface Vll

PART I INTRODUCTORY
I The Essence of Federalism 3
Addendum: Forerunners of Federalism IS

PART II THE CASE STUDIES 2I

2 Attempted Federations Which Never Materialised 23
(A) Frustrated Hopes in South Africa 23
(B) Abortive Federation in East Africa
(Kenya, Uganda, Tanzania) 37
3 Short-lived Federations Which Never Attained Nationhood 55
(A) Federation, Fragmentation and Regionalism
in the Caribbean
(B) The Federation of Malaysia and Singapore
4 A Sad Case of Total Failure: The British
Central African Federation
5 Federalism in the Indian Subcontinent
(A) The Long Road to Indian Federal Union
(B) Federalism in Pakistan
6 Decolonisation and Federalism in Nigeria
7 Two Successful Federal Systems
(A) Federalism in Australia
(B) The Swiss Confederation

PART III I6g

8 Lessons of Experience: Failure and Success I7I

.Notes and References I97

Index 20I

v
Preface
This book owes its existence to an invitation from Professor Russell
Mathews, Director of the Centre for Research in Federal Financial
Relations at the Australian National University, Canberra, to contribute
to the programme of the Centre a study offederal failure. The subject at
once intrigued and interested me, and my first thanks must go to Professor
Mathews and his team, not only for suggesting it but for inviting me to
Canberra for discussions (in the Spring of 1976) and for much valuable
information in the course of my work.
When I began seriously to think about the subject I soon became
convinced that a study of the causes of failure necessitated also an
investigation of the causes of success. This was particularly evident because
throughout history failure and success have been intermingled. The most
successful federations have from time to time had very adverse experiences
when some degree of break-up seemed inevitable. Similarly there are
gleams of light in the experience of even the worst failures. These
experiences leave their mark on federal organisation. Only the historical
approach can do justice to these sequences. Similarly, only by studying the
past history of peoples and their political and cultural backgrounds is it
possible to give adequate weight to the sociological factors which have
gone to the making -or undoing -of particular excursions into federalism.
We can distinguish two types of federal organisation: coordinate and
cooperative. (I owe these terms to Professor Mathews and perhaps he was
responsible for coining them, but they are extremely useful.) The essence of
federalism is two-level government (national and state). The names may
differ but the principle is the same. In coordinate federalism both levels of
government operate independently within the field set for them by the
Constitution. Problems of intergovernmental relations (economic and
financial as well as political) are consequently minimal. The locus classicus
of the coordinate model is K. C. Wheare's Federal Government (OUP, first
ed. 1946). Quite recently another model of coordinate federalism has been
developed in the USA by C. Tiebout and R. A. Musgrave, stemming from
Tiebout's now famous article 'The Pure Theory of Local Expenditure'
(]. P. E., 1964). This model seeks to bypass problems of intergovernmen-
tal relations by encouraging communities to sort themselves out by
migration into homogeneous self-regarding government entities (as it has
been said, rather in the manner of a layer cake). Each community would
choose the services it desired and the level of their development. It would
Vll
Vlll Preface
either produce them itself or buy them from outside, paying for them by
(essentially benefit) taxes.
But in the modern world federal systems have largely abandoned the
coordinate model in favour of cooperative federalism in which the relations
of Centre and State are much closer. This can take many forms. They may
even change over time because they are essentially dynamic and flexible.
But in all forms the central problem is intergovernmental relations:
economic, political and social. It is the solution of this problem which
makes or mars a federation. The solution adopted determines both the
general form and the details of the federal system which will be found
appropriate in particular circumstances.
The problem of intergovernmental relations in a cooperative federation
can be viewed either from the economic-financial or from the political-
administrative side. A recent example of the economic approach is to be
found in W. E. Oates Fiscal Federalism (Harcourt Brace Jovanovich, 1972)
and in the same author's contribution in The Political Economy of Federalism
(Lexington Books, 1977). A good statement of the political approach is
contained in S. H. Beer's essay 'A Political Scientist's View of Fiscal
Federalism' in the same volume. Also relevant to the discussion is the work
of James Buchanan, especially The Theory of Public Choice; Political
Applications of Economics, a volume of essays edited by J. Buchanan and R.
D. Tollison (University of Michigan Press, 1972).
The economic approach stresses the similarity (even identification) of
the problem of intergovernmental relations in a federation and in a unitary
country with strong local government. The political approach on the other
hand emphasises the basic difference in the status of lower-level govern-
ments. In a federation their rights are constitutional and cannot be
interfered with except by very special arrangements. In a unitary state
lower-level governments are merely statutory and can be made to conform
precisely to national policy, even though in particular fields they may
exercise considerable powers of initiative and independent decision-
making. It is clear that we need to keep in mind both approaches. But even
then we cannot be sure that together they will provide the necessary
background for the socio-historical aspects which are essential for a proper
understanding of federal failure and success in particular cases.
My case studies have been selected in the hope of doing justice to this
aspect. I have personally visited all the countries studied (with the
exception of Rhodesia and Nyasaland, where I had to withdraw at the last
minute from an invitation to Salisbury and Lusaka owing to the sudden
illness of my husband). But in addition to my own experiences I have
naturally sought the assistance oflocal experts. This has without exception
been most generously given. In this connection I would particularly like to
mention the help of Dr A. Calloway of the Nigerian Institute of Social and
Economic Research, lbadan and the Institute of Commonwealth Studies,
Oxford; Dr Max Frankel of the Foundation for Federal Collaboration,
 Preface lX

Solothurn, Switzerland; Mrs Judith Heyer, who after long experience in

East Africa is now a Fellow of Somerville College, Oxford; Professor Wong,
Professor of History at the University of Singapore, and Mr Shanmugalin-
gam of the Malaysian Civil Service and Balliol College, Oxford. The views
I have put forward do not necessarily coincide with theirs; but broadly I
am in full agreement and have found them most helpful.

Ursula K. Hicks
Part I

Introductory
1 The Essence of Federalism
Most of the federations which will be discussed in this book are
contemporary; either they are still in existence or have existed in quite
recent years. The beginnings of federation however are quite ancient. As
soon as settlements grew enough for the people to feel themselves part of a
group or community a natural instinct arose to contact other settlements
and to join together for mutual benefit, perhaps for trade but above all for
defence, especially against the great dynastic powers which were already
well established (although often only temporarily). The communities
seeking neighbourly contacts were usually urban, partly no doubt because
they had more to defend, and also because their trade contacts spread
fairly widely. But these settlements were not always urban. The three
founding cantons of the Swiss Confederation were most definitely rural,
but their location in deeply separated mountain valleys no doubt
encouraged a feeling of community. Although primarily for defence these
early alliances had strong economic objectives also, such as securing larger
markets from a point of greater vantage or constructing public works (such
as roads) which would have been too difficult for a single community
acting alone. The organisation of these early 'federations' (or leagues) was
generally primitive; communications were bad and the members were
lacking in the administrative skills or experience to build a lasting
foundation. Nevertheless although these early 'federations' all eventually
collapsed, some of them (such as the League of Hanseatic towns in
mediaeval Northern Germany) lasted for several centuries, longer than
any modern federations have yet had the opportunity of doing.
The experiences ofthese early 'leagues' can throw a good deal oflight on
the problems of modern federations, largely because life was much simpler.
Hence the cause of failure and success can be more easily identified. With
this in mind I have annexed to this introductory chapter a brief study of
some classical and mediaeval forerunners of federalism.
Today 'federations' such as the USA, Canada, Australia and Switzer-
land are among the most successful and wealthy countries in the world.
Except for Switzerland their foundations are relatively modern:
eighteenth, nineteenth or twentieth century. But more recently (mainly
after the Second World War) a new crop offederations has emerged (or
been attempted). They owe their existence partly to the charisma of such
countries as the USA or Canada, but partly because this form of
government has recommended itself to former colonial powers as a means

3
4 Federalism: Failure and Success
of establishing sizeable areas which might be able to stand on their own
independently. This policy was followed (or attempted) by the Dutch in
Indonesia, by the French in their Central and West African colonies, and
more extensively by the British in East and Central Africa, Nigeria,
Malaya and Singapore and the British West Indies. Perhaps one should
also include the Indian subcontinent, although federalism was already
planned for this well back in the nineteenth century. A number of these
attempted new federations were failures, others partial (and very interest-
ing) successes. Their experiences throw a new light on the eternal problems
of failure and success in federations.
The first point to be settled for our investigations is to determine how a
'federation' is to be defined and identified. In modern terms a federation is
a type of polity operating a Constitution which works on two levels of
government: as a nation and as a collection of related but self-standing
units. The objective offederation is a form of government for the people by
the people. That is to say it is inherently democratic (in the Western sense).
It seeks on the one hand to create and maintain a nation, on the other to
preserve the integrity of the units, their identity, culture and tradition. The
objective of building and maintaining a nation implies that there needs to
be unity of commercial and financial policy, and free movement oflabour
and capital from one part to another. But neither level of government can
be allowed absolute sovereignty, because this would violate some of the
rights of the other level, which are guaranteed in the Constitution. (It is
interesting that this essential limitation was realised by the Swiss before the
end of the fourteenth century.) Formal arrangements for 'residual powers'
may sometimes be written into federal Constitutions and on occasions may
accrue to the lower level of government. But in the modern world it is
generally accepted that in case of need (backwardness, failure to act) or for
introducing new services or controls as may become necessary (due to
technical changes) the national government must act in the general
interest.
But both levels of government are bound by the Constitution currently
in force. Of course Constitutions can be (and will probably have to be)
altered. Indeed an agreed method for achieving constitutional adjust-
ments as the need arises is often the key to the continued success (or even
existence) of the federation. Such constitutional changes would be
expected to be of the nature of modifications, rather than of the
disturbance offundamentals. It is essential that there should be room in the
Constitution for such adjustments to take account of the new problems and
technical innovations with which the modern world is faced, such as
population growth (and especially increasing urbanisation), the need for
social services, modern communications, atomic energy and pollution
control. Many of these require to be tackled on a large (in fact national)
basis. Hence there is an inevitable tendency for the growth of the central
sector. This can still be compatible with maintenance of the constitutional
 The Essence of Federalism 5
rights of the units (States). New implications of such problems face every
type of government today; it has always been necessary for federations to
develop their own methods of dealing with them. The methods which they
are evolving for this purpose seem often to be very similar to those used in
the decentralised unitary democracies, such as the UK and Scandinavia.
The experiences of these two types of political organisation can often throw
useful light on each other (for instance in the field of fiscal relations, and
cooperation between governments).
Since the two situations are in many ways similar economists are
sometimes tempted to equate precisely the problems of federations and of
decentralised unitary countries. But to do this is to overlook a fundamental
difference on the political side. In a federation the rights of the States are
guaranteed by the Constitution, while in any sort of unitary country,
however, decentralised, lower-level governments are merely statutory
bodies. Any or all of them could in principle be swept away by the
government at any point. (But where lower-level governments are ancient
and strongly entrenched it would be a bold government which made a
frontal attack on them.) Nevertheless their (limited) autonomy may be
gradually and covertly eroded. This has occurred in the Netherlands, and
may be occuring in the UK today.
A particular aspect of the difference between a federation and any form
of unitary government is that in a federation the conduct and care of local
governments is within the purview of the States: the central government
has no constitutional relation with them. Any extension of federal
influence in this field (for instance by extending inter-local redistribution
or by expanding a service which belongs in the State field (such as the
special development of higher education) may be regarded as an
illegitimate encroachment on State rights. On the other hand it may be
welcomed on account of the additional funds which it will make available
(as recent Australian experience in this field demonstrates) .1
The next question to be looked at is how formal federations come into
existence (apart from primitive and temporary leagues). Their historical
origin may clearly affect their Constitutions and the working thereof. The
first and most important way in which federations come into existence is by
spontaneous aggregative agreement among neighbouring governments.
But this does not necessarily produce more than a Confederation in which the
federating units agree indeed on a central body to which they send
delegates, but which has virtually no powers or finances and whose
decisions are not necessarily binding on the members. The central body
may be called a Diet, but it is not a government. Such undoubtedly was the
Swiss nation at first. Such might have been the Indian subcontinent if the
Congress Higher Command had agreed, 2 in which case Pakistan would
probably not have broken away. The Federation of the British Caribbean
islands was more of this nature than of a true federation. 3
Secondly, although a federal form of government may be strongly
6 Federalism: Failure and Success
recommended by a retiring colonial power in the first instance, given
suitable circumstances and experience it may produce a basic semi-
spontaneous agreement for federal government. India may be cited as an
illustration of the development of such an attitude. 4 At the time of
independence some members of the centralising end of the Congress Party
would like to have done away with the States (substituting river valley
regions perhaps). But the power of States rights proved too strong for any
such fundamental change. The persistence of this attitude was de-
monstrated by the defeat of Mrs Gandhi's centralising moves in 1977.
Something of the same sort (on a minor scale) seems to have inspired the
three East African states of Kenya, Uganda and Tanzania repeatedly to
come back to the idea of some sort of federation. 5
A similar almost spontaneous preference for the federal form has been
shown in Nigeria. A short time after the end of the civil war in 1966 (which
was essentially concerned with the right of one state to withdraw from the
Federation), the Army announced that Nigeria would henceforward be a
unitary state. But this decision was very soon, and quite definitely, reversed
in favour of trying again for federation, with a new Constitution which
would avoid the mistakes of the past. 6
It may in principle also occur that federations start by disaggregation of
a unitary regime, especially when a particular force hitherto holding them
together has disappeared. India may in part be described as an example of
this phenomenon, since the government of the British Raj began by being
more centralised than any independent government had been. The
federalisation of the Pakistan Constitution after the withdrawal of
Bangladesh from the unitary Constitution may be cited as a more direct
illustration. 7 It was felt that only by a federal form of government could
Pakistan hope to hold together such diverse elements as the rich and
sophisticated Punjab, the relatively well developed Sind (containing in
Karachi a 4·5 million city) and the primitive Baluchistan and Frontier
Provinces. Even this relaxation may not succeed.
This discussion suggests that a satisfactory and enduring federal
Constitution needs to include accepted and trusted machinery both for
admitting new members, speeding the departure of those that just do not fit
(such as Bangladesh) and also for the adjustment of the number and
boundaries of States to meet changing circumstances. Both the USA and
Canada have had much experience of successfully adding new members.
The Swiss confederation was built up very gradually over the centuries;
and most of this process was completed before she adopted a formal federal
Constitution. But it took her sixty years of gentle pressure to induce the two
pieces of Canton Basel to reunite. This experience revealed clearly that the
number and size of States is considered to be a matter of national
importance even in such a loose confederation as the Swiss. 8
We have defined the type of polity which should qualify for the
designation 'federation'; but it will only successfully remain one if it is
 The Essence of Federalism 7
provided with appropriate institutions. Experience has shown that the
essential governmental organs of a federation are three:

( 1) a sizeable freely elected Assembly representative of all the units.

This needs to stand for a fixed term of years (preferably fairly short
in order to maintain the necessary close connection with the people).
Relative state membership of the Assembly may conveniently be related
to population by some formal rules; but it is essential that it should be
adjustable (and be adjusted) to changing population movements.
(2) An elected Upper House or Senate of a fixed and limited number,
with equal representation of all States. Only through this medium can
the smaller and weaker States feel that they can make a positive
contribution to national policy decisions.
(3) A central (or general) government of quite a small number, capable
of taking decisions quickly, probably preparing the first draft of the
national budget, and probably playing an important role in introducing
new legislation or suggesting constitutional amendments.
In addition to these governmental bodies it is essential to have a
Supreme Court or watchdog of the Constitution, to prevent and
circumvent perversions. (This calls for later discussion.)

Experience of successful federations demonstrates that the central

government may take several forms: it may follow the US plan of an
elected Executive President, who chooses the members of the 'Cabinet'
(Government). If (as in the USA) the presidential elections take place in
two stages by means of 'primaries' in each State (whereby the leaders of the
contending parties are selected), followed by a national election, the
citizens play (and feel they play) a vital part in the presidential election.
Entirely different (but apparently quite satisfactory to them) is the Swiss
method of achieving a central government. 9 It consists of seven members
elected by the Assembly, the Chairman being the President of the
Republic for the year. The Swiss hold that seven is an ideal number
because it is large enough for the various cantons to feel that their interests
are not being neglected, yet small enough to discourage the emergence of
factions. The Swiss system seems to be essentially government by
committee; the President is not Executive and has no outstanding
importance.
A third alternative for choosing a federal government is the adaptation
of the British system of cabinet government, but working within the
bounds of a Constitution. The Parliamentary majority takes its leader as
Prime Minister and the Cabinet is mainly chosen by him. The ultimate
power is with the Governor, chosen from outside on the advice of the Prime
Minister, but he has no executive power. Nevertheless he may have a very
important constitutional power in an emergency, as recent events in
Australia demonstrated. 10 This method of acquiring a national govern-
8 Federalism: Failure and Success
ment has been adopted by the mainly British-type federations of Canada,
Australia and India, and would almost certainly have been used in South
Africa if she had become a federation. It would seem that of these three
methods the Swiss gets best marks on the score of continuing active
democracy (which, as their history reveals, they regard as extremely
important), while the British system shows up as the least democratic. But
naturally other considerations besides democratic control have to be
brought into the account, such as the speed with which a new government
can act.
Having discussed the organs offederal government a word must now be
said on the functions of the Supreme Court. This is the major safeguard in a
federation for preserving democratic liberties and state rights. Its value has
been conclusively and repeatedly demonstrated in the USA. It has
recently been of major importance in India. It is not for nothing that the
first thing a would-be dictator wishes to do is to curtail the powers of the
Supreme Court, on the grounds that it is essential for Parliament to
exercise unfettered powers. (In such a case one may suspect some prior
rigging of Parliament.) The development of the Supreme Court in
Switzerland is particularly illuminating. 11 Provision for it was made in the
basic Constitution of 1848. But it was only after the centralising process
had made some headway that its full potential was recognised. Its real
importance dates from the constitutional Revision of 1874, and since then
it has progressively strengthened, more particularly in the Revision of
rgr r.
In all countries it is unavoidable (no matter how rich or poor they may
be as a whole) that some areas will be stronger than others. In a unitary
country any agreed mechanism for the interlocal redistribution of wealth
(or of the ways to acquire it) in order to produce greater equality, will be
looked after by the central government. But in a federation these
differences tend to take the form of one (or perhaps two) States being head
and shoulders above the rest, while others are (unless helped) more or less
continuously on the border of the red. Means of dealing with both these
types of unevenness should ideally be included in the Constitution.
If one State is stronger than all the rest it may tend to dominate the
federation so that it approaches to a unitary government. This happened
with the domination of Athens in the Athenian League, or of Amsterdam
in the United Netherlands. An alternative possibility is that the strong
State(s), apprehensive of the responsibilities which may be put upon them,
decide to withdraw (as first jamaica and then Trinidad withdrew from the
British West Indian Federation) .1 2 In a less extreme case the unevenness
may be prevented from becoming too strident by limiting the opportu-
nities of the strong State from becoming stronger, for instance by making
sure that the federal capital is kept well away from the capital of the strong
State. Canberra, Ottawa, and Brasilia are examples of this device. When
there had in any case to be a move in Pakistan from Lahore (which was in
 The Essence of Federalism 9
too exposed a position after Partition), Islamabad was selected (and not
Karachi) as the capital of the new nation. At the same time great efforts
will have to be made to keep the strong State from seceding. Its wealth and
example are needed.
On the other side of the account is the problem of the poor, weak units.
They may be inclined to try to 'go it alone' ifthey think that they see better
sources of help from outside the federation (a former mother country or a
rising and unscrupulous developing nation). just as a federation will be
most reluctant to lose a rich unit, it may not be able to afford to lose a weak
one, for fear of letting some unwelcome influence get a foot in the door.
Alternatively completeness of the coverage of the relevant area may be
necessary to protect customs revenue. Possibly this may partly explain the
generosity of Canada to Prince Edward Island, its smallest and weakest
Province. To acquire and hold reluctant poor States it will probably be
necessary to bribe them in some way, as Western Australia was bribed: 13
first by being allowed to keep its customs revenue for a defined number of
years and later by special budget-related grants and investment expendi-
ture (for instance on roads).
Thus over the years the make-up of a federation may change in a way
that could hardly be foreseen. Similar troubles may of course appear in a
unitary country, although this is perhaps not so likely. It is probably easier
to meet them (or stave them off) by some degree of devolution. Thus Italy,
to preserve her unity, found it desirable to give additional freedoms to her
least integrated provinces of Val d'Aosta, Tridentino and Sicily. On the
other hand devolution may be demanded essentially as a first step on the
road to independence, as the creation of the (Dominion status) Irish Free
State showed, and as the Basques and probably some of the Scots hope.
Having defined the essential institutions of a federation we should next
try to decide what we should mean by failure, or mutatis mutandis success.
If we adhere strictly to the position that the objective of federation is to
establish and maintain a polity where government by the people produces
at one and the same time a strong self-conscious national organisation and
also keeps intact the rights and cultures of the units as enshrined in the
Constitution, then any deviation from such a polity must be accounted
failure. The basis of this philosophy is unassailable, but there are many
acceptable degrees of change and adjustment which can be tolerated
without destroying the federal framework. In a rapidly changing world the
relation between the centre and the units can never be static. A federation
may develop into a substantially different organisation from that which the
founders envisaged, but still remain most definitely a federation. As we
shall see this is often largely a matter of increased centralisation. Good
examples of this are the growth in power of the Swiss central 'Conseil
d'Etat', 14 or the emergence of direct grants from federal funds to local
authorities in Australia and India. 15
In this connection it is interesting to compare also the experience of
IO Federalism: Failure and Success
those countries that (so to speak) failed in advance, that is to say which
were on more than one occasion very near federation but which never
quite reached agreement on it. With this in view I have included ( r) the
experience of South Mrica which, when it united, became almost
accidentally a unitary State and not a federation, 16 and (2) the story of the
three territories of former British East Africa (Kenya, Uganda and
Tanzania) which repeatedly declared that they would like a federation but
always withdrew at what seemed like the last minute. But even then they
retained for many years a wide range of common services which they all
valuedY
If we concentrate on the economic side we are in some difficulty
concerning the definition offailure given above. Economically it is difficult
to regard a break-up which leaves the units in a more prosperous state than
they would have been with their federal Constitution as a complete failure.
Two interesting recent illustrations suggest themselves here: the former
Cameroon federation of ex-Trust British and French territories and the
federation of Malaysia and Singapore.
Although Cameroon 18 is very well endowed with natural resources and
should have been happy in independence, the federation did not work
well. It consisted of just two States, both ex-League of Nations Trust
territories: a small one previously integrated (especially on the economic
side) with the Eastern Region of Nigeria, and a much larger French area
closely following the French zone organisation and culture. The British
area, having made the decision not to maintain its Nigerian connection,
had no choice but to revolutionise its economy, including markets, lines of
communications, trading connections and to some extent language, in the
French direction. This having been successfully accomplished, there
seemed to be little point in maintaining the federal regime. On some points
the French area was prepared to meet the British half-way, and the now
unitary Republic of Cameroon is preparing to go forward as a new nation
evolving its own institutions and even its own language.
The establishment, short life and collapse of the Federation of Malaya,
Singapore and North Borneo (Sabah, Sarawak but not Brunei) is discussed
in some detail in Chapter 3(B) below, so that here it is only necessary to
emphasise a few points. Both Malaya and Singapore went into the
federation of their own volition (although encouraged also by the retiring
British). Singapore was considerably the wealthiest unit. On that account
it was welcomed by Malaya as a partner. This was quite obvious to
Singapore, but on account of its extremely small size it was afraid (at that
stage) to attempt to 'go it alone'. But on ethnic grounds (seeing that
Singapore is predominantly Chinese) Malaya was apprehensive concern-
ing the relation between her own (minority) Chinese and the Malays, until
non-Chinese North Borneo was persuaded to join in. For its part North
Borneo had no great interest in Malaysia, but regarded the federation as a
useful step towards complete independence. There was some (not very
 The Essence of Federalism I I

complete) understanding that Singapore would contribute handsomely to

the development of Borneo.l 9
It is evident that there were enough ethnic, political and financial
differences to make the maintenance of this federation difficult. It broke
down partly on political and partly on financial grounds. But after the
break had been made Malaysia and Singapore remained (and still remain)
on reasonably good terms (for all that it is a sort oflove/hate relationship).
They have a number of common interests and a joint water supply
organisation. Both Singapore and Malaysia have been extremely pro-
sperous since the break-up (largely because of good world prices for their
products). Singapore has probably increased its lead, certainly more than
it would have done in federation with an obligation to contribute largely to
poorer areas. Both of the federations that we have been discussing had
voluntary origins and the break-up was also voluntary, although one broke
up into a unitary State and the other into separate entities-the Borneo
States still remain as part of the federation (Eastern Malaysia). Are we to
call them failures in a formal political sense?
Failure and break-up are much more likely to occur when the
establishment of the federation has not been completely voluntary and
spontaneous. This is especially likely to occur in less developed countries
where standards of administration may be low (and may well be very
corrupt). On this ground alone (especially after the introduction of poor
and backward Nyasaland (Malawi) at the behest of the British Govern-
ment), a short life for the Central African Federation of the Rhodesians
was predictable. 20 (This question is discussed in detail in Chapter 4 below.)
Want of administrative skill and experience was (as we shall see) a major
cause of the break-up of the very historical federations (Leagues).
Switzerland was lucky in that her beginning was very small-scale, so that
she could learn by experience as she grew.
It may be helpful even at this preliminary to identify some particular
factors which make life too difficult for a federation or which constitute
awkward corners which may cause the wreck of the federation if they
cannot be successfully turned before views have hardened and positions
been taken up from which there can be no retreat.
In the first place the three most obviously (potentially) divisive forces
are ethnic (race, language and culture), religion, and political ideology. At
a more technical level we might add: (inappropriate) organisation and
difficult communications, and finally economic and financial issues.
Generally speaking two or more of these factors operate in concert, as can
be seen from the obvious example of Canada. In the plan for the federation
of the entire Indian subcontinent there was a clear division of religion and
culture with which to contend. The northern Moslems feared too much the
destruction of their culture (if not of their religion) by the centralising
Congress Hindus. 21 Later the break-away of Bangladesh from the West
Wing of Pakistan was partly a matter of culture (which was more Indian
12 Federalism: Failure and Success
than Pakistani) but more importantly a matter oflanguage and economic
neglect (or so it seemed to the founders of Bangladesh).
There is no inherent reason why in themselves language differences
should be divisive. The Swiss now have four official languages. India is said
to have 143 (but a much smaller number is effectively operative). Nigeria
also has a large array oflanguages, but they are not divisive (partly because
English still operates as a lingua franca). Trouble only arises over language
when the government, on the bidding of the strongest State or party,
attempts to force its language on the whole, as the Indian Congress
governments attempted to force Hindi. The attempt of the Pakistan
government to force Urdu on the East Wing 22 provoked a violent reaction
from the Bengali (who speak an Aryan language similar to Hindi) and was
instrumental in causing the secession of Bangladesh. Again the attempt of
the Quebecois to force French as widely as possible in Canada is leading to
serious difficulties, in spite of conciliatory gestures on the part of the
English-speaking Provinces. Similarly religious differences need not be
inherently divisive, so long as there is reasonable tolerance and the
government does not attempt to stamp out a religion of which it
disapproves. Switzerland is an example in this aspect also. 23 Although at
one time there were great strains between Catholics and Protestants, all
now live together in harmony even where there is a difference between one
village and the next.
Differences in political ideology (leading to different policy decisions)
are of increasing significance in the modern world. This was an important
cause of the withdrawal of Jamaica from the Federation of the West
Indies. 24 She had already moved to the left of most of the British islands,
and that move has recently been intensified. Political ideology (including
choice of 'patron' between Russia, China and the West), quite apart from
important ethnic differences between Africans, Asians and Europeans, not
only prevented the East African Territories from ever taking the final step
to federation but seem now to be driving them further apart. 25
When adopting the federal form of government it is extremely difficult
to get the state organisation and its working appropriate at a first shot. This
is especially so in a less developed country where it is essential not to throw
together tribes or peoples which prove to be incompatible. Those
responsible for organising the units are naturally anxious for them to be
sufficiently large to be financially viable in the sense that they can afford
well trained administrators and security officers. But there is a danger that
with this consideration in mind the units will be drawn too large to be
compatible with smooth working internally. Hence there arises a strong
demand for fission on the part of some of the units, and the government
finds it impossible not to allow their number to increase. Both India and
Nigeria have experienced this phenomenon. In India a striking illustration
was the division of the big presidency State of Bombay (in any case out of
scale with the rest), into Maharashtra and Gujarat. This has proved a
 The Essence of Federalism
beneficial division in every way (once the problem of which was to have
Bombay had been settled).
The experience of Nigeria is especially interesting in this respect. 26 The
independent federation inherited just three States (Regions) from the
British period. The desire for a greater number was refused precisely on the
point that States must be big enough to be viable. But the decision was
disastrous in several ways. Friction between the three States and jockeying
for the most profitable alliance was inevitable. The position was further
complicated by the circumstance (although this was not realised) that one
State was larger in population than the other two together. Moreover,
within the Regions (especially in the East) incompatible peoples were put
to live together, leading to much infighting. The planners of the new
federal Constitution realise that it is a task of first importance to draw the
tribal map so that as many incompatibilities as possible can be eliminated,
notwithstanding that the result will inevitably be an increase in the
number of States (nineteen are planned). Clearly there is a limit to the
amount of fission which a federal government can tolerate. It is now widely
recognised that the number and size of the units is a matter of national
interest. Even a loose federation (confederation) such as Switzerland (as
we saw) feels this to be so, hence the immense trouble the central
government took to induce the two parts of Canton Basel to reunite.
Poor communications can be a divisive force in two different senses. In
the first place a federation where the lines of communication are long and
difficult has to face exceptional problems to keep the units in touch. It is all
too easy for misunderstandings and suspicions to arise. It cannot be
doubted that this was a major trouble in the organisation of Pakistan in two
'Wings' with a large slice of India between them. 27 The position in Eastern
Malaysia is also likely to be difficult, although there is nothing but sea
between Malaya and Borneo. Long lines of communication were also a
trouble between Western Australia and the other colonies, and again in the
Caribbean, especially between Jamaica and the Eastern islands.
Secondly, if there is not free communication in the movement of persons
and products between the States the federation can hardly grow into a
nation. In the West Indies freedom of personal movement was prevented
because Trinidad feared that an influx of (East) Indians would upset the
delicate balance between her African and Asian communities. Similarly
the East African countries never achieved freedom of movement of
persons. Freedom of movement of products really implies a common tariff
and absence of internal hindrances to trade. But experienc shows that
relatively minor differences can be tolerated without too much difficulty.
Thus the USA freely allows differences in local sales taxes to operate
(especially on petrol) from State to State. Those Indian States which make
large use of octroi are in a somewhat worse position because the spread of
taxed articles is very wide. The East African countries were not very far off
a common tariff and this difficulty might have been overcome if a
 Federalism: Failure and Success
federation had been achieved. The West Indies never got near such a
position, in spite of much hard work by commissions on the subject. 28
For a federation (or even a unitary country) to experience some of these
difficulties is inevitable. The successful federation is one which finds a way
through them to mutual satisfaction, and is able to build up a nation.
When this has been done it will be virtually secure against internal
disruption because the members are proud of their national citizenship,
and may well feel that in the long run this is more important to them than
some of the details of their States Rights. Such indubitably is the position in
the USA today, in Australia and probably in Canada. Such again is
emphatically true in Switzerland, although it attained nationhood only by
slow degrees over the centuries. Such also is (perhaps hopefully) true in
India who, throughout her turbulent history and in spite of great diversity,
has somewhere deep down a consciousness of and a confidence in national
unity, which endures through the centuries. 29
As I understand it, federalism is essentially government by the people for
the people themselves,. This implies that democracy is not just something
enshrined in a paper Constitution. All the trappings of democracy may be
there: an apparently legal government, an elected Assembly, and a Senate,
elections not being conspicuously rigged. There may be some degree of
freedom of speech and of the written word. But if the press and the media
are essentially controlled by a non-democratic force it will not be genuine
democracy. In the real world things do not work out according to paper
Constitutions because it is an immensely complicated place. Different
stresses and strains appear at different times and places. They operate not
in easily identifiable isolation but in highly complex combinations. The
path of federation is no more likely to run smooth than the path of true
love.
For this reason I have selected ten 'case studies' for examination in their
relation to federalism. I have deliberately chosen fairly simple illustrations
in the hope that causes and influences will be reliably identifiable, in
respect of their formation, institutions, political and economic experiences.
It is no part of my plan to discuss in detail the turning of awkward corners
in such well set federations as the USA and Canada (especially as they are
profusely documented). The Commonwealth of Australia is in a rather
different class, since it has been established more recently and some of its
institutions are still in the development stage (for instance the timing of
Senate elections). In addition Australia offers one of the best illustrations of
how with tolerance and goodwill difficult corners can be successfully
turned. On the other side I have left alone the story of doubtfully
democratic federations in Latin America, and also the very recent
(interesting but definitely feudal rather than democratic) federation of the
United Arab Emirates. It may be thought that the Federal Republic of
West Germany is a serious, almost unforgivable omission. But this would
require a book in itself. Germany exhibits all the complexity of a modern
 The Essence qf Federalism
advanced country, superimposed on its own turbulent and complicated
history. It is still too early to form a balanced and reliable judgment on its
federal success or failure.
In my case studies I have tried to illustrate a wide experience of federal
failure and success: some which failed at the starting-point, some which
lived only a few years, two important countries which are struggling hard
for democratic federal success, and finally two which seem in their success
to embody the best vindication of the federal principle.

ADDENDUM: FORERUNNERS OF FEDERALISM

The propensity for urban communities to get together for mutual defence
and advancement is (as suggested at the start) a natural and fundamental
instinct, which manifested itself at an early stage in human history. In fact
we owe to the Greeks both the first theory and the practice of federalism.
Their federal experiments can be traced back to the fifth century B.c. At an
early stage they distinguished between (I) a Symmachia and ( 2) a
Sympoliteia. In English usage both these forms of alliance are known as
'leagues' although they were substantially different. The Symmachia was
little more than a military alliance. The Sympoliteiaon the other hand was a
sharing of citizenship or political life. It thus implied that there must be a
central government, and hence there arose the need for defining the
division of powers between it and the local city governments. There was
thus a double citizenship and allegiance: to the federal and to the local
community. The relation could be symbolised by the expression 'an
Aetolian from Amphissa' as one used to say 'a British citizen from Canada'.
To the federal government belonged foreign affairs, control of the army
and jurisdiction in cases of treason. Other matters belonged to the
federating communities. Practices were naturally not the same every-
where; but there seems to have been a tendency towards uniformity.
Normally political rights could only be exercised in one community. But it
seems that certain civil rights, such as the acquisition of property, could be
exercised in other communities within the league. -
It is evident that the arrangements of the Sympoliteia were very close to a
modern conception of federation, while the Symmachia was even looser
than a modern confederation. (Compare the early organisation of
Switzerland.) But the position was neither uniform nor static, and in any
case our knowledge is only fragmentary. It seems that a Symmachia might
develop into a Sympoliteia. This certainly occurred in the Aetolian League.
Although these federal states can first be discerned in Greece in the fifth
century B.c., they were at their most developed and influential stage in the
more advanced Hellenistic period. The origin of the leagues was tribal and
in some cases they developed into a federal state without disrupting the
tribe; in other cases the tribal boundary was overstepped. If a really large
r6 Federalism: Failure and Success
alliance was being formed obviously it would stretch far beyond the tribal
limits. This was true of the Achaean League. This type of extension does
not seem to have occurred much before the third century B.c. From the
beginning cities with oligarchic governments were more prone to federal-
isation than democracies, which were no doubt more difficult to organise.
In classical Greece there were a number of these leagues of different types,
many of them by no means ephemeral since they lasted upwards of three
generations. They were often organised under the leadership (hegemony)
of a particular city, as the Peloponnesian League depended on Sparta, the
Boeotian League on Thebes. In the Athenian League the position of
Athens was so dominant that it became more an empire than a federation.
The earliest known and longest lived league was the Peloponnesian,
flourishing in the fourth century until its dissolution in 336 B.C. Several
others such as the Aetolian, Achaean and Boeotian Leagues were of
outstanding importance. The Aetolian League was at its height in the late
fourth century B.c. In its heyday (third and second century B.c.) the
Achaean League was the most powerful force in Greece.
We are not concerned with the history of these federal beginnings,
fascinating though it is. The details are set out (with full references) in the
Oxford Classical Dictionary. 30 The commonest causes of their fall were (as we
might expect): first, inability to stand up indefinitely to a great power,
(such as Persia, Macedonia and ultimately Rome) and secondly difficulties
of communication and control with the then available means of transport
and administrative skill. But the federal organisation of the great Leagues
is clearly of very particular relevance for our investigations, even though
the mformation available is often very scrappy and there is no means of
knowing to what extent the rules worked out in practice. But the rules
themselves are an amazing testimony to the organising ability of the
Greeks.
One of the most complete accounts of the organisation of these federal
forerunners is contained in a document relating to the (oligarchic) League
of Boeotia as it was in the early fourth century B.c. Citizenship depended
on a property qualification (in a democracy it would no doubt have been
open to all males over thirty). The local governments were uniform. One
quarter of the citizens served on the Boule (Council), the remainder were
members of the Ecclesia (Assembly). The Boule had very wide powers and
responsibilities, but was in the last resort subject to the Ecclesia. For federal
purposes the Boeotian League's country was divided into eleven parts.
Thebes and its dependencies controlled four, two other cities with their
neighbouring villages had two each. The remainder were amalgamated in
small groups. Each of the eleven parts supplied sixty members to the Boule
besides some magistrates, a uniform contribution to the federal treasury
and a fixed number of horse and foot soldiers. The federal Boule was the
final authority, so that the constitution worked on a representative
principle, and not by direct democracy.
 The Essence of Federalism I7
In Greek federations the Assembly tended to be of much less importance
than the Council, and met less frequently. Indeed some federations
dispensed with it completely; but in others (for example the Aetolian and
Achaean Leagues) it remained important in principle. But as the territory
of the League expanded (at its height the Achaean League covered almost
all the Peloponnese and stretched as far east as Aegina) only the wealthiest
citizens continued to attend. The Achaean rules were somewhat different
from those of the earlier Boeotians, but the basic principles were very
similar. All male citizens over thirty could speak and vote in the Assembly.
A Council of 120 (unpaid) delegates from the different city Councils
prepared the federal programme and elected the federal magistrates. The
chief executive was the Strategos (General). He had complete command in
the field but in general affairs he was assisted by ten Demiurgi who formed a
sort of cabinet. All the higher officials were unpaid. Regular taxes were
imposed and uniform laws, standards and coinage were insisted upon.
By and large all the Greek Leagues conformed to a similar pattern
although there were differences in detail, for instance more use of the
elective principle in democracies, e.g. for the appointment of magistrates.
The basic principles may be summed under three heads: ( r) There were
two government organs, the Council and the Assembly. The relative sizes
of these might differ, but tenure of office was short in order to prevent the
growth of vested interests. Normally all members of the Council would
previously have served on the Assembly; (2) Regular financial (and
probably other) contributions were exacted from all members, but (3) very
commonly the larger and richer members were required to make larger
contributions, the basis generally being determined by relative popu-
lations. Thus there was an element of redistribution. It was many centuries
before the world was to see again such effective and sophisticated examples
of the federal principle.
We should not expect to find much evidence offederalism in the Dark
Ages; this is also true of the early Middle Ages. The famous Lombard
League was effectively nothing more than a loose and ephemeral alliance
of the cities round Milan to ward off successive attacks by the great
powers -of the Empire and later of France. Milan itself was badly run and
provided no effective leadership. The beginnings of the Swiss Con-
federation can be traced from the thirteenth century (see Chapter 7(B))
but it was long before it attained a clear federal form, and before the Swiss
could confidently feel themselves to be a nation. One other League starting
in the thirteenth century is nevertheless of considerable interest and
relevance, namely the Hanseatic League of north German towns. 31 This is
worth some attention partly because of its wide coverage and partly
because of its long life- the London office was not closed until the mid-
nineteenth century. It had a definite and effective set of rules, although
they were not so elaborate as those of the Greek federal states.
The beginnings of the Hanseatic League are obscure, but in 1241
18 Federalism: Failure and Success
Lubeck and Hamburg joined together to guard the vitally important
narrows between the North and Baltic Seas (the area that became
Schleswig-Holstein). In 1256 the first meeting was held of six towns which
became the Wendish sub-group of the League. The death of Henry the
Lion (see Ch. 7(B)) weakened the imperial power in Saxony and a second
group grew up. there. A third group also emerged in Scandinavia-
Gotland, based on Wisby. For a time this was reckoned as the capital of the
League, but it gradually lost out to Lubeck and Bruges when the economic
centre moved westward with the development of the trade with Flanders
and England.
At first the League members were almost wholely engaged in maritime
trade. For this purpose they established depots, 'comtors', in various
overseas cities. That in London was especially important. In spite of pirates
and freebooters sea trade was on the whole safer than land trade because of
its greater freedom from interference by territorial magnates. In I 226 the
Emperor made Lubeck a free imperial city. It was then the centre of trade
with Scandinavia and the Baltic, and was most capably managed. Further
west the comtor of Bruges was increasingly prosperous due to the
continued expansion of trade with Flanders and England. The careful
policy ofBruges, its width of view, political insight and insistence on Union
did much to support the whole League.
The condition of the League continued to be extremely flourishing. Its
power and influence was about at its highest in the decades I 356-76.
Overland trade between the towns themselves had become the most
important element. Maritime trade was tending more and more to fall into
the hands of the 'great powers', especially Flanders, England and
Scandinavia. Their ships were larger and stronger than any cities could
command. Union in the League was strictly enforced. As one writer put it
'what touches one town touches all'. Regular meetings of the whole Hansa
were held, and a new codification of the rules was undertaken. The
governing body consisted of an Assembly of delegates from each of the
towns. It was a loose but 'firma corifederatio'. From I361 contributions from
all the members were exacted for League expenses. Further, a lower tier of
group assemblies was growing up, so that the organisation was becoming
more sophisticated.
But in fact the position of the League was beginning to weaken. From
the fiteenth century it was reduced to a purely defensive position by
pressure from the great powers. As it weakened, its quasi-monopoly powers
over the members became more and more restrictive and its exactions
(inevitably) more and more onerous. Some towns began to ask themselves
whether it would not be better to withdraw and trade independently in a
free market, thus escaping the dues which the League authorities exacted.
The wisdom of such a move depended very much on the location of the
town in question, and economic prospects were changing. Not only was sea
trade more difficult than it had been, land trade was becoming easier and
 The Essence of Federalism
more profitable with the weakening of imperial power, and the resources of
the local princelings were limited. The League soldiered along; but by the
time of the Thirty Years' War it had ceased to be of any political
significance. The last General Assembly took place in 166g, but the
London comtor was not finally closed until 1852.
Although the .firma confederatio ultimately broke up it had had a long and
honourable career. The chief administrative centres (especially Lubeck
and Bruges) were both wise and efficient. They did much to expand
economic growth (and indeed civilisation) in a region that was initially
extremely undeveloped. That the League was able to become so powerful
and to maintain its organisation for so many years was partly due to the
fact that no great power was emerging in Germany, as it was both in
France and in England. But the federal principle was not yet ready to take
over full nationhood. In the sixteenth century it began to be able to do so,
both in the Netherlands and in Switzerland. The United Netherlands
broke down as a federation because of the overweaning power of
Amsterdam (inter alia). But it emerged as a strong unitary State. The Swiss
Confederation on the other hand developed into one of the most successful
and enduring federations that the world has seen. Indeed it may be called
the archetype of federal success, and as such must have a very special place
in our discussions.
Part II
The Case Studies
 2 Attempted Federations
Which Never Materialised
(A) FRUSTRATED HOPES IN SOUTH AFRICA

South Africa and the East African Territories (Kenya, Uganda and
Tanzania) are both areas included in the erstwhile British Empire in which
there have been repeated hopes of the establishment of a federal
Constitution. It is an extremely interesting and instructive problem to
determine how in the one case a unitary Constitution emerged which is
getting tighter and tighter at every turn, while in the other the attempt for
federation has led to nothing more than an agreement to support certain
common services, the list of which is getting shorter at every turn. We
should also enquire what the prospects are for the continuance of the trends
as they have developed. The present chapter concentrates on a chronologi-
cal survey of South Africa.
As we shall see, most of the early ideas for federation in South Africa put
forward by British administrators were inspired by the frustrating
difficulties of communications between one part of the area to be ruled and
another, especially as British territory expanded. If we exclude the plan of
Lord Carnarvon, only on the part of Cecil Rhodes and his friends were
there any overt ideals of political and physical 'empire-building'. Later on
hopes concentrated on the idea that federation would be a means of
drawing together very diverse elements in a colony: of language, culture
and race, for the good of the whole. In the latest years there has been a faint
revival of this hope in relation to potential States with different colours and
culture, united in a loose federation. The proponents of the tight union
which ultimately emerged equally recognised (and indeed emphasised)
this diversity but argued that nation-building required that all should be
brought into the same system, by force if necessary.
The South African situation in respect of both these views was echoed in
India thirty-seven years later. The British rulers of the subcontinent had
maintained for over a century that Indian diversities of race, language and
culture were so strong that only as the centre of a very loose federation
could an Indian government be made to work. This was also the view of
Moslems and other minority groups (if indeed Partition was not the only
feasible solution). In India it was the Congress Party which took the view
(as the Nationalist Party in South Africa did) that only by means of a tight
23
 Federalism: Failure and Success
Constitution and strong central government, with little autonomy for the
units, and if possible with a single national language, could a worthwhile
nation be built.
Although the British have been in many ways good and sympathetic
colonisers, they have little knowledge of (or interest in) Constitution
making. Indeed many of them believe (or used to believe) that a
Constitution is an unnecessary encumbrance in rational government.
Hence in neither South Mrica nor in India did they insist on the
desirability of considering the Constitutions of successful federations (for
instance the USA or Australia) which the peoples had made for
themselves. A very similar criticism can be made in respect of Nigeria, but
there, after more than ten years' experience of suffering, bloodshed and
civil war under an unworkable Constitution, the people themselves are
currently most actively engaged in searching for a federal Constitution
which will provide an appropriate solution.
The first serious suggestion for federation in South Mrica came from Sir
George Grey, who was Governor of Cape Province in 1853· His previous
service had been in South Australia and in New Zealand. In both of these
he had made a reputation for firmness and good government. Although
autocratic he had learnt in New Zealand how to manage tribal peoples and
gain their affection. In South Mrica he came to a colony which had
already experienced a variety of (not very happy) regimes: from I 778 to
I 795 it was under the dying administration of the Dutch East India
Company (which was far too busy in East and Southeast Asia to pay much
attention to Mrica (or for that matter to India). From I 795 to I 803 there
was (temporarily) in charge a High Tory British Government. The Dutch
returned as the Batavian Republic I8o3/o6 to be succeeded by British rule.
From I8o6 to I825 British rule was again High Tory, with the Castle in
Cape Town much in evidence. From I825 a more liberal regime ruled
from Westminster but a tight hold was still kept on the Colony. To a
substantial degree Cape policy was dictated or suggested from West-
minster by the Colonial Secretary. Instructions from Westminster in-
evitably reflected the policy of whichever Party was in command in
Parliament and so swung about. (This was also true in India, but there is
some evidence that the unique interest of the India Office imparted a
greater continuity of policy than was possible in the Colonial Office with its
multifarious responsibilities). Nevertheless whatever their political com-
plexion successive British governments had similar aims for colonies: to
extend the rule of law and to achieve a modus vivendi with the natives.
In the Cape Grey found plenty of the sort of thing he had been used to: in
South Australia utter chaos, and mismanagement, in New Zealand all that
and also serious trouble with the Maoris. But in both these places the
settlers were an almost homogeneous population of British extraction. The
Cape Whites consisted first of a substratum of Dutch settlers mingled with
French Huguenot refugees. To these were added English settlers, more
 Attempted Federations Which Never Materialised 25
particularly in the south-east part of the Colony where they had been
encouraged (and subsidised) from 1820 when the country came per-
manently under British control. In addition to the Whites there were some
brown men, Hottentots, the originals of the Cape Coloured population,
but hardly yet a mixed race. There were also some Javanese brought in by
the Dutch as slaves. Today these are known as Malays, which correctly
indicates their language and religion. There were in the Cape (especially
in the Western Cape) very few black men. The 'coloured' section of the
population was regarded sympathetically from the first by the Cape
Whites. They made excellent servants, soldiers and artisans. There was
always the possibility of friction between the Dutch and British elements,
but in fact up to at least about 1870 there was little sign of anything of the
sort.
To understand the British/Dutch relation as it subsequently developed it
is necessary to recall what happened to the Dutch settlers. After rule was
permanently transferred to the British, some, the better off, had remained
in Cape Town, often as leading members of the professions, especially law.
From the first a number of them identified themselves with the British,
becoming extremely Anglophile and loyal to the Empire. But others, in
equally good positions, remained aloof, gradually, from about the 187os,
taking up (to some extent forced) an anti-British anti-native position,
becoming extremely nationalistic.
But the extraordinary and unique development of the Dutch settlers was
not among the settlers of either of these parties. Instead it was among the
farmers- 'Boers'. Whatever they were to start with they became a highly
peculiar society, living on their virtually free lands of 6ooo or more acres of
sheep and rough cattle grazing (trek ox), tending their flocks and not
bothering at all about the rest of the world. They were devout members of
the Dutch Reformed Church (the most rigid form of Calvinism), attending
their form of monthly communion with enthusiasm whenever they could.
They read the Bible regularly and were careful to have their enormous
families (seventeen or more) baptised. They asked only to have plenty of
room (so as not to have near neighbours). They had no use for government
and could not abide the idea of paying taxes. Clearly they were not the sort
of citizens any respectable government would care for -just as the
Americans did not welcome the Mormons (and they were relatively a
much smaller problem).
At first Cape Province covered only a very small area and the Boers
could easily obtain pastures for virtually nothing, quite near at hand. But
gradually the area under British rule extended, both by tribal annexations
and by settlement. As the population increased the Boers found that they
had to move further and further from Cape Town to achieve their desired
solitude. Much of the land into which they moved was sparsely inhabited,
but already before the British arrived contact had been made with Bantu
Xosas, who themselves were probably advancing along the coast from the
 Federalism: Failure and Success
north-east. The 'First Kaffir War' is dated I779· The British Government
attempted to keep the peace (although they complicated the situation by
introducing British settlers in r82o). To the Boers it appeared that the
Government was failing to support them, so they broke out of the territory
which had been annexed by the British, to fend for themselves (the Great
Trek, r 835). They made first for the High Veld (which became the Orange
River State and the Transvaal), where they defeated the Matabele, and
drove them into what became Rhodesia. Then they were tempted to turn
into Natal, at that time mainly in possession of the Zulu, the most warlike
of all the tribes. But there were not enough of them to defend themselves
against the Zulu, so they withdrew to the High Veld, leaving Natal to the
Zulu and to the British, who took on the area the Boers had occupied in
Natal.
On the High Veld there was chaos for a time, but the Boers did realise
that they had to have some government. So they set out constitution-
making (a most interesting exercise which we cannot go into here).
Gradually two Boer Republics: the Transvaal (later the South African
Republic) and the Orange Free State emerged.
This was broadly the situation as Sir George Grey found it when he
arrived in r853· The small area of the Western Cape was indeed fairly
civilised and had been promised representative (although not responsible)
government. This duly started in r854, members being elected on what
was later known as the 'colour-blind' franchise, that is to say all were
chosen on a single roll, irrespective of the colour of the voters. Elsewhere in
Cape Colony things were very different. The Eastern Cape was sparsely
inhabited. Grahamstown, its principal town, hardly existed. In the north
the Boer republics were near chaos, with a constant threat of war between
them and the Bantu. Building on his New Zealand experience Sir George
urged that it was impossible to administer South Africa in its existing
fragmented state. He advised a series of federated provinces, more or less
self-governing, under a strong central government. This had worked well
in New Zealand. But the Colonial Office was looking the other way. At
that time Westminster had embraced a policy of disengagement. It wan ted
not more, but less, trouble and expense in South Africa. Due to the
slowness of communications Grey was not aware of the strength of this
policy until much later, not fully indeed until he received his letter of recall
(in r86o). In the meantime Grey continued with his quasi-federal plans,
emboldened by the success of a policy of intervention in a war between the
Basuto and the Orange Free State. It was all just as it had been in New
Zealand. There was indeed some prospect that the Boer Republic might
come together, in which case a federation might well become practical.
Grey's scheme as he propounded it to the Colonial Secretary (Bulwer
Lytton) was a union of federated States, each State having a governor, an
elected ministry and a State legislature. The State Assembly would deal
with all local affairs, while the federal government would legislate on all
 Attempted Federations Which Neuer Materialised
matters of general interest, be responsible for defence and for allocating
revenue among the States.
It was an ingenious plan, which might well have been listened to with
interest at a later date. But at that time nobody was interested. The
Colonial Office was still set on disengagement. The newly established Cape
Parliament was afraid that federation might imply giving up some of the
customs revenue and helping to pay for the defence of the Orange Free
State. In the Cape there was indeed some support for Sir George's scheme,
but on the grounds that it might make the Cape government more remote.
There was no real desire for federation. (Given the impossibility of
progressive personal income taxes; which are so appropriate for the central
government of a federation, a federal government had to rely on customs
revenue, as the only worthwhile tax. The same dilemma occurred in
respect of Western Australia, forty years later.) But Grey had gone far
beyond his book in even proposing his schtme, and in 186o he received his
letter of recall. So ended the first federal hope in South Africa.
Grey was succeeded (in 1862) by Sir P. Wodehouse. Wodehouse's
previous experience had been in the Caribbean and Bombay, less relevant
to the South African situation than Grey's. He was immediately faced by
two serious troubles. First the Basuto were again an active danger to the
Orange Free State, and secondly, as it filled up and developed, the Eastern
Cape was becoming increasingly restive at the domination of the Western
Cape. They especially resented the trouble and expense of attending
Parliament in that far-off corner. A central (federal) government would
have suited them well. They were still in great need of help against the
'Kaffirs' (as the Blacks of all tribes were then called). But Wodehouse was
no federalist. He was not even in favour of representative (far less
responsible) government. To appease the Eastern Cape he decided to hold
the 1864 session of Parliament at Grahamstown. This move infuriated
Cape Town and pleased nobody. No wonder that he wrote to the Earl of
Carnarvon (who in 1866 had become the Colonial Secretary in the second
Disraeli Ministry), 'This is a very troublesome colony to govern, with as
unmanageable a system of government as could have been devised'. His
own solution was to abolish Parliament and to substitute something very
like the later colonial system of 'Leg. Co.' and 'Ex.Co.' with a strong
imperial power at the top.
Wodehouse was indeed in a very difficult position. The country was
suffering from severe drought and depression. (It will be recalled that
London experienced one of the most severe crises of the century in 1866-7.)
In South Africa it was very difficult to collect taxes. Tribal wars were very
expensive and the Colonial treasury was in deficit. There was nothing that
the Governor could do except to attempt to increase the revenue and start
retrenchment. But in the meantime expenses were increasing. In 1868 the
Basuto were declared British subjects. British 'Kaffra,.ria' (Ciskei) was also
annexed, to the great annoyance of the East Cape. The Orange Free State
 Federalism: Failure and Success
was appeased by some boundary concessions and the remainder of
Basutoland became the Native Reserve ofBasutoland, later Lesotho, with
a guarantee against Boer penetration. By these measures it was hoped to
extend the rule of law and order. In rapid succession Wodehouse put
forward four separate constitutional suggestions, each more autocratic
than the one before. He was convinced that nothing short of the abolition
of the Cape Parliament would make it possible to govern the country. In
Jamaica he had recently (I 886) seen the abolition of the island Parliament
followed by a great improvement in law and order. Lord Glanville,
Colonial Secretary after the change of government, agreed that the current
Cape Constitution was inadequate and should be regarded as transitional.
But transitional to what? Glanville was not opposed to responsible
government as a long-term solution, but he doubted whether Wodehouse
(who seemed to make enemies wherever he went) was the man to get
agreement on the needed additional powers for the central government.
The choice seemed to lie between a much strengthened colonial
government and the establishment of local responsible governments. It
was on this last point that the discussion centred. In the meantime both the
Colonial Secretary and the Governor were agreed that there must be no
splitting of West and East Cape in a pseudo-federation. Of course if the
Boer Republics could be brought in the whole question offederation would
be put on a different footing. In view of their continuing troubles with the
natives it seemed not impossible that they might agree to join. In I868
W odehouse himself had spoken in the Cape Parliament in favour of that
sort of a federation. Responsible governments would be the only hope of
uniting the South African territories under a single government and so
putting an end to fragmentation. But in 1872 W odehouse was moved on to
Bombay, and the same year the Cape was granted responsible govern-
ment, although in a number of ways it was still subject to direction.
In the meantime things had changed in London. In 1866 the Earl of
Carnarvon had become Colonial Secretary in the third Derby adminis-
tration. Disengagement was now out. Carnarvon was a convinced
federalist. He had just launched with great success the British North
America Act, creating the Dominion of Canada, which came into force in
I 867. The position in South Africa seemed not so dissimilar. The French in
Lower Canada and the British in Upper Canada seemed further apart
than the Dutch and British in the Cape. But the Conservative Ministry
lasted only until 186g, and Carnarvon found himself once more in
opposition. Nevertheless he did not abandon his federal aims. His ambition
was to create a great confederation of the British Empire. He felt that the
Liberals were totally neglecting this magnificent opportunity.
Back in office in 1874 Carnarvon actively took up again the federal idea.
The most difficult problem now seemed to be centred on Griqualand West,
where (at Kimberley) diamonds had been discovered and were fast
becoming important, both politically and economically. The Griqualand
 Attempted Federations Which Never Materialised 29
area was disputed with the Boers, but Wodehouse's successor (Sir H.
Barkly) succeeded in annexing it for the British (not without Dutch
opposition). The five candidates for a possible federation were thus: the
British Cape Colonies (West and East), Natal and Griqualand West and
the two Dutch Republics of Transvaal and Orange Free State. As always
Carnarvon was very concerned about the treatment of the natives. In
order to make himself better informe about the situation he persuaded his
friend, the historian]. A. Froude, to take a look round South Africa in late
I874, on his way to Australia. Froude was much impressed by what he saw
and encouraged Carnarvon to go ahead with his federal plans. At this the
Colonial Secretary wrote to Governor Barkly suggesting a meeting in Cape
Town of representatives of all five territories. It was hoped that three points
would be discussed:
(I) the possibility of a uniform policy in respect of treatment of the natives;
(2) the control of arms supplied to them, and finally
(3) the all important question of a possible union of South Africa in some
sort of confederation.
For the Cape Town conference Carnarvon put forward the names of
possible delegates: for West Cape,J. C. Molteno (the first Prime Minister
of the Cape Parliament), for the East Cape, Paterson (a well known
separatist) and Froude as a British delegate. The suggestion was not well
received, although Molteno himself had sponsored a federal enquiry
commission in I87 I. Molteno's primary objective had been to reconcile the
East Cape with a separate Assembly linked federally to the West. But at the
suggestion of Chiefjustice de Villiers the remit had included a request for
views on the possibility of a federation of all the South African territories.
This looked very different from what Molteno really had in mind: the
ultimate absorption by the Cape of the whole country. The Cape
Parliament consequently rejected the idea of a conference such as
Carnarvon was suggesting. At this moment Froude turned up in Cape
Town. Unfortunately he immediately set about stirring up Molteno's
enemies, an activity which for the most part only succeeded in hardening
the opposition of the Ministry. Nevertheless it was finally agreed that a
representative should be sent to the conference. But by then Carnarvon
had changed his tactics. He now suggested instead of a conference in Cape
Town, one in London, whose first task would be to settle the question of
Griqualand West.
The Cape Parliament no longer felt bound to oppose this idea. It was
anxious to get the Griqualand affair settled; so it was agreed to send
delegates to London. But on second thoughts it was decided just to send
Molteno. The conference duly met in August ( I876) under Carnarvon's
chairmanship. But the Cape had no proper representation; the Transvaal
sent no one at all. The President of the Orange Free State turned up, but
with no authority to discuss federation. Froude was to represent Griqua-
land West. Natal alone sent a full delegation. (Among them was Sir
 Federalism: Failure and Success
Theophilus Shepstone, the Secretary for Native Affairs, who was to play a
very important part at the next round.) Such a body was neither
competent nor interested in discussing federation, and it was not touched
on. But the need for some sort of unification in South Africa remained.
Carnarvon's next move was to launch (in the House of Lords for a start)
a permissive Federation Bill, to be submitted to the Imperial Parliament.
It was proposed to set up a federation on Canadian lines of any colonies or
states in South Mrica which were willing to join. Copies of the Draft were
sent to the Cape and to Natal for their consideration, and their views were
embodied in the Act (which became law in 1877). In order to hasten its
implementation a new Governor (Sir Bartle Frere) was sent to the Cape,
while at the same time Shepstone was sent to the Transvaal with authority
to administer provisionally, and if he thought necessary, to annex any
territory provided that a sufficient number of the inhabitants wished to
become British subjects. In the Transvaal confusion over the mines and
bankruptcies on one side and trouble with the natives on the other were
reducing the territory to chaos. Shepstone judged that if respectable
government were to be restored it would be unavoidable to annex the
Transvaal. This he proceeded to do.
Carnarvon's idea (anticipating in some ways Cecil Rhodes) was to
follow a two-pronged approach to federation: Transvaal and Orange Free
State being brought along in the north while Frere worked on Cape
Province (East and West) from the south. In the meantime Molteno's
place in Cape Town was taken by Sir Gordon Sprigg. Sprigg was not
enthusiastic for federation (which would almost certainly have removed
the Eastern Cape from the influence of Cape Town). But he was less
opposed to federation (and to Carnarvon) than Molteno.
It turned out that the annexation of the Transvaal was a fatal error. (It
was quickly reversed by Gladstone when the Liberals came in in 188o.) But
it already appeared that the Boers were not prepared to become British
subjects, and the British did not have the power on the spot to hold them
against their will. Thus the restored South African Republic, led by
Kruger, came into existence in a spirit of hostility to the British- a hostility
that was only aggravated by later events.
In the meantime no progress towards federation was possible. Neverthe-
less Paterson, the separatist, proposed a conference on the subject. This
suggestion was rejected by the House of Assembly, but on the dissolution of
the Cape Parliament the next year the electorate was admonished that it
should consider the question of federation, 'the most important subject
which has ever been submitted to them'. But Sprigg was in no hurry, in
spite of repeated proddings from London. It was even suggested that the
Cape Constitution might be suspended in order that all territories should
be put on an equal footing for federation. Eventually (June 188o) Sprigg
moved in the House of Assembly that a conference of the British colonies
and neighbouring territories be set up to discuss mutual relations and the
 Attempted Federations Which Never Materialised
possibility of some sort of union. The response to this feeler was virtually
zero. After a very few days the idea was dropped without a division. It was
left to the Governor to regret that in view of the continuing troubles in the
Transvaal and unhappy relations with the Bantu Xosas, it was not
expedient to proceed with the conference. This situation was accepted by
the Imperial Government and the next Governor was instructed not to
raise the issue of union unless there was an express desire for it among the
colonists themselves.
Looking back over the Carnarvon episode one can see that what he was
planning was a loosely unified South Africa under British protection. But
that assumed that the Boers would accept British protection against their
Bantu enemies (especially the Zulu). The defeat of the first British Army
that was sent against the Zulu (although that defeat was subsequently
reversed) made it evident that the protection which the British could and
would offer would not be enough. So there was an upsurge of national
(Dutch) consciousness in the Republics (and also in the Cape). For those
were the years in which the Cape Dutch were organised as a political party
(the Afrikaner 'Bond'), and in which they asserted the individuality of
their language (Mrikaans, 1875) as distinct from European Dutch. Thus
not only the Boer Republics, but the Cape Assembly also proved
unreceptive to Carnarvon's ideas.
The events of the next twenty-five years are very well known. What
mainly changed the 188o situation was the discovery of gold in the
Transvaal and the growth of what was at first an immensely profitable gold
mining industry on the Rand. The High Veld was no longer a mere
frontier region, association with which could be a cost to a colonial power.
The eyes that were now set upon it saw something very different. There
was a large non-Dutch immigration into an area that had been a Dutch
preserve. International capital became anxious to develop South Africa.
Its interest awoke the attention of governments, not only British but
German also.
We shall not pay much attention to the federal schemes which sprang
from the brain of Cecil Rhodes. It is clear that what Rhodes had in mind
was the organisation of South Africa on the basis of its mineral
development. His plans are well summed up by Eric Walker (A History of
South 4frica, p. 416):

It is never easy to say what Rhodes' plans were at any one time but his
ideas when fully developed came to this: the Imperial government was
slow to scramble for Africa; therefore the Colony and his Companies
must annex as much of the unclaimed interior as possible. Given that,
the Transvaal and Natal would surely be obliged to enter the customs
union. As in the case of the German Zollverein, the customs union might
speedily become a political federation over which the U nionjack would
 Federalism: Failure and Success
float as the federal flag while the republics kept their constitutions for
local purposes.

Rhodes secured control of what was to be Rhodesia through his chartered

company (1889), while on the other hand he made an alliance with the
Afrikaner Bond in the Cape, so that in 1890 he became Cape Prime
Minister. North of Rhodesia his plans encountered constitutional com-
plications; but the principal resistance was in the Boer Republics. His
attempt (or those of his friends) to force the issue their misfired (Jameson
Raid, 1896), after which it must be said that his plans lay in ruins. But
Rhodes had provoked the Boers, who were more than ever convinced that
the British were their enemies. Hence the Anglo-Boer war of 1899.
At the end of the war (Peace ofVereening, 1902) the Boer Republics
were annexed, but self-government under British suzerainty was restored
to them in 1907. There followed the negotiations which led to the Union
(not a federal Union) in 1910.
There were federalists, such as the Liberal 0. D. Schreiner, at the
Cape. But there were a number of unsettled questions in the way of
successful federation. From the late 188os right up to 1906 there were
continuous disputes, bickerings and negotiations. They revolved round
three subjects on which it was essential for federation that there should be
agreement. These were first, the need for a customs union, secondly a
common policy for dealing with the natives (in respect of this the Cape was
at variance with all the other units). Thirdly, and in the short term the
most important and difficult, the question of communications.
In respect of the need for a customs union there was the usual difficulty
that the urbanised areas wanted protection for their industries while
farmers wanted free trade in order to ensure cheap imports of consumer
goods and farm equipment. Durban in particular wanted protection. But
on the whole provincial boundaries cut across these differences; for
instance the Cape and the Orange Free State had been living happily
together in a customs union since 1903, and this was capable of expansion.
The treatment of the natives was a very different matter, and one on which
it still seems impossible to reach agreement. In respect of this problem the
Cape, with its 'colour-blind franchise', admitting practically all coloured
people on the same role as the Whites, stood alone. In the western Cape
there was little experience of Africans. Only in the eastern part of the
East Cape was there any real experience with Bantu. And even there, there
was no Indian problem to complicate the issue.
The liberal Cape view, as expressed by Schreiner, was that both Blacks
and Browns should gradually be brought along in education, civilisation
and political advancement. Schreiner felt confident that the White man
would still remain on top- at least as long as he needed or deserved the
position. Among the Whites in the Republics and in Natal things were very
different. Two quite separate views can be distinguished, although they
 Attempted Federatwns Which Never Materialised 33
were united in denying the franchise to anyone but Whites (apart from the
abortive Natal scheme for Indians which we noticed above). In one
view it was desirable to build up a stable labour force of (at least partly)
educated and skilled urban Blacks. It would be convenient if they could
work in factories on the outskirts of towns, returning to the 'Locations'
(now called 'Homelands') to live. Incidentally this would minimise the
amount of commuting required. The other view with which the name of H.
C. Verwoerd, later Minister for Native Affairs, should be associated was
that there should be a continuous stream of unskilled Black labour coming
from the homelands. This could be expanded or contracted according to
the needs of industry or mining. In fact something like this has occurred,
the position of the Blacks improving in times of high employment and
worsening in times of depression, when it became necessary to reserve jobs
for 'poor Whites'- but this is to anticipate.
The remaining unsettled question which stood in the way of federation
or union was that of communications. Distances were long and much of the
terrain extremely mountainous. One can but admire the democratic zeal
with which M.P.s from the Eastern Cape faced three days on one of the
most terrible seas in the world, to attend Parliament in Cape Town. With
the building of the railways short distance communications improved. But
as the lines were built privately and separately in each unit long distance
communication was hardly any easier. The basic snag was that as the lines
approached the mines they all came under the domination and ownership
of the South African Republic (the Transvaal) .Johannesburg was now the
largest and richest city in South Africa. It could hold the whole country to
ransom by this, if not by other means.
The dominant figure in promoting federation or union was now Sir
Alfred (later Viscount) Milner. He had been Governor of Cape Colony
and High Commissioner for South Africa r8g7-r go r. Subsequently he was
Governor of the Transvaal and Orange River Colony, as well as High
Commissioner for the whole of South Africa rgor-5. Milner thus had
detailed knowledge of the Republics. He was becoming increasingly
apprehensive of the domination of Afrikaner interests there and con-
sequently impatient to get a federation established which would prevent
this. Like so many of his predecessors, from Sir George Grey onwards,
Milner felt that some sort of unification was essential for the good
governance of the country. He did not distinguish sharply between
federation and unification, so long as some sort of cohesion, which would
make it possible to run the country as a whole, could be achieved. Milner's
scant appreciation of the liberal Cape point of view is evident in that- just
like Carnarvon- he was prepared to scrap the whole Cape Constitution in
order to put all the units on an equal footing for federation. It seems clear
that at this juncture the great majority of Whites, both urban and rural,
were thinking in terms only of federation, quite a loose federation perhaps,
at least one that would allow the Cape to retain its tradition of liberal
34 Federalism: Failure and Success
tolerance. But in the Transvaal there was a small but growing body of
intellectual Mrikaners who were violently opposed to federation and in
favour of a close union. Jan Smuts in the Transvaal was in close touch with
the Cape Mrikaners.
In I903 Milner established an Internal Affairs Commission to discuss
some sort of unification. The next year Smuts was writing to Merriman (a
leading non-Mrikaner Member of the Cape Government): 'When the
Liberals get in again should we not try for federation?' Only the Liberals
Schreiner and Sprigg seem to have been at all apprehensive of what a
united Mrikaner front (which included the Cape) might mean in terms of
Transvaal domination. That the (in the circumstances) subtle difference
between federation and unification was not grasped can be seen from a
Memorandum written in I906 by Lionel Curtis, one of Milner's leading
men. Curtis argued cogently for closer union, but made no analysis of what
form the union should take, or what would be the consequences of the
adoption of one form or another. The next year (I 907) self-government
was introduced for the Transvaal (under Botha and Smuts) and for the
Orange Free State. Thus all four units could start on the same footing, not
by demoting the Cape, but by promoting the others. The following year a
treaty between the units was signed at Vereening. It was a preliminary
draft for the Act of Union. No mention was made of the Cape franchise.
At this point Milner called a National Convention of thirty delegates
chosen by the Parliaments of the four units on an all party basis (twelve
from the Cape, eight from the Transvaal, five each from the Orange Free
State and Natal, together with three observers from Rhodesia), in order to
reach agreement on the terms of closer union. Schreiner himself was
unable to attend the Convention as he had an important brief in a native
case which he felt he could not withdraw from. But it is unlikely that had he
been present he would have been able to do much. Mter reference back to
the four Parliaments this became the South Mrica Act, passed by the UK
Parliament in I909 and coming into force on 3I May I910, the second
anniversary of the Treaty of I9o8. The Report of the Convention was
never published, but it became clear that the Transvaalers had been much
the most important group and that they were strongly in favour of a close
union, rather than of any form of federation. All that the Constitution left
for the Provinces was a small say in elementary education.
In addition to the question offederation or union the Convention had
been asked to pronounce on four issues: (I) the rights of the two languages,
English and the new Mrikaans, (2) the location of the new capital, (3) the
question of the franchise and (4) the future of the High Commission
Territories of Basutoland, Swaziland and the protectorate of Botswana,
which were administered directly by the Colonial Office with a High
Commission in South Mrica. In respect oflanguage rights, equal status for
the two languages was fairly easily agreed. On the whole it seems that
English has been gaining ground. When in the summer of I976 the
 Attempted Federations Which Never Materialised 35
administration in the township ofSoweto near Johannesburg attempted to
educate the children only in Afrikaans the roof blew off and after much
rioting and bloodshed the attempt was abandoned.
The location of the future capital gave a great deal of trouble. It was
finally resolved by 'dividing' the capital, the executive and administration
to be settled at Pretoria in the Transvaal, the judiciary at Bloemfontein in
the Free State, and the Parliament in Cape Town. This was all that was left
of South African 'federation'. In respect of (4) the Afrikaner leaders were
anxious that the Territories should be absorbed into the Union. If this had
been done there is no doubt that there would have been penetration by
White farmers eager for land and labour. Their position however
remained inviolate until they were granted their independence by the
British.
During the first three sessions of the Convention it had been assumed
that proportional representation would be introduced. This would have
had the effect of limiting the power of a Parliamentary majority in certain
circumstances. It would have been especially useful in a situation in which
a small majority was intent on pushing through legislation of a partisan
type. But proportional representation was not well understood and was
held to be too complicated and novel for incorporation in the Constitution.
Consequently the idea was (most unfortunately) abandoned. The real
battle in the Convention was foughtover the question of the franchise. The
Cape representatives fought tooth and nail for the retention of their single
'colour-blind' electoral roll. But the best that they could attain was an
'entrenched' clause (section I 52 of the South Africa Act) where it was
coupled with the equality oflanguages clause. It was there laid down that
it could be amended or repealed only by a two-thirds majority in the
Assembly and the Senate, voting together. It was also mandatory to
reserve a Bill dealing with the franchise for 'the signification of the King's
pleasure'. In Cape Town the Bond was divided on the question of the non-
White vote. F. S. Malan, a prominent Parliamentarian, both at the
provincial and national level, and editor of Ons Land (the organ of the
Bond), wanted additional safeguards, such as that the Cape Repre-
sentatives must also vote in favour before a change could be made. There
was a widely held view that somehow or other a two-thirds majority could
be conjured up, for the National Party always intended to do away with
the Cape franchise (and with any remaining shreds of provincial
autonomy. (The story of how this was accomplished within a professedly
legal framework is of great interest in respect of the process of amendment
of federal consititutions.)
In the first place the way was eased by the enactment of the so-called
Statute of Westminster by the UK Parliament (I 93 I). By this the UK
Parliament disclaimed all right to revise legislation of Dominion Parlia-
ments and further that the laws of Dominion Parliaments remained valid
even if they were in conflict with the laws of the UK. (We shall see later the
 Federalism: Failure and Success
repercussions of this enactment in India.) In South Africa it led to the
Status Act of I934· The purpose of this was to make clear that the Union
Parliament was the sole governing power in South Africa, both internally
and externally. In addition it was at pains to assert that the executive
power in South Africa was vested in the King (or his representative, the
Governor General) on the advice of the Union Cabinet. The Governor
General's right to reserve a Bill amending the Constitution for the
'signification of the King's pleasure' was abolished, thus making it possible
to alter the franchise without further trouble. It was questioned by some
whether the Status Act did not ipso facto destroy all entrenched clauses. But
neither the Nationalist nor the United Party was prepared to go so far as to
accept this reading at the time.
The War brought much controversy to South Africa, but what
especially concerns us here is that it brought an influx oflndians to Durban
where it was felt that without the new immigrants they already had more
than enough of an Indian problem. Jan Smuts who was then (I 939) in his
second term of office as Prime Minister of the Union (his first period having
been from I910to I924), tried to keep clear of this question. Indeed in I943
he claimed that native segregation was dead. Unfortunately sudden
trouble in Natal forced Smuts to freeze the existing native property
ownership regulations, until a better system could be agreed. But as
agreement seemed impossible, in I946 the Asiatic Land Tenure and
Representation Act was passed (by simple majority of the two Houses
sitting separately). Although the United Party had many members in
Natal, Smuts' policy was not welcome to his supporters. In fact the Act
never operated and was epealed in I948. But its importance is that it gave
the Nationalists an excuse for apartheid and gave them a small majority in
I 948. After this they wet straight ahead to abolish the Coloured vote in the
Cape.
In I95I the Representation of Voters Bill virtually disfranchising 47000
Coloured citizens, was passed by separate simple majorities of the two
Houses. In place of the vote the Coloureds were given the right to choose
four European-Members of the Assembly and two representatives (who
could be White or Coloured) to represent their interests. The Act was
challenged in the Courts. The Supreme Court held that it was not
unconstitutional because the Appeal Court had ruled that the South
African Parliament was sovereign. The Government lawyer argued that
nothing was being taken away from the Coloureds because they could still
vote. Anyhow Parliament had full authority to do what it wanted as South
Africa (like Britain) now had only a Common Law Constitution. (This
contention was upheld by some British lawyers steeped in the Common
Law tradition.) On appeal it was held that this argument was wrong, and
that the Act was invalid.
The Nationalist reaction to this decision was to introduce a High Court
of parliament Bill which was passed in I952 by simple majorities of the two
 Attempted Federations Which Never Materialised 37
Houses. This established a new Constitutional Court of the two Houses
sitting together which by simple majority could set aside an Appeal Court
judgment which was not agreeable to it. The session was held at Pretoria.
The opposition boycotted the meetings and the session unanimously voted
to reverse the Appeal Court's decision. But things were not quite
straightforward for the Government yet. The Cape Province Division of
the Appeal Court held that this decision was invalid. The Government
appealed, but the decision was confirmed. It is interesting to speculate
what would have happened if a final appeal to the Privy Council in
London had been in force; but it had been abolished in I950.
The Government next tried to secure the necessary two-thirds majority,
but failed. Its next move was to introduce an Appellate Division Bill for a
new Court of Appeal which would have exclusive jurisdiction in
constitutional matters. A joint Select Committee of the Senate (with party
distribution I I-7) gave a straight majority Report to validate the invalid.
They would not even allow minority objections to be quoted. But the result
was that only I 29 votes were cast in favour while I 38 were required for the
two-thirds majority.
On this reverse the Government appointed five additional Appeal Court
judges, and promoted an Appellate Division Quorum Act, making it
compulsory to have all eleven judges for a quorum, with a majority of six in
favour. This was followed by a Senate Bill providing for the appointment of
additional senators on a (White) population basis (27 for the Transvaal, 22
for the Cape, 8 each for the Orange Free State and Natal). Thus in each
Province the party in power selects all its senators. As a result all senators in
the Cape, the Transvaal and Orange Free State are members of the
Nationalist Party, in Natal they all belong to the United Party (but of
recent years this has split into two). From this point the Government has
been able to control the Senate. It can count on I 7 I votes to 77, which
provides an ample two-thirds majority of two Houses sitting together. By
I956 the Government was in a position to remove all entrenchments,
which it proceeded to do with the exception of the equal language rights.
But recent events in Soweto (mentioned above) call even this in question.
The South African Constitution was in tatters. The opposition have
virtually no power to control the Senate, nor, consequently Parliament.
And they are far from united. This is the situation in which the landslide
victory of the National Party occurred in November I977·

(B) ABORTIVE FEDERATION IN EAST AFRICA

The idea offederation between the three East African territories of Kenya,
Uganda and Tanganyika (as it was before independence) is an illustration
of the firm belief in federalism in the second half of the twentieth century,
which we have already noticed. It was thought to be especially useful as a
 Federalism: Failure and Success
means of launching colonies into independence. For East Africa it was
strongly urged -although not forced -by the UK on three grounds. Firstly
the three territories had been accustomed to working broadly the same
system. The British officers who administered it in town and country were
even interchangeable. Thus it seemed that integration could easily be
arranged on the administrative side. Secondly, the three together would
form a compact and sizeable nation (with a population of about 25
million) which could hardly fail to make a name and attract development
funds for its potentially wide range of products. Thirdly, well before
independence was discussed, a considerable range of common services had
been established, which all appeared to be working well. After inde-
pendence the three Heads of State declared themselves to be in favour of
federation, so that everything appeared to be set fair for its establishment.
Not only did the federal idea fail to come to maturity, however, in the
rg6o; and rg7o; the three territories began following different economic
and social policies, the common services started to break down -although
even today they have not wholly disappeared -and the three countries
drifted apart (although some cooperation remained). It looked a clear case
of a federation which failed at birth. But can one say that it could in fact
have been successfully launched, and if established, have been maintained,
especially in view of the continued failure to bring about an East African
national identity or to secure freedom of movement from one territory to
another? It is the purpose of this chapter to explore the possibilities.
The three East African territories in question entered the British
Commonwealth by different routes, and are geographically very distinct.
Uganda, first explored by Lugard, possesses fertile soil and an ample
rainfull, well distributed. The country rises from about 4000 feet, on the
shores of Lake Victoria, to more than twice that height in the Ruwenzori in
the west. The Nile, issuing from Lake Victoria, passes obliquely through
the country to the north-west. The two weaknesses of an otherwise
promising economy are: first the virtual absence of useful minerals and
secondly the long haul through Kenya to the sea. When Lugard explored
the country he found in Buganda (the most accessible and developed area)
a large, relatively sophisticated, people living under the rule of a
hereditary 'Kabaka'. It was largely this apparently settled government
which inspired Lugard with the idea of Indirect Rule which he was later to
apply very widely in Nigeria. Under this system the native chiefs continue
to rule along established lines, keeping their own customs so far as these are
not repugnant to civilised practices. The traditional rulers would be
subject only to fairly light control by a resident British officer. At a later
stage the dominance of the Buganda people and their attachment to their
Kabaka in fact put an end to the systm oflndirect Rule in Uganda. Indeed
it was one of the causes of the eventual break-up of established government
in that country.
There was in Uganda no complication of White settlers, as there was in
 Attempted Federations Which Never Materialised 39
Kenya. Nevertheless there were two potentially disruptive elements. First,
religion: Christianity came to the Mricans around Kampala (the
Kabaka's capital) relatively early, and the greater part of the southern
peoples became Christianised. Only in the north, on the Sudan border,
was there a large Moslem element. But Christianity as introduced into
Uganda was itself divisive. French missionaries corning from the north
brought with them Roman Catholicism, while Protestant missionaries in
the south introduced Protestantism, mainly Anglican. The rivalry bet-
ween the two branches of Christianity determined the political allegiance
of the mass of the people. At times almost a Northern Irish situation was
created. On the whole the expatriate administrators (being mainly
English) slightly favoured the Protestant interest.
Secondly, although there were no White settlers there grew up round
Kampala (fast becoming the commercial capital and close to the Kabaka's
palace) a wealthy Asian community of traders. Some had come originally
for railway construction (although not nearly so many as in Kenya), but
the stream of professional and commercial immigrants was still flowing at
the time of independence. Most of them were well educated middle-class
families, very loyal to their adopted country and to the Commonwealth. A
number chose Ugandan citizenship on independence. But this did them no
good; when the great purge came all were expelled.
Kenya, whose territory begins at the north corner of Lake Victoria, is
geographically a very different country from Uganda. Initially the two
territories were administered together as the 'East Mrican Protectorate';
but because of the immense distances to be covered this proved extremely
inconvenient. Hence in 1902 the two Administrations were separated.
Kenya on the whole is a much drier country than Uganda and
considerably higher. The northern areas, bordering on Somalia, are
complete desert so that the useable area is smaller than appears from the
map. But in the south of Kenya, on the shores of Lake Victoria, an
excellent rainfall and an altitude of over 6ooo feet provide ideal conditions
for high grown tea and coffee. Much of the terrain is hilly, even
mountainous. Other parts of the highlands are quite suitable for temperate
crops and cattle breeding. Kenya also possesses a good harbour at
Mombasa.
The potential of Kenya was early observed. A wave of immigrants
poured in during the early years of the century and was followed by a
econd wave of soldier settlers after the First World War. The climate was
exhilarating and temperate, with (apparently) only a very limited
indigenous population to interfere or be interfered with. There has thus
long been an important European element in rural areas. In addition there
grew up in and around Nairobi (the capital) a large settlement of Asians,
first dating (as in Uganda) from the railway construction period, but later
reinforced by a professional and trading community even larger than that
at Kampala. Finally at Mombasa and other coastal areas there linger
 Federalism: Failure and Success
Moslem and Ismaeli relics of former Arab trading posts.
Although the Administration gradually became aware of a great
number of tribes, two (together with their affiliates) were dominant: the
Kikuyu in the areas north and north-west of Nairobi, and the Luo on the
east and north-east shores of Lake Victoria. Both these peoples were
powerful and relatively advanced. Between them they have supplied most
of the African leaders who were later to take over (in particular Jomo
Kenyatta, a Kikuyu who in old age still dominates the country, and Tom
Mboya, an intelligent and well educated Luo, regarded as Kenyatta's
natural successor, until he was assassinated). The Mau Mau disturbances
which rent the country in the 195os were essentially a civil war between
Africans, rather than an attack on the settlers.
Tanganyika (Tanzania after independence and the annexation of
Zanzibar) entered the British Commonwealth by an entirely different
route. A German colony (dating from 1886), it become a League of
Nations Trust territory assigned to the British after the First World War.
Geographically it is also very different from the other two. It can be
described as a sea of desert, punctuated by a number of islands, some very
fertile. The best land lies on the southern slopes ofKilimanjaro, which are
ideal for high grown coffee, and round the south of Lake Victoria which is
good cotton land. In the south-west there are also potentialities. There are
a number of sisal estates. The cloves of Zanzibar and Pemba are world
famous. Finally Tanzania as some promising minerals.
Due to the scattered nature of settlements and the scanty population, no
great tribal build-up similar to those of Uganda and Kenya took place.
Neverthess there appeared an early and well organised national movement
('Tanu', Tanganyika African National Union), led by Julius Nyerere,
later the first (and a most powerful) President. Due to the limited
development of tribalism and to the wide influence of Tanu, Tanganyika
appeared to be more ready for self-rule than either Uganda or Kenya.
Hence Tanganyika was the first of the three to receive independence,
notwithstanding that in many ways it was the most backward.
Although the three territories were administered separately the type and
organisation of the expatriate personnel in the services was identical. It was
natural that there should be many contact between them. In fact basic
common services were established at an early date. In the first decade of
the century a single railway system for Kenya and Uganda was built. This
was later extended to cover Western Uganda and Tanganyika. A Court of
Appeal and common postal services were established (the last also initially
only between Kenya and Uganda, but Tanganyika joined in 1933). In
1929 higher education became interterritorial, and the beginnings of a
univesity grew up at Makere close to Kampala. During the Second World
War a number ofjoint boards and research projects were set up. Although
these mainly had reference to the war and disappeared afterwards, they
provided some practice in cooperative working. A common Statistical
 Attempted Federations Which Never Materialised
Department was established and also common income tax machinery. But
Uganda insisted in refraining from income tax until long after the other
ttwo had imposed it, on the excuse that her heavy export duty on cotton
was an adequate substitute. (This was of course special pleading.) It must
be observed that although the railways were made a common service, road
transport licensing was never unified, nor were the airports, although
internal air services started in 1929.
There was early a form of customs union (referred to hopefully as a
common market). From 1917 Kenya and Uganda were operating this;
Tanganyika formally joined in 1927, but retained its own organisation
until 1949. In 1923 free trade in local produce was agreed between the
three. Thus what in infant federations is often a stumbling-block, in East
Mrica was achieved in advance of a general policy of integration. But no
progress was made with the vital federal requirement of freedom of
movement of persons between the territories. There were difficulties also
over customs duties. Kenya (with already some degree of industrialisation)
was anxious for high rates as a protection against foreign imports.
Tanganyika having then nothing to protect, was only anxious to get her
imports from overseas as cheaply as possible. Uganda also favoured low
duties, thinking of her high transport costs. The interterritorial rates were
not completely inflexible but could be varied within limits unilaterally,
due warning having been given. The interterritorial allocation of customs
revenue gave rise to considerable difficulties; but the introduction (in
1927) offormal transfer forms greatly improved the accuracy (and hence
the acceptability) of the allocations. In the 19300 the system was extended
to cover excise duties.
The other important common service which from an early date gave rise
to interterritorial trouble was the administration of the railways. The first
stage of track went no further than Kisumu at the north-east corner of the
Lake, transport from there to Uganda being by boat across the Lake. The
separation of the Administrations in 1902 thus left the railway wholly in
Kenya territory. She proceeded to manage it entirely in her own interests,
which were not at all those of Uganda, predominantly interested in cheap
freight rates for her long hauls. In 1925 a Railways Advisory Council was
set up, for the extended system. This led to interterritorial management, so
for the moment that corner was turned. The Port ofMombasa, also, which
had previously been under the sole control of Kenya, was transferred to the
new Railways and Harbour Administration. This was a considerable relief
to Uganda which had previously had to conduct most of her trade through
more southerly ports. But in spite of joint control the railways (especially
rates policy) continued to cause trouble until the break-up of the system,
due to the different and changing demands of the territories for railway
services. This was greatly affected by the growth of road transport in
respect of which there has never been any joint control. But this is to
anticipate.
42 Federalism: Failure and Success
It must be observed that in spite of this substantial development of
common services, they were all concentrated on the revenue side. There
was no idea of a common economic policy, and no suggestion of planning
although there had been some half-hearted discussion of the possibility of
steering industrial location at an early stage. Later this became very
important.
In the early 192os the British Government began seriously to discuss the
question of federation. The arguments in favour were, firstly that a
combined administration would be more efficient, and secondly that a
larger home market would give a great impetus to development. This
implicitly assumed that the industries which might be set up in East Mrica
were such that economies of scale would be important. Further thought
would surely have suggested that this was not very likely. It was obvious
that all three territories were export oriented. The Kenya accounts alone
showed a sizeable volume of interterritorial trade. Kenya's local export
surplus was matched by a big import surplus in Uganda. That there was
plenty of scope for the expansion of interterritorial trade was apparent. It
was less clear that with a tariff ring round the three territories the total
volume of trade would be increased. It might simply be diverted from the
freedom of the world market to protected local production (trade diversion
rather than trade creation). That this indeed happened appears from the
fact that Kenya continued to run a large local surplus, while the other two
countries continued to run deficits. Kenya's interterritorial surplus was
helping to finance her external deficit. Uganda was in deficit both on
internal and external account. Tanganyika, with her favourable exports,
managed to run a small surplus on external account.
But consideration of the trade figures did not enter into the discussions
concerning federation. The British Government showed its concern for the
future by appointing a succession of Commissions to advise on the general
issue. The first of these (Onnsby Gore, 1924) reported against federation
on the grounds of the administrative expense of the changeover, and of the
almost certain opposition of Mricans and Asians. By and large it was the
settler interest which favoured a closer relation, because they considered
that it would lead more quickly to a settler-dominated independence. On a
similar argument Mricans and Asians were against federation. Although
the Ormsby Gore Commission rejected the idea of federation they
recommended increased cooperaion and suggested regular meetings of the
three Governors to promote it.
The next (Hilton Young) Commission was bidden to examine the scope
for federation or other closer system of cooperation, among the East and
Central Mrican Colonies. This Commission reported in favour of
federation. But in order to make sure of the protection of the non-Whites
they suggested conditions which would have increased the influence of
Whitehall while reducing that of the settler interest. This plan was rejected
both by the Colonial Office and by the settlers. In an attempt to divorce the
 Attempted Federations Which Never Materialised 43
discussion from politics the Colonial Office then sent out Sir Samuel
Wilson to examine all the questions at issue. He proposed that a High
Commission should be set up to manage the common services, but that
policy towards the Mricans should remain under territorial control. The
settlers in Kenya could be given a majority of elected members over
officials on their Assembly.
The Labour Government of I 929 rejected these proposals, but favoured
the establishment of a High Commission which would be overseen by the
Colonial Office (in order to prevent colour discrimination). This idea was
rejected by all interests. The Mricans in Uganda and Tanganyika were
convinced that it was just another scheme for increasing settler dom-
ination. The matter was then referred to a select committee of both Houses
of Parliament. This reported in I 93 I against federation, both on grounds of
expense and of want of agreement between the three races concerned. But
it recommended an intensification of the Onnsby Gore policy of
Governors' conferences to promote economic cooperation. The first
governors' conferem:e had taken place in Nairobi under the chairmanship
of the Governor of Kenya (I 926). In succeeding years these conferences
had been held annually, always under the chairmanship of the Governor of
Kenya. A permanent secretariat had been established and matters of
common interest (such as railway rates and the tariff) were discussed.
During the Second World War these interterritorial meetings had proved
particularly useful.
Mter the war the British Government put forward a new and much
more centralised scheme, although they insisted that it was not federation
(now fully realising the Mrican and Asian opposition to the whole idea).
There was to be a Common Legislative Assembly with parity between the
races. A high Commission would have powers of control over the common
services, including tax collection, road transport and custom rates. The
new arrangements would be financed by appropriate deductions from
customs revenues. So centralised a scheme was not acceptable to any of the
interests concerned, and as finally enacted was considerably watered down
although the High Commission remained. Racial parity in the CLA was
abandoned; so also was the control of road transport, and more
importantly, the finance of the High Commission was to depend wholly on
contributions from the Territories. The High Commission was intended to
be a fully East African authority, working through its own officials. But no
one in any of the Territories had got to the point of thinking in terms of a
possible East African nation. While acknowledging the convenience of
some of the common services, the Territories were effectively only
interested in their own policies and the repercussions of the actions of the
others upon them.
The creation of the High Commission was an improvement on anything
that had gone before, especially in the sense that it formalised and legalised
practices which had grown up haphazard on no firmer basis than the
44 Federalzsm: Fazlure and Success
original Ormsby Gore recommendations. But Uganda and Tanganyika
were not very happy with the working of the High Commission. They
continually feared domination by the Kenya White settlers. Moreover
now they had before their eyes the way in which Northern Rhodesia and
Nyasaland had been pressed into a federation dominated by White
Rhodesians. In fact in the later I950i so far as East Africa was concerned
these fears were groundless because all three territories had been promised
their independence, and it was clear that Kenya would not be given
independence (whenever it might be) with minority rule. In actual fact
Uganda and Tanganyika's GDPs appear to have been increasing faster
than Kenya's. But their territorial statistical departments (which had been
set up in I 96 I), seemed to indicate that Kenya was gaining on them. It was
clear at least that the lion's share of industralisation was going to Kenya.
Indeed in the middle I950i Tanganyika threatened to withdraw from the
common arrangements unlessshe was enabled to secure a greater share of
industrialisation.
The reply of the British Government to these stresses and strains was to
appoint a strong Commission under Sir Jeremy Raisman (the last Finance
Member in the government of British India, who had already acted in
Central Africa and was later to be employed on a similar mission in
Nigeria). The Remit of the Commission was to examine the working of the
various East African institutions (particularly the so-called 'common
market') so as to put them on to a satisfactory footing for an independent
organisation. The Commission reported in I961. Tanganyika (as we have
seen) gained her independence at the end of that year. Kenya, the last of
the three, gained hers in I 963.
The business of the Raisman Commission was to examine in detail the
existing arrangements, and to consider their advantages and disadvan-
tages both in total and in respect of each Territory. They were then to
recommend what adjustments (fiscal or other) might be made to improve
the efficiency and territorial equity of the system. The Report thus had two
aspects: (I) an economic analysis and (2) recommendations (mainly fiscal)
for improving the situation. The influence of Sir Jeremy is apparent
throughout, but especially in the fiscal section, which was his special
interest. The economic analysis was by far the most elaborate that had yet
been attempted in the area. The general conclusions were: firstly, that the
'common market' arrangements were working well, and secondly that
although Kenya was doing better than the other two this was largely due to
her White population. Moreover both the others were better off than they
would have been without the common market. The benefits of a larger
East African market (which however was not necessarily the same as the
common market) were likely to expand over time as development
progressed. They found already a certain amount of interterritorial
cooperation. (In this respect the Commission pitched on a most unfor-
tunate illustration: the sale to Kenya by Uganda of Owen Falls electricity,
 Attempted Federatwns Which Never Materialised 45
a cooperation which had been forced on Uganda by the necessity of
reducing the deficit on this white elephant, by selling electric current at less
than its cost.)
The general conclusion of the Commission was that a new scheme was
unnecessary. All that was wanted was a series of adjustments to the existing
arrangements. In particular a fiscal redistribution to assist Uganda and
Tanganyika was required. For this as well as for further development of the
common services additional funds would be needed. The first objective was
to be met through a distributable pool. (Sir Jeremy's favourite recipe for
revenue allocation, it was applied both to the Central African Federation
and later to Nigeria.) For this purpose it was proposed that 6 per cent of
customs and excise, together with 40 per cent of the revenue from the
taxation of the 'profits of companies from Industry and Finance' should be
paid into a fund. One half of this was to provide an additional (and more
reliable) source of finance for the common services. The remaining half
was to be distributed equally between the three territories. Accordingly
while each would receive from the pool an equal amount, each would
contribute to the pool in proportion to the revenue it itself collected. Thus
the worse off a territory was the more it would get from the pool in relation
to its contribution. It was argued that there would be some further
redistribution through the new system proposed for the common services
(see below).
The Commission declared that the selected magnitude of the re-
distribution exercise had been made 'after careful assessment of the
evidence regarding the effects on the Territories of the Existing Common
Market arrangements, and after allowing for (our) recommendations for
improved economic coordination'. This 'blindfold' exercise of judgment
thus provided no means of making a statistical check of the impact and
working of the machinery, and hence no data for assessing adjustments
which might become necessary. This was in accordance with Sir Jeremy's
invariable practice, later applied in Nigeria.
In the summer of 1961 discussions were held between the British
Government and representatives of the three Territories. There was
general agreement that the common services should continue on an East
African basis, but that when Tanganyika became independent (at the end
of the year) the High Commission should be replaced by an East African
Common Services Organisation (EACSO). This would be financed by the
non-distributable half of the pool. The administration ofEACSO would be
in the hands of a set of 'Triumvirates' consisting of the Ministers
responsible for the different services (communications, finance, com-
mercial and industrial coordination, social and research activities). It must
be borne in mind through all this that there was no freedom of labour
movement between the Territories. The recommendations of the Tri-
umvirates must be unanimously agreed; otherwise they would have to be
referred to the Authority itself. The management of EACSO was in the
 Federalism: Failure and Success
hands of a Secretary General. Other senior executives were the managers
of the Railways and Harbours, Postmaster General, Legal Secretary,
Financial Secretary and Auditor General. The Central Legislative
Assembly was to be retained although it would be reduced in scope (and
hence in principle be more manageable than it has been under the High
Commission). Things almost began to look like a coming federation.
Although the EACSO arrangements were an improvement on the
somewhat informal working of the High Commission, similar stresses and
strains began to appear almost as soon as the new system was put into
operation (Ig6I/2). Some of these were the same as before. Others
concerned the actual settlement. And over the whole scene now hung the
curtain of coming independence.
Since the Raisman Commission had revealed nothing of their working it
was impossible to say how much fiscal redistribution they conceived to be
necessary or how much they thought their direct measures would provide.
In fact, almost irrespective of its amount, fiscal redistribution would not
have gone far towards meeting the grievances of either Uganda or
Tanganyika. In the first place the whole arrangement was far too static.
Secondly (and much more important), the suspicions ofboth Uganda and
Tanzania (as we should now say) were too diverse and too deep seated to
be allayed in this way. The indirect benefits which accrued to Kenya from
being the centre of the organisation and supplying most of the staff (which
was inevitable) were obvious, although they were not so large as Uganda
and Tanzania imagined. Moreover there was considerable economy and
convenience in working through a single centre.
The settlement itself also did not work out altogether as hoped. The
system of 'triumvirates' should have brought the administrations of the
Territories closer together. And in a sense it did, but only at the 'micro'
level of each Ministry seperately. Moreover Ministers and their officals
were far too heavily involved in the affairs of their own Ministries and
Territories to have much time or interest for East Mrican affairs, which
definitely took second place. Still no one at the political level was really
thinking of East Mrica as a unity. Nevertheless it was noticeable that a
number of private firms were beginning to plan in terms of an East Mrican
market. But such plans were also conceived in terms of Nairobi as the
centre.
Such feelings as these led to a meeting of the three now independent
countries at Kampala in April I g64. Tanzania still felt very strongly that
she was not getting her fair share of industry and threatened to withdraw
from the common arragements unless the others were prepared to do
something about it. A further meeting of Heads of State took place in
Mable in January I 965. By that time complaints seem to have polarised
round the question ofinterterritorial trade imbalances. Five ways whereby
these might be reduced were put forward in what as was as the Kampala
Agreement. Various versions of this appeared, but no offical document was
 Attempted Federations Which Never Materialised 47
ever issued. As things turned out the Agreement had hardly got into
operation before the general collapse of the common system began. Many
of the changes would in any case have taken some time to implement.
The first two items of the programme did indeed make some progress
towards implementation, and they were by far the most important: firstly,
it was decided to attempt to induce firms which operated in two or more of
the three countries to concentrate their production in the less developed
areas. (The industries in question were: breweries, cement, tobacco and
shoes- Bata.) This change was not so easy as it sounded since a number of
the firms were specialising in different lines in the three countries. But on
the whole the plan made progress towards its objective. It was estimated
that when the process of adjustment was complete imbalances would be
reduced by 25 per cent. As a start trade in beer across boundaries
practically ceased.
The second part of the programme was (as a temporary measure) to
introduce immediately quotas on exports from the surplus to the deficit
partners which also produced the articles in question. Where one of the
three planned to produce an article but had not yet started to do so, a
suspended quota might be granted. Although some care was taken to
prevent the quota system from being restrictive these attempts at national
self-sufficiency were inevitably cost raising. In some cases they disrupted
production. There might even ensue a shortage of a particular line of
products where a new plant in a deficit country could not be built up in
time. Mutatis mutandis when all three countries were operating it a general
surplus might emerge.
-The other three items in the Kampala programme did not get going so
quickly. It was decided that different industries were to be allocated to one
of the three countries with a guarantee that in the selected country the
industry would have a monopoly of the East African market.This would be
a powerful inducement to entrepreneurs who were interested in the East
African market, but if none (or very few) were in fact interested the result
would be restrictive, in the sense that East African consumers would be
prevented from buying in a cheaper world market. The industries which
might qualify were to be selected by the East African Industrial Council.
An Industrial Experts Committee was to draw up a list of industries which
would require the whole East African market for economic operation.
Even if this had been done rationally there was still the danger that the
allocated location would be less efficient than one chosen on economic
considerations alone. This scheme was ingenious and constructive, and
might conceivably have led to an international planning device (on the
lines of the British Location of Industry legislation). If it had worked it
could have brought integration a step nearer. Unfortunately the com-
mittee of experts was never set up, and by the end of the year the whole
scheme was as good as dead.
The change to independence upset the established monetary arrange-
 Federalism: Failure and Success
ments also. Each country felt that it must control its own monetary supply
and policy, so all three announced that they would set up their own central
banks. Up to that point (dating from 1920) the East African Currency
Board, functioning exactly like the Currency Boards in other British
Colonies, had almost invariably kept the East African shilling strictly at
par with sterling, initially on the basis of a 100 per cent reserve. In fact this
practice was by no means as rigid as it sounded, because the commercial
(expatriate) banks operating in the area were always able to supply the
necessary sterling for crop movements and other temporary commercial
transactions. Moreover from 1955 a 10 per cent fiduciary issue was
permitted to eat into the 100 per cent reserve. By 1962 this had risen to 25
per cent. In addition there was an allowance for temporary crop growing
finance, which in 1962 became IO per cent, making a very sizeable
fiduciary issue in total. It was divided between the countries in accordance
with their estimated currency circulation. In fact the total fiduciary issue
had never been near the permitted maximum, although on one occasion
Uganda and on another Tanzania had approached their limits. But on
each occasion the need had been clearly temporary. The Currency Board
maintained that it was doing all the work of a normal central bank, with
indeed more flexibility than many. It further maintained that it was just
holding the fort until conditions (political and economic) were ripe for the
establishment of an independent central bank.
It had cogently been argued by several economists that the East African
market was by then sufficently monetised to require a central bank which
could undertake an active monetary policy (expansionist if required), and
not merely be prepared to follow the fluctuations of economic activity.
This contention was in line with opinion in the three countries. The
difficulty was that they could not agree on the form of the central bank.
The IMF was asked to make suggestions on this. But before it could issue an
agreed report Tanzania threw over the traces, and announced that she
would separate her currency and establish a central bank of her own.
Nevertheless it was agreed that all three currencies would be firmly tied to
sterling, and would be freely convertible into each other. They would thus
be independent only to a limited extent. Exchange movements could only
take place within a narrow range, so that balance of payments troubles
would soon become apparent.
The IMF had argued that separate currencies of the form envisaged
could hardly work successfully without some form of central coordination,
such as a reserve bank, or preferably some form of political centralisation,
such as a federation. The fear of White settler domination having been
removed by independence, and the exigencies of the monetary system
being apparent, there was a lively revival of the federal idea. In june 1963
the three Heads of State issued a joint declaration in favour of federation.
They stated that the working of the common market and of the common
services through EACSO had convinced them all of the benefits of
 Attempted Federations Which Never Materialised 49
standing closer. Nyerere had even offered to delay the independence of
Tanzania until Kenya also became independent. A working party was set
up to report quickly on the steps to be taken to establish some sort offederal
organisation.
Excitement Dver the idea of federation had led to some neglect of
consideration of the working of EACSO. It was now seen that a number of
adjustment had to be made in order to fit it for operation among
independent States. Moreover the currency changes were not the only sign
of the dissolution of the common arrangements. Tanzania had withdrawn
from the East Mrican navy in 1961 claiming that ships stationed at
Mombasa offered her no protection. Uganda felt ill used over the tourist
trade arrangements, and proceeded to set up her own organisation. Both
Kenya and Tanzania demanded their own universities, and shortly set
them up (at Nairobi and Dar-es-Salaam respectively). Further, it was
evident that the trade imbalances (which had been causing so much
trouble) were by no means cured. Tanzania was complaining that the new
arrangements cut her off from world markets where the goods she wanted
were cheaper and in better variety than those she could buy locally. (She
had in mind the produce of such countries as Hong Kong,Japan and many
others.)
In view of all these differences the three governments decided to set up a
Commission to survey every aspect of the working ofjoint institutions. But
the establishment of a federation was not included in the remit of the
Commission. For Chairman they chose Professor Kjeld Philip (himself a
Dane, but Professor of Economics in Stockholm). The Commission
effectively started work in January 1966 but with the help of a team of
experts from the World Bank it made a quick job. Referred to as 'the
Commission of East Mrican Cooperation' it consisted ofthe Ministers from
the three countries, so that it was in effect a bargaining exercise with
Professor Philip to hold the ring and perhaps to introduce some new and
useful ideas. The result of the Commission's labours was (after sundry
adjustments) signed by the three Heads of State in June 1967 and came
into operation in December of that year.
The 'Treaty for East African Cooperation' did not do much but confirm
and codify existing arrangements (putting a few more teeth into them here
and there). Its main interest is that it recorded the desire of all three
governments not to drift apart, but continue with as close cooperation as
their new independent circumstances allowed. The objectives were the
same as before: maintenance of the common market, supported by better
equalisation devices so as to promote even development. The common
market was to function inside an East African Community. It was now
obvious that in so far as it had ever been a genuine common market it had
long ceased to be antything more than a (rather limited) customs union.
The ban against 'international' labour movement was continued. Nothing
was said about capital movements.
 Federalism: Failure and Success
A system of transfer taxes now took the place of the quota arrangements
(and was similarly supposed to be temporary). No individual tax was to
last more than eight years and the whole system was to come to an end in
fifteen years. The idea was that a transfer tax could be imposed by a
country having an overall deficit in East African trade in manufactures,
against a country with which it had a deficit. In fact this was just another
idea for dealing with the problem of interstate imbalances (which it had
been hoped would be cured by the quota system). Implicitly the deficit on
interstate trading in manufactures was being used as a proxy for the degree
of industrial development. The rate of transfer tax was not to exceed that of
the external tariff. It was estimated that it would not have to exceed 15 to
20 per cent. If and when a country became an exporter of a commodity on
which it was levying a transfer tax, the tax would have to be removed. For
successful working the transfer tax system called for a clear distinction
between industries that could only operate efficiently on an East African
scale, and local industries. It is doubtful whether the distinction could have
been made, and (as we have seen) the Committee of Industrial Experts
which would have had to make the attempt had never been set up. There
was hence no bar to an uneconomic duplication of plants (at least between
Kenya and Tanzania).
An East African Development Bank (mainly subscribed by the three
countries) was to be established. In fact this registered as much a further
effort at equalisation as a provider of further funds for development. The
Bank Charter expressly laid down that funds should be distributed as to 22
per cent to Kenya and 38·75 per cent each to Tanzania and Uganda.
(These percentages were subject to revision after five years.) Of course the
Bank's funds were not the only source of industrial finance. Kenya would
naturally find it much easier than the oher two to raise outside funds, and
so might end up with more ample resources than planned. Moreover the
economic climate in Kenya was obviously much better prepared for
additional industrial investment than the other two. The promotion of
industry was widely defined in the Charter to include agriculture, forestry
and fishing. But it did not extend to infra-structure which, especially for
Tanzania, was really a sine qua non of a big increase in industrialisation.
Once the EADB was operating, the work of the distributable pool would
be unnecessary, and it would be gradually phased out. This implied the loss
of a fairly constant annual sum which might (or might not) be compensated
by the additional redistributional effects of the new arrangements. It was
particularly laid down that currency arrangements were to be harmonised
as much as possible and that there were to be regular meetings of the Bank
governors. Rather unexpectedly the practice of regular meetings came to
have a real importance as a means of keeping the three countries in touch
after almost all other joint arrangements had collapsed.
Under the new organisation the common services were all to remain
joint, but changes (also with a redistributional aspect) were introduced
 Attempted Federations Which Never Materialised
into their management and location. Hitherto only the airways had a
corporate organisation. The opportunity was now taken to distribute the
headquarters of the common services so that all three countries could share
in the 'multiplier' advantages of its presence. Thus although railways and
airways were to remain in Nairobi, Kampala was to get posts and
telecommunications, and also the headquarters of EACSO, while the
newly hived off harbours administration was to be in Dar, although
Mombasa would remain as the chief port.
It had been a complaint of Tanzania and Uganda that the distributable
pool arrangements for the financing of EACSO had given that organi-
sation more funds than it would usefully spend. In future its services and
those of the 'non-self-contained' (i.e. not commercial) administrations
were (on the dissolution of the distributable pool) to be financed by direct
apropriations from the three countries' budgets. (In fact these also tended
to provide more than was needed.) Nor did the new arragements inhibit
Kenya from continuing to finance her external deficit from her East
African surplus. This all goes to show how difficult it is to change direction
in established services.
The Government of the Community was placed at Arusha, (in
Tanzania, but very near the Kenya border). The East African Assembly
continued as before but with a smaller number of Members. The
'triumvirates' were replaced by committees of the three East African
Ministers, each with an efficient secretariat. There were also five
Ministerial Councils. Together these settled a number of small but
important points- 'teething troubles' at the beginning of the new system.
Larger troubles were to be settled by the Common Market Tribunal,
which in fact was not completed until it was too late for it to function as
planned.
Although the new system covered a very wide range of the relations
between the three countries, there remained a number of points which had
not been tackled and which turned out to be of increasing importance. One
of the most troublesome of these was the impossibility of establishing a
common agricultural policy, in view of the diverse methods of marketing
between the states. Kenya's marketing was strongly dominated by
marketing boards. Tanzania's was controlled by public sector boards. The
second problem in this field was how to make an allowance for the growing
non-cash barter transactions between one or other of the three and
powerful States in the outside world (e.g. Russia and China). The
increased influence of China in Tanzania had been noticeable. But it was
uncertain how much of this was permanent or merely related to
cooperative construction work on the new railway from Zambia.
Although the new Community arrangements had not been fully
implemented, up to I 97 I things seemed to be going along reasonably well,
when suddenly ldi Amin by a military coup overthrew the government of
Milton Obote in Uganda, implicitly dealing most of the common
 Federalism: Failure and Success

arrangements a body blow. The new Head of State was a Moslem from
West Nile, one of the most backward areas in Northern Uganda. This
illustrates the extent to which tribal outlooks had changed since federation
was first mooted. Indeed one of the first actions of Obote had been to break
the power of the Kabaka of Buganda, which the British Administration
had never succeeded in Community effectively. The Community con-
tinued for some time under its own momentum; it could still command
sufficient funds. But there were no more meetings of top officials. With the
expulsion ofthe Uganda Asians the whole of the merchant and much of the
professional classes of Uganda vanished. Uganda statistics also more or less
disappeared in the general black-out. A violent quarrel between Uganda
and Tanzania resulted from an abortive attempt by Obote to regain his
position (assisted by Nyerere). Strangely, even at this stage the Legislative
Assembly seemed to be gaining in influence. In 1973 it set up a Select
Committee on Federation, indicating that the idea still had a spark oflife.
By this time the public corporations were all in the red, partly because
the funds received locally were not handed over to Headquarters (as they
should have been) so that the Administrations could not be carried on. On
the railways passenger services in Kenya and Uganda had to be suspended
for want of rolling stock. (Tanzania maintained her own services by direct
purchases of locomotives.) The harbours administration was also in
trouble; widespread corruption was suspected and cooperation between
Mombasa and the Tanzanian ports had virtually ceased. It was felt by
many that if these two key common services were to collapse the whole
edifice might crumble. So far as Kenya and Tanzania were concerned an
awkward effect of the changes in Uganda was necessity for tight exchange
control, in view of the capital flight which it engendered. In fact -largely
due to the onset of the world depression- balance of payments difficulties
were now the chief worry of all three countries. But this was to some extent
temporary. The sudden violent rise in world tea and coffee prices came to
the rescue of Kenya and Uganda. For Kenya this implied a reduction in
her overseas deficit which reduced the need for her to rely on local
surpluses to balance her accounts. Uganda as a big producer of the popular
'Robusta' coffee was able to accumulate sufficient funds to support Amin's
strange policy.
In spite of these favourable pointers, in many ways the years 1975--6
were disastrous for the East African Community. In Uganda Amin showed
increasing belligerency. Early in 1975 he announced a claim to a very large
slice of Kenyan territory. (It will be remembered that intially the two
countries had been administered together as the East African Protectorate,
which it could plausibly be argued was based on Kampala -but naturally
this was now quite irrevelant.) A worse quarrel between Kenya and
Uganda ensued from the occasion of an Israeli plane landing at Entebbe
and freeing Israeli prisoners. Amin accused Kenya of having assisted in
this. Rumours of extensive imprisonments and killings began to come out
 Attempted Federations Which Never Materialised 53
of Uganda. It was noticeable that more and more Moslems from the north
were to be seen in Kampala and there were signs of an anti-Christian
movement. Up to this point Kenya had put up quietly with the vagaries of
her unpredictable neighbour, but tolerance was fast becoming impossible.
Meanwhile Uganda's trade with her neighbours had almost ceased. In
I970 her imports from her partners had been valued at £24 million, with
exports worth some £I 6 million. In I 97 5 imports rose to £35 million, but
exports had collapsed to not much more than £2 million. The one piece of
development that seemed to be taking place was that of the Army.
We have seen that the joint corporations had already all been in trouble
(although most of them had been profitable until a few years previously).
From early I 97 5 they all defaulted because the state branches continued to
keep back their takings instead of paying them over the Headquarters as
they were under an obligation to do. In an attempt to bring the
Administrations to their senses (in May) the World Bank suspended the
Sso million loan it was in course of giving, until the corporations put their
house in order. A temporary agreement on this was patched up; but in
effect joint working had been suspended on the railways, harbours and
airways. (In fact a team of consultants in I976 recommended the
permanent splitting of the railways.) In respect of the airways Kenya
precipitated the complete break-up by establishing her own air line
Oanuary I977)· She had also withdrawn from the joint income tax
collection system ( I 97 4).
In these circumstances the outlook for any sort of 'standing closer'
between the three looked extremely dim. Moreover politically the three
seemed to be taking violently different courses. Kenya had all along done
best out of the arrangements; but her free enterprise economy was now
feeling the backwash of the world depression. Moreover (perhaps
inevitably) the tide of nationalism was rising even there. Although Asians
had not been expelled from Kenya, discrimination against them in jobs
and promotions was becoming noticeable, and was even affecting
Europeans. Tanzania all this time was much occupied with her transfor-
mation into a Socialist State.
But the idea of a federation (or at least continued cooperation) has had
extraordinary vitality. Fine new offices for the expected enlarged Com-
munity services were in course of erection at Arusha. Towards the end of
I975 the Community had decided to set up a Commission to advise on
continuing methods of cooperation. As Chairman they approached
William Demas, a Trinidadian who had good experience of the (failed)
West Indian Federation and had subsequently been a keen advocate and
architect of'Caricom' (the Caribbean Community). More recently he had
been made Chairman of the Caribbean Development Bank. The commis-
sion consisted of three representatives from each State: the Prime Minister,
Minister of Transport and one other. Through I976 the Commission was
meeting regularly for five or six days every quarter (the times being chosen
54 Federalism: Failure and Success
to suit Demas, who is an extremely busy man). But after the idea of the
Commission was mooted its remit seems to have been restricted by the
dictum that changes already made could not be undone. This would seem
to have cut out further discussion of the break-up ofjoint arrangements for
transport and harbours, the most important corporations.
There remain a few common services, and cooperation between the
Universities of Nairobi and Dar continue (Makerere being unfortunately
out). The Reserve Banks also keep in touch. But from early 1977 the
situation began to deteriorate rapidly. Tanzania started by closing the
frontier with Kenya. This was a definitely hostile act for which no
adequate explanation was apparent. When by the beginning of the
Community's fiscal year in July neither Tanzania nor Uganda had
provided any funds for the continuation of cooperation, Kenya announced
that the Community was dead. Her citizens working at Arusha were
ordered to return home, although those from Tanzania and Uganda
remained at their posts. At the beginning of the financial year Kenya also
announced that she was establishing a new Customs and Excise Depart-
ment to take over the services of the Community. The Presidents ofboth
Tanzania and Uganda continued to assert that the Community was not
dead and could be carried on without Kenya. A meeting between the three
Presidents was proposed (but since Nyerere has refused to sit with Amin
this seems difficult). But whatever Tanzania and Uganda maysayit would
seem that the Community is clinically dead.
3 Short-lived Federations
Which Never Attained
Nationhood
(A) FEDERATION, FRAGMENTATION AND REGIONALISM
IN THE CARIBBEAN

Although it is very small scale (at the time of federation the total
population of the area of the federating British West Indies did not exceed
four million), the history of federal failure in the Caribbean is of
considerable interest and relevance for our study. It went through two
distinct phases: ( 1) the formal federation, inaugurated in 1958 and
dissolved in 1962, and (2) the attempt in 1962-3 to patch up a federation of
eight or nine of the smaller islands (the Windwards and Leewards) and
their dependencies. This never came off. The causes of failure in both
episodes are interesting because they were somewhat different from other
experiences of failure. Moreover a somewhat similar situation may well
blow up in the South Pacific, now just maturing to independence. This will
be of first interest to Australia. Finally it does not seem that after all the
abortive plans of 1963 were the last word. There has recently been a very
interesting expansion in organs of (at least economic) cooperation in the
area. These are leading to greater mutual understanding among the once
federal units. It is not altogether impossible that some sort of political
federalism might eventually emerge. An increasing number of the leaders
are clearly anxious that this should come about.
The British Caribbean colonies included three different elements: ( 1)
the 'big' four: Jamaica, Trinidad and Tobago, Barbados, and Guyana (on
the South American continent). These four are now known as the More
Developed Countries, (MDCs), (2) the 'Little Islands' (as they call their
cricket team): the Windwards and the Leewards (LDCs), (3) a few
scattered territories in different parts of the area: the long string of the
Bahamas, the British Virgin islands in the north and British Honduras
(now Belize) in central America. None of these last ever took part in the
federation, but they are now increasingly active in regional programmes.
The little islands stretch in a great arc, or more precisely a double arc,
from the Virgins in the north, sweeping east and then south to Grenada just
north of Trinidad. Politically the islands fall into two groups, parting at

55
 Federalism: Failure and Success
Dominica. Dominica was the normal landfall of a sailing ship coming in on
the Trade Winds. All to the north and west of such a ship were to her
leeward, all to the east and south, hence to her windward. Dominica just in
the middle was formerly reckoned a Leeward, but is now classed as a
Windward, which indeed more closely corresponds to the sort of island she
is. The islands represent peaks of what was once a large stretch of land
where the Caribbean Sea now lies. Most of the British islands lie on the
inner arc, which forms an almost continuous chain. After Dominica
(which is separated from its British neighbours by the two French islands of
Guadaloupe to the north and Martinique to the south) there come St
Lucia, St Vincent, the Grenadines and Grenada close to Trinidad (which
however does not belong to the system). Proceeding west from Dominica
we have little Montserrat, Antigua and St Kitts with its dependency Nevis
(and formerly also Anguilla). Antigua, (with its dependency Barbuda),
Barbados and Tobago are isolated peaks in the outer arc.
All the islands seem to have been volcanic in origin, but this is not
apparent in those which have had no eruptions in recent centuries. St
Vincent had a severe eruption in 1902, at the same time that half of
Martinique was blown away. Several of the other islands have hot springs
and other evidences of disturbance. Jamaica had a severe earthquake in
1907. Most of the islands lie within the hurricane belt. Apart from volcanic
rocks the islands are largely composed of cretaceous limestone, some with
sizeable peaks, but others rather flat and with surrounding coral growths.
Differences in the predominant surface soil give rise to differences in
agricultural opportunities. The limestone islands are particularly suitable
for sugar, and the Leewards being somewhat drier than the Windwards
grow a little ultra long staple cotton (sea island cotton). They have
beautiful sandy beaches, especially suitable for tourism. The mountainous
and volcanic Windwards are especially suitable for bananas and other
tropical fruits. They are attractive to tourists but have not such good
beaches -those ofSt Vincent are still black from the eruption. Jamaica has
good bauxite, as does Guyana, and this gives rise to a considerable industry
and source of tax revenue. Trinidad has famous asphalt deposits, and some
oil. With the aid of imported crude oil a large refinery industry has been
built up. This makes Trinidad now the richest of the whole area. None of
the other islands has any minerals of importance.
Racially the populations of all the islands are similar, being descended
from African slaves, imported for the sugar plantations. In Trinidad and
Guyana these were supplemented by indentured labour from India, when,
on emancipation, slaves were no longer available. Since the Indians are
very fertile their descendants are now an important element in the
populations ofboth Trinidad and Guyana. Jamaica stands somewhat aloof
from the rest, since her economic and social connections are more with the
USA and Canada than with the southerly islands, from which she is
separated by nearly a thousand miles. Historically several of the Wind-
 Short-lived Federations 57
wards were French colonies, notably St Lucia and Dominica. They were
subjects of bitter fighting in the eighteenth century, since they were greatly
desired for their sugar and spices. On this account their culture is rather
different from the others, and in country places in both St Lucia and
Dominica a French patois is spoken. Dominica also possessed a Carib
Reserve but today it is rare to come across a pure blooded Red Indian, and
there is little difference between the Reserve and other parts of the island.
Successive British governments had long desired to reduce, (or at least to
concentrate) their responsibilities in the Caribbean, if only to simplify the
annual discussions with the British Treasury concerning subsidies and
other forms of aid. But the scattered location of the islands, separated by
very unkind seas, made this difficult, until the initiation of air transport. A
step towards federation had been made among the Leewards, and a few
common services (such as agricultural advice) were available for the
Windwards. But this did not amount to any advance towards responsible
administration.
The first definite step towards the establishment of a federation of the
British Caribbean territories was a dispatch from the Secretary of State for
the Colonies (Mr Creech Jones) to all the Governors (1945). The sequel to
this was a meeting of representatives from all the islands at Montego Bay
(the main tourist resort of Jamaica), in 1947· From this resulted the
establishment of the 'British Caribbean Standing Closer' Association. A
Committee (the Rance Commission) was set up to examine the possibility
of federation. This reported in 1948--g and their report became the basis of
the terms of federation, when they were later agreed. Nevertheless the
federation was not ready to take off effectively until certain fundamental
questions had been settled. The two basic problems were (1) the
establishment of a customs union and (2) the determination of the relative
powers of the federal and unit governments, and the allocation of revenues
appropriate for meeting their responsibilities. In addition there was the
question of the free movement of people from one unit to another.
It was generally felt that there ought to be customs union if there were to
be any chance of a stable federation emerging, much less the formation of a
new nation. The problem was examined by the McLagan Commission and
later by the Croft Committee. The report of the latter on 'Trade and
Tariffs' was published in 1957-8. But neither on the inauguration of the
Federation (in 1958) nor by the time of its collapse (in April1962) had any
agreement on a common tariff been reached. Nevertheless during the
lifetime of the Federation much hard and constructive work was carried
out by an intergovernmental Committee. Had the Federation survived a
little longer an agreed tariff might well have emerged. A serious trouble
was that Jamaica had recently set out on a carefully planned path of
industrial development, consequently she felt that she required effective
protection for her infant industries.
On the second problem (federal relations), from about 1953 three
58 Federalism: Failure and Success
independent missions were sent out to examine in detail, island by island,
the legal position, civil service needs and fiscal prospects. The Fiscal
Report, by Sir Sidney Caine, is of particular interest because it drew
attention to a number of problems which later proved to be serious
obstacles to the continuance of the Federation and which consequently
dogged the plans for a second federation of the little islands.
The situation was indeed a difficult one. Disparity in size and wealth of
the territories proposing to federate was (as always) present, but in the
Caribbean it was evident to an exceptional degree.Jamaica had almost the
highest per capita income (exceeded only by Trinidad with its oil). It had a
relatively bruad economic base, and over half the population of the whole
federating area. There was a university, intended to service the whole
Caribbean, politicians and others were well educated. In 1954, when a
two-man Commission (J .R. and U. K. Hicks) visited the island to examine
its problems of finance and taxation on behalf of the Jamaican Govern-
ment, the three opposition leaders had all been Oxford Rhodes Scholars.
Others were trained at the London School of Economics. At the local
government (parochial board) level also most Secretaries and Members
were serious and hard working. By contrast in some of the little islands
education consisted of recital by rote of large classes before a 'pupil
teacher'. Almost all the island Premiers were trade union leaders whose
natural instinct was to put the interests of their unions well before their
governmental responsibilities.
It is doubtful whether there existed a full understanding in Britain at the
time offederation of the disparities between the islands. Disparities of size
were obvious, but were not necessarily a real indication of potential. Thus
little Barbados (of 166 sq. m.) had a much higher per capita income than
Dominica which was substantially larger (291 sq. m.). Trinidad had a per
capita income of S BWI 6o2, while that of Montserrat was no more than
S BWI 195· As yet there were no reliable estimates of island GDPs. If the
significance of these disparities was not fully realised in Whitehall, the
more subtle, but no less vital, disparities in political experience, sophisti-
cation and culture were hardly grasped at all. The trade union Premiers
administered their islands with very varying degrees of efficiency and
honesty.
The little islands tended to be jealous of each other, and all were jealous
of Jamaica which indeed was not disposed to be friendly to any of them.
This was not surprising, since all the islands were producing highly
competitive primary products and their trade was mainly with advanced
countries. In the little islands there had at the time of federation been
scarcely any opportunity of gaining political experience. The limited
federation of the Leewards and the still more limited common services of
the Windwards were closed down in anticipation of federation, in order
that all should enter the new regimes on strictly equal terms. (This was the
established policy of Whitehall, and was repeated in Central Mrica, by
 Short-lived Ffderations 59
taking away the most inconsiderable degree of self-government which
Southern Rhodesia had been enjoying, with results that can only be
described as disastrous.) In the little Caribbean islands the closing down of
these organs deprived them of the opportunity of political experience,
slender as it was.
It should have been obvious that the British West Indian Federation was
a very tender plant and would need all the guidance and help it could get
from the federal authorities. Unfortunately the first Governor General
selected by the British (Conservative) Government was neither very
knowledgeable about, or even very interested in the area and its problems.
The Federal Prime Minister was Sir Grandy Adams from Barbados, an
honest, but somewhat unimaginative civil servant. The autonomous
revenue of the Federation was extremely meagre, consisting only of the
profits on the currency. Contributions from the units were supposed to
supply its further needs; but there was no real sanction that they would be
paid. The most reliable revenue source was still the British taxpayer
through 'development' funds, administered by the Colonial Office under
development and welfare legislation. The total of this contribution was
determined by Parliament on the recommendation of the Colonial Office
and the Treasury. The inter-island distribution was decided by the
Colonial Office, apparently on the relative size of island budgets. On
federation the administration of these funds, and their inter-island
distribution, were transferred to the Federal Authorities. It was felt in
London that although it would not be managing its own money, practice
in administering these CDW funds would be a useful training in financial
responsi hili ty.
In default of a strong Governor or Prime Minister the Federal Treasurer
(Robert Bradshaw ofSt Kitts) emerged as the most important figure in the
federation. Bradshaw was tough, but inexperienced, and difficulties soon
arose. Apparently in his distribution policy Bradshaw continued to use the
Colonial Office criterion of relative budgets. But there was no distinction
between current and capital assistance, and indefinite virement was
allowed. In this way in the first couple of years Bradshaw appeared to have
considerable bonuses to distribute, so that a higher standard ofliving was
established in the little islands than could have been maintained without
continuing higher aid. But by rg62 Bradshaw found that he had not
enough in hand to cover current outlay and was forced to make substantial
cuts, to the consternation of the island Governments. Thus what was
intended to be selective temporary help turned out to be assistance for all to
maintain a higher standard than they had been accustomed to. And there
seemed to be no prospect of bringing the situation to an end.
The Jamaican Premier (Norman Manley) had promised his electors
that before Jamaica was finally committed to federation a referendum
would be held. Manley was a staunch federalist, but when the referendum
took place, to his chagrin it showed a categorical refusal to join the
6o Federalism: Failure and Success
Federation. Consequently he had no choice but to withdraw. No doubt the
result was partly due to the typical conservatism of direct democracy in
referenda. But in addition Jamaica was frightened by the prospect of a
common tariff which would not suit her, and now also by contemplation of
the larger subsidies which the little islands would demand for their
expanded economies, a great part of which would probably fall on her
shoulders. A little later Trinidad also withdrew, partly in anticipation of
the further grants she would have to make after Jamaica's disappearance,
partly because she feared trouble with her East Indian population if
freedom of movement of people was insisted upon. Trinidad at the same
time announced that she would welcome integration with any other island
which was prepared to follow her policy. If any island chose to do so it
would naturally have an African-origin population which would help her.
Grenada, Trinidad's nearest neighbour, was for a time tempted by this
offer, but on reflection feared that she would become a second-class
dependency as Nevis and Anguilla were of St Kitts.
Thus with the withdrawal of the two largest islands the Federation broke
up. Guyana had never been a member, so there were only eight little LDC
islands, and Barbados. Barbados was now the natural leader, and could (if
she were willing) head a new federation. But she too was fearful of the costs
which would fall on her, and was not willing to come forward, in spite of
the advantages that would have accrued to her as the capital. Con-
sequently the allocation and distribution of grants in aid reverted to the
Colonial Office. The little islands continued to enjoy themselves, with a
higher level offunds than before the Federation had come into existence.
The Premier of Jamaica was not the only person who regretted the
failure of the experiment. Also bitterly disappointed was Sir Arthur Lewis,
a native of St Lucia, (LSE trained, Professor of Economics at Manchester
before coming home as Vice-Chancellor of the new University of the West
Indies, and later Professor at Princeton). Lewis was an enthusiastic
federalist, and refused to accept that the dissolution of 1 g62 spelled the end
of federalism in the West Indies. To prove his point Lewis made a rapid
tour of the Eastern Caribbean. He reported that there was a genuine desire
for federation among the little islands. If it were possible to strike while the
iron was hot it would be easy to achieve. Unfortunately government
departments are not good at striking while the iron is hot. And there were
obviously a number of complications and questions to be settled before an
Eastern Caribbean Federation could be launched, even if all (or sufficient)
little islands agreed in advance to join.
First of all came fiscal arrangements for and the division of resources
between the federal and unit governments- never satisfactorily solved in
the first federation- had to be determined. Secondly (and of particular
interest to the British Treasury) was the extent to which the different
islands could become eventually self-supporting, and the speed with which
this desirable objective could be reached. Thirdly, there was the question
 Short-lived Federations
of the numbers and cost of the civil servants which would be required for
efficient administration. (This had been less important in the first
federation because of the higher standard of education in the MDO;.)
Finally there was the still unsolved problem of the common tariff-
although without Jamaica this might have been less difficult. In view of all
these problems some months elapsed before a Fiscal and a Manpower
Commissioner were appointed. The Fiscal Commissioner (the present
author) reported before Christmas rg62 but the administrative and
personnel recommendations were not ready until some months later, so
that a substantial time elapsed before the new proposals were available,
and this proved fatal for their acceptance (see below).
The Fiscal Commissioner's first task was clearly to find how many- and
which -of the islands would be prepared to federate on their own. On
investigating each in turn it appeared that most of the islands would
welcome a federation even on a reduced scale. Grenada (which was at the
time flirting with Trinidad) refused to consider the matter and St Vincent
was very reluctant. (It had special difficulties with population explosion,
and was poorly administered.) At this stage then the federal principle was
broadly accepted. The next problem was to find a capital or seat of
government. Barbados was the obvious choice, but she politely refused the
honour. She preferred to follow the MDQ; into independence.
The fiscal problem was baffling. A major trouble of the first federation
had been the scanty financial resources of the federal government. In rg62
the units were hardly in a position to make contributions, since all except
Barbados were in receipt of subsidies from the Colonial Office. A future
federation would require either compulsory transfers to the centre from the
units or a worthwhile federal tax. But the common tariff had not yet been
agreed, and a federal income tax would hardly have been practicable
under the circumstances, although some of the islands (where current
withholding had been introduced) were doing quite well with their own
local income taxes. On the other hand the sudden fall in the standard of
living which must ensue (if current account subsidies were quickly
suspended) would be quite unacceptable. But clearly something had to be
done to get the majority of the islands out ofsubsidisation, both for the sake
of the British taxpayer and for the restoration of moral and financial
responsibility of the island governments.
Three avenues seemed worth exploring: first a large and well monitored
effort to improve the standard of island administration, especially fiscal
administration; secondly the introduction of new island taxes, and thirdly
a formal system of diminishing current account subsidies which would be
withdrawn after a term of years within which steps to improvement could
have been taken. These measures seemed to be not impossible for all the
islands, except perhaps little Montserrat. It was naturally assumed that the
fiscal settlement would be accompanied by strenuous efforts to raise island
incomes, essentially from agriculture. In fact this was already taking place
 Federalism: Failure and Success
in respect of the banana industry of the Windwards, through the efforts of
the 'Winban' private enterprise organisation, which gave advice to
farmers and organised fruit collection and marketing. There was plenty of
room for improvement in administration. Not all the islands had income
taxes, and too often the tax rolls were very imperfect, overlooking many of
the living, and including a number of the deceased. Only St Kitts had any
effective defence against smuggling which was everywhere rife (and
suspected of police support). It was extremely lucrative owing to the ease of
transport from the French and Dutch free port islands just north ofSt Kitts.
The success of a policy of selective reduction of subsidies called for an
intensive education and training programme m management and
administration.
Putting into operation all these three routes to improvement, the
situation (although admittedly difficult) did not seem impossible. The
development which had taken place since Mr Creech Jones wrote his
famous letter was by no means negligible. Apart from bananas, even in the
more backward islands, such as St Vincent, agricultural research (for
instance in coffee and cocoa) was yielding good results. Guaranteed prices
for sugar and some other crops were raising incomes and greatly increasing
incentives. The island GDPs had by this time been estimated, so that
planning could be to some extent quantitative. A good local air transport
system was bringing the islands much closer together. The University in
Jamaica was more firmly established and additional faculties had been
opened in Trinidad. But primary education remained primitive in many
islands (for instance Dominica). A system of refresher courses for teachers
and perhaps some exchange might have improved standards. Above all the
tourist trade was rapidly expanding, not only in jamaica, which got in first,
but also in several of the smaller islands, notably Barbados, Antigua and St
Lucia. Americans and Canadians were already developing the habit of
building second (or third) homes there, to get away from the rigours of
their own winters.
To the Fiscal Commissioner's mind what was most needed was better
administration, much better tax collection and a reliable police force. But
when in the spring of 1963 the complete Report (including both the fiscal
and the manpower sections) was communicated a general fear had arisen
of the costs offederation. No longer was any interest displayed in it, and the
Report was rejected out of hand, almost without discussion.
Although federation was for the time being completely out, something
had to be done, firstly to make the island Governments assume greater
responsibility and secondly to get them closer together economically (so
that they would learn to trade with each other, and not only with the
advanced countries). This might be done by means of regional de-
velopmental agencies and alliances. To meet these objectives the then
Conservative Government suggested a scheme of 'Associated Territories'
which would have considerably more independence (and consequently
 Short-lived Federations
more responsibility), as a temporary and transitional solution. Defence
would remain the responsibility of the UK and each island was to have a
'Governor' (who was by no means to govern) appointed by Whitehall.
Most of the little islands joined the scheme; but Barbados and Guyana
decided to go it alone, taking their full independence as Jamaica and
Trinidad had already done. Belize and Montserrat retained their full
colonial status, due essentially to their small size.
The new arrangement was not unsuccessful as a temporary measure. But
by 1976-7 it was breaking up, through the desire of some of the islands to
try complete independence, especially among the Windwards. (At least
they are as big as the Seychelles, and have much larger populations.) It is
doubtful if the full implications of independence are realised, for instance
by such a poor and weak island as Dominica, whose economy is dominated
by the culture of bananas, an uncertain crop vulnerable both to wind and
drought. Yet Dominica has convinced herself that all the advantages of
independence would be immediately available to her: control of economic
policy, money, finances and the level of employment. More soberly, if the
aid of the UK were abandoned two alternatives would appear to be open
to such an island: ( 1) she could seek another 'mammy' in place of the UK
or (2) she could promote some sort of get-together with other islands
similarly placed, and so at least expand her markets and widen the choice
of administrative personnel. The example of Russian-backed Cuba has a
certain attraction as a 'mammy', not only in Dominica, but more
conspicuously in Jamaica and Guyana, for all that the 'facts' of the Cuban
experience are little known and much misinterpreted. The obvious 'mates'
for Dominica would be her neighbours, the two French islands. But these
are a Province of France, and it cannot be supposed that they would
embarrass their relations with Paris for the sake of Dominica. There
remains (as we shall see) the possibility of a mini-federation with such
islands as St Vincent and St Lucia, both of whom are in a very similar
position.
Caribbean federation in the old sense is undoubtedly dead. Moreover a
number of divisive decisions have been made, such as the separation of
island currencies, and even in some places attempts to establish a sort of
embryo central bank. But (as suggested earlier) the most recent years have
witnessed some striking policy changes and the taking of definite steps
towards (at least) economic standing closer. The changes may be dated
from the 'Treaty' of Chagaramas, resulting from a meeting of repre-
sentatives of island Governments in Trinidad in 1971. The Governments
pledged themselves to support regional development of key productive
sectors. The Caribbean Community (Caricom) was established. A
Caribbean Development Bank under the able and forceful guidance of Sir
Arthur Lewis proceeded to identify a variety of projects of an eminently
practical nature, both in fields in which it could function directly and by
establishing specialist organisations for other aspects of development. The
 Federalism: Failure and Success
constructive work of the CDB has been so important for the region that it is
worth dwelling on its activities shortly, more particularly since they could
have relevance to other regions of LDC cooperation, such as ASEAN
(Alliance of South East Asian Nations).
Perhaps the most important function of the Development Bank is to
provide period loans for the small business, whether in industry or
agriculture. Such enterprises are inevitably the preponderant form of
organisation all over the area. So far the Bank (I976 Report) has made
period loans valued at SUS I I I ·3 million, distributed as to 28 per cent for
infra-structure, I 7 per cent for ports, 23 per cent for agriculture and I 7 per
cent for industry. Latterly this work has been supplemented by short
courses on management and the technology involved. This part of the
Bank's work is looked after by a cadre of'Small Industries Loan Officers',
who are in close touch with development finance officers in the individual
islands. To back up its work the Bank has been much occupied (and rather
successfully) in attracting funds, for instance from the World Bank,
Venezuela and Colombia (richer neighbours). For larger projects 'Special
Funds' have been established, part of which have been earmarked for
project preparation. Canada and the US have contributed to these funds.
The UK has subscribed the equivalent of S US 27 million in 'equity
capital' of which part is earmarked for special developments. The CDB has
also borrowed SUS 57 million from the Japanese Export/Import Bank.
Japan would welcome, and the CDB would also like to see, some joint
industrial working such as Japan conducts in Taiwan.
One of the most interesting organisations which the CDB has promoted
is the Caribbean Agricultural Development Institute. This arose out of an
Enquiry which the Bank had commissioned a short time previously. A
Food Institute is also in course of being organised. When fully operational
it should be of very great importance, both for raising the standard of
nutrition in the islands, and for the tourist trade, which has in the past
relied too heavily on imported foods.
In the field of transport the Bank, through the West Indian Shipping
Company (WISCO), engaged on an expansion of inter-island transport,
both by means of (relatively) large ships for 'trunk route' express vessels
between the MSCs, and more modest 'through route' connections among
the smaller islands, where the operation of any but small vessels is
uneconomic. When it is fully operational this project should do much to
improve communications and trade, as well as bringing the islands into
closer social and cultural contact. The still more recently established
Caribbean Investment Corporation is intended to improve coordination of
all these developments. Most of these regional organisations have a much
wider territorial and political coverage than was ever contemplated in the
days of the federation. The widest seems to be the Caribbean Association of
Industry and Commerce (CAlC) which covers: Antigua, Bahamas,
Barbados, Belize, Dominica, Dominican Republic, Grenada, Haiti,
 Short-lived Federations
Jamaica, Montserrat, St Kitts-Nevis, St Lucia, St Vincent, Trinidad and
Tobago and Venezuela. This however belongs to an earlier stage of getting
together than the CDB's promotions, and has not yet been very successful.
A recent and very important achievement of the CDB, right within its
own field, has been to rationalise (so far as possible) the divided 'national'
(island) currencies which grew up as a result of increased independence.
Rationalisation is being achieved by encouraging the individual islands to
tie their currencies to the US dollar, at more or less fixed parities. This
should greatly facilitate trade between the islands, and should be ofspecial
importance for the tourist industry. No doubt it will be some time before an
Eastern Caribbean (EC) dollar attains the reliability of the old British
West Indian (BWI) dollar. On the other hand it should have a wider
coverage since Jamaica has now come into the dollar system, having
previously been on a pound sterling base.
The CDB has also (after some difficulty) established a good relation with
the American Industrial Development Bank, and some of the member
units of the CDB have been admitted to this. On the retirement of Sir
Arthur Lewis from the Chairmanship of the CDB, Mr W. G. Demas, a
Trinidadian, took over. Demas had previously been Secretary General of
Caricom and is no less than Lewis a staunch federalist. Indeed in his
inaugural address he announced that he had taken the job, expressly in the
hope of furthering the federal cause. (His place at Caricom has been taken
by Mr Alistair Mcintyre, a Jamaican, with experience in the World Bank
as well as in academic life, and also a convinced federalist.) There is no
doubt that the CDB has acquired an enviable reputation for good
management and has entirely won the confidence of the World Bank.
Indeed with the financial support it has received from abroad it is within
measurable distance of being self-supporting, in spite of many of its loans
being extremely soft.
On the political front there is unfortunately less progress towards
federation to report. The major objectives of Caricom have not yet been
fulfilled. Nevertheless there is much greater cooperation and understand-
ing between the units, although the old jealousies and mutual distrusts are
not far below the surface, and can be roused by petty incidents. Wide
differences between political ideologies have arisen, for instance between
the relative conservatism of Trinidad, the private enterprise outlook of
Barbados and the outright Socialism (at least in theory) of Guyana and
Jamaica. The relative influence of the units has changed. Jamaica, with a
rapid population growth (no longer contained by unlimited emigration to
the UK), is plagued with heavy unemployment and balance of payments
difficulties, aggravated by severe drought. Her tourist trade, based on
luxury hotels, does not stand up well to depression in the US. Jamaica's
leading position has largely been taken by oil-rich Trinidad which, under
Dr Eric Williams, has by far the most experienced leader in the region. The
MDCs (and particularly Trinidad) have done something to help the local
66 Federalism: Failure and Success
LDCs by themselves refraining from borrowing from the CDB as much as
they might. Trinidad has gone further, and has in what the CDB calls 'the
finest hour of Caricom' given substantial aid to Jamaica to support her
balance of payments. The Bahamas (now an independent Common-
wealth) has come much closer, and little Belize (British Honduras),
terrified of being swallowed by Guatemala, is making her presence felt. She
seems to have an encouraging degree of development potential, if she can
be fitted into the right place.
As we have seen the system of associated states, which was never
intended to be more than temporary, is fast disappearing and the members
are much tempted by the glitter of independence. Grenada became
independent in 1974; both St Lucia and Dominica may be in the pipeline.
But many of their people are beginning to realise that they cannot go it
alone. St Vincent recently took the lead in suggesting the formation of a
sub-group among the Windwards. (It is odd to find St Vincent taking the
initiative, since she was very reluctant to accept the idea of an Eastern
Caribbean Federation in 1962.) Such no doubt rather ephemeral sub-
groupings are to be expected, and certainly deserve support, until a modus
vivendi has been found for the area. The Caribbean LDCs are now at a very
difficult cross-road.
Although there is thus nothing very definite to report in the direction of a
new Caribbean federation, quite clearly regionalism is growing, and there
is much more understanding of what is needed for development. It is
beginning to be realised that it is much easier to get a project (either in
agriculture or industry) started, than it is to maintain it and to market the
product. The CDB for its loans is increasingly insistent not merely on
preliminary general feasibility estimates, but also on pre-feasibility studies
at the start and careful and mature engineering analysis, before a project is
finally cleared for implementation. Its new training courses should be of
great importance in this respect. All the islands are now earnestly
endeavouring to improve the standards of management in their adminis-
trations, especially with regard to revenue assessment and collection. The
level of education has greatly improved, and academic extra-mural
institutes are being established in most of the islands. But the basic need
remains for many more and better trained personnel, both for technical
aspects of projects, and for management.
There are many who think that the best long-term solution for the
Caribbean would still be a federation (or confederation). On the economic
side this might be reached quite quickly. But there remains a very difficult
political question. The Premiers of the islands are extremely jealous of their
powers. Although annual meetings of Premiers have drawn them together
to a much greater extent than ever before, and some of them at least are
learning to think in regional terms, a number feel that they would lose
prestige and status too much if they were no longer in full command of an
island. This fear is probably groundless. As Ministers in a sizeable and
 Short-lived Federations
progressive State they would probably exert greater influence than as head
of a small island without much prospect of autonomous development.
Naturally much would depend on the sort of Constitution adopted. It
might well benefit the Caribbean to look at Switzerland's experience.

(B) THE FEDERATION OF MALAYSIA AND SINGAPORE

Although the Federation of Malaysia and Singapore was extremely short-

lived (I 963-5), its gestation period was considerable. The history of this
experience is illuminating, not merely for the actual federal period but also
for the present situation and future prospects of the two now independent
nations of Malaysia and Singapore. It should be borne in mind that the
third element of the I963-5 episode, North Borneo (Sabah and Sarawak),
is still in federal relation to Malaysia.
Before the Second World War and the Japanese occupation the British
Government had been trying to get the different elements in the Malay
Peninsula into some sort of consolidation instead of being fragmented
between 'federated' and 'unfederated' Malay States under their own
(absolute) Sultans and the 'Straits Settlements'. The respective relation
with Britain was different in Kuala Lumpur, Johor, Penang (and Port
Butterworth) and Malacca. With some sort of consolidation in mind
Britain launched (in April I946) an official plan for a multiracial union
(Malay, Chinese and Indian). Singapore did not figure at this round,
presumably because Britain then planned to keep that most useful military
base under her direct control. This feeler for union fell completely flat. The
Malays were very hostile, and none of the proposed members had any
interest in it at that time.
At the next turn of events Singapore also came into the picture. The
Malayan Chinese Communist Party (MCP) had conceived the ambition
of uniting both Malaya and Singapore in a joint Communist Republic.
Since Singapore was almost IOO per cent Chinese it was clearly necessary
to include it. In Malaya the Chinese proportion of the population was very
much smaller: in fact the MCP only exercised any strong influence among
the urban workers. After a couple of years of work and propaganda the
MCP came to the conclusion that to make real progress it would be
necessary to stage an armed revolution. This was timed for June I 948. The
British-Malayan reply was to declare a state of emergency (which officially
lasted until I 960, in spite of many changes in conditions). Already in I 946
the United Malay National Organisation (UMNO), under Tunku Abdul
Rahman, had been organised to fight federation. It quickly became (and
still remains) the strongest party in Malaya. It is essentially a party of
Malaya for the Malays, in reaction to the Chinese influence to which they
were strongly opposed. From very early on they began to work wholehear-
68 Federalism: Failure and Success
tedly for independence, which (as we shall see) was eventually obtained in
I957·
At the start of the emergency the MCP effectively left Singapore alone,
realising that the main struggle would have to be fought out in the
Peninsula. But the absence of the MCP from Singapore was only
temporary, for its plan was still to bring Malaya and Singapore jointly into
a Communist State.
The next move in the struggle was that the British ( I954) put forward a
measure of 'constitutional advance', known as the Rendel Constitution.
This immediately brought the MCP back to Singapore, although at that
juncture the British never contemplated a separate status for Singapore.
Both they, and indeed the Singaporeans themselves, regarded the place as
too small to go it alone (an objection which would no longer hold now that
tiny islands are gaining 'independence'). The important breakthrough of
the Chinese Communist Party (CPP) can be dated from I 949 and this was
greatly strengthening the local MCP. From the declaration of the
Emergency up to the publication of the Rende! Constitution the Govern-
ment in Singapore was dominated (in so far as it had any independent
decision-making power) by a right-wing pro-British 'Progressive Party'
(PP), which was not at all to the taste of most Singaporeans.
I954 is a vital date in Malaya/Singapore policy and the fight for
independence, for it was in November of that year that the Singapore
People's Action Party (PAP) was founded under the leadership of Lee
Kuan Yew, who twenty-one years later continues to guide it. The aim of
the PAP was an independent Socialist regime combining Malaya and
Singapore. They fully realised that it would be a long haul to get the
Malays, with the strong nationalist and conservative policies of the
Sultans, to accept union with a 'Socialist' country. 'Socialist' for Singapore
implies a strong government that must be obeyed, and a large public
sector. But this is combined with a policy of complete racial, religious,
educational, industrial and employment equality and absence of discrimi-
nation. Thus it ca hardly be described as 'fascism' as is sometimes done. For
the time being the PAP was prepared to remain in the wings waiting for a
suitable moment to bridge the gap when they could secure an independent
democratic non-Communist state of Malaya/Singapore.
The British were as much afraid as the Malays of Singapore going
Communist and so ruining their most important base; it was only later that
thePAP openly turned against Communism. At this time the PAP was
giving top priority to independence, and so appeared to be implacably
anti-British. But their real enemy was the MCP. The first election under
the Rende! Constitution (indeed the first election with any political
significance) was set for I 959· It turned out to be a fight to the finish
between PAP and MCP. A new and wider voting base had been adopted
and this was likely to cause a considerable shift in influence, but just what
the effect would be in the different constituencies was difficult to foresee, as
 Short-lived Federations 6g
the situation was extremely fluid. After some hesitation PAP decided to
fight and to stake all on winning. Its plans were carefully laid. It was able to
conceal the extent to which it was making an all out effort and was in fact
going to contest every seat. Since they meant both to obtain power and to
hold it the PAP election promises were very moderate. The British were by
now well disposed towards PAP. For instance when the Party requested
the release of certain detainees (whom the British had distrusted) this was
readily granted.
The big question remained. If Singapore successfully trod the path to
independence would it be able to maintain its position? PAP believed that
a merger with Malaya was vital. If after all the MCP (backed by the CCP)
were to come out on top in Malaya an impossible situation would arise,
with Communism at one end of the causeway and moderate Socialism at
the other. (The exact opposite of what the Malays had feared, and for a
time the British also.) PAP in spite of regarding itself as a national party did
not believe that it could survive alone. Hence it was essential to get Malaya
sufficiently near to Singapore's way of thinking to accept the merger. This
was by no means easy. The Sultans and UMNO were bitterly opposed to
the merger because the addition of over a million Chinese would fatally
destroy the racial balance, as a glance at the make-up of the Malayan
population (in 1g62) shows.

Peninsular Malqya, 1¢2, Population by Race (millions)

Malay 3'753
Chinese 2·765
Indian, etc. o·832

For some years the idea had been floating about that racial balance in a
federation might be restored by including the Borneo states: Sabah,
Sa.rawak and Brunei (oil rich Brunei was especially attractive but in fact it
has never been possible to induce the Sultan to share his wealth). Sabah
and Sarawak were backward and little developed, but they were certainly
not Chinese nor Communist. Neither were they pro-Moslem. In fact a
number of 'notables' were reluctant to enter the federation for fear of
Moslem domination. They regarded federation as a first step towards
independence, rather than as a long-period arrangement. The inclusion of
North Borneo also fitted in well with British decolonisation policy.
From about 1955 the Tunku's speeches reveal that he was rather
attracted by the idea of including the Borneo States in order to restore the
racial balance in the proposed federation. By 1961 the idea of this broader
group seemed to be generally acceptable. Meanwhile PAP had been
attempting to consolidate its position at home. It now announced that it
would demand independence with or without merger. This was not
welcome news to the Tunku, but worse was to come. The resurrected
MCP, more amply supported by CPP, now placed itself in violent
70 Federalism: Failure and Success
opposition to PAP, even indulging in physical damage to persons and
property. Its policy almost brought about the collapse of the PAP,
especially after the latter's loss of an important by-election. The Tunku,
now thoroughly alarmed, publicly announced that he was ready to accept
the merger if the Borneo States were included. A political settlement
became the more urgent because of news of a new aggressive policy on the
part of Indonesia. In order to speed a settlement a mission (Cobbold
Commission) was sent out from England to ascertain the feelings of the
Borneo peoples. It reported that they seemed to be quite happy with the
prospect of federation.
In August 1961 the two Prime Ministers (the Tunku and Lee Kuan
Yew) announced that the merger had been agreed and that the crucial
date for its inauguration would be August 1963. Although this was a quite
firm and freely made agreement there were still a number of obstacles on
the road to completion. Malaya found the size and wealth of Singapore a
very awkward proposition to tuck into the federation. It was too 'big' in
relation to the other sultanates even if it were willing to accept this status,
which clearly it was not. Its idea (and certainly that of PAP) was some type
of full partnership. At this stage PAP had to be very careful not to seem a
pro-British stooge. To ensure, and to demonstrate, that it had the people of
Singapore behind it, in order to convince both British and Malay opinion,
PAP staged an immense programme of speeches in strategic parts of the
city, as well as debates and broadcasts, the whole extending over 345 days.
As a result of this demonstration of solidarity several amendments which
Singapore wanted were inserted in the draft Constitution before it actually
became law. Singapore secured autonomy in education so that it could
cater for all races, religions and languages where separate schools were
desired. Similarly in every occupation, including the civil service, in
Singapore there would be special assistance for races lagging behind. Such
ideas were by no means congenial to Malaya, where its own policy was
concentrating on the build-up of its people into a nation, with their own
language, culture and the Moslem religion. But they had to agree.
In order to prove that it had 'grass roots' support the Singapore
government (PAP controlled) put on a referendum in July 1962.
Singaporeans were not asked whether they supported a merger, but
instead which type of merger they preferred, hence there was no real
choice. The government was supporting 'Scheme A', which in fact was
derived from a White Paper put out by the British Government. It
included the special provisions for Singapore which we have just noted.
Opposition parties took the case to the UN hoping that even at the
eleventh hour the merger might be stopped. But the UN refused to
interfere in what it regarded as a local concern. At the final date for voting
for the merger 71 per cent of Singaporeans voted for a merger according to
Scheme A. (Abstentions were counted as votes in favour.) PAP's grass roots
claim was demonstrated. For the first time a Parliamentary majority (66
 Short-lived Federations
per cent) voted against MCP and Peking. Further discussions with the
Borneo States made it quite clear that they did not want Communism
either.
But there was still Indonesian Communism to be reckoned with. The
Indonesia PKI was the largest Communist party in Southeast Asia. Its
immediate objective was to wean Sukarno from his friendship with the
Soviet Union and to strengthen his ties with China. By 1965 this policy had
so far succeeded that a Peking/Jakarta 'axis' was announced. In a speech in
Cairo the PKI branded the Malaysian/Singapore plan as 'neo-
colonialism'. A revolt was organised in Brunei, perhaps to divert attention
from troubles at home. This was crushed by British troops. Sukarno's next
move was to set up a base in the Rhio Islands (in full view of Singapore)
and to announce a 'confrontation'. This consisted mainly of harassment of
Singapore shipping, small bombs and bangs at night and similar vexations.
Economically the worst effect of the confrontation was the interference
with Singapore's entrep<)t-trade, which was vital to her. Many of her small
ships had just to be tied up in a sort of 'mothball' formation. But on the
other hand Indonesia's exports, which largely went through Singapore
hands, were also disrupted. The whole campaign was vexatious rather
than dangerous, but, as we shall see, it had serious side effects. In respect of
the merger the effect was merely to delay inauguration by a few weeks
(from 31 August to 16 September).
Why Sukarno had become violently anti- Malaysian since about 1961 is
an interesting question. A simple explanation is that it was to divert
attention from mounting troubles at home. The West Irian campaign had
been very costly. There had been discussions about a union (or at least
standing closer) between Indonesia, the Philippines and Malaya (Maphil-
indo) and these were coming to nothing. But Sukarno was determined to
squeeze out Malaysia, starting with Singapore. By and large the effect of
Sukarno's confrontation was to hasten the formation of the Malaysian/
Singapore federation, the very thing he wanted to prevent.
Even after the principle of merger was fully agreed there were a number
of points to settle. Singapore wanted provision for a common market to be
written into the Constitution with full movement of goods (but not of
labour), but Malaya (for which trade is far less important than exports of
primary products) was not prepared for this, so that a compromise had to
be found. It was agreed that Singapore status certificates should be fixed by
the Federal Government. On behalf of Malaysia the Federal Government
wanted to control the whole of Singapore's revenue; to this Singapore
would not agree. It was finally arranged that Singapore should pay over 40
per cent of its revenue for federal services, and would give a loan oflhso
million (S. Ss) to develop Borneo. Negotiations were extremely tough. At
the last minute the Tunku unaccountably indulged in a little flirtation with
the Maphilindo idea. Conceivably this might have smashed the merger
negotiations. Nevertheless in the end both countries signed up for Federal
 Federalism: Failure and Success
Malaysia including Singapore. A successful confirmatory election was held
in 1963.
The mainly Communist organisation whipped up all the forces it could
command to make sure that Singapore got safely inside Malaysia, with the
idea that the whole federation could then neatly be transferred to Peking
allegiance. At the other side the Singapore branch of the Alliance
(UMNO) Party tried to get Singapore to accept a right wing UMNO
Constitution. But the Malays in Singapore were more anxious to support
PAP and had no desire to go back to Malaya. The British on the whole
played their part with understanding and moderation. They put on an
'Operation Cold Storage' which kept some of the most obstreperous
members of the Opposition out of the way at the critical time. (It can
hardly have been the intention of the British that some of the victims
should remain in detention long after the settlement had been carried
through, but in fact this seems to have happened).
In spite of all the hard work and negotiation which had gone into it, the
Federation got off to a bad start. Within nine months there were
exceptional communal riots in Singapore. Within fifteen months Sin-
gapore had become an independent nation. What had happened? There is
no doubt that a side effect of the confrontation had been to heighten
tension in both Malaya and Singapore; but there were deeper troubles. It
was evident (and this was recognised in London) that PAP was no longer
anti-British. Indeed British troops had played an important part in
fighting the Indonesian confrontation. Its cooperation in Exercise Cold
Storage was also appreciated. (In fact the cost of fighting confrontation
was an important ingredient in the new British policy of dropping her
commitments east of Suez.)
The basic trouble was still the part that Singapore should play in the
Federation. PAP was the second largest opposition party and saw itself as a
National Party in the Federation as it had long been in Singapore. But the
UMNO Alliance was very powerful, not only in Western Malaysia but also
in the Borneo States. The Malay extremists were bitterly opposed to the
'survival of the fittest' multiracialism of the Singapore Government,
although the Tunku and moderate UMNO elements realised, as did Lee
Kuan Yew, that their respective policies had a great deal in common.
There was nothing in the Federal Constitution to prevent any party
running candidates in electoral districts at the other end of the causeway.
In fact UMNO had already sponsored candidates in Singapore. In 1964,
ignoring what had been considered an understanding, PAP decided to
follow suit and to contest a small number of seats in the Malayan elections.
Their objective was to attempt to build up a national image for PAP,
particularly among the local Chinese, by no means to upset the
Government of the Tunku. In the event PAP only achieved one seat in
Malaysia; but by defeating some of the more extreme left-wing candidates
it did Malaysia a service rather than otherwise. PAP's action was seen by
 Short-lived Federations 73
many as an attempt by the Chinese to restore their position in Malaysia.
The PAP, like everything else in Singapore, was predominantly Chinese
but, as we have seen, had strong support from the Malays in Singapore.
The important position which the (Indian) Minister Rajaratnam has held
in the party since its inception is further evidence of its multiracial base.
Numerically there was no need for Malaysians to be so nervous. In 1962,
49 per cent of the population of the Peninsula was Malay, and 36 per cent
Chinese, the other races being mainly South Indian Tamils. By 1971 the
Malay proportion had increased to 51 per cent. Neither of the main
peoples had a high net reproduction rate. In Borneo on the other hand the
rate was very high, but as they were not Chinese this should have been
reassuring rather than alarming to the Malays. But it does seem that the
actions of the Singapore leaders could have given legitimate grounds for
apprehension. Lee Kuan Yew had induced the Borneo leaders to declare
for self-government, thus indicating to the Malays that they could not
indefinitely count on them for racial balance.
PAP had now become the largest opposition party in Kuala Lumpur
and even UMNO believed that it was the beginning of a Chinese bid for
hegemony. Extreme Malaysians tried to undermine the influence of
Singapore by claiming that it was anti-Malay. Indonesia used the
opportunity to play on Malaysian fears of the Chinese. Race riots followed.
The 'Singapore Malaysian Action Group' urged Malaysians in Singapore
to go round killing Singaporeans. It took a week of hard going and a toll of
22 deaths before the situation was back to normal. But in the autumn there
were further riots, this time ascribed to the Indonesians. PAP now tried to
win over moderate Malaysians. They stressed particularly their adherence
to the moderate Malaysian policy of economic and social improvement.
They endeavoured to cooperate with the moderate Malaysians by offering
their help in building up a strong and united Malaysia by peaceful means.
They were largely, but by no means wholly, responsible for organising a
Malaysian Solidarity Commission (May 1965). This included besides PAP
two Malaysian Parties (but not UMNO) and representatives of Parties in
the two Borneo States. PAP did its best to make it clear that it was not
opposed to special privileges for Malays in Malaysia. But there were to be
no special privileges for anyone in Singapore.
In general the Federation was not working smoothly. One trouble was
that UMNO was both the strongest federal Party and was also the
Malayan State Party. PAP also aspired to be both the State party in
Singapore (as it already was) and also a federal Party. But it had not yet
had time to build up its federal position. It is doubtful if it ever could have
done so, in face of the great power of UMNO. Under the Constitution as
finally agreed, as we have seen, Singapore was to pay over 40 per cent of its
revenue for federal purposes. The exact proportion was to be revised every
two years. Malaya now demanded that the proportion should be raised to
6o per cent in order to help pay for the war with Indonesia. Kuala Lumpur
74 Federalism: Failure and Success
further argued that wealthy Singapore (per capita income $964 as
compared with Peninsular Malaya $354) should be more active in
promoting the industrialisation of Malaya and Borneo. The loan which
Singapore had promised to Borneo for the purpose had never been paid.
Singapore maintained that it had only undertaken to give assistance if
Singapore labour were employed. None of these differences was very
fundamental but they added up to increasing tension.
There were also further troubles. Some Malaysians demanded that the
offices of the Bank of China should be closed as they were still suspicious of
Singapore's relations with China. Singapore could not agree to the closing
of the Bank as it was very important for financing some parts of its entrepc)t-
trade. Some of the more extreme Malaysians demanded the banning of
PAP and the detention of Lee Kuan Yew, but it was pointed out to them
that an equally unwelcome leader would immediately take his place. In
London a coup against PAP was thought to be imminent, so much so that
Harold Wilson came out to persuade the Tunku not to countenance
anything so rash. A highly successful by-election convinced many
Malaysians that PAP was too firmly seated to be easily knocked off. The
Tunku is on record as having said that if he had felt stronger at home he
might have ridden the storm. But as it was there seemed to be no way out
except by dissolving the Federation. Thus in August 1965 Singapore
became an Independent Sovereign State.
Unquestionably both Prime Ministers regretted the divorce. Lee Kuan
Yew was in tears, and both asserted that they nourished the hope that in
quieter times in the future they might be able to come together again. PAP
was loath to sacrifice its hope of becoming a really important national
power. Malaysia lost what chance it had to share in Singapore's wealth.
But in neither country have the economic results of the dissolution been
disadvantageous. They may even have done better alone than they would
have done in concert. This seeiDS particularly likely in respect of
Singapore. An 8 per cent growth rate was forecast for Singapore in 1977,
while Malaysia aspires to 8·5 per cent (but she would be starting from a
lower income level) .
Singapore has been especially lucky in the survival of her well tried
leaders (Lee Kuan Yew, Goh Ken Swee and Rajaratnam). This had
undoubtedly promoted consistency in policy. Malaysia by bad luck first
lost Tunku Abdul Rahman (by retirement) and then Tun Razak by death.
Hussein Onn only took over in January 1976. Nevertheless, so far in
Malaysia policy has been very consistent and stable throughout. Although
mutual relations between the two countries are not so close as they were
during the federal period (passports are now necessary to go from one to
the other) there is no let or hindrance to travel. Every weekend
Singaporeans drive, cycle or walk across the causeway in great numbers in
order to enjoy the greater recreational opportunities of the mainland. In
addition one close economic bond remains: in respect of water. In spite of a
 Short-lived Federations 75
big development of reservoirs Singapore has not enough water for her
industries and high income level population. She consequently imports
large supplies from Malaysia. All of this she processes and purifies, but
returns a statutory amount to Malaysia, which consequently does not
bother to process her water. It looks as though this arrangement would give
Singapore the whip hand (at least in the short run) in case of any serious
disagreement between the two countries. But of course Malaysia has other
sources of water, and in an extremity she could cut off Singapore's supply.
In Singapore continued prosperity and high growth rates have been
very largely due to the port, which is now one of the largest in the world.
The continued prosperity of Malaysia has been due especially to the high
prices of her rubber and tin exports, as well as to the successful introduction
of oil palms. Yet neither country feels itself in an entirely happy and secure
position. Both are located in a very unsettled part of the world. There is
also the danger, so far as Singapore is concerned, that the development of
the Philippines and Indonesia may reduce her entrep6t-trade on which she
so much depends. But the most serious possibility for both is renewed
Chinese pressure and aggression deriving from China's greatly increased
influence in many parts of the world. The Prime Minister of Singapore
announced in the summer of 1976 that his security forces had uncovered
Chinese 'ctlls' working against his Government at home, in Malaysia and
even in Australia. Specific proofs are wanting, but it is not impossible.
On the other hand a regional pact (ASEAN) is developing among the
five reasonably stable nations of Southeast Asia (Malaysia, Singapore,
Thailand, Indonesia and the Philippines). While there is no argument for
attempting to revive the Federation, this standing closer movement
deserves to be taken seriously by the advanced countries. After several
years of scarcely any progress important ASEAN Summit Conferences
were held in Bali in February 1976 and at Kuala Lumpur in August 1977·
At the Bali summit active and amicable discussion under the leaders of
Indonesia and Singapore led to a unanimous agreement to promote
cooperation and trade among the five, to work towards a common tariff
and a uniform currency, and to cooperate in defence. The attitude of
Singapore and Indonesia towards each other was thus very different from
what it had been a decade previously. ASEAN is also trying to improve its
position in the world by requesting as good a concession from the EEC as is
already enjoyed by the ACP nations (Africa, Caribbean and Pacific). We
shall have more to say about it later.
Thus the brief life of the Malaysia/Singapore Federation, although it
ended in apparent failure, nevertheless embodied considerable success.
4 A Sad Case of Total Failure:
The British Central Mrican
Federation
The idea of a closer relationship between Northern and Southern
Rhodesia had already been discussed in the interwar period; but
arguments were vague and often at cross purposes. The first idea was for
amalgamation. Southern Rhodesia was already substantially settled by
European (mainly English) farmers and had obtained a measure of self-
government. Northern Rhodesia was much less colonised, but contained
highly important mines (especially copper), organised and owned by
powerful international groups. The White mining personnel and the
European settlers were anxious to attain the same status as Southern
Rhodesia. But the British Government had recently ( 1930) reaffirmed its
policy of paramountcy of native (African) interests, which had been
enunciated seven years previously in respect of the relation between
Africans and Indians in Kenya. In view of this the Southern Rhodesians
began to feel apprehensive for their status. At the same time the wealth and
economic power of Northern Rhodesia, in strong contrast to the position of
the struggling farmers in the south, made some sort of partnership with
Northern Rhodesia an attractive proposition.
A Royal Commission in 1939 examined the situation, to explore what
form of standing closer would be appropriate. The Commission rejected
the idea of amalgamation, largely on the grounds of Southern Rhodesia's
native policy, but favoured the establishment of a federation. (This was
finally agreed upon in 1953.) Nyasaland was some what unexpectedly
included in the Federation, at the request, apparently, of the British
Government. Whitehall no doubt had in mind that outside the Federation
Nyasaland would be a direct charge of the British taxpayer, while within a
successful Federation other means of financing it might be available. The
CAF was thus one more example of the immense confidence at that time in
the federal solution for related territories, by the ex-colonial powers. The
same solution was to be sought about ten years later in the short-lived
federations of the British West Indies and of Malaysia and Singapore, with
scarcely any greater success.
It should be noted that the whole campaign for federation in Central
Africa was conducted without any consultation or cooperation being
 A Sad Case tif Total Failure 77
sought with the Mricans. In fact they were bitterly opposed to the whole
idea, more particularly the Mricans in the northern territories, who feared
an increase in the power of the hard-liner White settlers (observing what
was happening in Kenya and South Mrica). This fear was not without
justification, since notwithstanding the British statement of 1930 British
government policy steadily ignored or misunderstood the nature of Mrican
opposition. It was believed to be confined to a few malcontents, and it was
felt that the confidence in the benefits, social and economic, which
federation would bring in its train would soon put an end to any opposition
or apprehension.
There were two distinct lines of argument in favour of federation:
political and economic. On the political side liberal minded politicians had
persuaded themselves that the proposed federation might lead to a genuine
solution of the racial problem, through partnership between the races, in
strong contrast to the growing White domination in South Mrica. Oliver
Lyttelton, the Colonial Secretary at the time of the crucial debates, quite
clearly and honestly was of this mind. It appears also that there was a
group of White settlers at that time who were prepared to work towards a
true partnership in Southern Rhodesia. Garfield Todd was for a time
Prime Minister there. But it is now evident that the group was not strong
enough to carry its way against the anti-Black party. What this latter
group thought of partnership can be read in the words of Sir Godfrey
Huggins, the first federal Prime Minister: 'Partnership between Black and
White is the partnership between the horse and its rider'. Or again at the
opening of Parliament: 'Let us for the sake of federation, which was for
economic advantage not for the sake of the Preamble of the Bill (which
enlarged on Partnership) which was forced upon us, have patience.' A
more careful reading of history concerning the activities of Cecil Rhodes'
White settlers might have suggested that they could be even tougher than
some of the Natal and Transvaal farmers.
Many who were sceptical of partnership in Lyttelton's sense still thought
that the economic arguments in favour of federation would made it
abundantly worthwhile. Nevertheless the economic case as put forward
was somewhat confused, and quite inadequately documented. We can
distinguish three lines of economic optimism: ( 1) the existence of a larger
home market would promote industrialisation and so create employment
opportunities; (2) the larger area would be better balanced, and since the
three economies appeared to be complementary it should also be more
stable; (3) the acquisition of capital funds (so badly needed for investment)
would be facilitated by the substantial projects, which could be both
jointly planned and implemented by experienced firms and would make it
possible to obtain better terms from lenders.
These arguments were in fact little more than assertions of the
protagonists of federation. Apparently no analysis was undertaken and no
quantitative forecasts were made. They reflect the then current belief in
 Federalism: Failure and Success
large size, which could so well be obtained quickly by federation. We have
seen that precisely similar arguments in favour of federation were put
forward in East Mrica, but the idea was at a disadvantage there, since
there was no interterritorial movement of labour, whereas in Central
Mrica this had already been attained. That implied that the additional
employment and other opportunities arising from federation would have
been less in Central Mrica than they might have been in East Mrica. It was
proposed to set up a free trade area within the federation, as was only
natural. But it was emphasised that it would be necessary to have a high
tariff wall round it, in order to protect the new industries which would be
established. This meant that consumers would be denied the opportunity
of buying cheap goods from abroad. The privileged position of Kenya's
industries in East Mrica is an exact parallel.
The argument about a better balanced and more stable economy was
built on the belief that the three economies were complementary. It was
true that they all produced substantially different commodities, but all
three were above all exporters of primary products. Prosperity and
depression in Northern Rhodesia's copper, in Southern Rhodesia's
tobacco and in Nyasaland's tea were likely to be the result of conditions in
their own particular markets rather than of the general level of activity in
the West. This is not to say that there was not initially a fairly substantial
amount of interterritorial trade, but it was very much less than existed
between a number of other countries which had not the slightest intention
of standing closer (Ireland and England, New Zealand and Australia).
To appreciate the prospects of improvement in a federation for either
Whites or Blacks it is essential to bear in mind the respective characteristics
of the three territories. The total population of the Federation in 1954
seems to have been about eight and a half million, with very similar per
capita distribution: Southern Rhodesia three million, Northern Rhodesia
and Nyasaland about 2·7 million each. In all there was a very large
preponderance of Mricans, but the ratio between Blacks and Whites
differed widely: in Southern Rhodesia there were I 58 thousand Euro-
peans, or 5 per cent of the total, in Northern Rhodesia 53 thousand (or
under 2 per cent) and in Nyasaland no more than five thousand Whites in
all. Although it was limited, the number of Whites in Southern Rhodesia
clearly gave it a predominace even greater than the White settlers in
Kenya enjoyed, more especially as this predominance was reflected in the
voting power for the federal Parliament. Moreover the relative wealth of
the peoples of the three territories differed enormously, largely due to the
number of Whites. Per capita GDP amounted to £54 in Southern
Rhodesia, £51 in Northern Rhodesia, and under £!2 in Nyasaland. Of
the federal GDP Southern Rhodesia contributed 49 per cent, Northern
Rhodesia 42 per cent and Nyasaland less than 9 per cent. To obtain any
sort of equality for Nyasaland a massive redistribution of income would
clearly be necessary, but this was out of the question. The 'subsistence'
 A Sad Case of Total Failure 79
incomes (non-employment in mines and similar installations) were very
similar in the three territories, although they were engaged in different
types of farming. Among the Whites and employed Mricans there were on
the other hand very great differences.
The third economic argument in favour of federation was, as we have
seen, the expectation of a greater availability of borrowed funds. This was
certainly realised, at least in the earlier years of the federation. But the
funds were not particularly directed to growth, nor even to the improve-
ment of infra-structure. No thought seems to have been given to the
interterritorial application of funds and their effects on the different
territories. The one really big project at issue was the Kariba dam. Some
additional source of power was one of great interest to the Rhodesians, but
none at all to Nyasaland. So far as the choice of site was concerned
Northern Rhodesia would have preferred Kafue to Kariba, because it
could have been constructed gradually as demand required. Apart from
the dam most of the investment funds went into residential and
commercial building in the towns, especially Salisbury. By and large the
lion's share of investment went to Southern Rhodesia and Nyasaland,
although it was mainly paid for out of Northern Rhodesia's mining profits.
In all this, as Professor Jack pointed out (in an otherwise not very
satisfactory Report), the divided administrative and financial responsi-
bility laid down in the Constitution between the federal and territorial
governments made any sort of cooperative planning exercise extremely
difficult, in spite of the hopes of the founders.
The revenue allocation in the Constitution was designed to enable the
Territories to carry out the services allocated to them at the pre-federation
level, thus the pattern of public expenditure was virtually fixed by what
was already being done. The interterritorial allocation of the proceeds of
federal borrowings was based on the proportions assigned for the
distribution of income tax receipts. In fact the riches of Northern Rhodesia
was redistributed to Southern Rhodesia and Nyasaland, both of which
were consequently able to borrow more than they could have without this
help, since they would have run very quickly into debt service problems.
Both Southern Rhodesia and Nyasaland had great need of loans, in
contrast to Northern Rhodesia for whom her own surpluses were ample.
Initially overseas lenders were very willing to take a stake in this much
advertised new country, partly because of its apparent investment
opportunities, partly because of continued belief in the federal solution
with the aid of which it seemed that the Central Mrican Federation was
about to establish a new sort of policy, tackling the same sort of problems as
South Mrica in a much better way. While it lasted the boom was very
impressive with a very high growth rate in the first year of Federation. But
after four or five years the confidence of overseas lenders began to sag. By
1958 the flow of immigrant funds had nearly run dry. Throughout the life
of the Federation it remained a foreign trade economy, and on the whole
Bo Federalism: Failure and Success
was successful. For instance the elasticity of supply of Northern Rhodesian
copper was so great than even in bad times total profits were maintained
and were duly applied to investment, but (as has been mentioned) very
largely to real estate in Salisbury. It was intended that Salisbury should be
the capital of a large new country. At the dissolution of the Federation it
was found that there had been overinvestment which caused some
difficulty in the distribution of assets between the now independent
countries. There was also a big expansion of industry, especially in
Southern Rhodesia. Northern Rhodesia also extended its manufactures,
especially in the later years of the federation. But it remained very much
below the industrial sector in Southern Rhodesia. For most of the period the
growth rate of the Federation remained high, and this was a main support
of the argument for continuing Federation. But the favourable judgment
depended to some extent on observations being confined to the actual
federal period. If what had happened before had been included it can be
argued that the growth rate was not higher, perhaps even slightly lower,
than it had been. Taking respectively I 950 a.nd I 954 as base years the rise
in local incomes were NR 2 I 6, 95; SR I 5 I, I 52; Na 220, I 93· It is naturally
not implied that the pre-federation rates would have continued in the
absence of federation.
It must be admitted that the way in which the federal Constitution had
been drawn up (reflecting perhaps the local White idea of racial
partnership) was not conducive to the general growth of the community.
We have already seen that, apart from other difficulties, the Constitution
made joint planning almost impossible. But the most serious difficulties
derived from the provision that basic services should be provided by
different authorities for Whites and Blacks: the former by federal
administration backed by ample federal funds, the latter by the Ter-
ritories, backed only by their meagre resources. It resulted from this
arrangement that public outlay in Southern Rhodesia was about twice
that of the other two Territories together. Percentagewise the figures were:

I954
NR 24
NA 7
SR 69

(The Federal Government had also assumed 6o-7o per cent of SR's debt
service.)
The two services where this dichotomy mattered most were agriculture
and education. In both these services Southern Rhodesia gained most
because of the large number of Whites. In both Southern and Northern
Rhodesia good progress was made with agricultural techniques, con-
trasted with stationary and traditional techniques in Nyasaland. Similarly
with education: most of the expenditure occurred in the White sector. An
 A Sad Case of Total Failure
earnest attempt was made to ensure that the University in Salisbury was
multiracial. But very few Blacks were in a position to acquire the necessary
qualifications for entrance. Independent Northern Rhodesia (Zambia)
made the starting of a university a top priority, but found it first had to
build up the secondary stage before progress could be made. In the first
year of the Central African Federation per capita educational outlay on
non-Africans was £I 3 gs, and on Africans&. By I963 the figures had risen
respectively to £22 IOl and I9S; the gap had somewhat narrowed. At the
same time it must be remembered that even the best African educational
programme would inevitably be heavily weighted at first with the simplest
and cheapest type of primary education. There would be little point in
spending more per capita until a firm primary foundation had been laid.
As the years went by the profound opposition of the Blacks to federation
became more and more obvious. But even Southern Rhodesia was
unhappy. Before federation she enjoyed a certain amount of political
freedom, but on federation this was lost, supposed to be merged in the
bigger organisation, and this was much resented -still more when on
dissolution she reverted to plain colonial administration. (The persistent
belief of the Colonial Office that in forming a federation all the units must
be of the same status was a source of trouble in other parts of the world too;
notably in the Leeward Islands.) Especially after the formation of the
Dominion Party (in I 956), demands for Dominion status became more
and more outspoken. The relatively 'moderate' Sir Edgar Whitehead was
ousted by the less moderate Winston Field, and he in turn by the still less
moderate Ian Smith.
Meanwhile in Nyasaland things had gone from bad to worse. Rioting
and bloodshed were increasing. At this the British Government (I 959) sent
out a Commission of Enquiry into affairs in the Territory (Devlin
Commission). They returned a very adverse Report, referring to Nyas-
aland as a 'police state'. They had been warned of universal opposition to
federation by Africans, and they found this to be only too true. After
extensive rioting and the shooting of 50 Africans by security forces, the
leader, Dr Hastings Banda, and a thousand ofhis supporters were arrested.
It was evident that if the Federation were to survive there would have to
be drastic constitutional revision. To prepare for this a large Commission
was sent out under Sir Walter (Lord) Monckton to plan the necessary
changes, for I96o. The Commission's Report was unfortunately by no
means penetrating. They stoutly maintained that although there might be
some political troubles, which should be attended to, the economic benefits
of the Federation were so obvious that there could be no question of
dissolution. To support these economic claims no significant figures were
presented. Virtually the same well tried arguments with which the
Federation was inaugurated were repeated, with no more analysis. In the
end the conference on the federal constitution never took place. Instead
attention was diverted to the Constitutions of the constituent territories. A
 Federalism: Failure and Success
decision was precipitated by the unanimous opposition revealed by the
Nyasaland elections in I96I. This performance was repeated in the
Northern elections the following year. At this point Sir Roger Stevens was
sent out by Mr R. A. Butler, who had become Minister for Central African
Affairs. Stevens reported that the withdrawal ofNyasaland was inevitable.
In December the British Government via Mr Butler (who always pursued
the 'Art of the Possible') announced that any territory which desired to
leave the Federation was at liberty to do so. The Bill for the secession of
Northern Rhodesia and Nyasaland was brought in by July, and by the end
of I963 the whole Federation was dissolved by Order in Council.
So ended the Central African experiment in 'Racial Partnership'. The
basic trouble was undoubtedly politico-racial incompatibility. Blacks in
Central Africa had reached the stage when nothing but independent Black
majority rule would satisfy them. This had been much less clear in I953
than it had become in I965. No other consideration would influence their
people. At the same time it must be admitted that the Constitution was
unfortunate.
The process of dissolution was complete and from that point of view has
some aspects of general interest. In its early years the Federation had been
extremely active, going forward with new investment, infra-structure and
additional power sources. It does not appear to have been running down
appreciably in the later years, although funds were less easily available.
The question consequently arose as to what was to be the fate of the new
installations. There were two important commitments to be allocated
between the territories: real assets and a considerable debt service. In
addition awkward problems arose at dissolution concerning the tariff
structure and future monetary arrangements. In respect of assets which,
apart from Kariba, were mostly building developments, it was decided
that all those created during the federal period, both fixed and moveable,
should accrue to the territory where they were situated. This gave
Southern Rhodesia a great bonus of buildings. But if after all Salisbury was
not destined to be the capital of a large new country many of the new
buildings might be superfluous. It now seems, nevertheless, that the
concentrated reorganisation due to UDI may have improved the position
of Salisbury again, so that the location of the assets was after all a bonus.
The debt settlement was rather more complicated. The Federal
Government debt consisted of four categories: (I) territorial debt taken
over at the beginning of Federation; (2) federal loans re-lent to the
territories; (3) federal loans used to finance statutory corporations and
other institutions of that nature; (4) loans raised by the Federation and
used for its own purposes. On dissolution ~hese categories of debt had to
receive different treatment. Category (I) had been completely financed by
the Federation. On dissolution it became a charge on the territorial
Governments. Category (2) was in any case financed by the territorial
Governments, and so remained. Category (3) was primarily the re-
 A Sad Case of Total Failure
sponsibility of the corporations. In particular £26·5 million out of £72·5
million represented the finance of the Kariba dam. Finally category (4),
which was offairly modest proportions ( £20·4 million on long and £7"8
million on short term), had to be shouldered by the territories. Thus their
total additional liability was by no means negligible.
The second part of the debt problem was the apportionment of the
charge between the territories. By and large the principle applied was that
a territory's share would be the same as that of its expenditure out offederal
loan funds during the period of Federation. The railway debt was to some
extent self-financing. The remainder could not easily be allocated between
the territories like other assets; hence the method applied to the self-
financing section was applied to it also. The Kariba dam debt was divided
between Northern and Southern Rhodesia. A good deal of the investment
had been financed out of current account surplus; in every year the North
had contributed to investment in the other territories as well as paying for
its own. It could consequently be argued (and was in fact very strongly
urged by the Northern delegates to the Conference) that the North had
already made sufficient contribution. But in the end it agreed to the
allocation desired by the other territories.
Turning to more general problems: little immediate change was made
in the tariff. Southern Rhodesia lost its near monopoly of manufactured
goods behind the tariff wall. But Northern industry was advancing and
could soon become competitive; Nyasaland imposed lower duties on
Southern Rhodesia exports than the federal tariff wall, and was com-
pensated by a cash payment. This she considered as a bonus, a matter that
is certainly questionable. Both the Northern territories profited by now
having cheaper foreign markets open to them, especially Hong Kong. But
before interterritorial trade had really established a new pattern, UDI
once more upset relationships. The common services continued much as
before. After the withdrawal of Nyasaland most of them were conducted
jointly by Northern and Southern Rhodesia. Airways, agriculture,
research and the railways were put under High Authorities with territorial
Ministers on the boards. They seem actually to have enjoyed more
autonomy from government interference than they had experienced
during the Federation.
Not surprisingly the central bank split up into territorial reserve banks
(just as had occurred in East Africa on independence). Nyasaland (now
Malawi) reverted to receiving a subsidy from the UK. It amounted to 50
per cent of her current expenditure, but was intended to cover capital as
well as current needs.
Since after UDI any possibility of a White/Black (or at present any other
sort offederation) was completely ruled out, we are exonerated from the
thankless task of pursuing the years of so far abortive negotiations between
the Rhodesian Prime Minister, his African opponents, the UK, USA and
the 'front line' African leaders.
 Federalism: Failure and Success
The failure of the CAF cannot reasonably be ascribed to economic
causes. On the whole (and especially at the beginning) considerable
advances were made. Even after the dissolution trade between the three
territories remained active, in spite of somewhat abortive sanctions against
Rhodesia. The basic mistake in the whole British policy was the conviction
that economic success could ever silence the very real and extensive
opposition of Africans to the whole idea. This stemmed from a complete
misunderstanding of the attitude of all Africans (not just a few extremists)
to a White-dominated federation. This was later to have repercussions in
East Africa, which were only settled (and that vainly) by the rapid grant of
independence to Tanzania and Uganda.
5 Federalism In the Indian
Subcontinent
(A) INDIA. THE LONG ROAD TO INDIAN FEDERAL UNION

India and Her Peoples (Up to the establishment of British Rule)

The story of federalism in the Indian subcontinent is one in which failure
and success are found side by side. India is unique in a number of ways: in
area, in population (size and density), in diversity of terrain, climate,
culture and political experience. On their withdrawal the British tried
hard to establish a single (although inevitably loose) federation for the
whole subcontinent.
They were more impressed by the diversities than by the underlying
unity. They felt that a federation of the whole would be the best way of
reducing the impact of those diversities. The result of British efforts to
promote federation was Partition, leaving the two successor States oflndia
(in the reduced sense) and Pakistan by no means friendly to one another.
Pakistan with two 'Wings' separated from each other by a slice of India,
experimented with both unity and federation but finally (having lost the
East Wing to Bangladesh) has probably returned to federation. India
managed to incorporate the Native (Princely) States, which at the time of
independence covered more than half her territory, within two years. She
was also able to absorb the foreign enclaves of Portugal (Goa) and France
(Pondicherry) within a relatively short time. Thus she was in a position to
establish a federation of the whole area. But the Constitution which she
adopted in I 94 7 (essentially drawn up by the British in I 935 for a different
purpose) can only be called marginally federal or quasi-federal. This is
especially true when we take into account the way in which it has been
modified and amended over the years.
The Indian successor State (the Gangetic plain and all to the southofit),
in spite of divergencies of peoples and languages, is held together by
invisible bonds, which are buried very deep in her social religious history.
In a very real sense India yearns for unity -which perhaps is one of the
reasons which caused her to accept the unifying British Raj so readily. This
remains true notwithstanding her striking diversities. Indian history raises
acutely the problem of whether, when large diversities exist but there is a
desire for unity, ultimate agreement is more likely to be attained by bowing
to the diversity and allowing a high degree of autonomy to the federating

as
86 Federalism: Failure and Success
units, or forcibly overriding it with a strong central government and little
autonomy for the units. It is the problem which South Mrica faced and met
in 1910 by a strong central government and little autonomy for the units.
The same problem is facing Nigeria (as we shall see) but they are trying to
overcome it in a slightly different way by compromise. In India the
consciousness of national unity on the one side and the very complicated
picture of her diversity on the other, make the problem particularly
difficult. Over the independence years there have been conflicting
tendencies -now towards unity, now towards diversification. It is the
common experience of every country in the modern world that, for a
number of reasons (largely economic), there is now a greater degree of
centralisation than was previously the case. India has naturally not been
immune to these centripetal forces. But that is by no means the whole story.
Underneath, the age-old diversities remain, in spite of a deliberate
centralising policy on the part of the Government and efforts at unified
'nation-building'. We must endeavour to unravel these subtle and
complicated social, economic and political differences and their effect on
federalism in the subcontinent.
Although it is large, the subcontinent is geographically a single entity,
bounded on the north by the wall of the Himalayas. These are cut in a few
places by great river valleys and viable passes, which have allowed
continuous important contacts with the rest of the world, more parti-
cularly with Persia (Iran) and what is now Mghanistan. For many
centuries the latter was an integral part of India. Great rivers flow from the
mountains to the Gangetic plain of Northern India. This is mainly dry,
except in the east in the territory of what is now Bangladesh. But it is much
subject to the vagaries of the monsoon, so that one year there may be
hopeless drought, and another devastating floods. Broadly similar country
extends southwards to the high and dry Deccan plateau. In the deep south,
now the states ofKerala and Tamil Nadu (formerly Madras), the rainfall is
more reliable and there are a number of fertile enclaves, especially in the
coastal hills.
The history of India is essentially the history of the north, partly because
we have more information concerning what went on there (mainly derived
from invaders, from Alexander onwards, who were interested in what they
saw, so different from anything elsewhere). Partly too, more seems to have
happened in the north, where contacts with the world beyond the
mountains were always maintained. In the Deccan and southwards the
people were significantly different although not really racially so. Their
Dravidian languages (Tamil and Telugu) and culture differed from those
of the northerners, and until the British Raj was established they were
never really absorbed into the mainstream of Indian life -indeed if it is
true that they have been even now. Nevertheless the Dravidians are
essentially Indian and almost all have embraced the Hindu religion.
Remnants of the original dark-skinned small people (who seem to have
 Federalism in the Indian Subcontinent
been the first inhabitants of the peninsula) still live their tribal life in some
States of central India. But they have never been of any importance. The
history of India may be said to begin with the Aryan invasions starting
some 2000 years before the Christian era, continuing for many centuries,
but never losing contact completely with their old homes in Persia and
Afghanistan. The country they came to was very sparsely inhabited. The
settlements which they made were widely scattered and hardly in touch
with one another. Some substantial dynasties did arise for a few
generations. Many common Bengali names such as Das and Gupta can be
traced from them. Their language (Sanskrit) was akin to the languages of
Europe (especially Greek) but due to the scattered nature of the
settlements, not altogether negligibly different languages gradually sprang
up, some of the more important of these being Hindi, Bengali, Bangla (the
language spoken in Bangladesh), Punjabi, Gujarati, Marathi and Oriya,
with Hindi well in front of the others. Language differences from State to
State are of special significance (as we shall see) since the decision to
reorganise the States on a linguistic basis in 1953· Successive governments
have tried to push Hindi as the single national language oflndia. There is
much opposition among the Dravidians; but gradually it seeiDS that Hindi
is gaining ground, although for many official purposes English remains the
lingua franca, and may even be increasing.
The Aryan invaders developed in India their Brahmanical culture,
distinguished by its complete taboo on the consumption of meat and
alcohol, and by its rigid caste system. In spite of great efforts on the part of
governments to break this down a substantial divergence still remains
between the high caste (sartorially distinguished) and the 'untouchable'.
The Hindu religion with its captivating legends and willingness to
accommodate local gods within its system, was found attractive to the
Dravidians, no less than to the Aryans (although the priority among the
gods is somewhat different in the south than in the north, Vishnu being
more popular among Dravidians, and Siva further north). The Hindu
religion and culture is undoubtedly a unifying force in India today. In the
fight for independence this was quickly recognised by the Congress leaders
who staged a revival of it, largely it would seem for political reasons.
There is one episode in early Indian history which we cannot completely
neglect, partly for its intrinsic interest, partly because of its influence in
India today: namely the Mauryan empire of the third century B. c. and
particularly of its great King Asoka, who succeeded to the throne in 273
B. c. Asoka is important to a large part of the world today in that he
enthusiastically embraced the Buddhist religion and was largely re-
sponsible for its spread throughout much of the then available world.
Today it is the official religion of Sri Lanka, Burma and Thailand, and has
many adherents in japan. Yet in the land of its birth it has (as Christianity
did) virtually disappeared. For Indians Asoka is important in a very
different way. He was an emperor almost in a modern sense. He marked
88 Federalism: Failure and Success
out the territories over which he had some jurisdiction by a series of
commemorative pillars, which convey some valuable information as well
as illustrating the range of territory he claimed. The capital of one of these
pillars (with four lion heads) has been chosen as the emblem of
independent India. To the modern Indian Asoka symbolises a great
inheritance of power and unity.
The next change in India relevant to our enquiries is the arrival of the
Moslems from over the passes, thus introducing the great rival in power,
religion and culture to the Hindus, a rivalry which endured right up to the
inevitability of Partition in 1947 (see below). The first Moslem power in
India was the Sultanate of Delhi under first the Tugluq and later the Lodi
Kings, whose tombs are well known sights in the Delhi neighbourhood. But
the real impact of the Moslems began with the establishment of the
Moghul Empire, based at first on Agra but later taking over Delhi. Moghul
power effectively began with the rule of Akbar in 1562 and ended as an
effective force with the death of Aurungzeb in 1707. At its height the
Moghul Empire was the wonder of the world, with its extent, unification
and above all its (apparent) fabulous wealth. Aurungzeb, whose appren-
ticeship had been in the south, even exerted influence (and exacted
tribute) from hitherto untouched peoples south of the Deccan. But in fact
the Moghul Empire's might was crumbling well before the accession of
Aurungzeb. While the seventeenth century was relatively quiet and
prosperous in India, the eighteenth was full of wars, most of them local
(rebellions and family quarrels), but some reaching national proportions.
Of these wars by far the most important were against the Marathas. To
start with the Marathas were hardly more than bands of (Hindu) robber
chiefs. But they were organised by their leader Sivaji into a well run unified
state, based on Poona (south of Bombay). They were undoubtedly the
most dangerous foes of the later Moghuls and subsequently of the British.
As their conquests spread in all directions the local generals became more
and more independent. Gradually what had been a tight unity broke up
into a loose confederacy, fighting the common enemy but soon fighting
each other. But as Hindus (although with some differences) the Marathas
were an important part of the come-back of Hinduism over Islam. At the
height of their power the arm of the Maratha Confederacy stretched right
across India from Kathiawar to the Orissa coast, and from just south of
Allahabad on the Ganges to the borders of the dominions of the Nizam of
Hyderabad.
South of the Maratha there remained several fairly powerful Moslem
States, the two largest being Hyderabad and Mysore; in the latter the
Dynasty of Hyder Ali and his son Tipu were formidable enemies. But
although these States had Mo~lem rulers the greater number of their
subjects were Hindu. This became very important, especially in the
Nizam's dominions in Hyderabad, when the Indian independent govern-
ment proceeded to destroy the State and its government. The Moghul
 Federalism in the Indian Subcontinent 8g

power in the north was also breaking up with Bengal lapsing into chaos. In
the Punjab the Sikhs were establishing their identity. Small wonder that at
the next round, when the British began to take stock of their power in
India, they were more impressed by its diversity than by its unity.
The year of the beginning of the British Raj in India (which led
eventually to paramountcy over the whole subcontinent), can be dated
either from Clive's victories (near Madras J75I and near Calcutta I 757) or
alternatively it can be dated from the Governor-Generalship of Warren
Hastings ( I772-I 785). The British in India were still under the control of
the East India Company, the first establishment of which had been in the
time of Elizabeth I. But it was becoming increasingly clear that the
Company was acquiring commitments of a political nature for which it
was doubtful whether it had either the resources or the sense of
responsibility that was called for, or so it seemed to the home government.
Pitt consequently determined to bring in the public sector by the India
Act of I 784. This created the post of Governor General. His seat was to be
Calcutta, so that he was definitely superior to the Governors of the two
other British 'Presidency' towns of Madras and Bombay. At the time
practically nothing was done to alter the policy of the Company, which
was to pay very meagre salaries- all it could afford- but to do nothing to
prevent its servants from amassing wealth in virtually any way they liked,
often at the expense of the natives. The sight of these 'Nabobs' returning to
English country estates, with untold wealth, had a profound effect on
English public opinion.
Hastings was greatly interested in the people, their languages, literature
and art. His governorship was in a way a first stirring of what were to be the
abiding principles of British colonial policy (even if they were not always
respected by the men on the spot): namely a high standard of honest
administration, cooperation and friendship with the local people, not
interfering with their customs and social habits except in so far as these
were repulsive to any general standards. In many ways it was a noble
tradition and drew to the Colonies (but especially to India) some of the
finest men of their generation. Only in the most recent years has it been
criticised for indifference to development and change. As one historian has
put it: '[Hastings] found Calcutta a counting house, and left it a seat of
Empire. He laid the foundation of the administrative structure upon which
others were to build a stately edifice.'

The British Raj and the First Breath of Federalism

At the beginning of their rule the British only directly controlled Bengal
and the east coast from south of Orissa to the Carnatic. On the west coast
they had Bombay (acquired from the Portuguese as part of the dowry of
Charles II's Queen). But they and other European powers had established
strong trading 'factories' up the coast at Surat, the most convenient seaport
for Delhi. In the north the Moslems, more securely based than in the
go Federalism: Failure and Success
south, controlled Delhi, Agra, Patna and Oudh (roughly the state of Uttar
Pradesh) and in addition all the country north of Delhi up to Peshawar
(apart from trouble with the Sikhs in the Punjab). All the rest of the
subcontinent was under the rule of native States, some very large such as
Hyderabad, Mysore and Travancore-Cochin in the south, and further
north the Sindias of Bhopal, other Maratha territory, and the Rajputs. By
194 7 on independence things were not very different except in the extreme
north-west where an important buffer state (the North-West Frontier
Province) had been established, and for the fact that the Punjab was now
firmly divided between (Hindu) Sikhs and Moslems. But there had been a
fundamental political change in that all the 'princely' States, large and
small, recognised British 'paramountcy'. A British 'Resident' was stationed
at every court, in order to 'advise' (and if necessary to restrain) the ruler.
Thus there was more unity in the subcontinent than there had ever been. It
was no empty boast when Queen Victoria assumed the title of Empress of
India (in 1875) as the successor of the Moghuls.
For decades the British could only defend their territories and support
their friends by fighting repeated, almost continuous, wars not only against
Marathas, but in the north against Mghans, Gurkas and Assamese. In the
course of all this the British controlled territory gradually expanded,
putting an ever greater strain on the Company's resources. But by the early
184os things were much quieter. The eighty or so years which it took to
transform India into a modern State had definitely started. A most
significant administrative beginning was made when Cornwallis (Hast-
ings' successor) made a 'Permanent Settlement' in Bengal (later general-
ised) with a regular system of taxation: 'Land Revenue' based on the
potential productivity of each parcel of land. This grew to be an
indispensable element in Indian finances (especially at the provincial
level) until eroded by the inflation of the First World War.
The Company's Charter was renewed in 1813, 1833 and 1853· On the
first occasion free trade was introduced and Christian missions were
encouraged. Although the number of Christian converts was never large
India owes a great debt to the educational and civilising influence of the
missionaries. These changes greatly stimulated the growth of the Indian
economy. From the point of view ofour present interest the most important
aspect of the 1833 renewal was the announcement that the UK had no
intention of staying permanently in India, but that she would withdraw as
soon an an independent Indian government (envisaged as inevitably
federal) was in a position to take over. At the time of the 1853 renewal the
(competitive) Civil Service was established with comprehensive training.
The ICS was undoubtedly one of the great civil services in the world,
regarded by British and Indian alike with pride. It was the existence of the
ICS that enabled the final withdrawal to be made smoothly. To some
extent its influence is still felt, but with declining effect.
We need not enter into the sordid details of the Indian Mutiny of 1857,
 Federalism in the Indian Subcontinent
but there are two points about it which should be noted as they are part of
the political story. In the first place Delhi was particularly affected by the
fighting, thus increasing the notoriety of the rebellion. Secondly, and
largely as a consequence, a subtle change in British policy can be
discerned. British morale had been severely shaken. To some extent at least
suspicion and hesitancy took the place of forwardness and confidence in
British policy, tending to slow up the progress of development. Neverthe-
less the plan for the establishment of universities in the three Presidency
towns was not abandoned. (They duly celebrated their centenaries in I 95 7
with much pomp and magnificence.) It was inevitable that at this point the
Company should give way to the Crown, and a Royal Proclamation to that
effect was made in I858. In this the intention of eventual withdrawal was
repeated.
Following on this ( I86I) a beginning of the development of local
government was made in the Indian Councils Act. This can be regarded as
a first step on the road to federalism. The idea was to establish local
councils all over the country. Where possible these were to be built on the
tradition of the village Panchqyats (committees of five senior citizens).
Where no Panchayat tradition existed the councils were to be as close as
possible a replica of British local government. In fact very few Panchayats
were still in existence (if they ever had been). It is interesting that ninety
years later Mr Nehru had the same idea of building Indian local
government on Panchayat Raj, only to make the same discovery, so that the
present Indian Panchayats are essentially a new creation.
More definite steps towards devolution and eventual self-government
were taken under Lord Ripon, who became Viceroy in 1883. Ripon was
steeped in the English nineteenth-century tradition of representative
government and, following Mill, Macaulay and Gladstone, of its applica-
bility to India. Rural District Boards and (elected) Municipal Councils
were established; Indians could be elected to the latter. In a few places they
even formed the majority. Ripon's ( I883) legislation was followed in 1892
by the Councils Act which increased the powers and duties of the
Provincial and Municipal Councils. Debates on the budget were allowed,
and members were appointed on community recommendation (which in
practice came very near to an elective system).
At the same time things were changing on the Indian side also. In I885
the National Congress was launched, holding its first meeting in Bombay.
There were gathered 72 English-educated prominent citizens to discuss
Indian affairs, especially administration from the local end. This historic
meeting rna y be called the beginning of modern Indian conscious
nationhood. The Governor General seems to have been quite unaware of
the nature of the new organisation and of its political potentiality. He
regarded it as just another sort of Durbar (ceremonial gathering) . A second
session of the Congress was held in Calcutta in I 886. Great enthusiasm was
shown for the idea of elective councils, similar to those just being
 Federalism: Failure and Success
established in England. The Congress leaders were most anxious to follow
the English model as closely as possible. In fact this was the background to
the 1892 Councils Act.
The next important step in constitutional advance for India was taken
under the Liberal Government in 1909. Lord Morley was at the India
Office and Lord Minto Viceroy. Under the Minto/Morley refonns the
elective principle was everywhere recognised and accepted. On Provincial
Councils it was now agreed that there might be an Indian majority. But by
this time Indian self-consciousness had very much developed. Some
opposition to the British Raj was already discernible. But the Congress was
still under the capable and moderate leadership of G. K. Gokhale (whose
name is perpetuated in the distinguished Research Institute in Poona). In
the meantime ( 1go6) the Moslem League had been founded as a
counterweight to the Hindu organisation.
During these years there were many disturbing and distressing factors
for the British administrators of India: drought and famine, plague and the
devaluation of India's silver currency through an unprecedented increase
in the world's supply of the metal. But in general the British Raj
(outwardly at least) continued on its even tenor of paternalism tempered
by consultation. A succession of Viceroys, Dufferin, Lansdowne and
Curzon particularly, were in the tradition of English landowning
aristocrats. From the moment of the takeover of the Crown from the
Company the relation of the native States had become basically different.
The Queen-Empress was now the heir to the Moghuls. Hence the legal
relationship of the States to the Government had become direct. This
change was not immediately apparent to the British, but policy towards
the States gradually acquired a new orientation. There were no more
annexations due to absorptions or lapses; but the British administrators in
India were unanimous in believing that representative and responsible
government could never be made to work in India.
The zenith of British power and influence was perhaps the Durbar of
191 I when the centre of government was transferred from Calcutta to
Delhi (but continuing the retreat to the hills when Delhi got too hot). The
gathering of the Princes, with all their maginficence, for the Durbar subtly
introduced a new factor into Indian politics, by giving the native rulers a
new feeling of unity and self-consciousness. This was to be much increased
within a few years by their outstanding part in the First World
War.lnstead of being considered stagnant backwaters in the stream of
Indian life the States were now regarded as an integral part of the stream.
Their territories were guaranteed. Bad government led not to absorption,
but to temporary supersession of the State government by direct British
administration (the forerunner of 'President's Rule' in independent
India).
India did very well out of the First World War. Areal start was made at
industrialisation. Farmers received greatly enhanced prices for their
 Federalism in the Indian Subcontinent 93
produce, while on the other side of the account the former heavy burden of
land revenue was reduced to negligible proportions by inflation. Neverthe-
less the continuing belief that it was a crippling burden and must be
abolished formed one of the most important planks in the Congress
independence platform.
Meanwhile friction between Hindus and Moslems had been growing
apace. The foundation of the Moslem League had done much to integrate
Moslem policy. Being in the minority in most areas south of the Ganges,
they were extremely apprehensive of the avowed intention of Congress to
control all Councils. One way of resisting such a design was for the
Moslems to insist on separate electoral rolls from the Hindus, thus
preventing Congress from swamping all the elections. In spite of this
fundamental cleavage Indian leaders on both sides were no less en-
thusiastic in supporting the British war effort than the princes. By the so-
called Lucknow Pact (I 9 I 6) differences were at least temporarily sunk by
Congress conceding the principle of separate electorates.
The importance of the Lucknow Pact was that the British at last began
to perceive the growing strength of Indian nationalism and were
consequently forced to look more closely at what they planned for the
future of the subcontinent. In I9I 7 a pronouncement was issued to the
effect that 'the policy ofH.M's Government with which the Government
of India are in complete accord, is that of the increasing association of
Indians in every branch of the Administration, and the gradual develop-
ment of self-governing institutions with a view to the progressive
realisation of responsible government of India as an integral part of the
British Empire'. This was clearly a considerable advance on the Morley/
Minto reforms.

The Struggle for Independence

In I9I9 Westminster resigned control of the government of India. This
change was enshrined in the so called Montford (Montague-Chelmsford)
reforms (constitutional advance) of the same year. By this provincial
services were defined as including education, medical and public health,
public works and land tenure. For the centre were reserved defence,
communications, foreign relations. Under the Act of I909 the Provinces
had no independent revenue, and were forced to rely wholly on grants
from the Centre. They now had handed over to them land revenue,
irrigation and its fees, excise, forests, stamps and registration fees. The
Centre reserved for itself customs and income taxes. The Provinces were
free to adjust the rates of the 'transferred' taxes. Law and order were
reserved to the 'Governor in Council' thus putting part of the responsibility
of 'Ex. Co' on to the Ministry. In the 'reserved' field the Governor of a
Province was responsible to the Governor General. He had the power to
veto any provincial legislation of which he did not approve, or alter-
natively to refer it to the Governor General. Refusal of a State government
94 Federalism: Failure and Success
to vote supplies for a transferred subject would require that its Ministry
should resign.
The Central Assembly was now given a non-official majority; but a
second House (Council of State) was added to ensure the continuance of
responsible actions. Administration was still basically the Governor and
Council. The system thus set up came to be known as 'Dyarchy' (a term
invented by Lionel Curtis of South Mrican fame). It was a species of semi-
federalism. Besides ministerial responsibility for all transferred services,
there were to be biennial elections, mainly on a nationwide vote from the
Centre. A Chamber of Princes was set up. Separate electorates were to be
continued. But there was provision for a review of the working ofDyarchy
after ten years' experience. The objective of Dyarchy was gradually to
introduce responsible democratic government as the politicians learned
how to work it. For a time the results were judged to be fairly hopeful.
Dyarchy was certainly working in some States. The change in the status of
India was now internationally recognised and she was admitted to the
League of Nations. It seemed that something like Dominion status was just
round the corner. But in spite of these favourable omens the Hindu/Moslem
situation was deteriorating very rapidly. In I 9 I 5 Mahatma Gandhi
arrived back from Natal full ofbitterness at the treatment of his race by the
Whites of Durban. By I9I8 he had risen to de facto leadership of the
Congress Party. Most unfortunately at this moment legislation was rushed
through the Assembly extending the powers of the Central and Provincial
Governments of imprisonment for civil offences. At this Gandhi organised
'hartals' (protest meetings) in leading northern towns. These served to
inflame public opinion still further and led to rioting and bloodshed. For
his pains Gandhi was imprisoned in I 92 I for seven years (but released after
two).
When elections to the new Montford Councils took place Congress
refused to cooperate, or take any part. The result of this action was twofold.
On the one hand the Councils were more homogeneous than had been
expected (which no doubt gave the Dyarchy system an appearance of
working better than in fact it did). On the other hand, the planned
educational experience of running democratic government misfired.
Communal tension was steadily growing through the I920l. Any possi-
bility of accommodation between Whitehall and Congress was fast
disappearing.
In I926 Lord Irwin (one of the most loved and respected of the long line
of Governors General and Viceroys) took office. Finding it impossible to
divert Indian opinion from politics, he decided to ask for a committee to
come from England to examine the working of the Dyarchy system
(actually two years earlier than had been laid down). Accordingly a seven
man purely Parliamentary Commission under Sir John Simon was sent
out. Such a committee could not by its nature include any Indians, but this
was not understood, and it was taken very badly. The Commission
 Federalism in the Indian Subcontinent 95
diligently toured India but was boycotted nearly everywhere and
consequently received a very poor impression of the state of India. It
recommended first, an increase in provincial autonomy by devolution and
by extending ministerial control over the whole field of administration;
and secondly, a restructuring of the Central Legislature on a federal basis
and with a single electoral roll. This Report was not accepted in India.
Congress was opposed to any sort of federation. The Moslem League
feared that the abolition of separate electorates would put them at the
mercy of Congress. Westminster's reply was to call a series (1930, 1931,
1932) of Round Table Conferences in London, of all interested parties
(including the Princes) to discuss the possibility of establishing some sort of
federation. Unfortunately attendance at the Conference was very in-
adequate; but there was sufficient to show that Congress would only settle
for a strong central government, while the Moslem League (and all other
minority groups) would only consider a very decentralised federation with
a weak Centre, indirectly elected.
In addition to the hardening of Congress opinion a contemporaneous
change was taking place in the outlook of Indian Moslems. Meslem
opinion all over the world was shaken by the dismemberment of the
Turkish Empire. This led to a drawing together of Islam, and the Indian
Moslems were naturally caught up in the movement. Moreover they
distrusted the British attitude on Turkey. In India the Moslem League was
restructured in 1934, M. A. Jinnah becoming President. Jinnah was a
young westernised member of the Moslem elite from Bombay. He was well
known and liked by the Indian intelligentsia. Had it not been for his
untimely death ( 1948) politics in the subcontinent might have run a good
deal more smoothly.
Seeing that the round table discussions were getting nowhere, the British
Government decided to take action. It issued a White Paper recommend-
ing what purported to be a federal Constitution, with safeguards both for
the Centre and for the Provinces. Without much alteration this was
accepted by both sides, and became the Government of India Act of 1935
(and strangely also -as we shall see -of the Indian Independence Act of
1947). Provinces now derived their authority direct from the Crown; but
federalism was only skin deep. The Governor General and the State
governors continued to exercise supreme power. Strong power at the
Centre was retained partly because the British were apprehensive of what
an independent India might do (especially after the hostile reception of the
Simon Commission), partly because the plan was only envisaged as a
transitional document, not at all a blueprint for independence. It was
hoped that the Princes would agree to join the 'federation', so its complete
implementation was to await the assent of at least 50 per cent of the States.
In order further to counteract centrifugal tendencies a new post of Crown
Representative was created (effectively the Governor General with a
different hat) to exercise paramountcy. In the event the Prin~es had not
96 Federalism: Failure and Success
made up their minds about joining before war broke out, so that the
implementation of the whole scheme was delayed. But the sections relating
to the Provinces came into force in I937·
The Act of I935 produced three lists of powers and duties -central,
provincial and concurrent. This implied that provincial Dyarchy was now
dead; but it had reappeared at the Centre. The Governor General had
special responsibility for financial stability, and in fact the Centre
controlled most of the taxes. It was expected that the Provinces would
continue to rely heavily on grants from the Centre. The Central Assembly
was to remain bicameral, but it would be practically all elected. The Act
said nothing about the Princes. The I9I9 Act had talked vaguely about
'some sort of federation' in the remote future. But after their loyalty during
the war the British Government was reluctant to do anything to disturb the
Native States. There were roughly 6oo of them. A few had legislatures
more or less elective, but many were still primitive autocracies. Up to I935
the Governor General in Council was the authority for the Princes,
discussing their affairs with the Residents (who often effectively governed).
But from I935 the existence of the Crown Representative put the States in
direct relationship with the British Government so that the Indian
Government no longer had any legal relationship with them. We may note
here that when independence came along the Princes were told that as
paramountcy had been ended their full sovereign powers would be handed
back to them. In fact this was a completely empty promise since there were
no longer British troops in the country to protect them. Most of the States -
at least the smaller ones -ceded to the Indian Government 'exclusive
authority, jurisdiction and powers for and in relation to (their) govern-
ment'. On independence 2I6 were immediately merged with existing
States of British India. Where this could not be carried out conveniently
they went for the time being directly under presidential rule. The larger
States were at first grouped under a Rajpramuk. Finally all States
disappeared, their rulers being given tax-free privy purses so as to maintain
in some sort of way their household standard of living.
The first elections under the I 935 Act were completed by the end of
I 936. It was only with difficulty that Congress would consent to fight them,
but it won decisive victories in seven Provinces and established Ministries
in them. In I938--9 these were ordered to resign by the Congress Higher
Command (Central Committee appointed by the President). This most of
them did, some rather reluctantly, since they felt that things were not going
too badly. These Provinces were then transferred to direct Government
administration. The non-Congress Provinces (Bengal, Punjab, Sind, and
later Orissa and Assam) were working quite well and did not resign until
the general shake-up of I942-3. But communal lines were strong and
friction was increasing. The Congress Higher Command was now
demanding a completely unitary Constitution. In fact it was out to kill the
proposed arrangements. Only 'pure' Congress Ministries would be
 Federalism in the Indian Subcontinent 97
tolerated, thus totally setting aside the interests of minority groups, which
the Act sought to preserve. Nevertheless some Congress Ministries had
been finding their feet, pursuing a definitely forward policy: social services
were expanded, prohibition was introduced (as a social service). The cost
of these changes was not considered, and the loss ofliquor revenue was later
to give endless trouble. But in other respects both their administration and
finance were prudent.
Immediately after the election victory the Higher Command had
announced two important ojectives of long-term Congress policy: ( 1) to
absorb all minority groups, but especially the League and (2) to force all
the States into the Union. (In this were included the French and
Portuguese enclaves at Pondicherry and Goa respectively.) Moslem
opinion naturally totally rejected these objectives, feeling that they could
only lead to complete domination by Congress. They began to set their
sights for a separate 'Pakistan' which would include the north-west of the
subcontinent and East Bengal, with Calcutta. In the latter increasing
bloodshed and rioting was taking place, although Gandhi stood aloof
according to his principle of non-violence.
India was now faced with the decision whether or not to take part in the
war. The Congress Ministries having resigned, all other groups readily
agreed to cooperate, especially the Princes, although the response was not
quite so hearty as in the First World War. By July 1944 the Congress
leaders were announcing that they would agree to join in if independence
were guaranteed (Gandhi remaining aloof as he was against all wars). The
British reply to this demand was to announce that when the independence
Constitution came to be drafted it would be wholly the work of Indians. In
view of continuing rioting a number of Congress leaders were arrested, but
released the next year and Gandhi came back to leadership to direct 'civil
disobedience'. By no means all Hindus followed the Congress policy. In
Madras Rajagopalachari (Rajaji) stoutly maintained that it was essential
to get agreement with the League.
In March 1942 Churchill sent out a mission under Sir Stafford Cripps
affirming the right oflndians to make their own Constitution and if they so
desired to leave the Commonwealth. But a change was taking place in
Indian views. The policy of Congress was hardening. In the view of the
League it could only lead to a dictatorship which would deny all rights to
Moslems. Gandhi now demanded the instant withdrawal of all British and
Americans from India and an immediate independent government. If
these demands were not granted he promised a much intensified civil
disobedience ~virtually open rebellion. In fact it was evident that this
could not be maintained and it more or less collapsed by the end of the
year. But there remained a complete impasse: the British declared that
they would not withdraw until a constitutional Indian government had
been established. Gandhi repeated that they would settle the Constitution
for themselves once the British were out of the way.
98 Federalism: Failure and Success
The next move came in February I 946 when Prime Minister Attlee sent
out a Cabinet mission to set up a representative constitution-making body.
The members of the mission toured the country widely but all they found
was increased Hindu/Moslem confrontation. They began to wonder
whether the only feasible solution might be partition. The League was
willing to join a restructured Executive Council, and to submit to a central
government, but only if it was very weak. Moslems considered that no
central government, just groupings of States, would be preferable. The
League was feeling stronger now, with League Ministries in Bengal, Sind
and NWFP, while the Congress Provinces which were not under
Government control were reduced to five (out of eleven). The Moslems
were demanding independent States (I) in the north-west and (2) in
Bengal, including Calcutta. But the fundamental basis of difference was
concerned with the Centre. The League insisted that representatives to the
Central Assembly should be purely delegates from their own Provinces,
without reference to All India affairs. Jinnah maintained that the
Constitution-making Assembly was illegal, and refused to join in its
deliberations. Congress continued to insist on a strong centre, the
Constitution to be settled with the British retired.
The next stage of the drama was an invitation for the Viceroy (General
Wavell), Jawaharlal Nehru (as prospective Congress Prime Minister),
Jinnah, and a representative of the Sikh community in the Punjab (which
was clearly going to be the most difficult problem) all to come to London to
thrash things out. Whatever happened at the meeting Jinnah came away
with the view that the British were not entirely opposed to Partition.
Meanwhile communal riots, bloodshed and every sort of atrocity were
increasing all over the country except in the south which remained
relatively quiet. In the winter of I946 fighting in the Punjab boiled over.
Multan and Amritsar were largely destroyed. The situation was desperate.
The final scene of the drama was ushered in by the replacement of
Wavell (who was not popular) by Lord Mountbatten (soon known to the
Indians as 'Prince Charming'). Prime Minister Attlee announced that the
British would definitely withdraw at an agreed date-June I948 was
mentioned. Mountbatten's own preference was for a federated subcon-
tinent with strong provinces but weak centre. But his instructions were to
obtain agreement on a unitary government if at all possible, and if not to
advise on what would be the best course to take. He soon discovered that
even a federated subcontinent was likely to be impossible. Meanwhile
Mountbatten's advisers were trying to persuade Jinnah that the Viceroy
was not altogether unfavourable to the Pakistan solution, when suddenly
Nehru did a complete volteface and announced 'The Moslem League can
have Pakistan if it wants'. The best explanation of this change seems to be
that he was deeply shocked at the communal atrocities which were
taking place. This situation could not be allowed to continue, and indeed
the British administration was breaking down under the strain.
 Federalism in the Indian Subcontinent 99
Shortly afterwards Nehru attended at the Viceregal Lodge, Simla, and
was shown plans for two successor federations, based on the old
Government oflndia Act 1935· By June the Council of the Moslem League
and the All India Congress had both accepted the plans, and the
subcontinent became independent on 18 July 1947· To the last Jinnah
insisted that the Punjab and Bengal must not be divided, but he knew that
he would have to give way. In the event both areas voluntarily agreed to
partition. The result was devastating, and the subcontinent started on its
independent lives in a bloodbath. It is a moot question whether some (at
least) of the horrors might have been avoided if a little more time and
thought had been given to the final arrangements (including the
unavoidable population shifts). As it was things could hardly have been
more unfortunate.

FEDERALISM IN INDEPENDENT INDIA

The Background
It would be both rash and inappropriate to attempt any finished or global
evaluation of India's federal success or failure during the quarter century
since independence (independence August 1947, republican status
January 1950). While she has naturally been building on what endowment
was already available, a great deal of her policy has been essentially new in
outlook and in attempted achievement. There have been ups and downs,
failures and successes on both the economic and politico-constitutional
fronts. But over all she has achieved a growth rate of GNP of about 4 per
cent. This is a good deal less than some of the more successful LDC's (such
as Korea, Taiwan and even Malaysia-Singapore); but it is better than
Burma, Sri Lanka and a number of Mrican ex-colonies, both British and
French.
Independent India has had to face the country's age-old troubles:
monsoon failures and excesses, famines and epidemics, survival of much of
the caste system and the unhealthy life of women in semi-purdah, in spite of
efforts to loosen things up. Even with modern improvements com-
munications over long distances are still difficult. Much of her soil is
exhausted and only 30 per cent of the land which calls urgently for
irrigation has actually been treated. Yet it still has to support 8o per cent of
a much increased population. To these difficulties have been added since
the early 19500 the population 'explosion'. The basic cause of this has been
the fall in death rates, particularly of infants. This is due partly to better
standards of living, especially nutrition, but most importantly to the (at
least temporary) elimination of malaria. These improvements have raised
the expectation oflife from forty to fifty over the last twenty-five years. But
inevitably they cause a disproportionate increase in the lower age groups,
100 Federalism: Failure and Success
implying special demands for education, housing and finding jobs for
school leavers.
On the other side of the account it must be noted that India started out
with a number of advantages not shared by many low income countries
becoming independent after the Second World War. First there was the
great tradition of the ICS, making transition completely smooth. In every
department the senior (British) officer just stepped aside and a reliable,
well trained and experienced Indian took his place. This was equally true
in the Reserve Bank. Secondly there was a substantial class of well
educated Indian professionals: lawyers, businessmen, bankers, financiers
and entrepreneurs. Thus whatever type of expertise was needed for making
and implementing plans, India could supply it. (Below the top grades
unfortunately standards declined rather sharply.) Thirdly, although her
agricultural potentiality was poor (and this affected some 8o per cent of
employment opportunities) she already had considerable manufacturing
experience with good export records, especially in cotton textiles, jute and
tea. Further, she was reasonably endowed with minerals, including iron
ore and coal, although they were still largely undeveloped. Finally, she had
by now a long tradition of elective democratic government, both at the
Centre (now Union) and in the Provinces (now States).
Broadly this is the background to the working of federalism in the first
twenty-five years of independence. In order to be able to form some
judgment as to its failure and success we need to look particularly in two
directions: firstly constitutional and political relations both between the
Union and the States and between the Government and the individual, be
he entrepreneur or private citizen. Secondly, we need to examine relations
on the monetary and fiscal sides. Finally the relation between the Congress
Party (both at the Centre and in the States) to other groups in the country
requires attention. From the first India set up as a strictly secular State, all
religions being treated equally. But in social and political matters the same
equality was not necessarily present.

Constitutional and Political Relations

There were several unusual features for a federation in the Constitution
adopted in 1947 -and continued with little alteration when India became
a Republic. ( 1) Although, as we have seen, the States had gradually over
the years acquired a good deal of autonomy and responsibility for
important services (especially education, public health and works) they
had, in the Wheare sense, no sovereignty at all. (2) The substantial
continuity of the Constitution (derived in a number of important details
from the Government of India Act of 1935) was entirely due to the All
Indian constitution-making body. What had been designed for the pre-
independence Constitution of the entire subcontinent by the British was
refitted with only minor alterations for independent India. The exercise
was very largely the work of the powerful Congress Party.
 Federalism in the Indian Subcontinent IOI

The first task of the future federation had been to secure domination
over the whole territory. Once the position of the Princes was disposed of
the Assembly got down to questions of the relationship between the Centre
and lower-level Governments. The Congress Party which, as we have seen,
had always been inclined for unification, felt that as far as possible there
should be a return to a unitary Constitution for independent India. Hence
they felt thatthe strong centralism of the r 935 Act (designed to keep British
control in reserve) would be just as appropriate for a strong Indian
Government. For this need they adduced three reasons. Firstly, as fully
aware of India's diversities as the British, the Congress Party felt strongly
that the only practical way to deal with them was by unification under a
strong central government. (The National Party in South Africa, it will be
recalled, held exactly similar views.) Secondly, India was held to be a
stagnant economy. To infuse life and growth into it called for an all-out
national effort, which could only be made under a strong central
government. Thirdly, a strong central government would be necessary to
insure against a revival of the internecine communal warfare of the last
years of British rule. There could of course be other views as regards all
these contentions. In particular with the departure of most of the Moslems
on Partition, communal warfare was much less likely to occur. It would be
universally agreed that in case of the emergency of war special centralised
control would be needed (and this was written into the Constitution, as we
shall see). But this did not necessarily imply the inevitability of a strong
centre in normal times.
Social and economic conditions and relations change over the years, so
that federal constitutions require adjustment from time to time. Provisions
for constitutional amendment must consequently be included. It is
an tici pa ted that these will (on the whole) be minor (such as the legality of
selling intoxicating liquor). But the core of the Constitution (and especially
the relations between the legislative, executive and judicial powers) is
expected to remain intact. Hence, as we saw at the start, the arrangements
made for the amendment of federal constitutions are of very great
importance.
The safeguards of the Indian Constitution are in this aspect a good deal
weaker than is usual. Moreover some of them appear conflicting. Several
methods are provided and the categorisation of where they should
severally apply is somewhat odd -thus a simple Parliamentary majority
only is required for amendments classed as 'non-constitutional'. These
include the creation or abolition of State Second Chambers. (These
provisions aptly illustrate the subordinate position of the States.) There are
certain 'entrenched clauses' which require a special majority and
ratification by 50 per cent of the States. In the first stages of independence
States which had not been Provinces under the British Raj were put into
different categories or added to existing States, whichever proved the most
convenient. It was natural that their extent, powers and responsibilities
102 Federalism: Failure and Success
should be the direct responsibility of the Centre. But this situation, and
with it the need for special treatment, soon passed away.
For the alteration of the territory of a State (including its abolition) it
was laid down that the wishes of the people should first be ascertained. But
by an amendment of 1955 consultation could be waived. A number of
States were dissatisfied with the bedfellows who had been alloted to them
and wished to go it alone. This demand registered a limited revival of
traditional diversity, in spite of the centralisation of the Constitution. The
first State to achieve separation was Andhra where a hunger strike to death
unnerved the Government. It determined on the operation of a States
Reorganisation Commission ( 1953), whose terms of reference were to
examine all applications for fission from the points of view of language,
customs and general viability. On this basis several partitions have been
admitted, mostly it would seem on the basis of language. The situation is
clearly not yet completely stabilised. Only a few years ago Haryana, (just
outside Delhi), succeeded in breaking away from the Punjab on the
grounds of the difference between Hindi and Punjabi. But Hyderabad has
not (yet) succeeded in breaking away from Andhra, since their common
language is Telugu. So much for the constitutional arrangments between
the Centre and the States, and the manner of changing them.
The relation between the Government and the rights of private business
and personal property was laid down in the Constitution. But there was
provision that they might be altered or deleted by special Act of
Parliament. In fact this has been done fairly extensively. The First
Amendment took away the right (as determined by a court) to com-
pensation for property taken over by the Government 'in the national
interest'. the Fourth Amendment ( 1955) went still further: the public
sector is empowered to take over any company's licence or jurisdiction.
This enables the Government to nationalise any firm, industry or financial
house (banking, insurance) at its will.
By Article r 23 the President is given power to promulgate Ordinances
and Decrees having the same form and effect as Acts of Parliament when
Parliament is not in session. Six weeks after Parliament reassembles these
should come to an end, but Parliament can always vote their continuance
and a complacent Parliament will certainly do so. There have been a
suspicious number of occasions when a batch of Decrees is suddenly
produced just after Parliament has risen. Hence this is not a very reliable
safeguard. Moreover, since the President is likely to be more or less a
nominee of the Prime Minister, independent action by him is unlikely.
State Governors can also issue Ordinances, although with certain
restrictions, and only with the agreement of the central government.
Under Article 240 the President can make Regulations for 'Peace, Progress
and Good Government' and can repeal or annul anything passed by
Parliament.
When an 'emergency' has been declared (which depends on the word of
 Federalism in the Indian Subcontinent 103
the Prime Minister) it is provided that the powers of the Prime Minister
should be greatly extended, and a series of amendments has still further
widened these powers. This is a direct inheritance from the Act of 1935,
where it was laid down that in an emergency the Governor General (now
President) may issue a proclamation much curtailing the rights of the
individual, in case of 'war, external and internal disturbance' (Article
358). By amendment this may be done before any formal declaration of
war is made. (The cause of this amendment was the informal war waged by
China in 1g62 against India.) During an emergency citizens' rights are
suspended, including the right of seeking redress in the courts if they
consider themselves injured by government policy. Under this Article
many supposed Chinese sympathisers were imprisoned. But the reaction of
different States to this policy varied considerably. Probably most of them
acquiesced to some extent; but Uttar Pradesh went so far as to claim that
the Order was unconstitutional.
The Criminal Procedure Code drawn up in 1923 in apprehension of
communal riots, was written into the Constitution as Article 372. In an
emergency the Government can restrain freedom of speech and movement
(i.e. it can detain anyone) without power of appeal. The Union thus can
exercise virtually complete powers over the States, and also over the
individual. As will be observed, most of these authoritarian traits in the
Constitution were inherited from the Act of 1935· There is no very obvious
reason why they should be necessary to an independent government.
It may plausibly be argued that by adopting the unifying spirit of the
Act of 1935 for the Constitution (and even adding to it by Amendment),
India has allowed herself to be put in a position in which a one-party
completely authoritarian regime could be established with no -or a
minimum -degree of illegality. The future will show whether the policies
of the States (they can hardly be called rights) and democratic traditions
towards the individual, can be permanently maintained.

Financial and Fiscal Relations

The initial fiscal set-up of independent India had three aspects: ( 1)
allocation oftax rights between the Centre and the States; (2) provision for
central revenue sharing with the States; (3) provision for the Union
Government to make grants to the States out of the Consolidated Fund for
particular purposes. This set-up still broadly obtains, but it has become
altered in a number of ways (such as the expansion of some and the decay
of other revenue sources). Much more importantly it has been distorted by
the impact (from 1950) of national plans and their financing.
As regards the allocation of tax rights, it was inevitable (it occurs nearly
everywhere) that the more flexible and expanding sources of revenue
should be ascribed to the centre, for purposes of national policy: income tax
(personal and impersonal), import and export duties. But the States were
also allocated what looked like important revenue sources, which it was
104 Federalism: Failure and Success
hoped would on the average be nearly sufficient to enable them to balance
their normal current budgets. The most important were: liquor duties,
land revenue, certain sales taxes and the local rate (tax on the occupation
ofland and buildings) in urban areas. The first two of these were for many
decades the main supports of provincial finances; but in independent India
they have proved broken reeds. As we have seen, the Congress Party had
long advocated complete prohibition. The States reacted to this policy
with varying degrees of seriousness and alacrity (for instance Andhra as a
wine-producing State was not happy about it). But enough was done to
destroy this important source of revenue- to the subsequent consternation
of the Central Government. Later policy has coaxed most of the States out
of prohibition, at least temporarily. As we have also seen, inflation had (in
the total absence of revaluations) very largely eroded the real yield ofland
revenue. With high prices for farm products the burden had become
negligible on most farmers. But land revenue had a very bad name, dating
from the heavy exactions of Z,amindars (landlords acting as tax collectors)
in the late nineteenth and early twentieth century. Hence the abolition of
Z,amindars and the revenue they collected became an important and
popular plank in the Congress platform. Land revenue thus ceased to be of
much fiscal importance. Various very plausible ways have been suggested
for reviving the tax, which would not only provide a very eligible revenue
source but would also redress the balance between urban and rural
taxation. Agricultural income tax was offered as an alternative way of
taxing farmers; but this has proved a complete non-starter. Such taxes are
always very difficult to assess, and the States had not the courage to tax the
better-off farmers. It is safe to say that no State has made anything out of
agricultural income tax while a number of States have never imposed it at
all. The real losers from the collapse ofland revenue are the various levels
oflocal government in the Panchayat raj, to which State governments have
been in the habit of allocating the receipts.
On the other hand as standards of living gradually rose (particularly
with increasing urbanisation), the revenue from State sales taxes steadily
increased. Nevertheless there were two good reasons against allowing the
States too free a hand with these: (I) an efficient organisation for
assessment and collection was beyond the powers of even the wealthiest
and most sophisticated States, as was demonstrated when the Union
Government transmuted some of the Bombay sales taxes into Union
excises (returning to the States an identical revenue) and the actual
collections were broadly doubled. ( 2) Sales taxes as a potential source of
revenue differed enormously from State to State. A rich State like Bombay
delighted in them; a poor State like Bihar got scarcely anything out of
them.
In addition to these the States had some other, not altogether negligible
revenue sources, such as a tax of trades, professions and occupations, and
octroi (a tax levied on goods, vehicles -and formerly persons and animals,
 Federalism zn the Indzan Subcontinent 105

as they entered an urban area). The tax on trades and professions could
conceivably, but for the very low ceiling at present imposed on it, develop
into a simple local income tax, the rates depending on the average incomes
of the particular occupation. (A true income tax would not be permissible
for the States.) Octroi was a relic of the stiff tax system of the Marathas. It is
acknowledged by all to be a bad tax, impossible to assess and collect
efficiently and restrictive of inter-area trade. Yet it is a good revenue raiser,
and hence seems to be extending rather than contracting in modern India.
In India the urban local rate is (as in Britain) assessed on annual rental
value. Since there is very little formal renting this is quite inappropriate. If
the tax were to be made to bring in a substantial revenue it would need
complete overhauling and putting on a capital base. Yet the source is there
and the rapid expansion of urbanisation would seem to justify the exercise.
When the independence fiscal settlement was made the extent of the
collapse ofland revenue and of the receipts from liquor duties was not fully
realised, nor probably was the increasing pressure to expand social services
(especially education and health) to which the States would be subjected.
But it was recognised that States might need some additional help to
balance their current budgets and if possible to secure some fiscal
equalisation between rich and poor States. A scheme was consequently
devised whereby ( r) the revenue from certain central taxes should be
shared with the States (mainly income tax and customs), (2) grants for
particular purposes (expected to be limited) would be made out of the
Consolidated Fund. These would be especially for States which had an
abnormal number of scheduled classes or tribal people. (The care and
advancement of backward elements was on the Federal List, but would be
administered by the States.)
The instrument chosen for recommending the amount to be distributed,
either by way of revenue sharing or by grants, was a Finance Commission
of four members, which would be set up and report every five years. The
revenue to be shared was to be paid into a distributable pool. The current
Finance Commission would recommend both the percentage of tax
receipts to be shared and its allocation between the States. It will be
recognised that we have encountered this system before in the short-lived
Central African Federation, and shall do so again in Nigeria, in both of
which countries it was adopted on the recommendation of Sir Jeremy
Raisman. Sir Jeremy was the last Finance Member under the British Raj
in India, and in a sense India was the model for later exercises. The good
points of the distributable pool system are first, that it is more or less self-
adjusting for price changes and secondly seldom requires large tax rate
changes (always politically difficult). Against these must be set three rather
serious disadvantages: ( 1) the actual revenue available to the States will
vary with the level of economic activity, thus transmitting to States
fluctuations in budgetary incomings which they are ill adjusted to take. ( 2)
No statement is ever published as to the formula under which the
ro6 Federalism: Failure and Success
allocations are advised. This is quite deliberate, and is presumably
designed to stifle criticism; but it treats independent people as if they were
still colonials, and is resented. (3) Every Indian Finance Commission has
to start afresh. It has to knowledge (other than the rather general
published report) as to what its predecessors found and thought. Thus
there is no continuity or build-up of experience. In this the somewhat
similar Australian system shows to much greater advantage, as we shall
see.
Apart from repeated suggestions that the distributable pool should be
enlarged, the Indian Finance Commissions have evidently put a heavy
weightage on population size, and a small weightage for other (social and
economic) needs. But the latter have not been sufficient to make the inter-
State allocations redistributional. In addition to the enlargement of the
distributable pool (which has been achieved by raising the percentage of
income tax distributed), successive Finance Commissions have taken
refuge in suggesting bigger grants under Article 282 of the Constitution, by
which the Union Government can make grants for any purpose it chooses,
whether on the central or state lists. This policy has certainly stretched
Article 282 well beyond the original intention. In practice Finance
Commissions have more or less confined themselves to covering State
deficits on current account. But it has not been possible to keep the States in
any sort of straitjacket because on most occasions they have been able to
run up overdrafts at the Reserve Bank. (Not long-term loans, because these
are forbidden to States which are indebted to the Bank -which all of them
are.)
It was on this sort of fiscal situation that the Planning Commission
impinged. Its establishment was announced in the Lok Sabha by Mr
Nehru (in January rgso), by simple decree, without any constitutional
status. Indian planning was in direct imitation of Russia, the big nation
which she has always considered her best friend, and most effective
counterweight to the much nearer and potentially very dangerous menace
of China. National planning was to be the big push which would get India
out of the stagnation in which she had been left by the colonial power. The
Russian strategy, with its concentration first on universal literacy and then
on armaments build-up, was not well understood in India, where it was
regarded as a glittering all round success.
It is not our business here either to judge or to evaluate Indian planning.
However limited its direct achievement it succeeded in putting India on
the map of the world and did much to promote Nehru's ambition of
'nation-building'. The two most important aspects oflndian development
strategy (first fully revealed in the Third Plan, April rg6r to March rg66)
were: ( r) investment in large-scale long-period works, such as steel mills,
and multipurpose electricity-generating projects. These were all heavily
aided by the advanced countries; (2) the (strictly Gandhian) attempt to
promote small-scale village industry (mainly spinning and weaving of
 Federalism in the Indian Subcontinent 107

local cotton) rather than paying attention to agricultural improvement. In

order to reserve a market for the rough village cloth (Khadi), where
productivity was incredibly low, the output of well established textile
factories was severely curtailed. The big works turned out to have an
extremely long gestation period. Modern equipment was sadly lacking
(when building a large reservoir the surplus soil had to be carried away by
head-load). Nor were there sufficient even semi-skilled engineers to plan
and monitor details. All of this was of course the result of trying to do too
much too quickly. The restrictions on the output of mill cloth had very
unfortunate effects on exports and the balance of payments.
Planning is on the concurrent list and it was an important aspect of
development strategy that the States should be drawn into the exercise,
both as supplementary planners, and as (it was expected) eager recipients
of the benefits of plan projects. In a parallel manner it was part of the
strategy that the village industries would be part of the process of reviving-
or as it turned out in most places creating- panchayat raj as 'development
from below'. Unfortunately the State end of planning did not come up to
expectation. As we have seen there had been a good deal of adjustment of
State territories and boundaries. Many of these had not yet been fully
absorbed into the respective administrations. To undertake planning in
addition was beyond their powers. Nor were the States greatly interested in
the long gestation projects of the Planning Commission, most of which
were in addition extremely capital intensive. The projects they wanted
were those which would quickly show results- partly for election purposes,
but partly because there was an understandable desire for people to see
improvements within their short life span. Finally, in the great cities where
planning was specially urgent there was no organisation at all.
It was clear that if anything worthwhile were to emerge at the State level
(whether sponsored by the Planning Commission or on State initiative) a
great deal of monitoring would be required. For this purpose the
Administrative Reforms Commission was devised. Over the years it did
much good work (especially perhaps in insisting on performance checks in
addition to financial records). But the number and diversity of projects
over all the States, and their inter-State location, as well as differences in
their handling, made a thorough examination impossible. This implied
that the full benefits of development projects could not be realised, even if
they had been well devised- which by no means all of them were.
But as ever in India, the basic obstacle was finance. The anticipated
financial arrangements had three prongs: ( 1) the States were expected to
raise a great deal more in taxation towards the finance of projects in their
own areas; (2) the Planning Commission would make cash payments out of
the Consolidated Fund and with the (readily given) approval of Parlia-
ment to which the State concerned would make some sort of matching
contribution; (3) part of the Planning Commission contribution would
come by way of loan from the Reserve Bank. The Planning Commission
108 Federalism: Failure and Success
would determine the relation between loan and grant for each particular
project. It appears that the Planning Commission tried much harder to
make its contributions redistributional than did the Finance Commission,
favouring the poor States wherever possible, and increasing the percentage
of loan to grants to make things easier for them. Thus the proposed
allocation for the Fourth Plan (which never materialised) was 6o per cent
on population base, and I o per cent each for (I) per capita tax effort over the
last three years, in relation to State incomes, (2) an allowance for the
completion of major works in course of construction and (3) special
distribution for the six poorest States.
But the poorest States were just the ones that could not be expected to
raise much additional revenue. Consequently the Planning Commission
wrote in a higher percentage ofloan to grant into their allocations. Since
few of the Plan projects were self-financing, even to the extent of covering
the debt service, let alone maintenance, this policy delayed (and actually
added to) the cost of the projects. In this way some States gradually got into
a very embarrassing position vis-a-vis the Reserve Bank, quite apart from
any overdrafts they might have obtained from the Bank themselves. The
situation was considered so serious that special advice on it was sought from
the Fourth Finance Commission.
Given the impossibility of effectively monitoring diverse schemes all over
the country, the Planning Commission sought to reduce the burden by
introducing much more uniformity, first in the range of projects, secondly
in the pay and conditions of service of those working on them and thirdly in
the loan/grant mix of its contribution. From Ig6g-7o all Planning
Commission funds have been awarded on the basis of loan 70 per cent,
grant 30 per cent. Uniformity of the arrangements and limitation of the
variety of projects will probably secure better implementation of pro-
grammes. But in other respects it is less than optimal, since the cost of wages
and other outlays differs greatly from State to State.
The Indian experiment in national planning in a federation is of great
international and constitutional interest. The net effects on Indian
federalism have unquestionably been a substantial increase in centrali-
sation and loss of autonomy by the States. In the early years when there
was a Congress majority in every State, and when Nehru's charisma was
unbounded, the loss was not felt. But when more recently important States
such as Gujarat and Tamil Nadu (which had an anti-Congress majority)
were put under President's rule it became much more obvious. The
assistance awarded by the Planning Commission has been larger than the
transfers the Finance Commission is empowered to recommend, and there
is no constitutional control over them since the Planning Commission itself
is unknown to the Constitution. Hence a substantial constitutional change
would have to be made if it were desired to unify the policy of the Finance
Commission and the Planning Commission. Various suggestions (for
instance of formal demarcation of function) have been made, but so far
 Federalism in the Indian Subcontinent 109
nothing has emerged.
In several ways the Indian situation is parallel to what occurred in
Australia under the Whitlam Government late in I974· The extent to
which direction of national policy (which is increasingly recognised as
essential for a central government, even in a federation) can be separated
from internal developments (and their finance) is a most difficult problem
which sooner or later is likely to be encountered by every federation.
Finally we must return for a moment to the federal, constitutional
position, which was put to a somewhat unexpected test in I977· That
increasing apprehension at and opposition to the high-handed actions of
Prime Minister Mrs Gandhi had been building up seemed clear. The
opposition to the operations of her son Sanjay were even more definite. He
was suspected of building a quite unauthorised empire in Uttar Pradesh
and other northern States. But the basic opposition was to his Youth
Movement and a campaign of compulsory sterilisation of males as the only
way of reducing the birth rate. The Prime Minister, relying confidently on
her continued charisma and on the absence of any united opposition or
powerful leader, called elections for March I977· But at the last minute the
opposition came together in the Janata Party, under the (at least
temporary) leadership of the veteran Mr Desai, and won a resounding
victory. Indians everywhere were overjoyed at the end of the emergency;
but the future of Indian federalism remains uncertain, except in one vital
respect; Indians are determined to return to a democratic federation in
which the rights of States and individuals are respected. However things
may ultimately turn out, it is a triumph for the federal principle.

(B) FEDERALISM IN PAKISTAN

We have already examined such federalism as there was in that part of the
subcontinent which became Pakistan at the same time as India became
independent. We must now follow the experience of federalism in Pakistan
from that point. Sadly it is not a very cheerful story, however revealing as
an experience of federal failure. The area whichJinnah had planned for
the new State covered the whole of Bengal (including Calcutta) the whole
of the Punjab, Kashmir and the Rann ofKutch (near Kathiawar), as well
as Sind, the North-West Frontier and Baluchistan. It certainly seemed as if
it could be a sound and prosperous basis for a new nation. But in the most
advanced provinces of Punjab and Bengal there were many Hindus. The
disentangling of the adherents of the two religions was the worst of the
many problems that had to be solved on Partition. As we have seen,
ultimately both Provinces opted for division, so Punjab P, Punjab I, West
Bengal (Hindu Indian), East Bengal (Moslem Pakistan) came into
existence. Even apart from the riots and massacres which accompanied
Partition, this arrangement was for Pakistan a disaster in several ways.
I IO Federalism: Failure and Success
Firstly, the loss of Calcutta and its port, for all that it was silting up and
not suitable for modern ships, was a sad blow. Strenuous efforts were made
to substitute Chittagong; but this took time and did not have so good a
location. Ultimately it was lost to Bangladesh.
Secondly, in addition to the problem of unifying the two Wings of
Pakistan, separated from each other by the Indian States ofUttar Pradesh
and Bihar, was the complication of the reduction in size and potential of
the rich and fertile Punjab, and of East Bengal, relatively well developed
and a big producer of the valuable jute crop. Moreover the fine and
ancient city of Lahore was too near the Indian frontier to serve as the
natural capital it should have been. For a time Pakistan made do with
Karachi but it was too big and commercial for an administrative
headquarters. After some years it was decided to build a new adminis-
trative capital to be called Islamabad, near Rawalpindi. This is not yet
fully pulling its weight.
A final trouble was that in spite of the partition settlement there
remained a number of contentious issues with India, and from the first
the two successor States were on bad terms, with Pakistan always the
weaker and generally the loser. The Rann of Kutch remained a bone of
contention with something very near war conditions until April rg65,
when Harold Wilson's personal intervention induced the contestants to
agree on boundaries, and it fell to India. Similarly disputes over Kashmir
and rights over the precious Indus waters (essential for West Pakistan's
agriculture) dragged on for many years. Administratively also Pakistan
found herself in a weak position. The competitive examination for the ICS
had always been open to all young men from the whole subcontinent and it
had been immaterial to the British from what part of the subcontinent the
candidates came. But (perhaps because of the limitations of Moslem
education) candidates from Pakistan had been far below her potential
quota, and she was definitely short of good administrators.
Partly as a result of these additional troubles the basic differences
between Pakistan's two 'Wings' showed up the more starkly. The East was
not greatly concerned with Kashmir or even with the allocation of the
Indus waters; but it felt that its own weakened position was being
insufficiently allowed for and it resented every sign of domination from the
West. Although East Bengal was Moslem in religion its culture was
essentially Indian. For instance educated Bengali women had been
accustomed to move freely in society and enter into any of their husbands'
interests. In the West their position was (at least at first) still traditional.
They felt themselves thrown back into the Middle Ages. Moreover,
although nominally Moslem, the Easterners practised their religion with
varying degrees of intensity, all of them a good way short of what was
expected (and enforced) in Karachi.
The physical differences between the two Wings were even more marked
than the social and cultural. The West Wing inclines towards aridity and
 Federalism in the Indian Subcontinent III
varies between rather economically advanced areas, both urban and rural
(where irrigation is available) on the one hand, and on the other unsettled
tribal territory very sparsely populated: the North-West Frontier and
Baluchistan, where basic law and order could not yet be guaranteed. The
East Wing by contrast suffers chronically from too much water, and
intermittently from serious floods. The population is very large in relation
to its area (larger than that of the West Wing in one sixth of its size), and
the net reproduction rate was very high. With no particular economic
potential the people were consequently very poor. Calcutta (which on
Partition fell to India) was, and is, the largest city in the subcontinent. But
it was not the city it had been when it was the capital of the British Raj. It
had lost its hinterland on Partition. For instance no longer did the tea from
Assam pass through on its way to the sea, nor did the world's largest supply
of jute come to its processing mills. Even if it had been possible to replace
Calcutta's jute mills in Pakistan the jute industry (the standby of the East
Wing) was beginning to decay with the increasing importance of man-
made fibres, and the competition of sisal. The demotion of Calcutta
reacted on the trade of the East as well as ofWest Bengal, and the damage
was mutual.
Dispassionately viewed it could hardly be said that the two Wings of
Pakistan looked as if they had the makings of a nation or federation, even a
very loose one- in fact they were yoked together until I 97 I, but never
comfortably, and always with India breathing down the neck of the East
Wing. It will be apparent from what has already been said that in tracing
the troubles of Pakistan we have to keep our eyes fixed on two different but
connected problems: (I) relations between the two Wings, and ( 2)
relations between Pakistan and India.
Like that of independent India, the initial Constitution of Pakistan was
based on the Government of India Act of I935, as modified in I947 for
independence. In Pakistan this was regarded as a temporary expedient,
pending the working out of an appropriate new Constitution. In fact this
was not ready until I956. There were four Governors' Provinces (E.
Bengal, W. Punjab, Sind and the North-West Frontier), a centrally
administered Chief Commissioner's Province in Baluchistan and ten
Princely States. All except E. Bengal were in the West Wing. In spite of the
large population of E. Bengal, leaders in the West argued that each
Province should have equal representation in the Upper House of the
Parliament. The East argued that it was sui generis because of its large
population and hence was entitled to a greater degree of consideration
than would have been practicable for the sparse western Provinces.
This was not the first open trouble between the two Wings. In I948 the
Federal Government had tried to impose Urdu as the sole language of
Pakistan, while the East Wing insisted that its Bengali should have equal
status. (Both languages are derived from Sanskrit, but Urdu has absorbed
a large number of Persian words.) This dispute dragged on and culminated
II2 Federalzsm: Fazlure and Success
in the death of two Dacca students in riots in February I952. This incident
is regarded as producing the first martyrs in the fight against West Pakistan
domination.
Between India and Pakistan the worst and most enduring struggle was
over Kashmir. The population of Kashmir was mostly Moslem and its
closest connections and communications had been with neighbouring
Moslem nations. But Kashmir was a Princely State with a Hindu
Maharajah, who proceeded to sign a Deed of Accession with India. From
May I948 to January I949 India and Pakistan waged undeclared war
inside Kashmir. In the spring of I 950 and the summer of I 95 I things were
even more strained, and it seemed that open war must break out. However
a ceasefire was proclaimed, but the situation was far from stable. In the
summer of I965 India claimed that armed infiltrators from Pakistan were
crossing the ceasefire line. An appeal was made to the Security Council,
but since this was clearly an internal affair it took no notice. In I965 there
was a short armed conflict between the two States. Finally injanuary I966
a meeting was held in Tashkent where the Prime Ministers of both India
and Pakistan signed a more lasting ceasefire under the aegis of Kosygin.
Kashmir remained with India.
The final and most serious quarrel between India and Pakistan
concerned the establishment of independent Bangladesh (which India
immediately recognised on 6 December I 97 I). But this we shall come to in
due course, for it is essential to trace the background steps which led to this
denouement.
It will be recalled that the Act of I935, designed for the period leading
up to independence, had conferred on the Governor General (expected to
be British) very strong powers. These were transferred virtually intact to
the Act of I947, and in India exercised by the strong hand of Nehru. The
position of Jinnah in Pakistan was even stronger. On Partition the
members ofthe Constitutent Assembly coming from areas now in Pakistan,
sat as members of Pakistan's 'Parliament' as well as of its Constituent
Assembly. The Prime Minister (Jinnah) and his Cabinet were answerable
to the 'Parliament' where they commanded massive support. Jinnah, in
addition to being Governor General, became President of the Constitutent
Assembly. He also presided at Cabinet meetings, retained several
portfolios in his own hands, and in addition made a number of important
decisions entirely on his own responsibility. As Founder of the Nation he
dominated all councils. By great misfortune he died in September I948.
At the next round the governor-generalship reverted to its former
position as a more or less constitutional monarch. Real power returned to
the Prime Minister, Liaquat Ali Khan.
Unfortunately he was assassinated in October I95L The balance of
power between President and Prime Minister nevertheless persisted for the
time being. But in I953 the Governor General (Ghulam Mohammed)
dismissed the Prime Minister (Khwaja Nazimuddin) and his Cabinet,
 Federalism in the Indian Subcontinent 113
replacing them with his own nominees, under Mohammed Ali Bogra, who
had been Pakistan's Ambassador in the USA, but was not well known in
his own country. Real power consequently reverted to the Governor
General. In 1954 Ghulam Mohammed dismissed the Constituent As-
sembly for its delay in producing an effective Constitution, and thus losing
the confidence of the people. The West Wing was gradually realising that
its somewhat artificial fragmentation into four rather weak Provinces was
weakening the power it felt was due to it vis-a-vis the East Wing.
Consequently the Provinces of West Pakistan were amalgamated (October
1955) and Pakistan became a federation with just two States. In the West
this arrangement was welcomed by the Punjabis, but not by the other
Provinces who now felt that they were in danger of domination by the
powerful and advanced Punjabis. A new constitution-making body (the
Constitutional Convention) was announced. It would be elected indirectly
by the Provincial Legislatures.
The very next year Ghulam Mohammed's health broke down and he
had to resign. His place was taken by Iskander Mirza, and real power
remained with the Governor General. The Constitution was at last
finalised in 1956 and came into force in 1957. The nation became the
Federal Islamic Republic of Pakistan. Emphasis was thus put on the
Moslem religion, in contrast to the Indian Constitution, which, as we have
seen, is completely secular. Pakistan was to have a single chamber
Parliament, with a President, who replaced the Governor General,
exercising constitutional powers. The National Assembly (Parliament)
was to have 300 members, 150 from each Wing. In practice the Governor
General continued to exercise wider powers than were strictly con-
stitutional, so that real power did not yet pass back to the Prime Minister.
But not more than a year after the operation of the new Constitution
lskander Mirza suspended it, dissolved the Ministry and declared martial
law. General Ayub Khan became 'Prime Minister' and Martial Law
Administrator. Three weeks later Mirza was turned out of the Presidency
and Ayub added the President's hat to his collection. President Ayub then
introduced an important innovation: a system of8ooo 'Basic Democracies'
(BDs) rather after the style oflndia's Panchayats. Each was planned to have
a population of w,ooo to 15,000. They were given the dual role of (very
limited) local government responsibilities, and (much more importantly)
they were to act as 'constituencies' for the indirect election of members of
the central and provincial legislatures. They were duly elected in 1959·
Under Ayub's constitution there was to be a federal-presidential system
(with emphasis on the powers of the President). The central (National)
Assembly was to have 156 members (75 from each Wing plus 6 women).
The President was to appoint his Minister who would be responsible to
him. They would sit in the National Assembly to explain and defend
Government policy. The first idea was that the Members of the Cabinet
were not to be elected members of the Assembly; but this was later reversed
114 Federalism: Failure and Success
to the effect that members of the Cabinet must be chosen from among the
members of the Assembly.
Under this new ( 1962) Constitution the President enjoyed immense
powers. He was Head both of the Executive and the Legislature.
Provincial Governors had similar powers in their own provinces, but as
they were to be nominated (a~d could be removed) by the President he
could also control the Provinces. The Constitution of 1962, by thus
eliminating the existing distribution of powers between the centre and the
Provinces, effectively annulled Provincial autonomy. The abandonment
of parliamentary federalism was implicit in the Constitution. Although
some residuary powers technically remained under provincial control, in
fact the Centre was all-powerful and could legislate on any subject in the
name of 'National Interest'.
The seven years' reign of Ayub's Constitution provides a convenient
moment to check how well Pakistan (as a whole and its two Wings
respectively) was getting on, economically and socially. Unfortunately one
cannot put full confidence in the figures, but it is hoped that they are at
least of the right order of magnitude. After some hesitation Pakistan had
followed India in going in for Five Year Plans. They ran for: 1955-6o,
196o-65, 1965-70. Progress during these periods can conveniently be
compared to the pre-Plan periods: 1949/50- 1954/5. Growth rates overall
do not ccme out too badly. Year by year from 1949/so to 1965/7o they
were respectively: 2·6, 2·4, 5·5, 5"7· But Pakistan had a population problem
similar to that of India, and much less effort was made to promote family
planning, especially in the East, with its high net reproduction rate.
Consequently per capita growth rate was substantially lower. Nevertheless it
rose from 1 in the pre-Plan period to 2·3 and 3 in the last two Plan
periods.
Pakistan was, like India, predominantly an agricultural country. In the
pre-Plan period the percentage share of agriculture in the GNP was 65 per
cent in the East and 55 per cent in the West. By the third Plan period it had
shrunk slightly in both Wings, to 56 per cent in the East and 42 per cent in
the West. Agricultural employment had also declined; from 77 to 67 per
cent in the East and from 65 to 53 per cent in the West. The greater
shrinkage in the West was due to a massive programme of tractorisation
(but this was not necessarily very productive), and to the improvements in
seeds, fertilisers and pesticides in the 'green revolution', particularly in
respect of wheat. The East Wing (even if she had had the funds) was not in
a position to benefit much from these changes, basically because her wet
climate dictated crops to which tractors could not well be applied, and
which in addition were largely outside the range of crops influenced by the
green revolution. What the East needed was a large-scale programme of
flood control and standby irrigation works. Without these farmers could
not (and dared not) plan ahead. But funds of the order required were not
available. In fact nothing short of international control of Brahma-
 Federalism in the Indian Subcontinent I I5
putra waters, coming down from Tibet, would have sufficed. Hence
agricultural productivity in the East fell further and further below that of
the West, as the years rolled by.
The industrial disparity between the two Wings was even more striking.
Pakistan was as eager as India to industrialise, believing (as indeed almost
everyone did at that time) that it was the only way to climb out of the
'underdeveloped' pit. But Pakistan's strategy was the very opposite of that
followed by India. Its aim was primarily to encourage private firms in the
direction of import substitution, by massive subsidies. Pakistan did not
have the mineral resources oflndia so that most of the materials had to be
imported. By far the greater part of the new investment accrued to the
West Wing, where conditions for it were relatively favourable. The result
of this policy was that whereas regional output in manufacturing was
initially in the East Wing 9·4 per cent of total output, in the West it was
already 14"7 per cent. By the end of the period it had climbed to 20·2 and
28·5 per cent respectively. Manufacturing provided initially 8·7 per cent of
employment in the East, and rose to I6·5 per cent, while in the
West,starting at I I .·6 per cent, it had climbed to 25·4 per cent. Or, to look
at it another way, the share of manufacturing in the GRP rose from 3·8 per
cent to 8·4 per cent in the East, but in the West it climbed from 7"9 per cent
to I5·8 per cent. Thus on the economic and employment side the West
Wing was faring consistently and increasingly better than the East. Even if
it had not much statistical expertise there were plenty of good economists
in Dacca who understood this very well, and who consequently shared in
the growing sense of grievance in the East.
As we saw, the Ayub Constitution came into force in Ig62. From the first
it was anything but popular, and after repeated mass demonstrations
against it, it came to an end in I969. Ayub handed over power to the Army
Supreme Commander, Yahya Khan, who immediately declared martial
law (although political parties were not proscribed). Yahya then pro-
moted elections for a new National Assembly to be elected on a one-man
one-vote system, incidentally bringing to an end the basic democracies. It
seems that this method of election was adopted because it was simple and
could readily be understood. Apparently it was not noticed that in
Pakistan's situation this would inevitably give the East a large majority.
This was naturally entirely unacceptable to the West and army action was
needed in the East where opposition to union with the West had grown
enormously.
In I965 (as we have seen) there was a short armed conflict with India
over Kashmir. The East felt itself to be neglected and left defenceless, and
in February I966 Mujibur Rahman (President of the Awami League,
Bengali for People's Party) put forward a six-point demand for a federal
form of government, on the basis of the Lahore Convention of I 940: that is,
for a federation with a very weak central government limited to
responsibility for foreign affairs and defence. It would be possible for the
116 Federalism: Failure and Success
Provinces to have individual fiscal and monetary policies and external
trade accounts (hence their respective balances of payments could be
considered separately) and there would be separate armed forces for each
of the (two) federating States. Ayub was naturally completely opposed to
these demands. He arrested Mujibur for 'plotting to deprive Pakistan of its
sovereignty over a part of its territory by an armed revolt with weapons'
(by means of ammunition and funds from India).
The effects of the 'September' war with India had been very bad for the
East Wing. The interruption of Indo-Pakistan trade hit it more seriously
than it did the West Wing. Although the East was less emotionally
involved over the Kashmir question, it was clear to them that if Pakistan
managed to hold on to Kashmir its accession would greatly enlarge the size
and power of the West, an outcome by no means welcome to the East. To
make inter-provincial relations still more difficult, just before the elections
under the new (I 969) Constitution were due to be held, the East Wing was
smitten by the worst cyclone in its history. There was talk of postponing the
election; but Mujibur was anxious to bring things to a head, and opposed
any delay. The East now strongly felt that the West had let it down by not
providing adequate relief and assistance to overcome the effects of the
disaster. By this time every village in the East Wing was determined that
'Bengalis must rule themselves'.
The elections were duly held. Mujibur's Awami League won I67 seats in
the National Assembly, giving it the inevitable overall majority. In the
West the most powerful party was the People's Party under Z. A. Bhutto,
which won 85 seats, confirming it as the dominant party in the West.
Differences between the two parties were irreconcilable. Events then
moved quickly. The National Assembly was summoned to meet in March
I97I in Dacca (presumably in the hope of getting Mujibur to come). But
Bhutto refused to attend. Yahya postponed the meeting; but in the East
Mujibur called a general strike. Yahya then announced (6 March) that the
Assembly would meet on 25 March. But Mujibur continued in non-
cooperation and on IO March he announced 'all branches of the
Government are complying with the directives issued by us in the name of
the people of Bangladesh'. Yahya flew to Dacca on I5 March but by the
25th discussions had broken down, whereupon Yahya banned the Awami
League and ordered the Pakistan Army 'to restore the authority of the
Government'. Mujibur was arrested and taken to the West Wing.
The very next day (26 March) the insurgents proclaimed independence.
Within a week of the breakdown of negotiations between Yahya Khan and
Mujibur both Houses of the Indian Parliament unanimously assured
Bangladesh of India's support. A terrible civil war followed the breakdown
of negotiations. The Bengalis murdered thousands of non-Bengali Mos-
lems; then the Pakistan Army wreaked a bloody vengeance on the
Bengalis. Regular Indian forces went into the Eastern Province on I8
November (I 97 I). Mrs Gandhi (now the Indian Prime Minister)
 Federalism in the Indian Subcontinent I I 7
informed the Secretary General of the UN that Pakistan was 'seriously
preparing to start a large-scale conflict with India' and that the latter had
consequently to take 'all necessary defensive measures'. (It might have
been surmised that the Pakistan Army had enough on its plate in the
Eastern Province without attacking India directly, but no one seems to
have challenged Mrs Gandhi's statement.) On 6 December India
recognised Bangladesh, whereupon Pakistan severed diplomatic relations.
On I6 December Indian troops occupied Dacca and declared a ceasefire.
Pakistan had no choice but to accept.
The end of any sort of hope of federalism between East and West
Pakistan had come. It is clear that a common religion is not enough in the
modern world to yoke two such disparate peoples together, unless other
conditions are favourable. In Pakistan not merely were they not favour-
able, but at every turn something seemed to occur to make them worse, be
it differences in growth rates, (both in industry and agriculture), outlay on
infra-structure and other investment, or sheer natural disaster. The
disparity in the incomes of West and East which Jinnah and the best
Pakistani leaders had hoped to end, in fact widened.
There was no prospect of federalism in Bangladesh, so that we are
absolved from examining its pitiable experience over the next few years.
But in the West a new little federation was set up, perhaps viable, but a sad
comedown from the plan for the federation of the entire subcontinent. The
reasons for adopting the federal form in the new Constitution were two. In
the first place the success of Bangladesh in seceding had put new heart into
the separatist movements among the Pathans and Baluchis. The Govern-
ment hoped that a small increase in local autonomy would satisfy them.
Secondly the other Provinces were jealous of the rich Pu11iab and feared its
domination. So the federation was set up with four Provinces: West
Punjab, Sind, North-West Frontier and Baluchistan (now sufficiently
advanced to look after itself). Equal representation in an Upper House
seemed to the others to be the best protection against Punjabi
domineering.
Yahya Khan resigned and handed over control (and the Presidentship)
to Z. A. Bhutto, who (as we have seen) was the leader of the majority Party
in the West. Bhutto continued to govern under martial law with a
presidential form of government, under an interim Constitution, until
August I973, when the new Constitution was ready. Under this the Prime
Minister is Head of the Government and is responsible to the National
Legislature. Rather exceptionally he is to be elected by the whole National
Assembly and not by the majority party alone. The Prime Minister is also
the Supreme Commander of the Armed Forces. The President is the
(constitutional) Head of State. The Legislature is bicameral but the Lower
House is the seat of power. It has two hundred members, elected on a
population base. The Senate should have sixty members, fourteen from
each of the four federating Provinces, the remainder representing minority
118 Federalism: Failure and Success
groups, women and tribal peoples. Cabinet members may come from
either House.
Whether this Constitution would finally suit Pakistan and give her the
peace she deserves to develop her considerable resources, cannot now be
gauged. Although it has been totally abrogated I have left the description
in the present tense, for it seems eminently sensible, and not inappropriate.
Under President Bhutto's regime affairs seemed to be going reasonably
well. Although there were political bickerings and an increasing desire on
the part of Pathans and Baluchi to follow the path of Bangladesh into
independence, Bhutto seemed to be widely accepted, and even popular.
Elections were called for March 1977 and resulted in a very large majority
for Bhutto. Yet six months later the Constitution had been abrogated and
Bhutto was under arrest, accused of corruption and murder. Pakistan was
once more under martial law, administered by General Zia-ul-Huque, a
former protege of Bhutto. What had happened?
It was widely held that the elections had been heavily rigged. This and
other troubles built up into an almost venomous hatred ofBhutto. He had
unquestionably been arrogant and tactless, and had used very shady
methods for getting the better of his opponents. Feelings ran so high that
other Islamic countries felt it desirable to intervene and if possible restore
harmony. Elections were billed for October 1977, but were postponed.
Thus the future of federalism in Pakistan remains extremely obscure.
6 Decolonisation and
Federalism in Nigeria
THE COUNTRY AND ITS PEOPLES

Among the post Second World War federations attempted as a sequel to

colonial rule, Nigeria is particularly important for several reasons. Firstly,
its size and population (now nearing 8o million) confer on it a dominant
role among English and French ex-colonies south of the Sahara.
Secondly, there is a complete absence of White settlers, so that what racial
troubles exist are between Africans. Thirdly, there has been an extra-
ordinarily rapid growth, within a generation, from a quite primitive
existence to a high level of educational attainment and social advance-
ment. In the north there was an ancient indigenous culture and political
system. It was only possible for the south to go ahead after the invention of
DDT in the Second World War to combat malaria and tsetse fly (up to that
time the area had been the 'White man's grave').
In the first thirteen years of independence Nigeria had a checkered
career. There have been coups and assassinations, and she has endured a
major civil war. But Nigeria has made remarkable economic progress, and
her plans for the restoration of representative government give rise to the
hope that she will also be found to have made substantial political progress.
The rapid advancement of the South owes a great deal to the work of
well trained and dedicated British District Officers (men who in a previous
generation would have been in the ICS). Very important also has been the
work of Christian missionaries of all denominations, who were well
received in the south (but not in the Moslem north) and who cooperated
closely with local government bodies. Nigeria exhibited the diversity of
peoples that we would expect in an area thrown together in ignorance by
the great European powers in the scramble for Africa .• But there has been
one outstanding cleavage which is only now ceasing to dominate the scene
(if indeed it is really doing so): between the Moslem north, with its strong
and rigid religious and cultural traditions, and the (now largely) Christian
south, agog to catch up with the modern world in every way open to it.
Nigerians on the whole were never really poor by Indian standards, except
perhaps in the semi-desert extreme north. Natural resources and climate
are reasonably good, and (except towards the Sahara) there is sufficient
rainfall. But in recent years Nigeria has come into a fortune -in oil-and
119
120 Federalism: Failure and Success

this is by no means a 100 per cent blessing: but it does mean that there no
longer need be a financial bottleneck or shortage of investment funds for
social and economic developments.
European traders and slave raiders had long been familiar with the
coast, especially with the creeks of the Niger delta, which offered safe
harbourage for the little ships of the day. But the first British penetration
was by Sir George Goldie's Royal Niger Company, chartered in 1885.
Strange rumours of the doings of these pioneers reached London and there
was much suspicion of what Goldie was up to, so that the Charter was
withdrawn in 1897. Nigeria then became a Protectorate of the British
Crown. F. D. Lugard (a close friend of Goldie's) was sent out the same
year, primarily to prevent the French encroaching on the allotted 'sphere'
of the British in Northern Nigeria. But in fact Lugard'sjob turned out to be
very much more than a military operation. He was effectively the first
governor and founder of British influence in Nigeria. Protectorates had
earlier been established in Lagos and further along the coast in the Oil
Rivers area; but these were still coastal depots, thus very different from the
more general assignment of Lugard. The British public began to hear of
Nigeria and its promise about the turn of the century.
At first the southern areas were administered as a single unit, just as was
Lugard's north. In 1922 a Legislative Council was established in Lagos to
'legislate' for the southern provinces jointly. It comprised 26 officials and
19 Mricans, of whom four were elected (three from Lagos and one from
Calabar). But only Mricans friendly to the British were chosen. Politics
had not yet entered Nigeria, although the polls for the four elective places
were already watched with great interest. In 1939 the then Governor
reported that it was too difficult to administer the two southern provinces
as a single unit, consequently they were separated into the Western Region
and the Eastern Region at his request. From this relatively early date
Nigeria was thus divided into three parts or 'Regions'. This division was
destined to play a vital role in her political and economic development.
Neither of the southern Regions had much experience of a fixed form of
government above the more or Jess local level, although the west had a
rank of Chiefs (Obas) chosen from a circle of chiefly families. Most of the
Obas exercised very limited powers (especially compared with the Emirs of
the north), except perhaps the Oba of Benin (in what later became the
Mid-West Region) who had a hereditary title. The Eastern Region had no
system of Obas, except for the Obi of Onitsha whose House was allied to
that of Benin. There was no organised government above the strictly
village level where the village elders exercised authority.
Each of the southern Regions was notable in having a dominant tribe-
or rather people (a congerie of tribes recognising a certain relationship).
In the west the dominant people were the Yorubas. They were divided
into a number ofsections (of which the Egbas and ljebus were probably the
most important). Lagos and district (early absorbed as a 'colony') was
 Decolonisation and Federalism in Nigeria 121

their capital. Through this, the only good deep water port on the coast,
Yorubas had long been in contact with Europeans. They had the
advantage of a language that could be written down and printed, more
easily than some of the other tonal languages, notably lbo. In the Eastern
Region the dominant people were the Ibo, for long savage and untame-
able, but extremely hard working and intelligent, with a thirst for
education, as soon as it came within their reach. In the Eastern Region
there were a number of small tribes, especially near the coast. This
situation was the aftermath of the slaving industry. By no means all those
who were forced down to the coast to be sold ever got on board. In addition
there were also some powerful tribes, such as the lbibio at Calabar. The
lbo could dominate these peoples but they never succeeded in winning
their confidence, much less their affection. Both the southern Regions are
in the rain forest belt; but the west has better soil and production
opportunities. In particular it is a leading cocoa producer. The traditional
'crop' of the east was palm products; but these are less of a paying
investment because of the close competition of other fats in the manufac-
ture of soap and margarine, which is their main use. Hence the Western
Region has always been the richer of the two southern Regions, at least
until the discovery ofoil in the Eastern Region. This has created an entirely
new situation. The west has no oil; but the mid-west has even better oil
than the east.
The Northern Region is an entirely different proposition from the south.
For the most part it is open savannah country, becoming very dry and
sandy as it approaches the Sahara (or rather the Sahara approaches it, for
it is always encroaching). The sparse population was strictly organised in
Emirates, some of them very large and powerful. Except in so far as he
might wish to consult others, the Emir's word was law. The dominant
peoples were the Hausa/Fulani complex, the Fulani being a small ruling
elite among the Rausa. Most were Moslems, acknowledging the authority
of the Sultan ofSokota (as Commander of the Faithful) and his 'lieutenant'
the Sardauna. They were unwilling to accept Christian missionaries, or the
education they offered, and since government (non-sectarian) schools
would have been very expensive (even if the right sort of teachers could
have been found) education was very backward compared with the south.
One other aspect of the northern civilisation needs to be noted, because
it is often overlooked: the importance and significance of the large towns:
Zaria, Kaduna, Kano and Sokoto (the last not so large but important as
the residence of the Sultan). These cities were developed as trading centres
across the Sahara, long before there was any thought of European
penetration. They were links in the trans-Saharan 'Golden Trade of the
Moors' by camel caravans. But with the development of the south more
important interests in the opposite direction began to develop for the
north. This was particularly important as irrigation spread and it became
possible to produce valuable export crops, especially ground nuts and
122 Federalism: Failure and Success

cotton, which of necessity had to be taken down to the sea at Lagos. Beyond
these crops the major productive occupation of the Region was cattle
ranching. But the northern peoples never completely lost touch with their
co-religionists and fellow-tribesmen over the northern border. As we shall
see, on two occasions they felt so alienated from the south that there was a
short-lived move to cut away and rejoin them.
Besides the Fulani/Hausa complex there were other large communities
in the north, such as the Kanuri. They were not very different from the
Hausa, although quite prepared to pick a quarrel with them. But the
southern part of the northern Region (known as the Middle Belt) was
substantially different. This represented the limit of Moslem advance in
the Jihad (holy war) in which they planned to conquer the whole of the
south and convert it to Islam. It was the point at which their horses gave
out, overcome by the ravages of the tsetse fly. The tribal congerie in the
Middle Belt was not unlike that of the Niger Delta, because it consisted of
small elements fleeing before the Fulani. Some of the tribes of the Middle
Belt were nevertheless quite large and powerful, such as the restless Tiv,
who were to play an important part in later politics. There was also a
sizeable Yoruba sector, cut off from the main body of their people in the
west. Most of the Middle Belt peoples were poor and backward. The true
northerners were not prepared to do much for them, although they
jealously guarded their affiliation to the northern Region. For the most
part the Middle Belt peoples were not averse to Christian missions, so
whatever education grants were available to the Region from the Centre,
tended to lodge there.
These intra- and inter-regional differences have continued with great
persistence and it is only in the latest phase that strenuous efforts are being
made to reduce their intensity, and so make the country more united.
Lugard's first contacts were with the Emirates, and this experience shaped
his whole strategy for the development of Nigeria.

INDIRECT RULE

The Nigerian Emirates used a form of government which might be

described as two (or three) tier. The Emirates (or at least the larger ones)
were divided into Districts. According to the total revenue required each
District, and within each District each village, was given a quota to raise,
depending on what was estimated broadly to be the taxable capacity ofthe
area. Within the villages it was the business of the Headman to determine
the just quota for each family to pay. It appeared to Lugard that in the
Emirate/village system, with its 'communal assessment' there already
existed a sure foundation for a system oflocal government. The Emirs were
transmuted into paid civil servants (but of course they also had large
financial resources from among their own people). The village organi-
 Decolonisation and Federalism in Nigeria 123
stations became 'Native Authorities', with important responsibilities for
law and order. Lugard's most relevant previous experience had been in
Uganda where he reported that the Ganda people (with whom he had
been in contact) were very well able to rule themselves, under their
Kabaka, with the help of a British Resident to advise, and if necessary
persuade. It seemed to Lugard that the Northern Emirates were even more
suitable for the application of this system of'indirect rule'. This was to play
an enormous part in the development of Nigeria.
Lugard determined to apply the system of indirect rule to the southern
Regions also. In the south the system did not fit nearly so well. The Obas in
the west had not the power or prestige of the Emirs, but they were at least a
foundation on which to build a local government system. In the east
indirect rule did not really fit at all as there was no cadre corresponding to
the Obas. It was consequently necessary for the Administration to pitch on
the most likely looking leader they could find in a District. The choice was
often very random. Indirect rule unquestionably saved the pockets of the
British taxpayer very effectively. It was possible to run vast territories and
many peoples with a mere skeleton staff. Indirect rule was not really
unpopular in Nigeria, partly no doubt because almost everywhere the
Residents (or District Officers if there were no rulers) were popular and
often much beloved by their people. But it did have the effect (to some
extent) of freezing the development of institutions so that when the time
came when change was inevitable, the process was difficult and painful.
It was Lugard's plan that the whole of Nigeria should be administered as
a unity, from the north. He chose as the capital Kaduna, the most
southerly of the northern great towns. It was to be a sort of Delhi. (The
locally constructed but grandiose 'Lugard Hall' in that city is a monument
to his intentions.) In fact as the north began to develop its southern
contacts at the expense of the northern tradition the long haul to the coast
for its exports would have made it very unsuitable. In default of a better
capital Lagos just drifted on as the centre of administration in spite of its
highly unsuitable site (on an island) and the inevitability of its becoming
overcrowded as the only viable port on the coast. Lagos has now become so
chaotic with the addition of traffic consequent on the oil boom, that it is at
last planned to build a new capital (at Ahuja in the Middle Belt. See
below, p. 139).

THE BEGINNING OF POLITICS

The 'Leg. Co.' that was established in 1922 functioned only in the south
although the north and south had been formally united in 1914, in
accordance with Lugard's ideas. It gave an opportunity for sounding
Mrican opinion on the coast. Nigeria's education in politics was beginning.
So far as sounding public opinion in the north was concerned it was only
I24 Federalism: Failure and Success
possible to make an approach through the Emirs. It was not long before a
nationalist movement began to appear in the south. In I934 Herbert
Macaulay, a young engineer from Lagos, started a Youth Movement; in
the space of two years it was able to claim national status. I 93 7 was seminal
for the eventual formation of an independent federation, for it saw the
return to Nigeria of Nnamdi Azikiwi (Zik), a young Ibo who had been
receiving his higher education in the USA. His return had something of the
flavour of Gandhi's return to India, although Zik was not actually opposed
to the administration. By his writings and speeches Zik quickly put a spark
to nationalism, especially among the non-Yoruba youth, many of whom
were no doubt Ibos (although formally in the Youth Movement the only
Ibos were Zik and one other). At first Zik gave his full support to Macaulay
and the Youth Movement, but becoming disgusted with the mismanage-
ment of the leaders, he left it within a year. This action laid bare a split in
nationalist politics which dogged it for a long time. The Youth Movement
never recovered from Zik's defection. From this point Zik was in the centre
of the stage.
Zik's next move was to set up (with Macaulay) a formal inter-regional
party, the 'National Council of Nigeria and the Cameroons' (NCNC,
I944)· After the defection of the Southern Cameroons to the French Zone
the last 'C' was made to represent 'Citizens'. During the war things had
moved fast in Nigeria. Ships and troops were going to and fro all the time.
Flying boats regularly visited Lagos. White men were no longer debarred
by malaria from living and starting businesses in the South. Nigerian
products, especially palm oil, commanded premium prices. Many Nig-
eriansjoined the British forces and overseas service introduced them to the
modern world. The Nigeria of I945 was a very different place from the
Nigeria of I 939·
At the end of the war it was evident that the arrangements of I922 had
become quite inappropriate. In I945 the Governor (Sir Arthur Richards)
put forward his proposals for changes. Effectively they became the
'Richards Constitution' of I947· Some attention was paid to the nationalist
movement by enlarging the elective element; but it was quickly pointed
out by the politicians that the representatives who made the grade would
be Chiefs, businessmen and others who could be guaranteed not to vote
against the Government. Although the (now well established) three
Regions were maintained, the Constitution was basically unitary. The
Richards Constitution endeavoured at one and the same time to give a
little more to the moderns and to reassure the traditionalists that they
would not be overwhelmed by them. In fact the changes were minimal. All
of this was enacted without giving Mricans any opportunity for discussion
or criticism, a matter that was much resented.
The Richards Constitution lasted barely three years. Richards had been
getting on increasingly badly with the politicians. Moreover Nigerians
now had the example of independent India before their eyes, and of much
 Decolonisation and Federalism in Nigeria 125
more rapid 'constitutional advance' in the Gold Coast (Ghana). Further,
with Creech Jones at the Colonial Office a substantial change in colonial
policy was discernible. Creech Jones urged on the Nigerian Government
the same policy as we have seen his recommending in the West Indies.
There should be more representation, special attention to the development
of local government, and an attempt to propagate responsible trade
unions, as the best prophylactic against subversion.
In 1948 Sir John Macpherson was sent out to succeed Richards and to
promote the new policy. Sir John's previous experience had been in India
and on the Gold Coast, so that he was familiar with the problems of
constitutional advance, and he was most anxious to take a part in the
process in Nigeria. In his initial statement on policy Sir John included as
objectives the Mricanisation of the civil service, and the democratisation of
the Native Authorities.
The biggest objection to the Richards Constitution seemed to be that
Mrican opinion was at no time consulted. Sir John was determined that
this should not happen again. Accordingly he initiated a series of
conferences at regional level all through the country. The southern regions
sought to reduce the power of the central colonial administration, and to
widen the franchise, giving more autonomy to the Regions. The north
accepted some slight amount of devolution, but wished to maintain the
colonial administration intact as their best protection against being
overwhelmed by the more advanced southerners. The regional proposals
were submitted to a Drafting Conference at lbadan in January 1950. At
this it was agreed that Nigeria should continue to be administered as a
unity, but that there should be a substantial amount of regional
devolution; larger and more representative Regional Assemblies, and
Nigerian Ministers to take a direct share in policy formulation (both at the
Centre and in the Regions). Mter much discussion it was agreed that the
north should have representational parity with the two southern Regions
combined. The north also secured a resolution that if on investigation it
was found that any Region had suffered from getting smaller and less
adequate grants than the others (for instance for education) it should be
awarded special compensation.

FEDERAL PLANS AND ELECTED ASSEMBLIES

It was also agreed that an independent expatriate Commission should be

invited to advise on finances and their distribution between the Centre and
the Regions severally. When the Commission's Report was available it was
to be discussed with a Convention of twelve Mrican leaders. The Revenue
Allocation Commission of 1950-52 (Hicks-Philipson) was a landmark in
the development of Nigerian institutions. Not only did it mark the
beginning of the federal experiment but its allocatory recommendations
 Federalism: Failure and Success
served as a benchmark and in some ways a model for recurrent future
allocations which were to take place every five years. The RAC started
work in july 1950, visiting in turn all the Regions, and reported in 1952. In
spite of a large measure of agreement the most vital question of all-the
future relations (political, administrative and financial) between the
Centre and the Regions- had not been settled.
In view of this it was not possible to devise a satisfactory allocation of
revenue. It could not be foreseen how much would need to be reserved for
the needs of the central administration. The first intention appeared to be
to reduce the Centre almost to vanishing point. Although this did not
happen it was clear at least that the Macpherson Constitution was going to
put important new responsibilities on the shoulders of the Regions in the
fields of education, health, welfare and infrastructure. As always the most
important and buoyant taxes, customs and excise, at Nigeria's stage of
development, necessarily accrued to the Centre, especially import duties.
As a result the Centre turned out to have a much larger revenue base than
it needed for its own purposes. Consequently the task of the RAC was first
to suggest additional taxes which might be allocated as autonomous
sources to the Regions (to ensure budgetary responsibility) and secondly to
devise an appropriate system of grants or revenue sharing to cover the
remainder of the regional budgets. The only autonomous tax which had so
far been used locally was the 'Direct Tax' which (as we have seen) was
communally assessed in the north, but in the south was a straight poll tax-
with the exception that in some areas there was growing up a second,
slightly progressive, schedule. Although this was forward looking, it was
very crudely assessed. Conceivably it could in time become a regional
income tax.
Since the possibility of finding additional autonomous taxes for the
Regions was practically zero, the RAC devoted most of its time to devising
a system of grants. It enunciated three principles on which a system of fiscal
transfers should be based: (1) needs, (2) even development and (3)
derivation. These criteria were re-enunciated at each successive revenue
allocation exercise, but the relative weights to be given to each were
sometimes hotly disputed before agreement could be reached. More
serious, the only statistics which seemed to be in any way reliable were
those of the population census. It will be observed that each of the criteria
relied on population estimates to some extent. In fact the formula was
essentially one of weighted population. Unfortunately the census figures
turned out to be very misleading and (as we shall see) this led to endless
trouble. In addition to the regular system of revenue sharing which the
RAC had to recommend there were in existence other grants of a more or
less regular type (some virtually of a capital nature). Of these the grants for
education were by far the most important. Since these were in principle
open-ended the lion's share went to the Eastern Region, which made good
 Decolonisation and Federalzsm in Nigeria 127

use of them. The north duly got its special consideration, which was
intended to be applied to education, but in fact for want of a viable
educational structure, it just went to swell the Region's very large London
balances.
Of the RAC's three principles, whereas the 'even development' criterion
was clearly redistributional, and the 'needs' element probably so to some
extent, the 'derivation' element was the exact opposite. Consequently at
successive allocation exercises the wealthiest Region invariably demanded
a higher weightage for derivation. Thus in 1958 the cocoa-wealthy west (its
revenues expanded with the profits of the Korean boom) clamoured for an
increase in the derivation element, while the east demanded a reduction.
But at the following exercise the position was reversed. Western Region
cocoa was troubled by 'swollen shoot', the east could already foresee vast
profits on oil, and in its turn demanded a greater weight for derivation. The
initial arrangement about oil was that a Region where oil was found was
entitled to retain 50 per cent of the revenue. The east fully counted on this,
in addition to what it might get by the derivation principle. When (at the
end ofthe 'pioneer period') oil revenues suddenly increased almost sixfold,
it was inevitable that the other Regions would demand a much bigger
share of the swag, but the east did not believe this.

THE QUESTION OF THE CENSUS

In Nigerian circumstances it is difficult to see how a rational allocation

system could be built without using the population figures, and as time
went on this included the relative growth rates of regional populations. In
rg63 a population census was taken. It was expected that there might be
some undercounting (to escape the direct tax and its successor), or perhaps
some overcounting (to gain more on the allocation exercise). But it was
hoped that these errors would cancel one another out. What was not
foreseen was the large numbers and relalively high rate of population
increase in the north (some of which was probably due to immigration
from the much poorer French territories of Chad and Niger which were
much subject to drought). Ignorance of relative populations was awkward
enough in respect of revenue allocation, but when fully representative
government was established and the number of seats in the Assembly
depended on its regional population, it became a national calamity. The
southerners (especially in the east) could not bring themselves to believe
that the northern figures had not been grossly inflated, in spite of the fact
that a second census (very carefully conducted) gave virtually the same
result. To appreciate the significance of this fundamental dispute it is
necessary to unravel briefly the political tangle.
The Regional figures for successive census are shown in Table 6.1:
128 Federalism: Failure and Success
TABLE 6.1 Population of Nigeria, by region

Region 1931 Census 1952/3 Census 1¢3 Census Per sq.

(in thousands) (in thousands) (in thousands) mile

Northern 11434 16840 29809 106

Western 2743 4595 10266 337
Mid-Western 986 1492 2536 170
Eastern 4266 7218 12395 420
Lagos (township) 126 272 665 24639
Totals 19555 30417 55671 156

At the next stage the introduction of central and regional elective

Assemblies with Executive Councils was announced. The main political
party was Zik's NCNC. This, deriving from the Youth Movement, had
claims to be a national party not based on any particular area or people. In
fact although Zik was an lbo he was strongly in favour of a united Nigeria.
Their (leftish) programme was for social improvement and an early award
of independence. But when the results of the 1952 elections were declared
the NCNC were only in control of the Eastern Region. In both the west
and the north strong local leaders had appeared, who dominated the
political scene in their own Regions.
In the west the leader was Abafemi Awolowo, an ljebu Yoruba from
Ikenne. He had been with-and had quarrelled with-Zik on the Youth
Movement. He set himself to stimulate (or if necessary create) a Yoruba
consciousness of a great tradition of history and culture. Due to its
relatively strong education and close contacts with Lagos (largely a
Yoruba city) the west had a growing class of able businessmen and
professionals. These westerners were getting alarmed at the number of
energetic young Ibos who were 'invading' Lagos and competing for top
jobs. With these elements (and some others who had become disenchanted
with the NCNC) Awolowo founded a political party, the 'Action Group'.
It was not wholly Yoruba, but it was in the west that its strength lay. The
N CN C was not an organised political party- and Zik was not the man to
create one. But it was roo per cent supported by Ibos, both inside the
Eastern Region and elsewhere. It could also, as a national party, draw
support from those parts of the west which resented Yoruba domination,
most of which later comprised the Mid-Western Region (now Bendel),
created in r g63 from seven blocks of peoples centred on Benin. The NCNC
also drew support from the big towns of the West (especially lbadan and
Oyo) which were fearful of domination by the Action Group. It should be
noted that all through Nigerian politics the bases of voting consisted much
more of communities than of individuals. When a new situation arose whole
communities would suddenly change their allegiance. This was the other
side of the strong local sentiment which was responsible for local
 Decolonisation and Federalism in Nigeria 129
government interest, and for the extent to which each group kept
continuous and careful watch over its 'absent sons' who had migrated to
other parts of Nigeria.
With the prospect of independence looming nearer, and observing the
preparations being made in the southern Regions, leading northerners
perceived that a strong political party in the North would be essential. The
problem was to find a way of combining the progressive elements in the
great towns with the traditional elements: the Emirs themselves and their
entourage, and indeed the whole of the rural population. Only thus could
the north present a united front to the south. There was no difficulty on the
side of religion, apart from the Middle Belt which was not taken into
consideration. The progressive elements were as devotedly Moslem as the
traditionalists.
The Emir of Zaria, one of the most progressive of his class, took the
initiative and found a most able leader in the person of Amadu Bello, the
Sardauna of Sokoto. At the time he was quite ideal, although later his
arrogant ways, corrupt patronage and conspicuous consumption made
him unpopular so that there was no great regret when he was eventually
assassinated. The Sardauna was ably assisted by Abubakar Tafawau
Balewa, an honest and experienced administrator, a former schoolteacher,
who had entered politics through local government. Together they formed
the Northern People's Congress- NPC. Although some trouble was
experienced with a more progressive splinter group (the Northern
Elements Progressive Union- NEPU), at the Northern Regional election
the NPC captured practically all the seats. The united northern image to
confront the southerners had been established. Their policy was one of very
gradual change only, and a slow progress towards independence. In these
aims they were supported by their British advisers.
The scene was now set for the run up to independence. Administration
was firmly based on the three Regions, in each of which there was a
strongly based local majority party, but also in each Region there were
dissident groups of considerable importance. In the west the Mid-West
Region was to be hived off. In the east only the lbo area was solidly behind
the regional administration. The tribes of Calabar, Ogoja and coastal
areas (Rivers) were all more or less violently opposed to Ibo domination.
In the north the opposition of the Middle Belt was very strong, although
the tribes were too dispersed and backward to succeed in organising any
integrated movement or party. The N CN C still retained a national image,
although it was not so strong as it had been. The 'Action Group' was also
aspiring to be a national party and in particular was pressing hard from
1953 for early independence. A western team under S. J. Akintola
campaigned in the north hoping to collect some progressive votes. But this
so alarmed the north that there were riots in Kano and the regional
authorities began seriously to discuss the possibility of withdrawing from
the coming federation, and returning to their traditional alliances over the
 Federalism: Failure and Success
northern border. (It was soon realised that this would be economic suicide,
and the idea was dropped.) But the northern determination to dominate
rather than to be dominated by the south remained very strong.
It would be unnecessarily tedious to go through the party history of the
pre-independence Assembly in detail. Everyone, (including the British)
had their eyes fixed on the coming federation. The British were rather
happy about the situation. They liked the tripartite arrangement because
the Regions were big enough to be viable, whereas if they were to be
fragmented small areas would be unable to secure adequate adminis-
tration or finance. But this was not the general view of Nigerians. Both the
NCNCand the AGwould like to have seen a larger number of states in the
federation. In both the southern Regions there were powerful minority
groups. The Mid- West was to be hived off, but in the Calabar, Ogoja,
Rivers areas opposition to the regional government was very strong. Only
the north was adamant that it must remain monolithic in order to combat
the influence of the south. Aware of these troubles the British Government
sent out a Commission under Sir Henry Willink to gauge the extent of
discontent, and if necessary to recommend some degree of fragmentation.
Predictably they reported that there was no need for such a drastic step,
since the COR areas were divided and without effective leadership. It did
not take independent Nigeria long to undo this arrangement. It seems not
to have occurred to anyone that a federation based on three States with its
constant danger of two against one, would tend to be very unstable.
Among the political parties it became the game to judge which coalition
would be most likely to offer the best terms for your particular Region.

THE RAISMAN-TRESS COMMISSION

The remaining point to be settled before the way was clear for
independence was the allocation of tax rights and revenue sharing. This
was entrusted to the Raisman-Tress Commission of I958. Their award
gave the Federal Government rights over all customs and excise, as well as
the revenue from personal income tax in Lagos, and of all company
taxation. The Regions were left their embryo income taxes (in the east
these were already by no means negligible) and some local export taxes. By
way of revenue sharing the Commission reserved certain proportions of
selected taxes, to be paid into a 'distributable pool' (Sir Jeremy's favourite
solution, as we have seen, also recommended for the Central Mrican
Federation, and in force in India). The relative shares of the Regions were
to be: 40 per cent to the north, 24 per cent for the west (including the Mid-
West area), 3I per cent to the east and 5 per cent to Cameroon (which had
not yet decided to leave Nigeria). The proportions were stated to have
been devised after careful consideration of (effectively) the Hicks/
Philipson principles, but in accordance with Sir Jeremy's usual practice no
 Decolomsation and Federalism in Nzgeria

statistical base was revealed and there was a strong feeling that they had
just been chosen by hunch.
The Raisman Commission made provision for a renewal exercise not less
than three and not more than five years later. This was duly held in I 964; it
resulted in only minor changes to which no particular exception was taken
in any of the Regions. In fact the Regions were getting less interested in
revenue sharing (especially where good oil revenue was expected). They
now competed much more actively for direct grants for the location of
industries out of the centre's superabundance of funds. As we have seen,
very much the same sort of thing happened in India in respect of grants
from the Planning Commission in relation to the regular revenue sharing
recommended by the Finance Commission and as we shall see something
similar was taking place in Australia, where specific purpose grants from
the Federal Government were increasing at a very much faster rate than
the traditional allocations of the Grants Commission.
Independent Nigeria started off in reasonably prosperous conditions.
Apart from oil possibilities (the extent of which was only just beginning to
be realised) industrialisation was progressing favourably, particularly
round Lagos and in the Eastern Region. Incomes were notably rising,
although the level in the west remained higher than elsewhere. The extent
of inter-regional and inter-local trade was expanding rapidly. This was a
step towards making Nigeria an economic entity. Ambitious plans
(although statistically very ill-founded) were made in the Regions for
economic development. These were put together to look like a 'National
Plan' (I962-8).

THE ELECTIONS OF I964 AND CIVIL WAR

But from the first the political situation was unhappy. As we have seen, the
southern Regions could not bring themselves to believe that the large
population in the north and its high growth rate (as shown in the I962/3
census) was correct. They were convinced that it had been grossly inflated
in order to secure more seats in the Federal Assembly. In fact there is no
reason to suppose that the northern figures were more inflated than those of
the other Regions. Moreover when the results of the I972 census were
available it is clear that the rate of increase in the north had even
accelerated. It appeared to be about 4'5 per cent. And on this occasion
(since the Assemblies had all been abolished) there could have been no
competition for seats.
While relations between the north and south were embittered by the
census figures the real confrontation arose over the second federal elections
of I964 (the first had been in I959)· The southerners found that they were
deprived of the opportunity of campaigning in the north, and obstacles
 Federalism: Failure and Success
were even put in their way in those areas of the west where northern
influence was strong. It was also discovered that it had been arranged that
a majority of northern Members would be returned unopposed. The
northerners were both jealous and frightened of the southerners, more
particularly of the Ibos. Because they were well educated, energetic and
hard working they had come to occupy most of the best jobs in the north,
especially in trade and commerce. Feelings ran very high. The Ibos felt
that they were being ill-treated; but at the same time their behaviour was
arrogant. The attitude of the northerners became so threatening that the
Ibos began to feel nervous for their women and children, and a
considerable exodus took place. It was the first of several waves of lbos
fleeing to their homeland, which were eventually to land the Eastern
Region with some r·2 million refugees, in an area barely rich enough to
provide for the existing residents. In the east there were serious discussions
for secession. As an independent country (Biafra) they felt they could
support themselves well with their oil and industrial output. But for this
arrangement to be workable it would be necessary to carry the Rivers
peoples with them, for it was in that part, rather than in the lbo heartland,
that the best oil was located.
The federal election was a fiasco. On one side the northern Parties joined
together in a new 'Nigerian National Alliance' (NNA) while on the other
the NCNC and Action Group sunk their differences to produce the 'United
Progressive Grand Alliance', as soon as they understood what the north
were really aiming at. Initially UPGA had been certain of winning, but
because of obstructions it lost its nerve and declared a boycott of the
election. As a result the NNA swept the entire north and won 36/57 of
western seats. In some areas of the west and all over the Mid-West, the
boycott was called off on polling day, and immediately the N CN C won all
the seats. The eastern authorities (in view of the actions of the NPC)
refused to conduct the election at all. Even if all their constituencies voted
NCNC there could not have been a southern majority in the Federal
Assembly.
Chaos inevitably succeeded such an election. The President (Zik)
hesitated to nominate a Prime Minister, saying that he was dissatisfied with
the conduct of the election. But the Government Parties made much of
Zik's being an Ibo and unduly favouring his own people. The President
could not do other than set Parliament going, so he called on Abubakar,
Prime Minister on independence, to form a broad based Ministry. A few
NCNC Ministers were included, but the AG was sent into opposition.
Some of the most important Ministries went to the NNDP (the Northern
elements operating in the west). Some of the NCNC argued that posts in
such a Ministry were a mistake; they would have done better to follow the
AG into opposition. But it became clear that appointed Ministers would
not give up their jobs (or rather the patronage they carried). The Yorubas
did not discuss secession, but they were sullen and infuriated. They pinned
 Decolonisation and Federalism in Nigeria 133
their faith to the western regional elections which were due to be held in
rg6s.
All eyes were now fixed on the western elections. But the southerners
found that when they attempted to canvas they had no chance. Voting
papers and access to polling booths were only available for government
candidates. Every sort of scandal appeared, even killings by the norther-
ners. True to his tribal allegiance Abubakar persisted in denying that the
elections were being rigged, and for the time being he carried the Cabinet
with him. So long as the Government controlled the army and the police it
could stay in power; but it clearly could not govern. Law and order had by
this time completely broken down in the west. Apart from election troubles
both Yorubas and Ibos resented the intrusion and rapid promotion of
northerners into jobs, even in the south. The obvious course for the
Government would have been to proclaim a state of emergency in the west
and put in an Administrator to restore order, but this they were unwilling
to do.
Indeed the troubles of the country went much deeper than a party
political struggle. The euphoria inspired by independence had worn off.
Development was not taking place as fast as had been expected (this was
largely a world phenomenon) and the populace was disgusted with the
corruption, nepotism and ostentation of the top politicans.
It was against this background that a group of young army officers
staged a revolt (January rg66). They were mostly Ibos, because most of
the officers in the Nigerian army were Ibos. The rebels captured only
Kaduna of the big towns, but they kidnapped and killed Abubakar (to
very general regret). They also killed Chief Festus Okotie-Eboh, (the
Federal Finance Minister), Chief Akintola and Amadu Bello the Sardauna
of Sokoto (the Western and Northern Premiers). General Ironsi (the Head
of the Army) and the more senior officers remained faithful to the
Government. But when it failed to appoint a new Prime Minister (and in
fact failed to do anything effective) Ironsi persuaded the Government to
hand over power to him. He immediately posted a Military Governor to
each Region. (In the east he appointed General Ojukwu, who sub-
sequently commanded the Biafran Army in the civil war.) This was the
beginning of the Military Administration which has not yet ended
although it now regards itself as essentially a temporary caretaker. Ironsi
also captured the rebel officers and put a number of them to death.
The popular reaction to the end of the Cabinet and to most of the
assassinations was one of relief. But what was to be done next? Not only the
educated classes but also the common people felt nothing but contempt for
the top ranking politicians. But there were some who felt that the whole set-
up offederal and regional governments was a mistake. Nigeria would get
on better as a unity. A considerable controversy over federalism versus
unity ensued. The North was in favour of unity because they felt that only
along that line could they exert their full monolithic power. The Ibos were
134 Federalism: Failure and Success
also in favour of unity as best ensuring that they would be able to go (and
take jobs) anywhere. The Yorubas on the other hand tended to favour a
federation where they considered that they would be a very powerful
'block'. The military government also favoured unity and cut the knot by
issuing (May rg66) a 'Unification Decree' which declared that Nigeria
was a unitary Republic, with a single civil service. Regions would be
abolished and replaced by Groups of States. In practice the grouping of the
States followed very much the same lines as the Regional boundaries. The
distributive pool and the revenue sharing system could consequently
continue to function in the traditional manner. It was evident that no
thought had been given to the organisation or management of a unitary
State.
Shortly after the publication of the Decree of Unity anti-Ibo riots broke
out in Hausa/Fulani areas. Northern trade was in a depressed condition.
Resentment had built up on the aftermath of the assassinations, and there
was alarm that the effect of the Decree would throw all types of
employment open to the Ibos. There was a breakdown oflaw and order in
the North, and many killings of Ibos. Ironsi and his supporters were quite
unable to cope with the situation. Hence it was not surprising that another
military coup took place. This time it was organised by a small group of
Northern Officers (July r g66). lronsi and a number of his supporters were
killed in skirmishes and the army set up a new Government (not including
the east). Lt. Col. Yakubu Gowon (a Christian from the small tribe of
Angas, in the Middle Belt) was installed as temporary Head of State. The
north thought again about secession and again decided it was impractic-
able, so instead they turned against the Ibos. A terrible massacre took place
in the north. It is estimated that between 6ooo and 8ooo Ibos were brutally
killed. Before this the east had been divided on the question of secession;
but the July massacre turned the great majority oflbos in favour of going it
alone.
Given the paralysis of central Government it was essential that
somebody should do something. An ad hoc Constitutional Committee was
called with delegates from each Region. The delegates from the north,
west and east put forward schemes that were effectively confederate rather
than federal. The territorial integrity of the Regions was to be maintained,
there was to be no further disintegration -and the common services would
continue as before. The Mid-West delegates on the other hand wished to
maintain a close federation with a strong centre and a larger number of
States. Urged on by Middle Belt elements, who were always anxious to get
away from Hausa control, the northerners suddenly turned round and
announced that they were prepared to see the north split up into about six
States. The anti-Ibo elements in the east were also in favour of a division of
States that would free them from the Ibos. After this no more was heard of
the confederate solution.
Before the Constitutional Committee had come to any definite decision
 Decolonisation and Federalism in Nigeria I35
a new wave oflbo killings broke out (September) . It was said in the north
that lbos had been slaughtering northerners in Enugu (their capital) and
in other towns in the east. This may well have been so, but it can only have
been on a small scale since there were not many northerners in Enugu.
There were also killings of lbos in Lagos and the west. This time not only
did the women and children flee, but clerks, businessmen and professionals
joined the exodus in sheer terror. As a result of the repatriation of over one
million lbos the situation in the east became intolerable. There was neither
food, accommodation nor employment for all, especially as unemploy-
ment was already high. The other Regions (especially the north) needed
lbo skills to carry on their occupations, and these were no longer available.
Shops and garages were forced to close down. Before the end of the year the
east had declared an independent Biafra, led by Ojukwu (the Military
Governor put in by lronsi) and civil war had broken out. The war was very
local and in the rest of the country (especially in the west) civil life went on
much as usual.
We need not enter into the fluctuating fortunes of the war. Since both
sides had very meagre resources (although the Nigerian Government
received a certain amount of help from the UK and the USSR) the war
dragged on indecisively. Gradually the Biafran forces were pushed back
into the lbo heartland, and finally (January I970) Ojukwu surrendered
and left the country. On the whole the postwar treatment of the Biafrans
was not severe. Within five years the Ibos were back in most places
including the Army (although not in the top jobs). Some outstanding civil
servants were given important and responsible assignments. Only Rivers
State refused to allow Ibos to reside, although it was glad enough to let
them work within its boundaries. One of the most striking features ofwar
finance had been the extent to which the Nigerian Government found it
possible enormously to increase taxes and successfully collect them. It was
an indication of the extent to which incomes were rising in those areas not
affected by the war.

THE OIL BOOM

Nigeria's next crisis was of a very different nature: an embqrras de richesses

with the oil boom (from I 973). She agreed to join the OPEC countries (she
could hardly do otherwise) and untold wealth began to flow in. The
economic and political effects were difficult to deal with. Rapid price
inflation was inevitable since wages and salaries rocketed overnight, the
former much stimulated by a general salary and wage award made by a
Committee of Enquiry (chaired by an lbo, a former member of the Eastern
Ministry of Finance). The port of Lagos which was (and effectively still is)
the only useful general port on the coast was a hopeless bottleneck, and this
in itself contributed much to the inflation. Nigeria had had some (not very
 Federalism: Failure and Success
effective) experience of planning but no one was able to agree on useful
things in which to invest in the short term. (Indeed that has been the
experience of all the OPEC countries, not excepting old hands like Iran.)
First, public debts were paid off, both at home and abroad. This had a very
old effect on budgetary accounting; it was something that the system had
never been geared for. In the early days the new funds mainly found their
way into private pockets, and corruption reappeared with renewed
intensity.
It had been hoped that Gowon would prove the ideal Head of State as a
compromise, being a northerner and yet a Christian. But although he had
good ideas and started a number of useful enquiries it did not work out
well. Gowon did not have the confidence of the northern Emirs, and had
lost that of the southerners. Nor could he stand up against the tide of wealth
which was engulfing him. He had undertaken to restore democracy and
free elections, greatly desired by all Nigerians. But as the apointed day
approached he backed down and refused to do so. The armed forces lost
patience and in the summer of 1975 they quietly arranged for him to be
superseded. Apparently without regrets he left the country and registered
for an undergraduate degree at Warwick University. Automatically the
next in the army command took over at State House.

PLANS FOR A NEW FEDERATION

The new Head of State (General Murtala Mohammed) made a good start.
Although he was a Fulani he was not apparently subservient to the Emirs.
Unfortunately less than a year later he was assassinated (February 1976).
Automatically the next in rank took over, but without any enthusiasm.
This time the lot fell to a Yoruba from Abeokuta, General Olusegun
Obasanjo. But by that time things had begun to move; the first steps for the
new democratic federation had already been taken. To these both Gowon
and Murtala had contributed something. In January 1966, immediately
after the end of the Civil War, Gowon issued a nine-point statement
outlining the military Government's plans for the new institutions
designed to avoid the mistakes of the first federation. The right thing
seemed to be to build a tight federation with a strong centre but which
would at the same time allow for diversities of two kinds; in respect of the
great number of tribes and peoples (estimated to be about 250) and
secondly to get rid of regional separation, so that it would truly be possible
to build 'one Nigeria' of which all recognised themselves to be citizens.
While clearly the smaller and fragmented peoples would have to be
amalgamated into viable units, it was important to avoid incompatibles
being yoked together as they had been in the Regions. Secondly it seemed
highly desirable on grounds of stability and social traditions, to maintain
the charisma of the traditional authorities (Emirs and Obas). So it was
 Decolonisation and Federalism in Nigeria 1 37
arranged that there would be provision for traditional councils alongside
the local government authorities, wherever this was desired. The end of the
separatism of the Regions was to be secured by their total abolition and the
substitution of a large number of States. Gowon hirnselfbrought the States
up to twelve; subsequently they were increased to nineteen (as we shall
see). It was strictly laid down that Nigeria would be an entirely secular
State with freedom of movement, complete equality before the law, free
press and all occupations open to all religions and tribes. Murtala had
broadly accepted Gowan's policy but had emphasised that a number of
definite steps would have to be taken before the country was ready for the
full restoration of representative government. He planned that this should
be accomplished by October 1979· Political parties would be restored in
1978 but it was laid down that no party should use a motto or symbol of
ethnic or religious significance. All parties must have their headquarters in
the capital and be formally registered. No party would be allowed to
receive funds from abroad.
In October 1975 two committees had been set up, first a panel to advise
on the reorganisation of the States and secondly a committee to draft the
new Constitution. This would then be submitted to a Convention and
subsequently discussed throughout the country. This was the first stage of
rebuilding. The second stage would consist of a complete overhaul of the
system of local government, based on areas of similar dimensions to the
former divisions. These local government units are considerably larger
than what had been called 'local government' under the British; but, since
communications had very much improved and (as we shall see), since it is
planned to give them fairly heavy responsibilities, it was a plausible
change.
In May 1976 an important international Conference was held in Lagos
with representatives of other Federations, in order to study their
experiences. The Drafting Committee was chaired by Chief Rotimi
Williams, an experienced Lagos lawyer. It consisted of 50 'wise men' (but
the veteran politician Awolowo declined to be a member). There were no
women, in spite of the important part they have always played in Nigerian
economic activities. The Committee recommended an American-type
Constitution with separation of legislature, executive and judiciary, an
elected Executive President and a Vice-President (who would come from a
different State). The President would choose his Cabinet from outside
Parliament, and it was desired to have as wide a spread as possible for
members of the Executive. The Parliament would be bicameral and
wholly elected. It was also planned to have a Senate, consisting of five
Members from each State, and a House of Assembly of 350 Members. A
parallel type of Constitution was advised for the States, but with a single
Chamber, consisting of three times as many Members as the State had in
the Federal Assembly. The Governor (a federal appointment) would be
the Chief Executive in his State.
 Federalism: Failure and Success
It is notable that the power and influence of the Federal Government
had been steadily increasing, even before the military takeover, exactly in
accordance with what we have seen elsewhere. But the process of
centralisation had greatly accelerated under the military Government, as
is apparent from the following figures:

Government Outlay (%s)

Federal State Local

I963/4 42"37 43"69 I4"02
I968/9 62"40 27" I 2 !0"47
I970/I 66·33 28"49 5"2I
I97I/2 70"49 26"07 3"49

Under the proposed new Constitution the Federal Government would

take over a number of additional services. These include higher education,
and perhaps some secondary (but leaving primary unequivocally to the
States). There would be universal primary education of exactly the same
design all over the country, for both boys and girls, lasting from age 6 to I 2
years. This to be financed out of oil revenues. There would be initially ten
universities (most of these were already established). The federal Govern-
ment would also take over important health services and communications.
It would supervise a national produce marketing organisation in place of
the (now abolished) regional marketing boards (which had been hotbeds
of corruption). All these new activities are of course in addition to normal
federal responsibilities of defence, law and order (including police), and
relations with foreign countries.
The first stage of implementing the draft Constitution was taken in
October I976 with the appointment of State Secretaries. The Con-
stitutional Convention was to number 203, elected ad hoc (so with no
necessary previous political experience). There are five from each State
plus a contingent depending on population. Thus Kano (the most
populous State) has 5 +I I, while Niger (a new State and one of the
poorest) had 5 + 2. Election is indirect through the Local Government
Council (whose position is explained below).
The reorganisation of the State and Local Governments is perhaps the
most interesting aspect of the plans for the new Nigeria. A White Paper on
the findings of the panel appointed to advise on States has been issued;
almost all of their recommendations have been accepted by the Govern-
ment. The principle of 'even development' has been stressed throughout,
and this underlies to an important extent the form which the States will
take. Most States, whether altered or not, have been renamed, in order to
get away from the old geographical significance. The new names are
mainly chosen from rivers (as they are in France). Some States have been
divided, others amalgamated (or have had their boundaries changed).
 Decolonisatwn and Federalism in Nigeria 1 39

The northern Emirates have been rationalised. But none of these changes
has been made without careful discussion and persuasion on the spot with
the peoples concerned. Nineteen was emphatically stated to be the
permanent number of States, and the suggestion of the panel for one more
division was refused.
The basic objectives of the reorganisation are: ( 1) to see that no State
should be in a position in which it can dominate the country (as the north
did in the 1g6os); (2) each State should be a compact geographical area,
having in view administrative convenience, historical associations and the
wishes of the people. Each State to have a carefully selected Capital,
destined to be a substantial administrative centre (as is made necessary by
the responsibilities which it is planned to put upon them). Not all the
authorised Capitals are the traditional centres; thus the Capital of Lagos
State is Ikeja. This is partly no doubt because Lagos Island has been
declared Federal Territory. Additional Federal Territories will be
Kaduna, Port Harcourt and Abuja (the site of the new National Capital).
New and reorganised States will not be permitted to appoint more than
nine Ministers (a prophylactic against indefinite proliferation). They will
be given substantial 'setting-up' grants: N 1000 million has been set aside
for the purpose.
A few small autonomous taxes will be left to the States; but it is expected
that most of their funds will come from federal grants. At present these
amount on the average to about 7S per cent of total expenditure; even
Lagos (in spite of its wealth) gets 33 per cent. The Federal Government
would like to see these reduced rather than increased and proposes to tie
development grants to State tax effort. The distributive pool will (at least
for the present) continue much as before. It is now fed by 3S per cent of the
duty on general imports, so per cent of on-shore petroleum tax (and a few
other royalties) so per cent of the excises on petrol and tobacco, 100 per
cent of all other excises. Under this arrangement the oil States, Rivers and
Bendel (formerly the Mid-West), will get more than twice as much out of
the pool as any of the others but in addition all are receiving statutory
grants, as before. It is realised that there is an urgent need to establish a
mechanism to adjust these percentages, to take the place of the former
Revenue Allocation Commissions. The distribution of the pool is at present
as to so per cent equal to all the States, the other so per cent on a
population basis. This is regarded as a temporary arrangement until a
more sophisticated system can be formulated.
It appears that the new and reorganised States are working well. It is
evident that their Governors have been very carefully chosen. But some are
experiencing staffing difficulties. For instance Gongola (in the extreme
east), really has no trained administrators and has been relying on its
neighbours to supply personnel. But these are now needed in their home
States. Ogun on the contrary (the richest of all, in the heart of the cocoa
country) finds its potential civil servants attracted away by private
 Federalism: Failure and Success
employment. The Federal Government has this problem very much in
mind and additional administrative training courses are being organised.
The same is of course necessary in the education field.
It is intended that the government and administration of the States
should be as uniform as possible. Diversity will be fully allowed for at the
local level. The well-working local government system established by the
British broke down badly after the District Officers departed. It is to be
hoped that enough experience remains to give the new authorities a good
start. They are to be called 'local government' but (as we have seen) they
have been planned to follow pretty closely the former divisional boun-
daries. The Federal Government has laid down guidelines for local
government, leaving it to the States to work out the arrangements most
appropriate for their individual circumstances, since (as is normal in
federations) local government will mainly be the responsibility of the
States. Local government may delegate some duties to inferior bodies. But
it is emphasised that these are not to be regarded as a second 'tier', simply
as agents. Bodies which are to be given delegated responsibilities must be
provided by their local governments with adequate staff and funds to carry
out their duties.
In addition there is provision for Traditional Rulers' Councils. This
attempt to combine traditional authority with modern institutions is of
particular interest. It might be a model for other countries similarly
placed. But it must be borne in mind that many of Nigeria's traditional
rulers have had long experience in a semi-civil service capacity, ever since
the days ofLugard. The precise form of the Traditional Councils is for local
determination; but they must include representatives of all the local
governments in their areas. Their make-up must be sanctioned by State
Governors. They will be provided with staff and funds, and will be
expected to advise and to assist with the maintenance of law and order.
They will appoint district and village heads. Emirs will be expected to tour
their areas, but are strictly enjoined not to meddle in politics.
The elections to local government Councils will usually be direct, but
may be indirect if desired, and as arranged by State Governments. Up to
25 per cent of the members may be nominated by the State. The President
(or Chairman if there is no appropriate traditional leader) will be elected
for three years (the same duration as the Councils). Each local government
will function through a (small) number of committees (as we shall see
below in respect of one State). The committees will be chaired by
councillors, the central one being finance and general purposes. They will
report to the local government Secretary (destined to be a very important
officer). He will finally report back to the Finance and General Purposes
Committee. Local governments will be responsible for primary education
(as we have seen), for certain health services, for agricultural extension
work, and for local roads and bridges. They will licence non-mechanical
transport, control animals and drumming (important politically in
 Decolonisation and Federalism in Nigeria
Nigeria). It is planned that they should gradually take responsibility for
health centres, rural water supplies, housing and pollution control. Each
local government area will have a police unit attached to it under a
responsible officer.
At the present stage it is impossible to say just how the various States will
organise their local governments for it is clear that while important
responsibilities are being placed on them, substantial flexibility is possible
within the guidelines. By way of illustration we may glance briefly at the
arrangements which are being made in Oyo State (one of the wealthiest
and that in which Ibadan, former Capital of the Western Region, is
situated). Before the new plans were finalised Oyo had already had a
modicum of local government reform, and had established 2 I Districts.
These will now be extended to 24 local government areas. They may
delegate some of their duties, subject to State approval. Each will have two
important Committees (General Purposes and Finance, and Education)
and may organise others, including Development. Local government
elections in Oyo duly took place on 28 December I976, and the Chairman
was elected, subject to the approval of the Military Governor. The
inaugural meeting of the Council was held on 29january I977, when the
Committee Chairmen were elected. In addition to the local governments
there are in Oyo State I5 traditional councils. (In two areas three districts
have been grouped, otherwise there is a traditional council in every local
government area.) In this State it is notable that the Obas (or Chiefs) are
exceptionally important and in some cases experienced statesmen.
For the first time the Federal Government is providing massive finance
to support the new local governments. Oyo State has already received N
4·2 million and expects a further sum of the same size in the near future.
Oyo will add a matching 50 per cent grant to the federal assistance. In
addition certain small revenues (including 'income rates', a primitive form
oflocal income tax) will be available for local governments. Oyo has also
approved a large programme of grants for its local governments, both on
current and on investment account. Briefly these are: (I) a general
capitation grant of 50 per cent of the total required to bring resources up to
the average of the State, a grant of 50 per cent of the cost of salaries and the
whole of the necessary contributions to pension funds. (2) Investment
funds (out of current resources) of N 200 per mile of roads of approved
standards, and N 1000 for approved dispensaries which conform to
particular standards, and (3) on capital account 75 per cent grant and 25
per cent loan for road and other approved projects. We may suspect that
not all States will be so generous.
It will be seen that the local government system in the new Nigeria
builds much more on British than on American practice. A great deal of
thought and hard work has gone into its construction. As one military
observer put it, 'Nigeria is being given her independence for the second
time'. The question just is whether, given all her experience (especially
 Federalism: Failure and Success
since I g6o) she will this time be able to make and hold an efficient and
democratic federation. The basic objectives which run through every
aspect of the reform plans are: (I) to bring under control the tribal
cleavages and the politics which support them, and so create a powerful
nation, and (2) to eliminate corruption at all levels. Very great care has
been devoted to secure these objectives. The (voluntary) dismemberment
of the monolithic north has been helpful in itself and by making it easier
also to reorganise the other States on a rational basis. Even army
commands have been altered so that they now run from east to west instead
offrom the more divisive north to south. Hopefully these changes will serve
to de-emphasise politics.
But the way back to representative government -the transition
process -will inevitably be arduous and slow, even if everything goes
according to timetable. There are two dangers here: first that some part of
the programme may not work out as hoped, so that it will inhibit (or at
least delay) the realisation of the whole, as well as the growth of the GNP
and the activities of the private sector, both of which are essential to sustain
the programme. The second danger is that even if there is no serious slow-
down the military may become impatient, failing fully to understand that
the transition will unavoidably be slow and difficult. Too often in Latin
American countries the military have effectively lost patience and have
thrown out the civilian regime they tried to establish, before it had a
chance to settle down.
Nigeria is potentially rich and prosperous beyond the dreams of twenty
years ago, and is quite out of line with her neighbours. But it is a question
whether her level of development has yet advanced sufficiently to allow her
to realise her potential at all quickly. The initial phase of the oil boom
(when it was difficult to think up things on which the surplus could be
spent) is now over. She is planning to spend more than she can afford with
the proceeds of the present oil output which has recently had to be reduced.
She will have to expand this as much as she can; but to bridge the gap
before this can be accomplished she may have to borrow abroad fairly
heavily. (In this respect also her experience exactly parallels that oflran.)
A number of steps to raise the GNP are being taken. Her Third Plan was
announced in I975· Nigeria is still predominantly an agricultural country.
70 per cent of her people live in rural areas. More than 40 per cent of the
age groups I5-55 are still working on the land. But they are an ageing
labour force and much more recruiting among the young will be required
for the full development of agricultural potential. The Third Plan rightly
concentrates on agricultural productivity. It puts forward what appears to
be a well balanced programme, ranging from small family mixed farms to
large commercial estates and plantations. Active research is going on into
appropriate seeds, breeds of livestock, fertilisers and pesticides. Nine river
valley comprehensive development projects are planned. Several of these
are already making a promising start. One of their most important tasks
 Decolonisation and Federalism in Nigeria 143
will be to promote irrigation so that dry areas can be brought into
cultivation with new and expanded crops (such as sugar and cotton) which
are not suitable for the rain forest belt.
Industry has been expanding fairly satisfactorily; but so far it is
concentrated on light industry. To realise her full potential Nigeria needs
some heavy industries providing 'tools to make tools'. A start has been
made on a large steel complex; but this will take some time to come into
operation. Industrial production is still being held up by shortage of ports
and poor communications. There is great pressure for 'indigenisation',
which is indeed desirable, but if it is pushed too fast it may also delay
development. There is a severe shortage of labour in the management
grades, while at the other extreme unemployment is fairly high. (It is
widely suspected that the assassination of the late Head of State was the
work of a group of young army officers who feared for their jobs.) Indeed
the army- and to some extent the other armed forces also- has expanded
beyond all reason (more than tenfold over 1g6o) and eats up a major part
of the budget. It is politically very difficult to get this straight.
It is planned to continue the established policy of strictly limited
nationalisation but strong encouragement of joint management by
Nigerian and overseas cooperation. Finally within a few years universal
UPE will be turning out a quite unprecedented volume of schoolleavers,
mostly insufficiently trained for skilled jobs. (One answer to this problem
can be a raising of the school leaving age, as soon as schools and teachers
can be provided.) All of these plans are both possible and plausible. The
major problem is to get their timing correct so that the whole programme
can go forward in harmony.
Since Nigeria is a great deal larger and richer than most newly
independent Mrican States, it is up to her (and this is expected by the
others) that she will come forward as a leader. Her leadership could
provide a great stimulus to the stability so much needed in the new States.
It is a hopeful sign that Nigeria seems to be giving strong support to the
Economic Community of West Mrican States (ECOWAS). The Head of
State in his 1976 budget speech referred to Nigeria as 'a nation in a hurry'.
It would be a pity if she is in too much of a hurry with her internal plans to
look beyond her borders.
7 Two Successful Federal
Systems
(A) FEDERALISM IN AUSTRALIA

Australia must be counted as one of the world's most successful federations.

It has changed its character in many ways since its foundation in 1901, but
the changes have been accomplished by negotiation and a willingness to
compromise, so that no violent measures were required. The start -as a
convict settlement -was not propitious, but the opportunities for farming
(especially sheep farming) and later the discovery of gold and other useful
minerals assured the success of the colonial venture. All along- especially
in the early days- Australia has had one great advantage over other
federations which have made a success, in particular Canada and
Switzerland: a homogeneous population almost wholly of UK descent. But
in a way it has suffered by having no powerful jealous neighbours whose
presence might have served to keep the colonies together, as happened
conspicuously in respect of Canada and Switzerland. Australia's six
colonies developed separately and individually, but their common cultural
heritage kept them close in spite of the vast distances which separated
them.
By the time the Federation was established all six had attained a
measure of democratic self-government. New South Wales and Victoria
had their own Constitutions from 1855· Tasmania and South Australia
followed in 1856, and Queensland in 1859· But West Australia, remote and
poor even after the gold adventure, did not acquire self-government until
1890. From the first New South Wales and Victoria were the most
developed, the most thickly populated (or least sparsely), and so they have
remained, keeping their leadership throughout. Besides a degree of self-
government the colonies had by the time offederation developed a variety
of activities and services, showing an interest in education, health, housing
and water supply.
The first step in the direction of federation was a National Convention
held in Sydney in 1891. At this meeting federation was in principle
approved. In view of the constitutional changes which have been made
over the years (and others which appear even now to be needed) the
arguments behind the original Constitution are of particular interest. It
took its ideas from the USA, Canada and Switzerland. Four constitutional
 Two Successful Federal Systems
aspects which developed out of these models are of fundamental impor-
tance. First, Australia was to be a Dominion, like Canada, with a Governor
General representing the British Sovereign, having a duty to report to the
Privy Council any drastic change or difficulty. In pursuance of this duty
Governors have on three occasions dismissed officials for contravening
rules and conventions. Until after the Second World War Governor
Generals were Englishmen, appointed by Westminster, perhaps a member
of the Royal Family. The views of Australians were naturally obtained first.
The first Australian Governor General, Casey, had worked much in the
Commonwealth and was about halfway to being an Englishman. Today
Governor Generals are without exception Australian, effectively nom-
inated by the federal Prime Minister and confirmed by the Privy Council.
This method of choice does not necessarily imply that the Governor
General is the 'man' of the Prime Minister, as was demonstrated by the
dismissal in 1975 of the federal Prime Minister by the Governor General by
whom he had been nominated.
The second important aspect of the Australian Constitution is that it has
adopted the British system of Cabinet government, Ministers being
Members of Parliament and responsible to it, thus fundamentally differing
from the American system whereby the Cabinet is appointed by the
President and is responsible to him.
Thirdly the Australians borrowed from the Swiss the use of the
referendum. This device is intended to settle disputed questions and to
secure constitutional amendments when necessary. For the latter purpose
especially, very considerable use is made of it. On the whole the
Australians have used the referendum with care and responsibility. Of a
batch of questions put to the referendum it may easily occur that some are
rejected (and are consequently dead~ at least for the time being), while
others are accepted and must give rise to legislation. By and large referenda
normally prompt the ordinary man to vote for the status quo, hence changes
have come about slowly and with moderation. The other side to this is that
a lag may occur in making adjustments to the Constitution which are
generally desired.
Finally, but quite fundamentally, residual powers in the Constitution
belong to the States. Australia is essentially a federation by aggregation
and (as has been noted above) the different colonies becoming States had
launched out on a variety of activities even before federation was discussed.
Initially thus the Federal Government was relatively weak. The States
were givers of powers, not receivers. The Constitution conformed in a
manner not reached anywhere else, to the classic image of a federation
with each level of government supreme and independent within its own
sphere, which was clearly demarcated in the Constitution. The course of
Australian constitutional adjustment can be considered as a gradual
transition from the predominant power residing in the States to a
centralisation greater than in any of the other classic federations. The
 Federalism: Failure and Success
gradual centralisation process is closely linked with the changed character
of the Australian economy (as is inevitable): now a country oflarge cities
and strong and powerful labour organisations, formerly a predominantly
r~ral economy in which it was only natural that the States should be given
extensive powers over the small weak towns. An important element in
present troubles is that little fundamental adjustment in favour of the cities
has yet been made, in spite of recent plans (see below).
Although there was general agreement for federation not all the States
came in willingly. This was the first corner to be turned. The common tariff
and federal control of customs and excise revenue (which all agreed to be
necessary) swept away the major source of State revenue, especially for the
poorer States. Nor was New South Wales satisfied with the common tariff
because she wanted a greater degree of protection for her infant industries.
She refused to sign until some amendments in the draft Constitution had
been made. Western Australia (which was virtually dependent on customs
revenue) had to receive special concessions. The financial settlement as
finally agreed provided first that 75 per cent of the net customs and excise
revenue would be returned to the States for ten years, secondly that the
Federal Government should take over a number of States debts, and
thirdly that any revenue surplus over and above the needs of the Federal
Government would be returned to the States on a derivation basis. It was
originally believed that the uneven revenue potential of the States was a
temporary phenomenon, and that experience of federation would soon
even things up. As in other federations this was a delusion. In spite of fairly
substantial changes over the years the States have retained their relative
positions to this day: two rich (New South Wales and Victoria), two poor
(Western Australia and Tasmania), with South Australia hovering near
the lower boundary and Queensland (the only tropical State) tending
towards the upper end as she developed her crops and minerals.
The distribution of surplus revenue ceased in I908, the funds being
diverted to an old age pensions trust from I910. The arrangement for
sharing customs and excise revenue also came to an end and was replaced
by a system of per capita revenue grants, at the rate of S2· 50 per head. These
changes left the States rather worse off than they had been before. In I9IO/
I I, I9I2/I3andagainin I929/3otherewereheavycomplaints from Western
Australia, Tasmania and South Australia, accompanied by threats of
withdrawal from the Federation. This was a nasty corner to turn and, in
fact, may be said not yet to have been completely mastered. For the
moment the complaining States were given special ad hoc grants, the
amounts of which were settled by negotiation. This was clearly only an
interim measure. It was not until I933 with the establishment of the
Commonwealth Grants Commission (which we shall discuss below) that a
more permanent arrangement was made. Since the grants were un-
allocated, and hence applicable to any purpose the States desired, the
principle of coordinate federation was not seriously disturbed. The States
 Two Successful Federal Systems 1 47

continued to be the main executive agencies for the Commonwealth

throughout the interwar period. But it is worth noting at this point that
with these selective grants a substantial step in the direction of inter-State
redistribution had been made.
Major changes of emphasis were on the way in the years just before,
during and immediately after the war. Labour majorities sought to widen
and increase the influence of the Federal Government. The war and
mobilisation naturally had the effect of intensifying this change. It soon
became apparent that the major objective of labour policy was the usual
Socialist goal of increasing the power and influence of the public sector by
every possible means. In 1911 the Commonwealth Bank was established
and was encouraged to make loans. The beginning of central banking
functions are just discernible. Further activities were plans for the
construction of the transcontinental railway, (especially desired by
Western Australia), the creation of a national shipping line and the
extension of social security benefits. These developments did not ne-
cessarily curtail the power of the States, since the activities were not within
their jurisdiction. But when further measures of proposed federal activity
were put to the referendum they were rejected.
When in 1917 the Conservative Party came into office it suggested the
separation of tax powers by the withdrawal of the Federal Government
from income tax, a change to be accompanied by the cessation of per capita
grants. There was a large measure of support for a coordinating but not
centralising policy of this type. Agreement on these two changes very
nearly led to their adoption in 1923. Only New South Wales stood out
against the arrangement. Nevertheless the Federal Government continued
its campaign for more power even in the absence of agreement. In 1927 it
announced the unilateral withdrawal of the per capita grants, and called for
a Convention of State Premiers to discuss a general financial settlement
between the Commonwealth and the States. The Conference resulted in
the 'Financial Agreement' which covered not only the problem of current
budgetary funds, but also of funds for the financing of long-term
investment. The States had been borrowing very actively to build up their
infra-structures, as was required by an increasing population and rising
incomes. As a result of more or less indiscriminate borrowing the situation
had become very confused, and the States found themselves burdened with
heavy debt interest.
This corner was rather happily turned (at least temporarily) by two
measures which could be introduced now that the per capita grants were out
of the way. First the Federal Government agreed to take over all State
debts (within the Financial Agreement). Secondly it urged the establish-
ment of a permanent and compulsory 'Loan Council' on which the Federal
and all the State Governments would be represented. (A voluntary
coordinating Loan Council had been operating for some years, but had not
been a success. Indeed New South Wales had withdrawn from it from
q.8 Federalism: Failure and Success
1925-1927.) The new authority (unique among federations) would
determine the permissible extent of foreign borrowing for the whole
economy. The total was to be based on the advice of the Commonwealth
Treasurer and the new Reserve Bank, which was taking the place of the
Commonwealth Bank as a central institution on all policy matters. The
Loan Council would take charge of all matters concerning the terms of
borrowing and debt service. The only permitted borrowing outside its
jurisdiction would be for defence and for short-period loans. Finally the
Loan Council would direct allocation of loan funds between the States
severally and between the Federal Government and the States. (Decisions
under this head had to be unanimous.) The Agreement on the new
arrangements was unanimously ratified by the States, and the Constitution
was consequently amended by referendum.
Each State was given one vote on the Loan Council, but the Federal
Government had two votes and in addition in particular circumstances
might exercise a casting vote. (At a later stage this proviso proved to be of
great importance.) In addition to the Loan Council the practice grew up-
partly arising from it -of regular meetings of the State Premiers, in a
committee of the same composition as the Council. This proved to be a
most helpful device for getting the leaders of the different States into
personal contact and knowledge of each others' problems. Following all
this, in 1936, by a so-called 'gentlemen's agreement', the cities also became
eligible for a share in the hand-out of borrowed funds: but this seems to
have had little effect on their finances, which were becoming steadily more
inadequate.
In combination these new measures, together with the joint services
developing out of wartime (especially defence) needs, appeared to be a big
step forward in cooperative federalism. This proved to be true not only
during the war but also for a few years afterwards. But after the Second
World War it emerged that the device which had been forged for
cooperative coordination could be turned into a powerful instrument of
central control. With its two votes on the Loan Council and the possibility
of a casting vote, the Federal Government, whatever its political
complexion, needed the support of only two States to carry its policy. This
either party could easily muster when in office. Important in confirming
this new instrument of centralisation (which had been created almost
fortuitously) was the development of the Reserve Bank into potentially an
instrument of policy, in a manner in which the Commonwealth Bank had
never acted. These developments reflected the general postwar movement
in most Western countries following the adoption of the Keynesian
analysis.
The experience of the Commonwealth Grants Commission (which also
belongs to this stage of Australian federal adjustment) has somewhat
analogously diverged from the original intention. Its business was
conceived as a means of working out the compensation which might be
 Two Successful Federal Systems 1 49
required by certain States for those of their disabilities which could be
considered as due to the effects of joining the Federation. In fact it has
proved to be a major instrument for horizontal redistribution between the
States. As we have seen, the poorer States had been unhappy ever since the
end of the per capita grant system. (There is little doubt that over the course
of years they would have become equally dissatisfied with it.) No more
satisfactory arrangements had been made for their relief than ad hoc special
grants fixed by negotiations. With the onset of depression and the collapse
of primary product prices their position further deteriorated. They
ascribed a great deal of their troubles to the working of the common market
on their unprotected agricultural exports (except for Queensland whose
sugar was in fact protected). Further the Navigation Act restricted their
access to cheaper shipping. In the early 193os serious secession movements
appeared in Western Australia, Tasmania and South Australia. In
Western Australia in 1933 a secession referendum was passed by a two-
thirds majority, and an appeal was made to London (which naturally
refused to intervene). In the meantime the Federal Government had been
working on a formal instrument to take care of these troubles, and the
Commonwealth Grants Commission was launched in 1933. Western
Australia and Tasmania quickly became 'claimant' States and were
shortly followed by South Australia.
The Commonwealth Grants Commission is a permanent independent
quasi-judicial public body whose duty it is to enquire into and make
recommendations concerning the special assistance required by certain
States. Its recommendations appear always to have been accepted by the
current Government. Poor States could claim (and must demonstrate)
that they could not without assistance supply services of the standard of the
richer States. At first, the CGC validated the requests of the claimant
States for special grants on the basis of their budgets, compared with those
of the 'standard' States (New South Wales and Victoria). But since the
States' current budgets did not reflect very accurately the true position of
State finances, and the States kept their budgetary accounts in diverse ways,
the procedure was more laborious than conclusive. Nevertheless the
strenuous efforts of the CGC do seem to have induced some improvements
in State budgeting practices. According to the latest adjustment (for-
malised in the Grants Commission Act of 1973) the CGC now concentrates
on measuring needs as a basis for special grants. Needs are defined as the
difference between the revenue the claimant State would have realised ( 1)
by a 'tax effort' equal to that of the standard States and (2) with standard
revenue effort if its per capita revenue base were equal to the standard
States' revenue base. On the expenditure side an adjustment is made for
any additional cost of providing the population with the same average
quality of service as the populations of the standard States enjoy. The
resulting grant is an unallocated addition to revenue according to the
Financial Agreement system, so that it is not choice-disturbing. Needs are
 Federalism: Failure and Success
measured service by service so that the final total is essentially an addition
of these. But this is to anticipate.
Redistribution in favour of the poorer States was not the only type of
transfer offunds from the Federal Government to the States that was now
required. During the Second World War (in addition to other cooperative
and centralised activities which we have already noticed) the Federal
Government (as in Canada) took over the State income taxes, compensat-
ing them (as it proved very inadequately) by an increase in the general
grant based on their previous tax collections. This, and the postwar
inflation, once more put the poor States into difficulties. This was
essentially a new awkward comer since it was not directly related to
redistribution. It was dealt with, not very satisfactorily but at least
avoiding a political crisis, in two ways. On the one hand the States were
bidden to impose additional taxes of their own, so long as they did not
impinge on income tax. On the other, since the Federal Government found
itself to be enjoying exceptional revenue from progressive taxes (due to
inflation), it felt that it was in a position to make more flexible
arrangements for the general grant. As a result of this easement even
Tasmania found itself able for the time being to move out of the claimant
category; but on receipt of an additional grant of S15 million.
In respect of all these changes in unallocated grant arrangements three
points should be noted. First the new grants are awarded directly, no
longer requiring a special 'claim'. Secondly the general grant, as it is now
based exclusively on needs, has become purely an equalising device of
horizontal equity between the States. Thirdly, because it is thus more than
ever discriminatory between States it has the effect of dividing their
interests to some extent. This makes it more difficult for them to 'gang up'
together against the Federal Government. The landslide victory of the
Conservative/Country Party over Labour in the December 1975 election
seems to indicate nevertheless that in certain circumstances unity between
the States is not impossible. So far as the Federal Government is concerned
the absence of unity in the policies of the States facilitates the introduction
by Canberra of additional measures of centralisation.
In the meantime there had been growing up a type of transfer new to
Australia (called there 'specific purpose', in the UK 'specific' and in the
USA 'categorical' grants). This registers a very marked divergence from
the Australian tradition of unallocated grants. Not only were (and are) the
specific purpose grants tied to particular services or projects, they contain
strings of various sorts, generally requiring a 'matching' requirement on
the part of the recipient State. They are not always liked by the States as
they are definitely budget distorting. Nevertheless most States are not
averse to receiving additional funds for agreed extensions of services, even
for those which are constitutionally the responsibility of the States.
The combined result of all these grant changes, and in particular of the
recent development of specific purpose grants, is shown in Table 7.1.
 Two Succesiful Federal Systems 151
TABLE 7·1 Transfers to or for the States ($ million)

1972/3 197314 197415 Increase

74/5 over 7314 (%)

General revenue (F.A.) 1700"9 1923"5 2375"9 28

Special purpose
recurrent 389·5 6o9·7 1078·1 70"4
Special purpose
capital 541·6 958·4 155 1"9 6o·6
General purpose
capital 982·o 867·0 1027"4 21"5
3614"0 4358·6 6033"3 38·4

It is apparent that while the general purpose financial assistance grants

remain the largest category, neither they nor the general purpose capital
transfers (which rna y take the form of either loans or advances) have been
increasing at a rate anything like that of the specific purpose grants and
capital payments. In 1972/3 specific purpose grants amounted to 25 per
cent of total payments to or for the States. By 1974/5 it was estimated that
they had risen to 40 per cent of transfers. This expansion is partly to be
explained by two changes in Federal/State relations: ( r) a new arrange-
ment for financing house building and (2) the transfer to federal
responsibility of the whole of tertiary education (much against the will of
some of the States). It should be noted that even general purpose grants
have been rising at a faster rate than the indices of costs and prices. The
Federal Government can afford this rise because of the beneficent effect of
continuing inflation on progressive tax revenue.
A substantial part of the rise in specific purpose grants has been due to a
new development which has been becoming extremely important in
Australian federal finance: the establishment of a number of commissions
or statutory bodies to advise on particular programmes, and (where
relevant) to make recommendations for grants to be made to States in
respect of them. The first commissions of this type, such as the Universities
Commission, the Commissions on Advanced Education, on Cities and on
Roads, date from before the accession to power of the Whitlam Labour
Government. It is noteworthy that the grants recommended were
frequently for services which under the Constitution were the re-
sponsibility of the States. After it came to power (in December 1972) the
Labour Government established (or announced its intention of establish-
ing) a number of further commissions, such as for schools, children's
services, social welfare, community health and the so-called' national
heritage. A breakdown of the effect of the new policy is shown in Table 7.2.
In every year capital grants (or advances) have exceeded current
assistance.
152 Federalism: Failure and Success
TABLE 7.2 Select specific purpose payments, 1972/3 to 1974/5
S million (rounded)

197314

Social Servrces
Education 259 623 1173
Health 21 51 Il5
Social security
(including welfare and housing) 270 280
Economic Services
Urban and regional development 56 252
Transport and communications 329 421
Water and electricity 27 39
Debt charges assistance 91 104
Assistance for local government 57

I have put together social welfare and housing because they are closely
related services. But their movement has been opposite. The decline in
unemployment in the early 197os made possible some savings (no doubt
temporary) in social security. On the other hand the federal takeover of
housing implied a big expansion, just as has the takeover of tertiary
education. Of special significance are the (virtually new) grants for urban
and regional development. It is clear that over this period they were
rapidly expanding. This is also true of assistance to local government.
Nevertheless even with this additional help and stimulus some States
have found themselves in dire need of additional resources. The process
(which we noticed above) of attempting to increase the volume of
independent State revenues has greatly accelerated. This has been
achieved partly by increasing rates of existing taxes following the Premiers'
Conference in june 1974. The most important change was the rise in the
rates of the payroll tax (from ·5 per cent on the average to 5 per cent).
Great efforts have also been made to introduce new levies. South Australia
imposed taxes on petrol, Victoria a tobacco tax, Western Australia a levy
on the gross revenue of business undertakings. Some States were able to
increase mining royalties. Thus Queensland has changed the base of its tax
from a levy on tonnage to one on the value of output and by this means was
able to increase its revenue from S4million in 1973/4 to 38 million in 1974/
5· Tasmania (uniquely) has mainly relied on raisng service charges. (But
there was no increase in railway charges which figure conspicuously in
most State budgets.) Since the States are constitutionally excluded from
income tax they are somewhat constrained in their choice of new sources of
revenue, lest the courts decide that they are effectively income taxes. On
the whole it has been found that charges for additional licences are a safe
 Two Successful Federal Systems 153
bid; but Tasmania was in trouble over a proposed tobacco licence tax
which the courts held also included a tax on operations. Western Australia
was similarly in trouble over its fisheries tax which included some
processing. The expansion of State fixed investment stimulated by this
federal policy (as so often happens, for instance in India) has caused
difficulties with the service of new State debts. Some States found
themselves unable to proceed with programmes without 'special loans'
from the Commonwealth Reserve Fund. The Federal Government
temporarily bypassed this problem by issuing capital grants in place of
loans. It also took over responsibility for a large amount of State debts. It
was able to do this for s<>me time because the entire federal debt had been
redeemed during the war.
The Conservative/Country Party Government which took over in
January 1976 initially announced its intention of retaining most of the
Labour Government's new Commissions; but they may well play a more
modest role than over the years 1972-5. In practice, however admirable
their objectives, they have led the country into an extremely awkward
corner, which has not yet been resolved. Two difficulties in particular have
showed up. Firstly, since the Commissions have often been advising on
finance for general government services, not a few of which are con-
stitutionally within the field of State responsibilities, it might be expected
that they would act as intergovernmental agencies. This expectation has
not been realised. The Commissions are appointed by the Federal
Government and report directly to it. They are consequently regarded by
the public as federal agents. Although they are statutory public bodies, in
several of their activities they are operating alongside of, and in some cases
duplicating, the work of some public service departments. They are thus
increasing centralisation, but not in an efficient manner.
Secondly (and more serious), no means was found by the Labour
Government of fitting additional expenditure arising out of commission
recommendations into the ordinary budgetary process. Since the recom-
mendations are ad hoc, and may be implemented at any time in the
financial year, there is none ofthe opportunity which a budget debate gives
for considering priorities and the relative importance of different pro-
grammes. Since the expenditure arising is mainly of an investment nature
the projects are not of the sort that could be expected to be financed out of
current incomings. Nor do they come within the jurisdiction of the Loan
Council. (At one time the Labour Government argued that although the
investments were of a lasting nature they could be regarded as a series of
short-term projects for which borrowing outside the Loan Council would
be permissible. This was clearly most unsatisfactory.)
The changes in federal financial arrangements which are taking place in
Australia not unnaturally affect the relations between the different levels of
government. It will be recalled that the Commonwealth Government was
only established after prolonged discussion (in the late 189os) with the
154 Federalism: Failure and Success
agreed system of coordinate federalism between the Commonwealth
Government and the States, the local authorities being entirely under the
jurisdiction ofthe States. The adjustments which are now being made seem
to be subject to no such agreement, rather to a spirit of antagonism. There
is even some risk of altering the relative status of the three levels of
government in a manner which would not (at present at least) be
acceptable to the majority of Australians. Yet there can be no doubt that
for a modern high income country Australia is underdeveloped in certain
aspects, for instance in the construction of modern motorways which
would directly serve to bring the scattered locations into closer contact and
understanding. Of even greater importance is the planning and moderni-
sation of the great cities which the State capitals have now become
(Sydney exceeds 4 million and Melbourne is not far behind). Neither of
these aspects of development is of prime interest to the Conservative/
Country Party which took office in January 1976, but it is just in these
directions that the Labour Party draws its best support.
Three intergovernmental relations have to be considered: ( 1) between
the Federal Government and the States, (2) between the Federal
Government and the local authorities and (3) within each State between
the State Government and the local authorities. Changes are taking place
(and more are in the pipeline) in respect of all these relationships. They
obviously include a number of very awkward corners. The States have
been losing some authority in respect of those services in which National
Commissions have been established. At the other end of State activities the
Federal Government has been awarding grants directly to local authorities
without reference to the system of grants through States. But a referendum
to enable the Federal Government in general freely to make direct grants
to local authorities was defeated. Some States proved to be strongly
opposed to any such change. Nevertheless the Labour Government
continued to make a number of direct grants to local authorities in
addition to the traditional system of passing the grants through the States.
The relative importance of these two methods of grant giving were (in
1973/4) Ss·8 million direct grants, $10·6 million by the traditional method
(excluding operations in the Northern Territories). The largest item in
direct grants was for aboriginal advancement (except in the Northern
Territories in which it was for area improvements). It was anticipated that
the total would rapidly increase; but it should be noted that many of the
programmes for which grants were made had not only been agreed but
even partly implemented for several years. The new factor was their rapid
acceleration.
As well as adjustments required in the relations between the local
authorities and the Federal and State Governments, the actual organi-
sation and administration of local government surely needs overhauling.
On the one hand the great cities are by no means fully supplied with basic
modern services such as water supply and water-borne sewerage. On the
 Two Successful Federal Systems 155
other hand even apart from the massive new house building which has
been taking place, amenities which modern communities demand, such as
recreation and sport, are very imperfectly catered for. One trouble is that
administration is organised in a vast number of separate and independent
areas (Sydney has over forty). This makes it almost impossible to plan the
whole rationally. In most of the States a drastic reduction in the number
and increase in the size of local jurisdictions has been recommended by a
commission of enquiry. But States have been slow to implement the
suggestions, probably apprehensive of local political and vested interest
reactions.
What would to some extent be an alternative solution (although
probably less stable than statutory local government) would be to
encourage regional cooperation between local authorities. This idea has
the blessing of the Commonwealth Grants Commission which has already
approved sixty-eight regional organisations. Under the Commonwealth
Grants legislation of 1973 the CGC would be prepared to make grants to
the regional organisations. (It does not seem to be quite clear whether the
grants would be passed to the Region for distribution or be paid directly to
the authorities within it.) However this problem is solved it would seem to
promote a much needed expansion of planning at a level intermediate
between State and local government.
A further idea is the establishment of 'growth centres' which would
appear to be a type of 'Metro' organisation, broadly conceived, catering
for a central city and its dependent commuter range. In addition to grants
emanating from the Federal Government most States have approved the
principle of Local Government Grants Commissions of their own, which
would distribute funds to their local governments broadly in the same
manner as the CGC distributes its grants to the States. With all these ideas
the technical means to turn these awkward corners would appear to offer
no great difficulty. As ever the problem is to secure agreement on their
adoption.
It seems that the winds of change are blowing strongly in the Australian
Constitution. The general wish of the people appears to be that the balance
of power and influence between the different levels of government should
not be seriously disturbed, for instance to the extent of turning the country
too violently in a unitary direction. In spite of her ethnic and cultural
homogeneity and the stable organisation of the fixed number of States, it
would seem that there remain sufficient differences (both cultural and
economic) between the States to continue to make the federal form of
government the most appropriate, even if at the same time it is liable to
produce awkward problems for which new solutions have to be found. The
history of federation in Australia is an illustration of the extent to which
flexibility can be introduced without causing a breakdown.
 Federalism: Failure and Success
(B) THE SWISS CONFEDERATION

The climax of our investigations into federal systems which have

weathered their storms and rounded their dangerous corners successfully
must necessarily be Switzerland. The Swiss Confederation has had a very
long life, dating (at least in embryo) from the thirteenth century. In the
course of these long years the Swiss have worked out a constitutional system
which is in some ways unique, tailored to their own particular needs and
small size. But the result is extremely suggestive for the needs of other
countries which have, or may be contemplating, a federal system.
Initially Switzerland consisted of a number of separate sovereign states,
later called cantons, which joined together to secure certain common
objectives, especially defence, foreign policy and large public works. Some
cohesion was established and preserved through a central Diet to which all
sent delegations. But the Diet's powers were minimal and any canton
which disliked its decisions sometimes felt free not to accept them. The
particular cantons included in the arrangement differed from time to time,
but over the years there was a steady expansion in their numbers. Not all
the cantons had equal status and even to modern times the confederate
element was maintained in the sense that there continued to be outlying
areas which hovered between alliance and full membership.
Cohesion was strengthened from an early point by the persistent
membership of some cantons, especially the three original Forest Cantons,
in the various groupings that came and went, notwithstanding that these
original cantons differed from most of their neighbours in being poor,
purely rural and usually very conservative. At the same time their
persistence illustrates the diversity which so long prevented the develop-
ment of closer union into a true federation in spite of the very small ethnic
differences between the cantons, compared with most federations (apart
from Australia). But today Switzerland is quite obviously a federation
taking account of the growth of the public sector at the federal level. This
has been due on the one hand to the requirement of a larger than cantonal
base for many services, and on the other to the expansion of public activity
in new fields of economic and social policy. Nevertheless the sovereignty of
the cantons within their own field of management remains constitutionally
intact (indeed cantonal activities have substantially increased in the most
recent period); they retain their old responsibilities for law and order,
education and culture and public works within their jurisdictions.
Settlements in different parts of what is now Switzerland were made
very early, before the Christian era, but continued to be founded right up
to the sixteenth century. In the western areas substantial towns flourished
in Roman times, but the whole of the rest of the country was rural and
agricultural. In the level areas the land is very good but in the mountains it
rapidly deteriorates and is only suitable for rough grazing or for small fields
to produce fodder crops. Thus from very early times the country has of
 Two Successful Federal Systems I 57
necessity been food importing (by heroic efforts in the latest years it is now
hoped that Switzerland might in an emergency be self-supporting in meat
and milk, but certainly not in grains). Through history it has been a major
economic problem to find sufficient exports to pay for the necessary food
imports. The first substantial export for this purpose was mercenary
soldiers, which served the country for several centuries until (as we shall
see) their methods of fighting became obsolete. Due especially to the food
situation, for many centuries Switzerland remained a very poor country.
Now it is one of the richest in the world. To this change a number of factors
have contributed.
The eastern part of what is now Switzerland was effectively part of
Germany, that is, of the Roman Empire and its more limited successor, the
'Holy Roman Empire of the German nation'. In a number of places very
important monasteries and bishoprics were established (especially St
Gallen in the north-east and Basel in the north-west). They constituted one
type of very powerful and (usually) aggressive landlord. Elsewhere there
tended to be local barons or dynasts living in highly fortified mountain
castles, exacting dues and service from the local inhabitants. In addition
there were also scattered estates of the great Houses with imperial
ambitions such as Zahringers and Kybergers coming from the north and
from Savoy. The greatest of these were the Imperial Hohenstaufen and
later the Habsburgs. The Hohenstaufen Emperors were usually too busy
with their German possessions and Italian adventures to bother very much
about Switzerland; but the Habsburgs were for some centuries regarded by
the Swiss as their arch-enemies. Two important victories which Swiss
armies won over their big enemy (the Habsburgs of Austria), namely
Morgarten in I 3 I 5 and Morat in I 4 76, were vital for the very existence of
the nation.
The first objective of the people was to rid themselves of the tyranny of
their Imperial Governors, by burning and destroying their strongholds.
The first people thus to throw off the yoke were the sturdy and stiff-necked
farmers in the mountainous Forest Cantons immediately to the south of the
Lake of Lucerne: Schwyz, Uri and Unterwalden. (Rather fortuitously the
first of these was to give its name to the whole country.) These cantons had
declared before the end of the thirteenth century that they held their land
directly from the (safely distant) German King-Emperor. The alliance of
these three cantons was the cradle of the Confederation, although it had no
Constitution nor common organisation, no executive and no treasury for
many decades. Thus the Swiss Confederation had the smallest possible
beginnings, very different for instance from Australia or even India. But
the nucleus was permanent and endured through all the changes and
troubles that beset the infant State.
The number of cantons has now grown to twenty-five. The early history
of Switzerland was largely concerned with the timing, method of entry,
organisation, or control of this very varied collection. The Confederation
 Federalism: Failure and Success
was not itself an 'empire-builder' intent on expansion, but Berne exhibited
territorial ambitions from an early date and Zurich played the same game
for a time. It was a main objective of the Confederation to protect its
boundaries from the aggrandisement of powerful neighbours. This
objective could be followed in several ways: (I) by attempting to get one of
the great powers (all of whom were rivals one with another) to support the
Swiss against the others. France played this role for a very long time, as we
shall see. (2) By encouraging small states such as Zug and Glarus to join the
Confederation as additional cantons, thus extending the safety zone, (3)
once the Confederation was known and respected, by enrolling additional
states, even if their reliability was not very certain, into some sort of inferior
alliance, or even holding them in joint control of more than one canton. A
powerful ally might also be useful and might eventually join the cantons, as
Zurich, Berne and Basel did. As a result of these policies there were some
awkward problems of eventually producing equality of status among all
the cantons.
The Forest Cantons made their first treaty of alliance in I 29 I. It is
probable that at the start the alliance was no more than a Landfriedensbund,
a temporary union of neighbours such as was common throughout
Germany. But it had two forward-looking characteristics. Firstly, there
remained the continuing hard core ofthe original members, whatever sub-
alliances, or even temporary withdrawals, individual cantons might
indulge in. Secondly, in I309 an alliance was drawn up which included a
strong urban element. Lucerne was a close neighbour and natural ally of
the Confederation; it became a full member in I332. Zurich, joining in
I35I, was already (by contemporary standards) a large manufacturing
town. Hence almost from the beginning the Confederation was faced with
the problem of dealing with the divergent problems of town and country.
This problem was intensified when in I 353 canton Berne joined the
Confederation. Berne was not an industrial city but was already a powerful
administrative imperial city. For much of the history of Switzerland Berne
has been the leading canton, just as she is now the capital of the
Confederation.
The great importance of the battle of Morgarten was that it de-
monstrated how an army of small farmers and townsmen wielding their
simple halberds (but with supreme skill and strategy) could utterly rout an
army of the best cavalry that the Habsburgs could command. The political
effect of the Swiss victory resounded all through Europe. The Swiss began
to feel some self-confidence, and even self-consciousness. Economically and
unexpectedly Morgarten gave rise to the cantons' first important export
industry: the services of mercenary soldiers. Fighting provided an exciting
and lucrative career for the superabundant youth in the valleys. It was
only with the development of modern artillery in the sixteenth century that
the Swiss strategy became obsolete and the demand for mercenaries
collapsed.
 Two Successful Federal Systems 159
All over Europe the later years of the fourteenth century were clouded
by incessant conflict between the towns (communes) and the rural areas.
In Switzerland the urban and rural cantons were substantially different.
The cities were ruled by oligarchies of the local leading families. There was
not a breath of democracy. The rural cantons used a sort of primitive
democracy for all male citizens. But in practice the villages were usually
run by a few well-recognised elites. Throughout the fourteenth century the
Swiss were gradually gaining in reputation. Outside powers were at once
jealous and apprehensive. The Swiss themselves acutely felt the need for
further safeguards for their territorial integrity. Aargau they won by
aggression; alliances with other neighbours were tried: the Valais in the
south-west, Ticino in the south-east and Grisons (Graubunden) in the east,
although it was many decades before these areas were actually in-
corporated in the Confederation.
In 1444 a Swiss army was virtually wiped out in battle by imperial
troops, but nevertheless much of the battle honour remained with the
Swiss. This battle (Stjacob an der Birs) was notable as the first occasion in
which the Swiss came into direct contact with France, which was rapidly
becoming the greatest power in Europe, and which has been the most
powerful influence on Switzerland throughout most of her history. An
immediate benefit was the friendly attitude of Louis XI in assisting the
Swiss to overcome the imperial threat of an invasion by Charles of
Burgundy. This episode had the effect of bringing the imperial city of Basel
into the Confederation. She immediately turned out to be useful in
organising a 'lower union' of some importance among the cities of the
Rhine forests. (Access to Rhine transport was of great importance for Swiss
food imports.)
All the major enemies of Switzerland were for the moment removed.
The Confederation was not only safe but its reputation was still high. To
some extent infighting now took the place of external wars. There were
quarrels and bickerings and even physical violence in every part of the
Confederation; but the general pattern of the troubles was the interests of
the rising cities against those of the rural areas. The former supplied the
funds, but the latter produced the soldiers (who when not fighting abroad
lost no opportunities of raiding and plundering the towns). Tension was
increased when Zurich's new (1483) Burgomaster (H. Waldman), an
experienced and successful soldier, started the city off on a career of
territorial aggrandisement.lt seemed that the victory of the urban element
was complete. It even looked like the wreck of the Confederation. But in
fact no one wanted to break it up; it was fast becoming a recognised and
respected power. Nevertheless the corruption and conspicuous con-
sumption of the city administrations (facilitated by large subsidies from
France, which were quickly absorbed by the leading families) turned the
rest of the population against them. The small town/rural element staged a
strong comeback, and there was no further danger of collapse.
160 Federalism: Failure and Success
But the reputation of the Swiss in Europe was now sadly declining. They
were even referred to as 'those small quarrelsome communities'. Neverthe-
less in an important battle against the Austrian Maximilian (June 1513)
the Swiss soldiers distinguished themselves sufficiently to encourage new
cantons -especially Schaflhausen and Appenzell (near neighbours with
key positions on the Rhine) to join the Confederation. This brought the
number of cantons up to thirteen. Nevertheless a Swiss army was shortly
afterwards beaten at Marignano before Milan by the French King. This
was important as it demonstrated first that the Swiss were deeply divided
among themselves and secondly that with modern weapons they could
quite easily be beaten. This spelled the end of mercenary soldiers as an
export industry.
Just when things seemed reasonably quiet again a new and ultimately
highly divisive force appeared on the horizon: the Protestant Reformation.
The wars of religion shook the States of Europe to their foundations; but
the tolerant Swiss managed to round the various awkward corners which
faced them without major involvement, thanks largely to their de-
centralised organisation. The Swiss were not directly concerned with the
beginnings of the Reformation. But not much later with their own Zwingli
(of Glarus) in Zurich, the Picard Calvin in Geneva and Luther's doctrines
affecting the German-speaking cantons, they were presented with three
forms of the reformed religion in addition to the traditional Roman
Catholicism (and after the Counter-Reformation with a much improved
and respectable form of the old religion).
Mter prolonged discussion among the citizens Berne also joined the
Reformation. For a time religious fervour was intense and at one time a
fierce war waged between Zurich (where Zwingli dreamed of a great
Protestant Empire linking up with Scandinavia) and most of the other
cantons. This died when Zwingli was killed in 1539· But the majority of the
Swiss people were not very interested in doctrinal matters. The Forest
Cantons stuck doggedly to the old faith mainly because it was their
traditional way of life. Some joined the Reformation because it offered
greater congregational freedom; but the majority did so mainly because
they were disgusted with the lascivious ways of the clergy. Mter the
Counter-Reformation they tended to drift back.
When the heat of religious fervour had died down it was clear that the
Swiss were sharply divided. There were only four Protestant cantons, but
these included the more advanced and thickly populated areas. So long as
religious fervour remained high it was very difficult to keep politics and
religion apart. The Swiss were moderately successful in this, helped by
their decentralisation in the cantonal system. But in Germany there was
complete chaos. Traditional States had become fragmented (due to the
absence of a firm rule of primogeniture) and every little principality chose
its own religion which it was prepared fiercely to defend. This was the
background of the terrible Thirty Years' War which racked and
 Two Succesiful Federal Systems

devastated Europe until I648 (Treaty of Westphalia). Although France

was the formal victor of the war, Switzerland did pretty well out of it. Her
independence was formally guaranteed by the powers; and her banks
(already well developed) profited by financing the compensation pay-
ments of the vanquished countries.
Basel and the cantons were henceforward completely independent of the
Empire. The cantons made themselves formally into a Confederation,
although the Diet remained inactive. This passivity may partly be
explained by apprehension of a revival of the urban/rural (and Catholic/
Protestant) controversies, especially when the peasants revolted against
their harsh treatment by the rising middle class in town and country. But
on the whole the cantons were free to develop their own political organs.
This was useful experience, but led to a great deal of diversity, some of
which still remains.
This broadly was the scene on which the French Revolution erupted. In
Switzerland only the young were in any way in favour of such doings; the
bulk of the population looked on them with apprehension, and so far as the
city oligarchies were concerned, with dismay. At the same time a new
liberal party was emerging which wished to get rid of the traditional
government organs. In the face of this awkward situation the Diet decided
that there was nothing useful that it could do. Even at a later stage, when it
became apparent that Napoleon was conquering and annexing neigh-
bouring territories, the Diet could think of nothing better than passive
neutrality. Effectively the last session of the Diet in I 797/8. Then came the
news of the fall of Berne followed by the formal collapse of the
Confederation, to be succeeded by the French-promoted Helvetic Re-
public, with a highly unified Constitution based on the French model.
Switzerland was Napoleon's latest intervention on the Continent. As a
means of transit for his larger plans it was vital to him, so that he
determined to make it a permanent satellite of France.
The Helvetic Republic, as such, lasted barely three years. Unification
led immediately to the emergence of factions (or parties) violently opposed
to each other: on the one side the Unionists (modern progressive) and on
the other the Federalists (traditionalist). By their fighting and disturbances
the country was reduced to chaos. A faction-rent satellite was no good to
Napoleon so he determined that he must intervene to restore order.
Accordingly in I 803 he summoned to Paris all the deputies and prominent
Swiss leaders. Sixty deputies of the progressive party turned up. But
Napoleon was not interested in parties, so he appointed a Convention
consisting of five each from the two parties and four Frenchmen. To these
he propounded his plan in what was known as the Act of Mediation
(between the parties). While he listened to what the Swiss had to say
concerning minor objections, there was no real consultation.
The Act of Mediation produced a compromise Constitution of consider-
able ingenuity. Cities were compelled to give up their privileges, but there
 Federalism: Failure and Success
was no more talk of unification. The subject districts were elevated to full
cantonal status (making nineteen in all). This arrangement was not unlike
the modern Switzerland (but with Neuchatel, Ticino, Valais, Geneva and
part of Basel missing). Some cantons Napoleon kept for himself. The
cantons were divided into three groups: rural, urban, and the former
subject areas. The first returned to their traditional Landsgemeinde, but with
a leading Landammann. The cities were given a supreme magistrate (Avtrye)
but an aristocratic Council. The third group (for which there was no
precedent) was more democratic. The six senior cantons were to send in
turn for a year their Head of Government as Landammann, or spokesman for
the whole country. There were just two other officers: Chancellor and
Clerk. All three had to be paid for by the directoral canton of the year.
There was provision for a Diet of twenty-five, but as there were only
nineteen cantons it was possible for the more populous to have two votes
each. The cantons were forced to maintain a strong army, for the use of
France. It would not fight except under the orders and direction of France.
In fact some Swiss soldiers were pressed into the implementation of the
Continental system against England. Since there was dire need of finance
a direct tax was introdued for the first time; but the revenue did not accrue
to the Swiss.
Thus from 1803 to 1814 Switzerland as independent ceased to exist.
Mter the final defeat of Napoleon the cantons signed a pact which virtually
restored the system of the ancien regime. But things were never the same
again. The idea of a united Swiss nation had struck deep roots. Moreover
all sorts of new ideas from abroad had been filtering into Switzerland. Even
before the Revolution the works of Rousseau had been read. The Swiss
found them heady and exciting but on the whole unacceptable. Of much
greater importance were the politics of the Radicals which had immense
influence on Switzerland, once they had reshaped what they had learnt
abroad to their own needs.
The French Revolution of 1830 was very exciting to the Swiss. It chimed
in well with the so-called 'Regeneration' movement which was appearing
in the towns, and which in fact reflected the rise of the middle class.
Individual cantons were gradually getting rid of their oligarchies and
going 'democratic'. The general tendency was for the large cities to remain
traditional, while modern ideas were spreading in the more progressive of
the rural areas and small towns. Thus canton Basel split into two: the
urban area (Basel Stadt) traditional and the extra-urban area (Basel
Land) democratic.
In the progressive areas, the Radicals were of growing importance,
especially among the young. They were already toying with the idea of a
unitary State, especially on the economic side, for such services as customs
and excise. But for the present the Regeneration movement was strictly
liberal. The liberals were flooding the country with ideas for legislation, by
which they hoped to win the popular vote. They were particularly
 Two Successful Federal Systems
interested in the separation of powers, and were eager to free the Assembly
from what they saw as the clutches of the Government. But the liberals had
little sense of organisation or drive, and on the whole their middle of the
road ideas were not found attractive. Nevertheless they accomplished some
useful things, especially on the side of education.
The Radicals were considerably further to the Left, and some of them
were violently anti-clerical, which naturally infuriated the ardent Cath-
olics, especially the Jesuits and the monasteries. The rift came out into the
open when at the behest of the Radicals canton Aargau dissolved all its
monasteries. The means of suppression used were often harsh, even brutal,
with the result that the whole Catholic world was roused. The struggle was
no longer a Swiss legal question. It had become international and political.
It was an all-out fight between religion and tradition (or conservation) on
the one side and on the other modernism, and anti-religion (or so it was
feared, for instance in England). This was too great a simplification. The
Radicals were in favour of a large public sector and social reform. They
believed firmly in the rights of the individual, offreedom of worship and of
the press. They were by no means in favour of interference with property
rights. But they had not yet learned to state their views with moderation
and responsibility.
Things were at sixes and sevens all over the cantons when Lucerne
suddenly announced that the Jesuits would be given major responsibility
for their educational system. This at once roused the democratic cantons,
and feeling themselves in danger of a Radical onslaught the Catholic
cantons of Lucerne, Uri, Schwyz, Unterwalden, Zug, Fribourg and Valais
formed a Sonderbund for more effective resistance. In answer to this twelve
cantons signed up for the Radicals. War did in fact break out, but it was all
over in twenty-five days, more as a result of skilful diplomacy by the
Radical leader than by force of arms. The Sonderbund had no effective
leadership and had been easily beaten. Although it was in a way a very
small-scale affair, the significance of the differences of opinion and the
demonstration of how they could be overcome, was of very great
importance for the future of Switzerland. Henceforward Switzerland had
much more confidence in her essential unity and independence. Geo-
graphically now she was almost complete, although the King of Prussia
obstinately held on to his little principality in Neuchatel until 1857·
The European revolutionary year, 1848, was of supreme importance to
Switzerland because it was by the Constitution of that year that she
became a true Federation. This Constitution has remained the basis of
Swiss government ever since. An important revision in 1874 in fact
produced no qualitative differences in the relation between the Govern-
ment and the cantons. Subsequent changes have been made more of the
nature of adjustments to take account of new (largely unforeseeable)
circumstances. New responsibilities have had to be taken on by the
Government; but while these have enlarged its sphere the cantons have
 Federalism: Failure and Success
also enlarged their activities and are still very much alive. This then seems
to be a convenient point to examine the institutions which the Swiss have
developed, and to observe in what manner they actually work.
From I803 Switzerland had (as we have seen) a Diet to which the
cantons sent delegates, but there was no obligation on them to accept the
Diet's rulings. Cantonal government was infinitely diverse. Some had
Assemblies, elected in various ways. Others had nothing but a Landam-
mann. The Constitution of I848 set up a federal organisation consisting of
(I) a large Assembly (National Council) with membership more or less
based on population, directly elected by manhood suffrage (now on a PR
system); (2) a Senate (Council of States) of forty-four Members, with equal
membership for all the cantons; (3) the Federal Council (Government)
consisting of a Council of seven (with a fixed term of office) chosen by the
Assembly, the Chairman becoming President for one year. It is argued by
the Swiss that this is a highly convenient number; large enough for no
canton to feel neglected, but small enough to avoid the development of
factions. The method of election is considered to promote stability and
avoid demogogy. Cantonal senators are elected (in principle) by any
method which a canton desires. But now they are usually chosen by direct
popular election for a four-year term.
An important objective of the Regeneration had been to bring the
people closer into the Government. Hence as well as the extensive electoral
powers of the citizens, two additional methods of preserving continual
contacts between people and governments have been promoted, in a way
that is unique to Switzerland. These are the referendum and the initiative. It
is open to any 3o,ooo citizens to demand a referendum, i.e. a popular vote
on a law drafted by Parliament. The result depends on simple majority
vote. Up to I874 the referendum was limited to questions concerning the
revision of the Constitution; but since that time its use has been extended to
more general questions. Since I92 I it has been applied to some in-
ternational treaties. In I949 it was extended to emergencies.
The device of the initiative is more unique. According to this any so,ooo
citizens may suggest changes which it is considered ought to be made. The
initiative was at first intended for total revision of the Constitution only,
but from I89I the machinery was adapted for partial revisions also.
Between I 848 and I 973 there were 25 7 referenda, somewhat concentrated
in the later years. Switzerland has thus provided herself with an
extraordinary array of democratic safeguards. But it is interesting to find
that after all not a lot of use is made of them. Even for elections she has more
abstentions than any other country, and for referenda the response is often
very poor. Very important subjects have failed to attract more than 50 per
cent of potential voters. Further, the volume of abstention is increasing.
This might be alarming if the same people always abstained, but this seems
far from being the case. There are some indeed who cannot be bothered
ever to vote, but also there are some who vote regularly and earnestly. The
 Two Succesiful Federal Systems I65
rest are floating voters, voting on a subject that interests them or when they
are not wanted at home on a Sunday morning.
Switzerland has what any other country would consider a fantastic
number of voting opportunities. From the establishment of the I848
Constitution the Swiss frequently vote federally, cantonally and com-
munally with referenda every few weeks. But it must be remembered that
many of the subjects on which Swiss citizens were asked their opinion were
very complicated, and, some being privately put forward, the question at
issue was often very unclear.
Before we pass over to the present there is one organ of government
which has been shown by experience to be offundamental importance in a
federation: the Supreme Court. This is the essential safeguard against one
state -or even one man -destroying the democratic base and covertly
establishing an autocracy or dictatorship. Provision for a Supreme Court
was included in the Swiss Constitution of I848, but it did not really come
into its own until the revision of I874· Further revisions in I893 and I9I I
increased its general powers. A number of matters with which the
government had previously had to pronounce were brought within its
jurisdiction and so also had some functions of the cantons. Since I9I I the
Government has been careful to consult all interests before action on
controversial matters. The cantonal courts have also become more
important and an increasing range of the complexities of modern life are
referred to them. Zurich has even appointed a cantonal ombudsman.
It is common experience that referendum voting tends to be con-
servative. This has certainly been true in Switzerland. One striking
example of this was the history of the suffrage. While Switzerland adopted
manhood suffrage and stressed the moral obligation to vote from I848 she
was a long way behind other countries in extending the vote to women. A
more recent example of the slow process of change are the obstacles being
encountered in securing joint action for the purification of the beautiful
Lakes, themselves an important tourist asset, but which are now
dangerously polluted. One difficulty is that the process of introducing
changes in Switzerland may be very long drawn out, perhaps from the
initiative through the drafting of a Bill by the Federal Council, its
confirmation by Parliament, subsequent referendum and its vesting date
(which may sometimes be considerably delayed).
As in all federations the relations (especially the fiscal relations) between
Parliament and the Government are never completely stable. This has
been very marked of recent years, due to the problems posed by new
developments. Frightened by the world wars, the Swiss Parliament was
given exceptional powers to secure quick action during an emergency. But
in general while there has been no formal change in the relations between
Parliament and the Government there is no doubt that the Government
(The Federal Council) has become much more powerful than was
envisaged in I848. Most of the laws and ordinances are now drafted by the
I66 Federalism: Failure and Success
Government, which consequently has the most say in their content. This
change in the relative importance of the two bodies is no doubt largely a
matter of size in relation to the work that has to be done. The Assembly is
too large to move with the speed that modern conditions require.
Under the ancien regime 'federal' responsibilities were confined to
defence, justice and police. Even the armies were cantonal, although they
could be called on in an emergency. But federal activities were already
expanding before I848, in the building of roads and hospitals, and in the
expansion of primary education. In the I 850> state universities and
technical colleges were established. In I 8g8, after a great deal of trouble
and adverse referenda, the railways were purchased from private hands.
The Swiss inherited from the eighteenth century very strong convictions
concerning human rights. These now include habeas corpus, arbitrary
detention, inviolability of the home (including police entry), liberty of
religion, liberty of the press and the opinions it expresses, rights of
association, freedom of enterprise and commerce. In I g6o it was expressly
confirmed that the enforcement of all of these freedoms is ultimately a
federal responsibility. Of recent years there has been legislation on health,
transport, civil and criminal law, and finally on housing. All of these were
federally sponsored. There has been extensive federal outlay on industrial
and agricultural subsidies. But it is not at all clear what all this amounts to,
nor what its effective incidence is. In respect of housing for instance the
main outlay seems to have been made in support of private firms.
Undoubtedly implementation varies very substantially from one part of
the country to another.
The fiscal implications of these new public activities are also not at all
clear. It may be that they have not yet been fully faced, either in respect of
their total potential cost, or of the allocation between federal and cantonal
finances (the problem which so much troubles other federations). So far the
financial implications of these centrally sponsored services are not easy to
evaluate, especially in view of the Swiss federal/fiscal system. It is in respect
of her fiscal arrangements that Switzerland most closely retains her con-
federate institutions and practices. The two Councils, the Assembly and
the Council of States (cantons), have equal legislative powers, which
include choice of taxes and tax rates. Switzerland is the only country in the
world where the people really determine what taxes shall be levied. Any
tax rate change at the national level, (or afortiori the introduction of a new
tax) requires a Constitutional Amendment. This involves the consent of
both Councils followed by a referendum. Hence there may be considerable
delay in implementing even a change which is generally agreed to be
desirable.
The financial power of the cantons and communes (which mainly derive
their revenue from surcharges on cantonal taxes) is very great. In terms of
total outlay ( I975, SwFr thousands) the federal share amounted to I3,627;
the cantonal bill was I3,297 and that of the communes I I,I4I. Only in
 Two Successful Federal Systems
respect of national defence, social insurance (but not assistance) and
agriculture was the federal share notably the biggest. The activities of
lower-level governments are supported mainly by their own taxes on
income and wealth. In 1975 the cantons collected (SwFr thousands)
17,839, the communes 12,958 as against the federal share of 13,361. The
lower level governments can also use a few taxes on outlay (but not
contributing as much as 10 per cent of what the federal taxes of this type
amount to). In spite of its inferior position (relative to that of other
federations) the federal treasury also makes substantial transfers to lower-
level governments, by conditional grants (almost wholly 'matching') and
by revenue sharing. This amounts to about half of the volume of
conditional grants. The principal revenues shared are the federal direct tax
on income, profits and wealth (including the withholding element) and 50
per cent of the alcohol monopoly together with a share of customs on
imported alcohol and motor fuel. Part of the last is earmarked for road
works, but all the rest are without strings.
Several objectives are designed to be served by ,these transfers: ( 1)
correction of the inherent imbalance between the federal and lower level
governments due essentially to the expanding costs of social services; (2)
economic development in the form (mainly) of infra-structure and
permanent works, and (3) an element of redistribution in favour of the
poorer cantons. This last item dates from the report of a commission
(Renold Commission) in 1958. All the members of the Commission were
members of Cantonal Councils. As a result of the Report of the
Commission an equalisation law was passed in •959·
The Federal Government and the lower levels seem not to see quite eye
to eye on the objectives of transfer policy. The federal authorities would
like to do their share of redistribution by means of conditional grants which
would raise the GNP as well as benefit poorer cantons (for instance
mountain roads), and if possible to discriminate against the richer cantons
who can look after themselves. The wealthy cantons have no great wish to
support this policy. They feel that they need every franc they can get for
urban development. Moreover the conditions imposed as a result ofa grant
are disliked both because they are budget distorting, and because they
require the establishment of centrally imposed minimum service stan-
dards, which are sometimes considered unnecessary in their local con-
ditions. Consequently the cantons prefer to have their transfers in the form
of revenue sharing, which rarely has any strings attached. But all
governments now have a strong concern for equalisation, even if their
preferred methods are not identical.
The level of taxation in Switzerland is still low in comparison with most
other countries. But the Federal government in particular feels itself short
offunds in the absence ofan easy ability to increase taxes. It has had to take
refuge in very high public utility charges as a substitute for taxes. These
have perhaps a slight redistributive effect as the larger users will be either
r68 Federalism: Failure and Success
in the high personal income ranges, or be firms. On the whole it cannot be
said that the degree of redistribution achieved is very impressive. At a later
stage we must examine the current outlook on this question.
In recent years Switzerland has been much affected by the doings of her
big neighbours (as indeed she has always been, but in a different manner).
Switzerland has become a rich and prosperous country. Her traditional
anxiety concerning food supplies is much reduced, since on the one hand
her agricultural output has been greatly expanded (especially in respect of
meat and milk, not to mention wine), while on the other she has developed
a number of useful exports. These are principally of consumer goods,
especially watches, fine textiles and pharmaceuticals. In addition she has
long had a highly successful and lucrative tourist trade. Over the decades
this has adapted itself intelligently to changing demands; from the heroic
mountaineers of Victorian times to the group travel of today, which
expects to be mechanically conveyed all over the country, even up the
mountains.
In the two world wars Switzerland remained strictly neutral, a position
which was scrupulously respected by the belligerents. She was very
reluctant to join the League of Nations, which she considered to be too
narrowly an alliance of the victors only. She was even more reluctant to
join the UN, the EEC, or any community of States. The most direct way in
which the Swiss got involved in the wars was through the flood of refugees
who streamed over her boundaries as their own countries became
impossible for them. This sudden expansion of population put a hardly
tolerable strain on Swiss accommodation and services. Even foreign funds
pouring into her banks came to strain the integrity of her banking system to
the limit, although it eased her balance of payments situation.
While in no wise retreating from her strict neutrality, Switzerland has
welcomed the establishment on her territory of international organisations
such as departments of the UN (for instance UNCTAD) and the ILO. In
these directions Switzerland feels that even a small stable nation may have
something positive to contribute to international cooperation and amity.
Part III
8 Lessons of Experience:
Failure and Success
In the Introductory Chapter it was emphasised that the path offederalism
never runs smoothly. Sooner or later all will experience difficult corners or
traverses. Now we have to enquire which corners are the most dangerous;
why do some federations succeed in rounding them safely while others fall
over the precipice? For selected federations our case studies should provide
useful information; but there is also a large volume of general con-
siderations which are relevant not only to them, but in addition to other
(and more famous) federations, living in similar conditions. We can call
upon these for additional light on the problem. In assessing causes offailure
or success it is seldom a matter of identifying a unique factor; it is rather a
question of judging which elements in a complex situation were most
responsible for the result. Many of the general or environmental factors
which have influenced failures or success are not peculiar to federal
systems, but are shared by unitary countries of many complexions. The
constitutional practices of such countries may be changed by similar
circumstances, and may lead to changes in the direction of greater
centralisation or decentralisation of decision-making responsibilities, in
many ways similar to the changes brought by the same causes in federal
systems.
In discussing failure or success it is not sufficient to follow the ups and
downs of a federal system to the point where it ceases to be a federal system.
We must look further and ask what subsequently becomes of its members.
This is a matter of great importance not only to its own citizens, but also to
its neighbours and perhaps even to the world. We have to observe, for
instance, whether a failed federation just fell apart into often unviable
separate units (as occurred in the Federation of the British West lndies), 1
or (to take a happier example) they did as well (or better) than if the
federation had continued (as occurred after the break-up of the Malaysia/
Singapore federation). 2 Alternatively did the citizens feel that the factors
which had led them to opt for federation in the first instance were no longer
decisive, so that a unitary government had become more appropriate (as
the members of the British and French Cameroons found)? 3 In assessing
factors influencing failure or success it is useful to distinguish between those
that are essentially general, in line with world environmental changes (due
for instance to new technological, physical or even political phenomena,
171
 Federalism: Failure and Success
which affected all countries) on the one side, and those which were
peculiar to a particular federation (or felt there with particular intensity).
It will be convenient to organise the discussion under four heads, dealing
respectively with the influence of: ( 1) initial endowments, physical and
human; (2) constitutional and institutional organisation; (3) the attitude of other
countries in a world of fierce national rivalry, and (4) incompatibilities and
imbalances between or within the federal States. Each of these i~fiuences is
very likely to change over time. This may lead to modification of the
federal structure and in particular circumstances to its breakdown or
extreme modification in the direction either of devolution, fragmentation,
or of greater unity. The immense changes, economic, social and political,
which have struck the world since the Second World War, have put a
particular strain on federal systems. Inherently they find it more difficult to
adjust to changes than a unitary system does. The various reactions of
contemporary federations to the changed circumstances add a new
dimension to federalism.
Incompatibilities and imbalances may be of many kinds, human and
institutional. Some may be inherent from the start but may resolve
themselves over time (or alternatively become more acute). Other
imbalances which were less visible at the start may become more
prominent as a result of change. One of the most difficult of these is fiscal
imbalance (between the central government and lower levels, or between
individual states). For the solution of this particularly modern problem no
federation has yet found a fully satisfactory answer; but many are now
deeply concerned to do so. It is highly relevant for our subject to discuss
briefiy 4 the efforts they are making as a result of their experiences. If fiscal
imbalance becomes serious enough it may cause the abandonment of a
federal system. Even at the best it will be an obstacle to maximum
efficiency of operation.

INITIAL ENDOWMENTS: PHYSICAL, GEOGRAPHICAL AND HUMAN

There are a number of instances in history where federal systems were (or
became) too large for effective management, especially given the means of
communication currently available. The members began to drift apart,
having doubts as to whether the benefits of association were worth the costs
which they implied (particularly of the contributions exacted). This was a
major factor leading to the decay of the Achaean League• after its eastward
thrust. Similarly the achievements of the Hanseatic League 6 were reduced
by its long lines of communication, once the rising powers of the
neighbouring countries impinged on its sketchy organisation. Even with
modern transport and communications long distances make cohesion very
difficult. The Borneo States 7 agreed to enter the Malaysian/Singapore
federation mainly as a step to independence. They are not particularly at
 Lessons of Experience 1 73
home in its second form (without -Singapore), and if they felt that they
could get more development aid by another alliance they would be
difficult to hold. Similarly an important factor hindering the full
development of the Federation of the British West Indies was the distance
between the units (especially between jamaica and the other islands). 8 In
Australia the difficulties of communication between Western Australia
and the rest were recognised from the first. The Commonwealth needed to
include Western Australia; but not even the award of special privileges and
grants was sufficient to prevent Western Australia from threatening
secession on several occasions. 9 That she did not secede illustrates that with
goodwill even severe inconveniences need not break up a federation.
In the case of Pakistan physical distance between the two Wings was not
so much the deciding factor in the secession of Bangladesh, as the difficulty
of communication due to the slice of India between the two parts. 10 If
communication cannot be close, from whatever cause, the poorer units
tend to develop a complex that they are being neglected and are receiving
less than their fair share of development. This was a major complaint of
Bangladesh. Similarly the reason for Tanzania's reluctance to proceed
further than common services was largely that through lack of com-
munication and understanding, she felt that she was being discriminated
against in respect of opportunities for industrialisation. 11
There are many other ways in which the physical environment may
affect the prospects of successful federation. An illustration of one such
phenomenon is the discovery of mineral wealth in one part of a federation,
as occurred when oil was found in the Eastern Region of Nigeria. 12 This
changed the whole relation between the different States of the Federation.
When the Eastern Region realised that within the Federation she would
not be permitted to retain the oil profits for her own use, she immediately
sought to withdraw, and was only prevented from doing so as a result of a
civil war.
Differences in human endowment may mar the harmonious operation of
a federation no less than differences in physical opportunities. These may
take the form of religious disagreement, differences of culture, degree of
education or sophistication and most of all of race (especially of course
where there is a question of colour). These may be present in various
degrees, and while any of them alone might be insufficient to cause
rupture, in combination they can easily lead to an impossible situation.
At the time of the Reformation in Switzerland 13 disagreement between
the Catholic and Protestant approaches to Christianity gave rise to enmity
which nearly wrecked the Confederation, although there were no
disparities of race, and very little of culture. With the general decline of
interest in doctrinal questions the danger evaporated. Generally speaking
religious differences would be less likely in modern conditions to cause
ruptures (unless combined with political differences, as in Northern
Ireland). But there remains one religious cleavage which is (if anything)
1 74 Federalism: Failure and Success
more dominant than it used to be, namely between Islam and all other
religions. This was the prime cause of the failure to bring about a
confederation of the Indian subcontinent. It continues to be important
elsewhere, for instance in Malaysia and Nigeria. But in these places
religious difficulties are combined with political and cultural differences.
The trouble is partly due to the Moslem ethic which insists on certain
norms of conduct which are foreign to other religions. In Nigeria the
hostility between the Moslem north and the mainly Christian south turns
much more on the social, cultural and political habits of the Emirates than
on religion. In fact Islam has been not unsuccessful in making religious
converts in Southern Nigeria 14 without causing political trouble there.
Again the Moslems in Malaysia are not opposed to the Tamil (Hindu)
elements (who in fact have very similar social habits). Their hostility to the
local Chinese is essentially cultural and economic, rather than a concern
about Confucianism.
There is no more striking example in history of cultural differences
which nearly wrecked a federation, and which had nothing to do with race
or religion, than the US Civil War between the (relatively) democratic
and 'colour-blind' North and the Southern plantation/slave economy.
Again, in Canada, religious differences are only a very partial explanation
of political tension between Quebec and the other Provinces. So far as the
Quebecois are concerned, English Catholics are considered as alien as
English Protestants. That language differences need not be disruptive is
shown by the history of Switzerland, and also by the multilingual
federations of India and Nigeria. But language can be used as a means of
conscious identification (by a country or a State), and hence of creating or
perpetuating tension (as is occurring in Canada). This use oflanguage may
even extend to the creation of a new language as a means of emphasising
mutual identity (as Afrikaans in South Africa, 15 and the new Cameroon
language, for example).
The difficulties which are almost certain to arise when the colour
question enters hardly need emphasis. Yet in several federations which
experience tensions it hardly arises: for instance in India and the
Federation of the West Indies. Yet in East Africa and in the ill-fated
Central African Federation they have been paramount. More precisely it
is not so much the presence ofcolour differences as the attitude to them that
gives rise to trouble. In East Africa for some time federation was prevented
by fear of domination by Kenya White settlers. In the USA also it was not
the presence of colour but its treatment that proved incompatible between
North and South. Ever since that time US governments have gone out of
their way to reduce or annihilate the colour problem. But again it is the
cultural aspect that needs emphasising, since US policy is equally directed
to the absorption of immigrants from Eastern Europe with different
cultural backgrounds. Australia also has to tackle cultural problems with
some of its 'New Australians'. Absence of social and cultural homogeneity
 Lessons qf Experience I75
does not necessarily prevent the establishment ofa federation, or wreck one
as it evolves. But it is certainly an additional obstacle to success.

CONSTITUTIONS AND INSTITUTIONS

If we agree that a federal system has the dual purpose of creating a nation
and preserving the identity of the units, it is clearly essential that
Constitution and institutions must be appropriately devised for both
purposes. We have seen how conscious the best of the Greek Leagues 16
were of both aims. The Hanseatic League was much less successful in
respect of any sort of national policy. It had no real capital but lived under
the hegemony of a succession of leading cities (especially Lubeck and
Bruges), according as economic and political circumstances changedY
The Greeks already expounded the basic necessities for both objectives
(centuries before de Tocqueville) and we cannot do better than recall
them.
In the first place a federation must have a Constitution. (This is not
strictly necessary for a unitary country, but may nevertheless be con-
venient there also.) The Constitution will provide for: (I) a (probably
large) Assembly representative of all citizens and chosen from the units (or
States), most likely in proportion to their relative populations; (2) a House
of States or Senate, considerably smaller but normally providing strictly
equal representation of all States; (3) a Council or Cabinet to give
direction and coordination to the whole (the relative power of (2) and (3)
may vary from one federation to another and yet be quite successful;) (4) a
chief Minister or President who may wield (but not necessarily) full
executive power, although subject in the last resort to the will of the
Assembly (since federation is government of the people by the people).
National policy is unlikely to be effectively implemented without all these
institutions, and in addition if sufficient funds are not made available to the
central government to carry it through. (We shall return to this below.)
In addition to these federal organs of government we must add a
Supreme Court, answerable to the government as a whole, as chief
interpreter of the Constitution. We need more knowledge to know exactly
what the Greeks did about the courts, but it is clear that the election of
magistrates was considered a most serious matter. Finally a viable and
durable federation cannot be built unless all citizens recognise themselves
as having double loyalty: to their own State and to the nation, with free
movement of persons and goods from State to State. These are the basic
needs of a durable federation. A looser (confederate) organisation will no
doubt be less precise, largely because the units do not fully agree. The early
history of Switzerland is a good example of this state of affairs.l 8
Nevertheless even a confederation needs a central organisation capable of
 Federalism: Failure and Success
looking after certain common interests (especially foreign relations). But
the units may feel no urgent compulsion to agree to everything that the
'General Government' proposes. Such a Constitution was what the
Southern States of the USA had in mind at the time of the civil war. A
confederation might perhaps have been workable at one time for the whole
of the Indian subcontinent-or so the more moderate leaders hoped. This
degree of common government is all that many people expected (and
hoped for) in South Africa. If anything had been possible in East Africa it
could hardly have been more cohesive.
It is extremely convenient if a federation can start in a small way with a
few States so that it can adapt the Constitution gradually as it acquires
more members. Such was the position with the original thirteen colonies of
the USA, although it was actually several years before they had any
Constitution at all. This was also the position ofthe early Swiss cantons. To
devise a ready-made Constitution for a completely new federation is
extremely difficult. An illustration of this was the complete confusion of the
Nigerian Colonial Government 19 as to what the appropriate relation
between the centre and the States ought to be. The general feeling that a
loose organisation would work best determined the decision that the States
(Regions) must be large enough to shoulder quasi-national responsibilities
(and so could only be very few). This turned out to be an untenable
position due to internal incompatibilities within each of the three Regions,
as we shall recall later. It was only the lucky homogeneity of the Australian
Colonies that enabled them to devise a workable Constitution almost at the
first shot.
In this respect it will be extremely interesting to observe the further
development of the German Federal Constitution. It was planned in such a
way that there would be no future danger of an over-powerful Central
Government. Hence important responsibilities and resources were left to
the States. But Germany, now in the forefront of the advanced nations,
must be able to formulate (and have the funds to implement) a strong
national policy. The present Constitution may not enable it to do this
without some adjustment. (This is a matter which we must discuss later in
relation to fiscal policy.) 20
Returning to our case studies, it is easy to see that there were often grave
constitutional deficiencies. The Constitution of the Federation of the
British West Indies could hardly have been durable without substantial
amendment, because firstly, the Federal Government had only the most
meagre financial resources, 21 secondly there was no freedom of personal
movement between the units and thirdly because a common tariff was
never agreed. Yet federation (had the appropriate conditions existed) was
clearly a good idea. The small size of several of the units made them non-
viable alone, and consequently subject to outside pressures. Similar
deficiencies were also present in the proposed federation of East Africa.
The Federation of Malaysia and Singapore on the other hand was
 Lessons of Experience
reasonably liberal in respect of the movement of persons and capital. But it
never developed a federal capital, 22 nor any feeling of nationhood.

FOREIGN REACTIONS

Foreign reactions are among the most important factors determining

failure or success in federation. The establishment of a new federation
effectively brings a new State into the comity of nations,·and to this many of
them cannot be indifferent, since it may affect their interests deeply. We
need to look at these relations from both sides: the attitude of the federation
to other countries and of other countries to the new federation. The most
vital relation is that of the new nation to its immediate neighbours. There
have been many instances where independent States got together for
mutual protection from powerful neighbours (these in fact unintentionally
promote federation if they do not swallow the infant nation). Canada and
Switzerland are both striking examples of this phenomenon. Canada was
so much afraid of being physically swallowed by the USA that the diverse
(and possible incompatible) elements of French (lower) and British
(upper) Canada were prepared to make a Ration together. There has long
ceased to be any danger of physical acquisition of Canada by the USA. But
increasing domination of Canadian investment by American firms (which
mainly affects English Canada) may come near to binding her to her great
neighbour as surely as political domination.
The history of the relation ofSwitzerland with her big neighbours is very
revealing. Whenever there was a pressing external danger the cantons
were strongly united. 23 When there was no immediate threat inter-
cantonal tensions and bickerings started up again. But gradually the
cantons came firmly together in mutual respect, and the nation was secure.
Thus the great danger that outside influences may break up a federation is
essentially at the start. When it is safely established as a nation there is little
danger of domination- more especially in view of the current policy of the
UN. On the other hand, like other influences the situation is not static. A
change of government or a technical development, for instance the
discovery of a new mineral resource, may turn a tolerant neighbour into an
aggressive one. The Malaysian/Singapore Federation was extremely
nervous of the policy of Indonesia, both as being Communist orientated 24
and as casting jealous eyes on Sa bah (North Borneo). But the fact that all
three are now active members of the rising regional pact of ASEAN and
that Indonesia has renounced all claim to Sabah, suggest that this trouble
is on its way out.
New federations created in the process of decolonisation naturally tend
to start with close relations (economic, political and cultural) with their
former mother countries with whose method of government and organi-
sation they are familiar. Although they are naturally anxious to seek advice
 Federalism: Failure and Success
(and no doubt aid) from outside sources as soon as they are at liberty to do
so, this need not imply a rupture of communication with the former mother
country. There can be few worse relations between ex-colonies than those
between India and Pakistan, yet both manage to preserve good relations
with the UK, notwithstanding the memory of the bitter and long-drawn-
out independence struggle. The case of Pakistan 25 draws attention to
another important element in outside relationships. It may occur that one
State in a projected federation has a strong affiliation (religious, cultural or
even political) with an outside country even though it may be by no means
a neighbour. Illustrations are the Moslem influence exercised (above all)
in Pakistan, but also in Nigeria, and of recent years in Uganda. In Pakistan
the effect has been a great intensification of Moslem observances. (On the
other hand Moslem world powers have beneficently been attempting to
reduce those troubles of Pakistan which are due to political faction.) On
the political side the backing of the South African Boers by Bismarck's
Germany was as disruptive as anything the modern world has seen. A more
recent illustration is the rapprochement between Quebec and metropo-
litan France. Of greater disturbance for relationships in infant federations
has been the rival power politics of Russia and China. This has already
impinged on our case studies in the Caribbean and in Africa, and no doubt
more is to come.

INCOMPATIBILITIES AND IMBALANCES

Disruptive forces from outside are specially likely to occur (and perhaps
succeed) in federations which suffer from internal incompatibilities and
imbalances. These may be at two levels: (I) between the levels of
government (vertical imbalance) and (2) within an individual State
(horizontal imbalance). Incompatibilities may be modified with a change
in outlook, such as the Swiss Protestants and Catholics who, having at one
time almost broken up the Federation, learned to live together in complete
harmony. On the other hand the course of history may intensify existing
but perhaps almost latent incompatibilities. The incompatibility which
prevented a union of the Indian subcontinent was mainly a matter of
religion, egged on by the intransigence of some Congress leaders and
Pakistan's consciousness that she was part of the great Moslem world. But
the incompatibility between Pakistan and Bangladesh had nothing to do
with religion. The divisive forces were language and culture. The
Federation of Malaysia/Singapore largely broke up through cultural and
political differences. Singapore is neutral as between races, religions and
languages, while Malaysia feels the need to assert her ego through religion
and language. Singapore, as by far the richest State, felt that she had a
right to play an important part in the Federation. This was incompatible
with Malaysia's policy. A most conspicuous case of incompatibility was the
 Lessons of Experience 1 79
attempt to bind together in the short-lived Central African Federation
White-dominated Southern Rhodesia, wealthy and relatively advanced
Northern Rhodesia (Zambia) and small and backward Nyasaland
(Malawi) .26 Since the break-up of the Federation it is probably right to say
that these incompatibilities have become more pronounced.
Incompatibilities within States are not usually such a serious matter as
to break up a federation; but they may prevent optimum functioning
through tensions, so that it is highly desirable to eliminate them so far as
possible. Initially in India there were many incompatibilities within some
States, for instance between the Mahrattas and Gujarati in Bombay State.
Dividing the State has been a great success. To reduce incompatibilities to
the point of innocuousness it has been necessary in India substantially to
increase the number of States. Even when reduced in size by fission they
greatly exceed in population, complication and extent many independent
nations recognised by the UN. But clearly the process of division cannot be
allowed to continue indefinitely without reducing their status. So far in
India it has been possible to halt the process of division by using language
as a proxy for compatibility. (But this does not quench the desire of
Hyderabad to be independent of Andhra State although both are Telugu-
speaking.)
Incompatibilities within the Nigerian Regions had existed as long as the
Regions themselves; but under British administration they had not been
very noticeable. On the eve of independence they surfaced. But by that
time it was impossible for the British to readjust boundaries. The
subsequent course of events has served greatly to intensify the incom-
patibilities, especially those between the Moslem North and the non-
Moslem Middle Belt of the Northern Region, and of several peoples in the
Eastern Region who resent the dominating (and domineering) attitude of
the Ibo. In order to reduce, if not to eliminate, incompatibilities in Nigeria
it has been necessary (as in India) greatly to increase the number of States.
Both India and Nigeria now have nineteen States; India serves 684 million
people, against Nigeria's go million. India is now in course of creating
three more; but they are hardly yet viable. In Nigeria very great care has
been taken by a Commission visiting every part of the country, hearing
complaints and suggesting boundaries. It will be exciting if the new States
can really forge ahead in harmony. 27
One incompatibility which is of increasing importance in some
federations is that between urban and rural interests. In Switzerland this
appeared at an early stage; but everywhere the recent growth of urban
communities has given a sharper edge to urban and rural differences, and
so between the areas that are largely urbanised, and those which remain
predominantly rural. A successful federation in which this incompatibility
threatens to assume awkward proportions is Australia. The rapidly
growing cities demand social services, constructional works and housing,
matters which are of only secondary interest in the rural-dominated State
r8o Federalism: Failure and Success
Parliaments. This is especially true in New South Wales and is reflected in
a sharp difference between the (urban) Labour Party (in Sydney) and the
(rural) National-Country Party. While it is unthinkable that these
differences could break up the Federation it is possible that they may
require not inconsiderable constitutional adjustments (in the direction of
more funds and powers for the cities). This could have wide repercussions.
(We return to this below.)
The incompatibilities which we have been discussing are one form of
imbalance. It is clearly desirable both to foresee and to guard against them
as much as possible and also to provide within the Constitution means of
mitigating them. But one common trouble is that balances which have
been carefully looked after in framing a Constitution may be destroyed by
economic, technological or social change. Good examples of such troubles
are provided both by the USA and Canada. Initially in the USA the
democratic, small farming, industrialising North and the feudal plantation
economy of the South were of more or less equal weight in the Federation.
But the opening up of the West as a wage economy completely altered the
balance in favour of the northern way of life. Actual civil war might
possibly have been avoided; but only at the cost of the North accepting a
much looser form of Constitution than she would have preferred. A very
similar situation arose in Canada. Initially there was a reasonable balance
between French and English-oriented areas. But the opening up of the
West on the English pattern completely altered the balance. Instead of
pulling half (or more) weight in the Federation Quebec found itself in an
increasingly inferior position, hence her anxiety to insist on her own
identity and culture, if she agrees to remain in the Dominion.
In the newer federations internal imbalances between the States were
sometimes there to start with. This was especially true in the Central
African Federation 28 where the trouble was not merely a matter of culture
and colour, but also of relative economic power. Northern Rhodesia had
all the money, Southern Rhodesia needed it for her industrialisation
programme, while Nyasaland was in desperate need of funds for every
aspect of development. Although the actual break-up of the Federation
started with Nyasaland's protests at discrimination and neglect, it is only
too likely that Northern Rhodesia would have rebelled against being the
perpetual milch cow of the Federation. In Nigeria the inherent imbalance
between the north and south was indeed realised, but it was hoped that this
would not greatly matter in the planned loose federation, because the
smaller south with much closer settlement and development would be a
counterpoise to the vast but sparsely inhabited and poor north. Con-
sequently it did not seem inappropriate to base such things as fiscal
handouts and Parliamentary representation on relative populations. But
when it was irrefutably revealed (by the census of rg64) that the
population of the north was enormously greater than had been believed (so
that under the Constitution perpetual domination by the north would
 Lessons of Experience
have been inevitable) substantial changes had to be made in order to
restore balance. This was accomplished in the first instance by splitting up
the monolithic north into six- by no means homogeneous- States. 29
We must now turn to the discussion of the most important and pervasive
imbalances of all: those on the .fiscal side. We need to distinguish two sorts
of fiscal imbalances: those between the national government and all lower
level governments, and those between the different units. At the State level
a similar problem arises between the State government and its local
authorities, but this is more like the problem in a unitary country, which
can also suffer badly from the phenomenon because the lower level has
only statutory and not constitutional standing, and so can (within reason)
be ordered about.
But we must be more precise as to the meaning offiscal imbalance. In the
centre/state connotation it implies in the constitutional sense that one or
other level of government cannot command sufficient funds to carry out its
federal obligations at an acceptable level. In an economic sense it would
imply that the federal system was unable to work at full potential efficiency.
All could be better off with appropriate fiscal adjustment. In the political
sense it can easily give rise to a feeling of injustice on the part of those States
that feel themselves to be discriminated against. In certain circumstances
this discontent might become serious enough to create a demand for
withdrawal (as jamaica withdrew from the Federation of the West Indies
and Western Australia threatened to withdraw from the Commonwealth) .
Within a State also a sense of injustice easily arises when an area considers
that it is less well treated than another (or perhaps the urban areas feel that
too much is being spent on rural interest-or vice versa).
At both levels of imbalance an important element of political ideology
enters when this situation occurs. Should policy (in the pursuit of national
growth) give greater assistance to the more viable units, trusting that their
prosperity will spill over to the rest, or should policy be directed first to the
poorer elements, following a policy of 'even development' and interlocal
income equalisation? There is no general solution to this dilemma, and
probably a combination of appropriate policies will be required. Although
the problem is basically economic, political elements often dominate the
discussion. Generally speaking an advanced country tends to favour
equalisation (redistribution) both interlocally and interpersonally. But (as
we shall discover later) their policies by no means always have this effect.
A poor and developing country which has urgent need of raising its
national income cannot afford to spend much on non-viable areas,
however greatly it may wish for equalisation (as India certainly does).
What, we must ask, does this imply in terms of fiscal distribution of
resources?
In the early Leagues and Confederations it was the norm that financial
resources belonged in the first instance to the units, so that the general
government depended on contributions from the members to finance its
 Federalism: Failure and Success
obligations and policy. This was certainly the position in the Greek
Leagues, and also in the Hansa. It worked, up to a point- the very low
point of what the general government was then supposed to do. In the early
days of the Swiss Confederation again such central government as there
was depended on the contributions of the cantons. The same arrangement
was tried in 1958 in the Federation of the British West Indies, although the
Federal Government did have a very small autonomous revenue" and
could count on some grants from the UK. The results were most
unfortunate. Contemplating these experiences, and more particularly the
multifarious duties that modern central governments are now expected to
undertake, we are driven to conclude that the means of redressing fiscal
imbalance must emanate from the centre and be directed to the States, and
not the other way round. This conclusion holds both for a federation and
for a unitary country if it has strong local governments. But for the looser
conditions of a modern 'Community' (from the EEC to Caricom) the
members will still have to support the centre with their contributions, for it
is likely to have only very sketchy autonomous resources.
Apart from a general system of grants (which is easier in a unitary that in
a federal system, as has recently been demonstrated in the USA- see
below), several devices are usually available in federations for instance: ( 1)
tax base sharing (competitive exploitation); (2) revenue sharing (a defined
percentage of certain national revenues is transferred to the States); (3)
bypassing the constitutional allocation of taxes by (effectively) using
public utility charges as taxes; (4) transferring administrative responsi-
bility for a service from lower-level governments to the centre (takeover by
the national Government). These methods are essentially on current
account, although the last contains a capital element, since a service
requires capital expenditure for its operation. Redress of fiscal imbalance
can also be directly tackled on capital account by concentrating public
works and investments in poor areas (as both India and the USA have
done). This policy can be extended to the private sector by location of
industry legislation. A final device which may be possible is for the national
government to take direct charge of certain very backward areas, so as to
relieve a State of responsibilities which would otherwise pull it down. This
occurred in Australia when the Federal Government took over South
Australia's responsibility for the Northern Territory.
When a federal Constitution is being drawn up it may well be realised
that some fiscal imbalance is unavoidable, because the national
government's basic duties offoreign relations and defence make it essential
that it should control taxes which impinge on the nation's international
position, especially customs duties (but not necessarily excises or sales
taxes). Inevitably also some of the States will be richer than others so that
some degree ofinterlocal redistribution is likely to be required. This may
extend to personal income redistribution (which may also be dsired as a
matter of general policy). For implementing such policies the national
 Lessons of Experience
government will want to exercise sufficient control over personal income
tax, although not necessarily extending to a monopoly of it. Finally, the
high desirability of treating profits similarly wherever in the federation
they may accrue, suggests that it should also control corporation taxes.
Thus the national government needs to have basic control over just the
taxes that happen to be the most productive and rapidly expanding
sources.
Imbalances arising on the incomings (revenue) side are matched by
similar almost unavoidable imbalances on the outgoings (expenditure)
side of the national accounts, because the responsibilities of lower level
governments-social services, especially education, public health and
housing-are the most rapidly expanding lines of expenditure. They are
also the services where disparity between the resources of States shows up
most acutely. Thus there is a built-in imbalance between resources and
needs in all federations (it also occurs in s.trong local government unitary
countries). And it is an imbalance which is tending to get more serious in
modern conditions.
We can indeed trace three stages of worsening imbalances; (I) in the
initial Constitution, where imbalances were realised to exist, but were
fairly stable (due for instance to pockets of backward peoples within the
territory of a State), so that it was possible to write into the Constitution
devices to meet them successfully (as the Indian Constitution particularly
enjoins the Finance Commissions to make special grants for tribal peoples
and untouchables). The central government's obligations were still
moderate so that national tax requirements were not so serious that States
could not be permitted to develop their own income taxes.
(2) The second stage can be dated from the rapid increase in public
expenditure arising in the Second World War. (Of our case studies this
problem hit Australia directly.) This expansion merged into the demand
for a positive national policy (even in time of peace) to cover the new
responsibilities of the central government in respect of the level of
economic activity, employment and growth. In particular federal govern-
ments declared (in Canada and Australia) that it was necessary to have
central control of income taxes, so that the States were forced out of them.
This piece of centralisation heavily reduced their fiscal autonomy. Even
those countries which had no direct part in the war found themselves
sucked in to the policy of centralisation, without which the new
responsibilities of national governments could not be discharged, and the
process of centralisation implied everywhere a great (and most expensive)
expansion of public sectors and their personnel.
(3) The third and most difficult stage of imbalance was reached with the
oil crisis of 1972, leading on directly to depression and inflation. The needs
of public sectors were even larger than before. No level of government any
longer controlled sufficient resources to sustain the social and economic
policies which had been embarked upon, without very substantial fiscal
 Federalism: Failure and Success
adjustments. These included an enormous rise in rates of existing taxes
(both central and lower level) and also the introduction of new taxes
(especially VAT). Even so some countries were faced with a situation
where both central and lower-level governments began to run repeated
budget deficits. National governments in order to help their own budgets
put even greater weight on State governments, who proceeded to repeat
the operation in respect of their own local governments. Thus all round
imbalances grew steadily worse. The trouble impinged especially on the
large cities where a number of factors (of which high local tax rates were
very important) were driving taxpayers and industry into the country,
beyond their jurisdictions. Hence their tax bases began to shrink
ominously.
To meet the fiscal imbalance of Stage (I), which was moderate and
manageable, some useful devices were developed, of which two (with their
variations) are particularly notable: the Australian Grants Commission
and the Distributable Pool (introduced into some African ex-British
Colonies, and-with modifications-practised in India). The Indian
method is in a way a hybrid of the two systems. Both methods have been
discussed in their respective case studies, but it will be convenient to recall
them more generally here, since they were serious attempts to find solutions
to unavoidable fiscal imbalances.
The Australian (Commonwealth) Grants Commission is a standing
body which is required to recommend grants sufficient to put the poorer
States in a position where they can conduct their services at no greater tax
burden than the wealthier 'standard' States. The total amount to be
transferred by the centre thus depends (effectively) on the spending levels
of the 'standard' States. To carry out its remit properly it was desirable for
the Grants Commission to evaluate the true position of State budgets. This
proved impossible and led to a series of deals between the Commonwealth
and State Governments. An enlarged Commission will now recommend
on tax-sharing rights. Individual membership of the Commission often
continued for long periods, so that much experience was gained and wide
publicity was given to their statistical findings. These were both important
by-products of the system. But there has recently been a marked drawback
from the Grants Commission method of correcting imbalances, due to the
impossibility which has been found of estimating closely the true
budgetary position of the States. In respect of budgeting (under the
Constitution) no rules could be enforced. Consequently the Federal
Government now seems to prefer to make additional use of other
equalising devices, or to rely on direct (specific purpose) grants which are
more flexible. (We return to this below.)
The Indian method of correcting fiscal imbalances also relies on a
Grants (Finance) Commission to make recommendations to the Union
Government both as to (I) the total that should be transferred (in the form
of percentages of central revenues from defined taxes) and (2) its
 Lessons 1.![ Experience
distribution between the States. The recommendations (so far as they are
accepted) hold for five years, when a totally new Commission is appointed
(thus precluding any build-up of experience such as the Australian CGC
has acquired). Nothing is published except the actual Report which
contains only the most general explanation of principles on which the
findings were bast:.d. But it is evident that relative populations weigh
heavily in the recommendations. In Indian conditions this does not make
for redistribution in favour of the poorer States, rather the reverse
(although in Australian conditions it probably does).
It was no doubt considered at the time of the drawing up of the Indian
Constitution -firmly in our Stage ( 1)- that no more than this would be
required to contain imbalances. It did however include some flexibility
since the revenue percentages to be transferred could be (and have been
repeatedly) raised. With the establishment of the Planning Commission
(effective from 1952) which derives large funds directly from the central
government (or ultimately from the Reserve Bank) the balancing factors
under the control of the Finance Commission have taken a secondary
place. It appears that in allocating its investment grants the Planning
Commission has been activated by social as well as economic con-
siderations, since many of them have been definitely redistributional.
The distributable pool system as applied in African countries (especially
in Central and East Africa and Nigeria) is similar to the Indian in that a
quinquennial Revenue Allocation Commission (usually very small and to
start with always expatriate) recommends both the percentages of revenue
from selected taxes which are to be paid into the pool and its allocation
between States. Nothing but the most general statements of the bases of
allocation are revealed, so that the result is a matter of politics rather than
of economics. In the absence of statistics it is impossible to quantify what
corrections would be needed to achieve and maintain a true balance. Yet
this system has survived in Nigeria for a number of years. Probably the
explanation is that (as in India) it accounts for a relatively minor part of
central transfers. Specific grants (especially for education), some of which
are directly promotional, carry more weight. A disadvantage common to
both tax base and revenue sharing as contrasted with straight grants is that
the amount transferred to lower-level governments varies pro-cyclically.
This is one (though by no means the only reason) why lower-level
governments cannot normally be expected to play any but the most minor
part in a national anti-cyclical (stabilisation) policy.

FEDERAL FISCAL ADJUSTMENTS TO THE TENSIONS OF THE MODERN

WORLD

As has been emphasised earlier- the economic and political disturbances

of the last few years have added a new intensity to federal /fiscal relations in
186 Federalism: Failure and Success
all the advanced federations. The USA, Canada, West Germany,
Australia and Switzerland have all introduced legislation in the 1970s for
the adjustment of federal/State fiscal relations to meet the new circum-
stances. By and large the content of the new policy is very similar in them
all, although the relative importance attached to the ingredients differs
from one to another. The principal ideas are: ( 1) a search for means of
stepping up revenue generally by raising the rates of existing taxes and
introducing new ones; (2) an announced intention to halt or reverse the
process of centralisation, by transferring back to lower-level governments
wider responsibilities for decision-making and the consequent finance; (3)
paying more attention to discriminating grants and federal investments, so
as to concentrate aid where it was most needed and (4) bringing about
more direct relations between the federal government and local authorities,
especially the large cities. Not all the programmes are yet fully in
operation; hence in a sense they can hardly be described as 'Lessons of
Experience'. Yet this is precisely what they are: adjustment suggestions
arising from their difficult experiences. Clearly we cannot go into the new
programmes in any detail, but it is very relevant to our previous discussions
to glance at some of them. I have selected the USA, Canada, Switzerland,
West Germany and Australia as the most interesting and most relevant to
our previous studies.

USA
The Federal Government now assumes some general responsibility for
poverty, educational deficiency, insufficient transport, crime and pol-
lution. This implies that it should follow a two-headed policy of general
(vertical) aid to lower-level governments and also of discrimination in
favour of the weaker ones (redistributional, horizontal aid). Since the
adoption of the so-called revenue sharing (more accurately grant system)
in 1972 federal aid to States has greatly increased and is continuing to rise.
In 1976 it amounted to S57 thousand million an increase of 19 per cent
over the previous year. It now represents one sixth of the federal budget
and a quarter of State and local budgets. But these grants are not all bonus,
if we take account of the relative contributions of States to federal taxes.
This is where the redistributional element comes in (as has been shown by
the Tax Foundation). In 1975, the latest year for which figures are
available twenty states paid more than they received, one broke even and
the remainder received more than they paid for. Connecticut came off
worst with a tax burden of $1050 million against grants of S724 million;
while Mississippi did best with grants of S778 million against payments of
$390 million. But this is only relatively best, since many States got much
higher grants: apart from New York at $6416 million there was
Pennsylvania with S31 18 million. The distribution formula (being
ascribed to the place where incomes are earned) relies heavily on relative
populations, and the balances are clearly very random. There is general
 Lessons qf Experience
agreement that the results have been disappointing, and the programme
very expensive.
For this ill success a number of reasons are put forward: local
government is extremely fragmented and so it is difficult to aid.
Fragmentation implies that local budgets are extremely 'open' so that the
externalities (benefits outside the jurisdiction) are very large. Fragmen-
tation also encourages mobility of families seeking the richest, least tax
burdened area for a home. In some quarters this is hailed as a singular
advantage (the Tiebout-Musgrave Thesis) as leading to greater efficiency
where communities are homogeneous. But the process of population shift
naturally tends to be anti-redistributional. Very deep ideological differ-
ences are at work here.
Secondly, in addition to normal local government bodies there is a
medley of counties, cities, school boards, and 'special districts' (these last
concentrating on a particular service). These supplementary bodies differ
in number and importance from State to State. So also do the populations
which they serve (which are said to run from five persons to over one
million). Their jurisdictions are frequently overlapping and there is also
great diversity between the proportions of a given service supplied by the
public and private sectors. Similarly the use of different taxes by the
various types of government varies considerably and quite randomly. The
main difference is between the use of property taxes and sales taxes, each of
which can vary in important details from one jurisdiction to another. In
these circumstances the Federal Government has found it virtually
impossible to ensure that a grant designed to cover the whole country will
go where it wants it to go. The only stable figure is the number of States;
but if a grant goes to States the federal authorities have no control over its
distribution within a state. Consequently the Federal Government would
like to give more directly to local government authorities, by way of what
are called 'categorical' (specific, conditional 'matching') grants. But there
are 39,000 local government authorities, of very varying competence and
sophistication. Further, for such an exercise there are no relevant statistics.
Few Americans are interested in local affairs outside their immediate
surroundings. It is evident that federal fiscal relations have not yet found
an equilibrium in the USA, and this is important for the success of
federalism itself, but these relations are not regarded as a high priority.

Canada
Although the two North American Federations are culturally very similar
and economically much interconnected, their federal systems are sub-
stantially different. The Canadian States (Provinces) are few (ten, plus two
northern territories federally administered). But they differ greatly in size
and wealth (from Ontario to Prince Edward Island). Constitutionally they
are similarly placed and powerful relative to the Federal Government.
They all have charge of their local governments, and some (Ontario for
I88 Federalism: Failure and Success
instance) are very interested in this side of their responsibilities. Ontario
has pioneered the reorganisation of Toronto into a metropolitan area and
thickly settled areas are regionally organised. The objective of the latter
arrangement is not quite clear. (It may aim at stopping further increase in
the influence of Toronto.)
But Canada faces one very difficult federal fiscal problem in the cleavage
between French Canada (Quebec) and the rest. Of recent years the
cleavage has deepened, owing to a number of causes, largely unavoid-
able. One of the most important, although it is partly political, is the
relative loss of wealth and status of Quebec in the face of the development
of the west (industrialising of Vancouver and mineral-rich Alberta). The
cleavage implies that in all fiscal legislation special arrangements have
been made to suit Quebec.
Because of the great diversity of the provinces and their (relatively)
narrow tax bases, Canada has all along been interested not only in general
assistance to correct the inherent federal/provincial imbalance, but also in
a policy of discriminating aid to the poorer provinces. A new Fiscal
Equalisation Programme was launched in I972, subject to quinquennial
review. The first review of this took place in I 976 and new legislation, the
Provincial Fiscal Arrangements Act, came into force in I 977. This
introduced some rather important changes, although the system remained
basically that of I972. In Canada all federal fiscal adjustments have been
subject to prolonged arguments and negotiations with the provinces.
These, unlike many of the American states, are very definite and self-
conscious personalities.
The I972 equalisation scheme broadly covered three transfer pro-
grammes: (I) general revenue, (2) shared cost services and (3) mis-
cellaneous special arrangements. In respect of (I) legislation dating from
I 952 had laid down that the seven provinces whose per capita revenues were
below the national average would receive compensation based on the
revenue collected from a designed range of taxes intended to be
representative. The list of taxes to be equalised has gradually been
extended until under the I977 plan it will embrace twenty-nine sources,
virtually all the important taxes. In addition the revenue from non-
renewable natural resources (minerals, oil and gas) was subject to
equalisation out of federal revenue.
The Federal Government has found several faults in the working of this
scheme, especially the opportunity which it has in principle provided for a
province to enhance its transfers by increasing its own expenditure.
Consequently the new legislation introduces several amendments. Taxes
for equalisation have been reclassified. Because of the high profits from
mineral extraction, in which the federal government does not share,
equalisation of this revenue has been reduced from I oo to 50 per cent in
order to spare the federal revenue.
Under the I972 arrangements the Provinces have had a guaranteed
 Lessons of Experience I89
revenue ansmg out of the I97I Income Tax Reform Act which had
reduced the provincial share and for which the Federal Government was
compelled to compensate them. But this was very costly to the Federal
Government and has now been reduced. The federal revenue stabilisation
guarantee will now be limited to the extent that a year-to-year reduction in
revenues exceeds 50 per cent. But the Provinces will also be protected from
loss resulting from federal changes in personal income tax, which exceed I
per cent of federal basic tax in a Province. Reciprocal federal provincial
tax arrangements have been agreed whereby the federal government pays
the local current level of sales tax on its activities in the provinces. The
provinces will gain something on this. Since I 972 the Federal Government
has been collecting free of charge income and corporation taxes in all
Provinces which are prepared to use the federal system. (The exceptions to
this concession are personal income tax in Quebec and corporation tax in
both Quebec and Ontario.) But any province that wishes can alter the
amount of tax paid by its residents by awarding tax credits.
Apart from the reciprocal tax arrangements just mentioned, the most
interesting special programme of Canadian federal fiscal policy is the
device of the 'contracting out' system. This is essentially (although not
explicitly) designed to meet the special case of Quebec. Under this system
it has been possible since the I96os for any province to 'contract out' of a
shared cost programme, such as higher education. It then receives no
transfer for the service, but can claim a compensatory reduction in income
tax.
Of the shared services the Federal Government has been contributing to
the operational costs of higher education by means of the transfer of I8
points of federal personal income tax and I per cent of corporation tax,
with a cash premium to make up any deficiency. But the largest
programme is in respect of medicare and hospitalisation. From I958 the
Federal Government was contributing to each Province for these services
on a slightly equalising basis, but this was found to be too open-ended and
from I975 a ceiling on transfers was imposed. The new scheme seems to be
an invitation to the Provinces to extend the contracting-out system and
thus stabilise the demands on federal revenues.
By and large the I 977legislation is designed to limit the open-endedness
of transfers in general and to relate their expansion to the growth of the
economy rather than to the expansion of provincial expenditure. The most
important innovation in respect of shared cost services is entitled
'Established Programme Financing'. Transfers for higher education,
medicare and hospital insurance which, as we have just seen, have been
going on for a number of years are being replaced by a new system. This
consists of two equal parts: (I) a tax transfer of I3·5 points from personal
income tax and I point from corporation tax. There is also a possibility of a
promotional grant for the further development of health services. Part (2)
consists of a system of equal per capita unconditional cash grants coverning a
I90 Federalism: Failure and Success
basic contribution of 50 per cent of the national average per capita transfers
of I975/76 plus an additional point of personal income tax and its
supplementary equalisation arrangements. It is intended that all of this
should be escalated in later years in accordance with a three-year moving
average of growth of the GNP.
It is also planned to arrest the expansion of discriminatory grants by a
levelling adjustment which will bring the transfers of the Provinces now
receiving more than average federal contributions back to the national
average in five years time, while the provinces now receiving less than the
national average will be brought up to it within three years. By a
transitional arrangement all provinces are guaranteed that they will
receive as much by the mixture of transfers and cash as they would have
done if the whole transfer had been in cash. The privilege which Quebec
has been receiving in respect of high school costs under the contracting-out
of shared cost services will be reduced from 24 personal income tax points
to I6.5 points. This reduction is calculated to put Quebec taxpayers in
exactly the same position as those of other provinces.
In introducing the new system the Prime Minister, Mr Trudeau, laid
great stress on the new arrangements for financing established
programmes, and to the fact that the total transfers of the Federal
Government to the provinces would be immediately increased by I 3·5 tax
points, a sum which would gradually and automatically expand over the
years. The Prime Minister hailed the changes as a big step forward along
the road of decentralisation, giving the provinces more autonomy in the
raising and spending of their own funds, and pursuing their own
programmes.
In general the new scheme reduces the promotional element in federal/
provincial fiscal relations, in that the contribution will be related to
growth, not to any miscellaneous spending in which a province might wish
to indulge. But the extended health grants might have a small affect in the
opposite direction. On the other hand the degree of equalisation or
redistribution will be reduced when all provinces are brought to the
national average. The richer provinces will gain because the amount of
their transfers will be increased, but it seems that the position of the poorer
provinces will be less good. It remains to be seen how the provinces will
evaluate the trade-off of greater autonomy (which means they have to find
more autonomous revenue) and the reduction in equalisation. This change
could be very important for the future of federal fiscal relations in Canada.

Switzerland
The federal fiscal problem in Switzerland resembles that in the USA in two
ways, in spite of the enormous different in size of the two countries. (I)
Some local (cantonal) jurisdiction are very small and poor; but they vary
enormously one from the other, (2) although Switzerland is (strictly
speaking) no longer a Confederation, the twenty-five cantons and half-
 Lessons of Experience
cantons, together with the communes (cities), are very powerful relative to
the Bund. 30 Only for national defence, social insurance and agriculture
were the Bund outlays substantially higher than those of the combined
lower-level governments. The largest outlays of these -as is normal-were
for education and research.
The federal budget has been in (mild) deficit since 1975, but fortunately
reserves are ample and 1976 seems to have worked out better than feared.
The cantonal budgets have not (on the average) been balanced since 1963,
and had previously been in trouble in the late 19501. But only those taxes
authorised by the Constitution can be levied and some existing taxes have
ceilings which can only be exceeded by constitutional amendment. The
introduction of a new tax also requires a constitutional amendment.
Recently the Federal Government had a sad disappointment: the
introduction ofVAT, on which it had (perhaps too much) been counting,
was turned down by the cantons and the Assembly.
Disparities between the cantons remain very large. In 1974 per capita
incomes varied between (Sw Fr th) 3 1· I in Basel city to I 1·2 in Appenzell
IR. This disparity is now considered to be giving too much encouragement
to migration, which (on account of the short distances in Switzerland) is
very easy. But it must be remembered that cantonal budgets are by no
means self-contained, and externalities of all kinds are very large. Thus
commuters from Basel Land to the city greatly improve the income of the
rural area.
There is a substantial body of opinion in favour of 'modernising' fiscal
relations by paying more attention to economic factors. The federal
government has a large and increasing influence on policy decisions
(transfers to lower level governments have doubled over the last two
decades) and it possesses in principle several means of equalisation. But on
the whole little has been accomplished. Many hope that ultimately the
process of migration will iron out the worst disparities. Some assistance is
given to the poorer cantons by (tied) grants and also by help with social
overheads. There is also talk of transfers from urban to rural areas. The
richer cantons seem to be declining in influence and are not organised to
defend their position, while the poor (mountain) cantons form an
organised pressure group, with the cooperation of the middle rank areas.
Hence a definite equalisation programme might yet be undertaken. It
seems that in spite of (or because of) its peculiar Constitution (which
makes change very difficult), Switzerland will weather this difficulty as it
has all previous ones.

West Germany 31
The position of Germany in respect of federal fiscal policy is somewhat
different from that of the other advanced federations, due to its con-
stitutional 'Basic Law' (Grundgeset;;;) which is aimed at preventing any
recurrence ofHitlerian concentration of power. There are eight states with
 Federalism: Failure and Success
a strong organisation oflocal government within them. These lower-level
governments account for over 6s per cent of all public investment. 43 per
cent of state revenue is transferred to municipalities, mainly by way of
conditional grants. All three levels of government play a part in equalising
standards of living in different parts of the country (as required by the
Grundgesetz) mainly through the sharing of tax bases. Indeed tax sharing is
the keynote of German fiscal federalism; but some specific grants are also
used. These are of increasing importance in respect of those services which
have no clear constitutional location, so that they tend to be somewhat
haphazard.
A new fiscal law was passed in I 970, so that there are now a few years of
experience to build on. But in fact the differences are mainly matters of
detail; the basic principles are the same. The major objective of policy
remains to equalise standards of living all over the federation. It con-
sequently puts a greater weight on redistribution than on other fiscal aims,
such as stabilisation or growth. With equalisation in view 43 per cent of
revenue from VAT is transferred to the weaker states. Further assistance
can also be given to them (to support budgetary balancing) under article
I 07 of the Grundgesetz:,.
The constitution awards the states a firm tax base. Up to I 9SS the whole
of income tax revenues accrued to them; but at that point the Federal
Government claimed a share. Under the I970 reforms a so/so allocation
was written into the Constitution. Further, the municipalities for the first
time were given a share (surcharge right) in respect offederal income tax,
but only in the proportional zone of the tax schedule. In return they have
had to give up a previous share which they enjoyed in the revenue from
business (profits) tax. In fact this is a decided improvement as their
jurisdictions were too limited for the effective operation of the tax. As a
result of these changes nearly 8o per cent of German taxes pia y some part in
vertical redistribution.
An interesting feature of German fiscal policy is the system ofjoint tasks.
Suitable projects or programmes in defined fields are suggested by the
states and, if accepted, are carried out jointly by the two levels of
government, under the supervision of an ad hoc planning board. The
psychological effect of this intergovernmental cooperation seems to
provide an excellent means of increased understanding between the
Federal and State Governments.
While German tax policy is thus very purposeful and powerful in respect
of equalisation (redistribution) aiins, there has been much less success in
respect of stabilisation and growth policy. This is partly to be explained by
the independent role given to the Central Bank, which puts monetary
policy (apart from the right to fix the foreign exchange level), outside the
Government's competence. The Federal Government (and it alone) can
introduce limited and temporary surcharges (or rebates) in taxes. But these
could only have a limited effect. In addition an attempt was made to
 Lessons if Experience 1 93

improve stability by the 'Stability and Growth' law of 1967. This

established a Financial Planning Organisation consisting of the Finance
Ministers of all the governments, together with four representatives of the
National Community Council. It was charged with the duty of suggesting
special stabilisation programmes. If the Assembly (Bundestag) does not
object to a programme within four weeks it becomes law. Unfortunately
programmes so far implemented have turned out pro- rather than anti-
cyclical. Probably this is due to the familiar trouble of timing, planning
and implementation of public works. Under the financial reforms of 1970
the Federal Government was empowered to make grants to lower-level
governments, intended to reduce their pro-cyclical propensities. But since
the grants would be tied to the fluctuations in State tax revenue receipts,
they seem unlikely to have a stabilising effect.
Finally, the most recent fiscal changes have suggested a further system of
financial assistance to the states aimed at stabilisation. 32 The results seem
to cause some divergence from the legal assignment of taxes. These grants
are based mainly on State 'fiscal capacity' defined as the sum of State taxes
plus their share offederal and local taxes. There is also an attempt to allow
for 'needs', but these are somewhat crudely measured by such factors as
regional financial burdens, degrees of urbanisation and population density
(it appears that the last two factors might work in opposite directions, if it is
assumed that it is cheaper to administer services to a dense population than
to a scattered one. But this is by no means always true, because the dense
population has need of more services).
Thus the German fiscal system is heavily committed to equalisation
through tax sharing, special grants and joint undertakings. This policy is in
accordance with the Grundgesetz; directive to improve farmers' incomes,
which are still very much below those of other occupations. This policy is
pursued through the ECC Common Agricultural Policy. The consequent
weakness of German stabilisation policies is a factor that needs to be taken
into account by other countries, and especially by Germany's EEC partners.

Australia
Australian federation differs from German in several ways although it is
alike in having very strong States. (This is normal in a federation by
aggregation; it is not due to any special political policy.) As a result the
cities are very much under the States, and local government, even of the
large cities, is only just beginning to make its problems felt. The Federal
Government has for many years been following a policy of centralisation,
to the extent that it is sometimes asked whether Australia is about to
become a unitary country. Indeed the increasing attention paid by the
Federal Government to the cities, and also the policy of developing social
services at the federal level, work in the same centralising direction, since
they would mainly benefit urban populations, and so reduce the control of
the States over the cities. This appears to have been an important aspect of
194 Federalism: Failure and Success
the policy of the late Labour Government. But from this there has now (at
least temporarily) been a decided turn about in the direction of
decentralisation. The National-Country Party Coalition is planning
something of a revolution in federal fiscal relations. So far only a minor and
preliminary part has been implemented. Thus the experience on which it is
based is essentially dissatisfaction both with the traditional machinery of
grants (especially specific purpose grants) and with the trend of recent
federal policy.
Australia has traditionally relied on financial assistance (general
revenue) grants with some implicit equalisation elements, plus special
grants on the recommendations of the Commission. But the FA grants have
been increasingly supplemented by specific purpose grants as a result of the
difficulty experienced in measuring State potentials. Under the new
proposals a system of tax sharing will be substituted, although (for the
transitional period at any rate) FA grants will continue to some extent.
The States will henceforward receive a defined share of federal income tax,
the amounts for 1976/77 being related to the FA grants of 1975/76. The
change would seem to imply that the traditional wrangling over FA grants
will be substituted by a no less fierce wrangling over the percentages to be
shared. (Except that a settlement once made is planned to stand for five
years, which will be good for planning but seems to rule out easy
adjustments.) The States feel that they were not sufficiently consulted on
these plans (probably not so thoroughly as they would have been in
Germany, through the Bundesrat), and they fear that they will be worse off
through the reduction and eventual demise of specific purpose grants. But
for Stage 1 of the reform, which is all that is yet definite, the States will be
guaranteed the same volume of transfers that they have been receiving, so
the change would seem to be minimal.
Up to the present, as in Germany, only the Federal Government has had
the power of making surcharges and rebates in taxes in pursuance of a
stabilisation policy. But when Stage 2 of the reform comes into operation,
as is at present planned for 1977/78, a State can introduce a surcharge or
rebate in its income tax share, any shortfall of funds for the State budget
being made good at the expense of the State. The rationalisation of these
provisions is to give the States more autonomy. But it must be noted that
the new system will do nothing to promote vertical equalisation, rather the
opposite. Moreover in principle the States could interfere with federal
redistributional policy. But we are travelling well beyond experience. The
proposed legislation may look different when it comes fully into operation.
Yet it is of great interest and significance that dissatisfaction with past
experience has produced so large a change in proposed federal fiscalism.
Thus all federations seem to be in some trouble over federal-fiscal
relations, even to the point of sponsoring new legislation or perhaps
constitutional amendments. In fact the basic problems of fiscal imbalance
in a federation have never been solved satisfactorily. And now they are
 Lessons of Experience 195
much intensified by the raw material crisis of 1972, followed closely by
inflation and depression. For federations fiscal adjustment is a much more
difficult operation than for unitary countries who have no constitutional
obligations to their lower-level governments. Once we leave the
(somewhat unreal) Wheare model of strictly coordinate powers of Federal
and State Governments, and the Tiebout/Musgrave (so-called layer cake)
model where each family realises which community would suit it best and
proceeds to move there, there is no easy or general solution to the problem.
The main result of fiscal imbalance is probably a less than optimum
functioning of the federation as a whole from the economic point of view.
&tablished federations will no doubt continue to experiment with
adjustments. But if withdrawals (or worse) occur it is unlikely that they will
primarily be on fiscal grounds, although fiscal malaise may make an
important contribution.

THE GROWTH OF REGIONAL ALLIANCES AS AN ALTERNATIVE TO

FEDERAL FAILURE

In attempting to evaluate failure and success in federalism it has been

necessary to discuss not only total failures, but also to emphasise the
troubles and awkward corners which even the most successful federations
have had to face from time to time. This should not lead anyone to
conclude that federalism is not a fine thing. As John Stuart Mill wrote in
Representative Government: 'When the conditions exist for the formation of
efficient and durable federal unions the multiplication of them is always a
benefit to the world.' From the context it is evident that he had in mind
especially the advantages to small areas, who would be by themselves
unable to achieve much advancement, of uniting in some sort of federal
alliance so as to form a sizeable nation. We have seen that this
consideration is no less relevant today. We may ask ourselves whether
conditions might not exist in the foreseeable future for some such policy.
We have seen that some of the federations which were formed as an
aftermath of the second World War and during the process of decol-
onisation were ill-founded and transgressed the basic requirements for
success in a number of ways. But they did not all fail.
In a world of increasingly efficient transport and closer international
communications of every sort it would seem that there should be new
opportunities arising in the direction offederalism. Can we discern any? I
believe that at least some of the regional pacts which are rapidly coming
into existence might in time come to qualify. They are certainly an
education in standing closer.
In this book I have not been concerned with the EEC. It has its troubles,
and they are probably symptomatic of what would occur in any regional
association or community. But no one can reasonably doubt the increasing
196 Federalism: Failure and Success
importance and influence of the EEC for its members and for the whole of
Western Europe.
In our case studies we have come across two such regional communities
whose prospects seem not unpromising: Caricom and ASEAN. We have
seen that Caricom in particular, with the cooperation of the Caribbean
Development Bank (which can attract outside funds), is working hard at
the economic and social development of the area. We also noted in our case
study that both Singapore and Malaysia have become enthusiastic
members of ASEAN (together with Thailand, Indonesia and the Philip-
pines). But since none of the other members of ASEAN bore any relation to
federalism it itself was outside our purview. Hence a word on it will not be
out of place here.
The birth of Caricom was relatively easy because the members shared a
common culture, language and religion. In ASEAN things were very
difficult because (even apart from constitutional differences) the members
had widely differing cultures, languages and religions (Christianity, Islam
and Buddhism). They have also had very different colonial experiences
(Thailand none at all). Indeed for the first ten years of its existence the
organisation almost completely failed to take off. It was forced into
acitivity and cohesion by the victory of Communism in Indochina in 1975,
and by the vision of a united and aggressive Vietnam on its doorstep. (We
know that fear of an outside power has been a very familiar experience in
the formation and maintenance of a federation.)
ASEAN's new life began with the meeting of Heads of State in Bali in
February 1976. At this meeting a Treaty of Amity and Concord was
enthusiastically signed by all five nations. It was especially emphasised
that ASEAN was not a military alliance, but intended to concentrate on
social and economic development. Mter the Bali meeting economic
interests began to become important. Now there are regular meetings of
Economic Ministers, as well as some of heads of agricultural and social
service departments. Although there is not yet a common market there
have been a number of tariff reductions and Singapore is always pressing
for more. An ASEAN Secretariat has been set up (in Indonesia).
Approaches have been made to neighbouring powers (Japan, Australia
and New Zealand). At the UN ASEAN speaks with a common voice.
Mutual understanding and mutual interest in culture and social con-
ditions have greatly increased. It is claimed that Ministers are learning to
think 'ASEAN' instead of putting the local interests of their own countries
first. Several of the leaders are of outstanding quality, and they are
determined that the world shall take ASEAN seriously.
Caricom and ASEAN are but two of the regional stirrings which are
now taking place. To make a study of them all would be an interesting
exercise; but it is beyond the scope of this book. It may be that we are
witnessing the birth of a new race of'Federal Forerunners'. If this is so it
would indeed be 'a benefit to the world'.
Notes and References
Chapter 1
I. See Chapter 7(B)
2. " " 5(A)
3· 3(A)
~ 5(A)
5· 2(B)
6. , 6
7· 5(B)
8. " 7(B)
9· 7(B)
10. 7(A)
II. 7(B)
I2. 3(A)
I3· 7(A)
I4. 7(B)
I5· 7(B) and Chapter 5(A)
I6. " 2(A)
I7. 2(B)
I8. See Ardener, 'The Nature of Reunification of Cameroon', in A. Hazlewood
(ed.), African Integration and Disintegration (R.I.I.A., O.U.P., I967).
I9· See Chapter 3(B)
20. " " 4
21. 5 (A)
22. 5(B)
23. 7(B)
2~ 3(A)
25. 2(B)
26. , 6
27. 5(B)
28. " 3(A)
29. 5(A)
30. See Oxford Classical Dictionary articles on Symmachia, Sympoliteia and on
Individual Leagues.
31. See Cambridge Mediaeval History, Vol. VI, Chapter on the Hansa.

Chapter 2( A)
G. Maastorfand A. S. B. Humphreys, From Shanty Town to Township (]uta & Co.,
Johannesburg, I975)·
]. L. McCracken, The Cape Parliament IB54-1910 (Clarendon Press, I967).

I97
 Federalism: Failure and Success
H. M. Robertson, South 4frzca, Economzc and Polztical Aspects (Duke University,
Commonwealth Studies Programme, 1957).
E. Walker, A Hzstory f!! South Africa (Longmans, 1928).
- W. P. Schreiner (O.U.P., 196g).

Chapter 2( B)
A. Hazlewood (ed.), African Integration and Diszntegration, Ch. III, cit.
A. Hazlewood, Economic Integration in East Africa (Heinemann, 1975).
U.K. Hicks Development from Below Chapters on The Three Territories (O.U.P.,
1961).
C. Leys and P. Robson (ed.) Federation in East Afrzca Opportunities and Problems
(O.U.P., 1 965 ).
M. Perham, Lugard: The rears f!! Adventure (Collins, 1956).
Raisman Report East 4frican Economic and Fzscal Commisszon Report (Colonial Office,
Cmd. 1279, 1961).

Chapter 3( A)
Annual Reports of the Caribbean Development Bank, passim.
J. R. and U.K. Hicks, Finance and Taxation in ]amazca (Government of Jamaica,
1955)·
U.K. Hicks, Report f!!the East Carzbbean Fiscal Commissioner (Cmd. 1991, 1963).
P. Savarin, 'A Mini-State at the Crossroads (Dominica)' (Unpublished thesis,
Ruskin College).

Chapter 3 (B)
Constitution of the federation.
Lin Ken Wong, (Raffles Professor of History, University of Singapore) 'History of
P.A.P.' (Unpublished).
Articles in The Tzmes, 31 August 1976, 19 October 1977·

Chapter 4
A. Hazlewood and P. D. Henderson, Nyasaland: The Economzcs f!! Federation
(O.U.P., I96o).
A. Hazlewood, 'Economics of Federation and Dissolution in Central Africa'
(Hazlewood (ed.), Integration and Disintegration in Africa cit.).
D. T. Jack (Chairman), Federation of Rhodesia and Nyasaland. Report on
Economic Survey of Nyasaland 1958/59·
Advisory Commission on the Constitution of Rhodesia and Nyasaland (Monkton
Report, Cmd. 1148, 196o).
Nyasaland Commission of Enquiry (Devlin Report, Cmd. 814, 1959).

Chapter 5( A)
A. Chanda, Federalism in India (Allen and Unwin, 1965).
R. Coupland, 'The Future oflndia' (Report submitted to the Warden and Fellows
of Nuffield College in 3 parts, 1942, 1943, 1943, O.U.P.).
S. Gopal, Vzcerqyalry f!! Lord Irwin, 192fi-3I (Clarendon Press, 1957).
U. K. Hicks, 'Industrialisation in India and its Urban Problems' in Ashok
Bhuleshkar Towards Socialist Transformation f!! Indian Economy (Popular Prak-
ashan, Bombay, 1972).
 Notes and References rgg
T. M. Joshi, N. Anjanaiah, S. V. Shende, Studies in the Taxation of Agricultural Land
and Income in India (Asia publishing House, New York, I968).
D. T. Lakdawala, Union State Financial Relations (Lanvani Publishing House, I 967).
H. K. Paranjape, Centre State Relations in Planning (I.J.P.A., I966).
K. Santharam, Union-State Relations in India (I.I.P.A., I96o).
K. V. S. Sastri, Federal State Fiscal Relations in India (O.U.P., India, I966).
Vincent A. Smith, Oxford History of India (O.U.P., I958).

Chapter 5 ( B}
(Early references included with India)
S. Ahmad, 'Pakistan's Constitutions' (unpublished essay, I976).
K. Griffin (ed.) with A. R. Khan, Growth and Inequality m Pakistan (Macmillan,
London, I972).
R. S. Wheeler, The Politics of Pakistan, a Constitutional Quest (C.ornell U.P., Ithaca
and London, I970).

Chapter 6
E. W. Bovill, The Golden Trade of the Moors (O.U.P., I96o).
Hicks/Philipson, Report of Revenue Allocation Commission 1952.
Oyo State Gazette Supplement, 'Edict No.5 of I976, Local Government Edict, I976'.
Oyo State Oificzal Document No. I of I976, 'Reform of Local Government in Oyo
State'.
Razsman Fzscal Commzssion Report (Cmd. 48I, I958).
West Ajrzca (Monthly Journal), passzm.

Chapter 7( A)
Centre for Research on Federal Financial Relations (A.N.U. Canberra) Annual
Reports up to I976 by R. Mathews (Director).
R. Mathews, The Changzng Pattern rif Australzan Federalism (Paper prepared for
discussion in Nigeria) (Reprint of Centre for Research, I976).
W. Prest, Intergovernmental Fiscal Relations-Some Implications for Australia of Recent
Developments m the USA and Canada (Reprint of Centre for Research, I977)·
P. B. Spahn, Australian Tax Sharing m the Light of West German Experience (Reprint of
Centre for Research, I976).
(See also Section on Recent Adjustments, Chapter 8 below.)

Chapter 7( B)
J. P. Aubert, Petite Histoire Constitutionelle de Ia Suisse (Berne, 1974).
Bonjour, Offler and Patton, Short History of Switzerland (Clarendon Press, I952).
Cambridge Mediaeval History, Vol. VII, Chapter on 'The Swiss Confederation in
the Middle Ages'.
B. Dafllon, Federal Finance in Theory and Practice with Especial Reference to Switzerland
(Berne, I977)·
R. L. Frey, 'The International Income Gap as a Problem of Swiss Federalism', in
Political Economy of Fiscal Federalism, ed. Oates (Lexington Books, 1977).
Ojjentlzche Finanzen der Schweiz (Eidgenossisches Statistisches Amt, Berne, I 977).
200 Federalism: Failure and Success
Chapter 8
1. See Chapter 3(A)
2. s(B)
3·
4· " below
5· " Chapter I Addendum
6. "
7· 3(B)
8. " s(A)
9· 7(A)
IO. 5(B)
II. 2(B)
I2. 6
I3· 7(B)
I4· 7
I5. 2(A)
I6. " I Addendum
I7.
I8. " 7(B)
6
20. " below
2 I. See Chapter 3(A)
22. s(B)
7(B)
s(B)
5(B)
4
27- 6
28. " 4
6
7(B)
" P. B. Spahn, Tax Sharing in the Light tif West German Experiences, Canberra.
Seej. H. Knott, 'Stabilisation Policy, Grants in Aid and the Federal System in
West Germany' in Oates, Political Econorrry tif Fiscal Federalism cit.
Index
Abubakar, T. B., 129, 132-3
Ahuja, 123
Action Group, 128-32
Adams, Sir Grantley, 59
Administrative Reforms Commission
(India), 107
Afghanistan, 86-7
Afrikaans, 34
Agricultural income tax (India), 104
Akintola, S. J ., 129, 133
Amin, Idi, 51-3
Army, uncontrolled expansion of (Ni-
geria) 143
ASEAN, 75, 177, Ig6
Asoka, 87
Assembly, importance of in Fed-
erations, 7; in Nigeria, 127-8, 137
Associated Territories (West Indies),
62
Attlee, C. M., 97
Australia, financial agreement 146,
149; growth centres in, 155; peoples
of, 144, 154; premiers' conferences
147, 152; regional organisations 155;
states, position of, 145--g, 152-4 (see
also South Australia, Western
Australia)
Awolowo, A., 128, 137
Ayub Khan, 113, 115
Azikiwe, M. (Zik), 124, 128, 132
Bali, ASEAN meeting at, 75, 196
Bangladesh, 11, IIO, II6-17, 178
Barbados, 55, 58, 6o
Basel, 153, 159, 162, 191
Basic Democracies (Pakistan), 113
Bendel (Nigeria), 128, 132, 139
Berne, 158
Bhutto, S. A., 116-18
Biafra, 132-3, I 35
Bismarck, 178
201
Boer republics, 25, 28--g, 178
Bombay, 8g--g1; division uf state, I 73;
sales tax in, 104
Bond, Afrikaner, 35
Borneo states, 6g, 71, 73-4
Bradshaw, R., 59
Butler, R. A., 52
Cabinet government, in Australia, 145
Caine, Sir S., 58
Calcutta, 8g, g 1, g8, 109, 116
Cameroons, 1o
Canada, personal income and corpo-
ration tax in, 18g; grant system, 18g-
go
Cantons (Switzerland), 156-7, 163-4,
166-7, 1go- 1; cantonal government,
16g; forest cantons, 156-8, 163
Cape Province (South Africa), 24, 27-
8, 29-31, 34-5
Caribbean (West Indies), 55-66; Ca-
ribbean Development Bank, 63-4;
Caricom, 63, 65, 182, 196; proposed
federation of Eastern, 60-2
Carnarvon, Lord, 23, 27-31
Census, in Nigeria, 126-8, 131, 180
Centralisation, tendency towards, in
Australia, 145, 154, 193; in Nigeria,
194; in Switzerland, 163-5
Chagaramas agreement, 63
Chittagong, 110
Chinese, in Australia, 75; in Malaysia,
68--g, 72-5; in Tanzania, 51
Churchill, W. S., and India, 97
Common Market, in East Africa, 95
Commonwealth Grants Commission
(Australia), 146, 148--g, 155, 184-5
Communal assessment, in Nigeria, 120
Communes (Swiss), 166
Confederation, definition of, 5, 176 (see
also Switzerland)
202
Congress Party (India), gi-2, 94-7,
IOO, I04
Constitutional committee (Nigeria),
I34, I37
Contracting out, in Canadian grant
system, I8g-go
Cornwallis, Lord, go
COR states (Nigeria), I 29-30, I 35, I 39
Cripps, Sir S., 97
Currency Board (East Africa), 48
Dacca, I I6
Decentralisation, in Canada, Igo
Demas, W ., 53-4, 65
Development Bank, East African, so;
Caribbean, 63-6
Devlin Report (Central Africa), 8I
Diet (in Swiss Confederation), I56,
I6I-4
Dominica, 56-8, 63
Dyarchy, (India) 94-6
EACSO (East African Common Ser-
vices Organisation, 45, 48, 5 I
East African Co-operation, Treaty for,
49
ECOWAS (Economic Community of
West African States), I4I
Elections in Nigeria, I3I, I33, I44
Emergency, state of, in India, I02-3;
in Malaya, 67
Entrenched clauses, in India, 10 I, I 93;
in South Africa, 35-6
Established Programme Financing
(Canada), I8g
Federal Council (Switzerland), I65
Federalism, in particular countries, see
Table of Contents; in India, in relation
to planning, 108
Federation, criteria for successful, I 75;
definition of, 4; state rights in, 5
Finance Commission in India, 105,
108, I84-5
Finance and Taxation in Jamaica
(Hicks Commission), 58
Fiscal Commission in East Caribbean,
6I
Index
Fiscal equalisation (redistribution),
I8I; in Canada I88
French Revolutions, in Switzerland,
(I797 and I83o), I6I-2
Froude, J. A., 29
Gandhi, Mahatma, 94, 97
Gandhi, Indira, 109, 116- I 7
Glarus, 158, I6o
Gokhale, G. K., 92
Governors, military in Nigeria, 133-4,
I36, I39
Governors-general, powers of, in Aus-
tralia, I45, I48; in India, 84, 93, 95-6,
103; in Pakistan, I I2-I3
Gowon, Y., I34, I36, I40
Grants, matching (US), I87; place in
Federations, I82, I85; specific pur-
pose (Australia), ISO-I
Grenada, 55-6
Grey, Sir G., 24, 26
Griqualand West, 28-g
Grundgeset;:. ('Basic Law') (West Ger-
many), I9I
Guyana 55-6
Habsburgs, I57
Hastings, Warren, 8g
Helvetic Republic, I6I-2
Hicks-Phillipson Commission (Ni-
geria), I25, I27, I30
High Authorities (common services in
Central Africa), 83
High Commission, in East Africa, 43;
for South African territories, 34
Hindi, language, 87
Hindu, religion, 86-8, 93; in West
Bengal, Iog
Holy Roman Empire, I57
Huggins, Sir G., 77
Hyderabad, 88, I 79
lbadan, I25, I28, I41
Ibos, I2I, I24, I32-5
Imbalances, fiscal, I8I-3; fundamental
in federations, I So
Income tax, state and local limits on,
I83; income tax reform act
(Canada), I8g
 Index
India, British legislation on (I 784) 8g- Liberals, in Switzerland, I62
go; (I86I) gi; (I892) gi; (Igog) 93; Liquor duties, in Indian states, I04
(I 935) 95, I I I; constitutional ar- Loan Council (Australia), I47-8
rangements on independence, I00- Local government, in Australia, I 54,
2, 109; Independence Act, 99 I 55, I93; in Nigeria, I28, I37-4I; in
Indian Civil Service, go, I I o Switzerland, I go; in US, I87; in West
Indirect rule, in Nigeria, I 22 ff.; m Germany, I92
Uganda, 38 Lucerne, I57-8, I63
Indonesia, 7I, 75, Ig6 Lucknow pact, 93
Initiative, in Switzerland, I64 Lugard, F., 38, I 20-3
International Monetary Fund, 48 Lyttleton, 0., 77
lronsi, General, I 33-4
Irwin, Lord, 94 Macauley, H., I24
Islamabad, I IO Macpherson, Sir J., I25-6
Madras, 8g
Jamaica, 55-8, 6o Malan, F. S., 35
Jesuits, in Switzerland, I63 Malawi (Nyasaland), I I, 44, 76, 78, 79,
Jinnah, M.A., 95, g8, 109, I I2 8I, 83
Johannesburg, 35 Malaya (Malaysia), IO, 7o-I, 74; Com-
Jones, Creech, 57, 62, I25 munist Party in, 67--9
Manley, N., 59
Kabaka, 38, 5 I Maphilindo, 7 I
Kaduna, I23 Marathas, 88, 105, I 79
Kampala, 39-40, 53; Kampala Pro- Marignano, I 6o
gramme 46-7 Matabele, 26
Kano, I29 Maximilian, I6o
Kariba, 79, 82 Mediation, Act of (Switzerland), I6I
Kashmir, I 10, I I2, I I6 'Metro' areas (Canada), I88
Kenya, 37, 39, 4I, 44> so-I Middle Belt (Nigeria), I 22-3, I 34, I 79
Kruger, Paul, 30 Mill, J. S., I95
Kuala Lumpur, 73, 75 Milner, A., 33-4
Minto, Lord, 92
Labour governments, in Australia, I 4 7, Mirza, Iskander, I I3
I50-I, I8o, I94 Mogul Emperors, 88--92
Lagos, I 20, I 22-4, I 30, I 35 Mohammed, Ghulam, I I 3
Lahore convention, I I5-I6 Molteno, J. C., 29
Land revenue, in India, gi, 104 Monkton Commission (Central Af-
Landammann (Switzerland), I62, I64 rica), 8I
Landjriedensbund (Switzerland), I 58 'Montford' reforms (India), 93-4
Leagues, Greek, I6-I7, I8I-2; Han- Montserrat, 58, 6 I' 63
seatic, I7-I9, I82 More developed countries (MDCs), in
Lee Kuan Yew, 68, 70, 72-4 Caribbean, 55, 6I, 64-5
Leeward Islands, 55 Morgarten, I57-8
LEGCO (Legislative Council) (Nig- Morley, J ., 92
eria), I2o, I23 Moslem League, 92-3, 95, g8
Less developed countries (LDCs), in Mountbatten, Lord, g8
Caribbean, 55, 66. Mujibur Rahman, I I5-I6
Lewis, Sir A., 6o, 63 Murtala, M., I36
Liaquat Ali Khan, I I 2 Mysore, 88
204
Nairobi, 39-40
Napoleon, in Switzerland, I6I-2
Natal, 29, 32, 37
National Congress of Nigeria and the
Cameroons (NCNC), I24, I28--g,
I32
Native Authorities (Nigeria), I23 (see
also Local Government)
Native (princely) states, in India, 92,
95-6, 100, Ig2; in Pakistan, I I I;
States Reorganisation Commission
(India), I02
Nehru,Jawaharlal, gi, g8--g
New South Wales, I44, I49
Niger Company (Royal), I20
Nigeria, I I9-44
North West Frontier Province, g8, 109,
I I I, I I7
Northern People's Congress (NPO)
(Nigeria), I2g, I32
Nyerere, 52
Obas, (Western Nigeria), I20, I23, I36
Obasanjo, 0., 136
Obote, Milton, 5I-2
Octroi, 105
Oil, in Nigeria, I 3 I, I 35, I 42
Ojukwu, General, I 33, I 35
Onn, Hussein, 74
OPEC countries, I35-6
Orange Free State, 27, 29, 37
Ormsby Gore, 42
Oyo state, I4I
Pakistan, creation of, 97--8, 109 ff.; East
Wing, II4-I5, II8;provincesin, II4
Panchayats, gi, 104
People's Action Party (PAP) (Sin-
gapore), 68-70, 72-4
Permanent Settlement (Bengal), go
Philip, Kjeld, 49
Pitt, William, 8g
Planning, in Nigeria, 131, I42
Planning Commission (India), 107-8
Pool, Distributable, I84-5; in East Af-
rica, 45; in India, 105-6; in Nigeria,
I30, I39
Poona, 88
President, powers of, in India, Io2; in
Index
Pakistan, I I 4, I I 7
Proportional Representation, sugges-
ted in South Africa, 35; used in
Switzerland, 164
Provinces (states) in India, powers of,
93, 95-6, 100; revenue rights of, I 03
Punjab (P), I I I, I I3
Quebec, I88, Igo
Queensland, I44, I46, I49, I52
Radicals, in Switzerland, I 67
Railways, in East Africa, 4o--I, 46, 5I-
3; in Switzerland, I66
Raisman, Sir J., in East Africa, 44-6,
52; Raisman-Tress committee in
Nigeria, I30-I
Referendum, in Australia, I45, I 54; in
Switzerland, I64-5
Regeneration movement (Switzer-
land), I62
Regional alliances, I95 ff.
RegionsofNigeria, I2o--I, I24-6, I2g-
31, 137, 179; Eastern Region, I 2 I,
I26, I28, I3I-2; Northern Region,
I2I, I29, I42; Western Re~Pon, I2I,
I27
Rende! Commission (Malaysia), 68
Renold Commission (Switzerland),
I67
Reorganisation of states, in India, I 79;
in Nigeria, I37; I39
Reserve banks (central banks), in Aus-
tralia, 148-51; in East Africa, 48, 54;
in India, 107-8; in West Germany,
192
Residents (British) in India, 96; m
Nigeria, 123; in Uganda, 38
Revenue Allocation Commission, see
Hicks-Phillipson
Revenue sharing (grants), in Australia,
195; in US, 188; in West Germany,
192
Rhio Islands, 71
Rhodes, Cecil, 23, 31-2
Rhodesia (South), 76--g; Northern
Rhodesia (Zambia), 76, 78-8o
Richards Constitution (Nigeria), 124
Ripon, Lord, 191
 Index
Round Table Conferences (India), 95
St Lucia, 56, 63, 66
St Vincent, 56, 63, 66
Sales taxes, in Indian states, 104
Salisbury (Rhodesia), 79-80
Schreiner, W. P., 32
Senate (Upper House), importance of
in Federations, 7, 173; in Switzer-
land, 164
Services, common, in Australia, 148; in
Central Africa, 83; in East Africa,
40-1, 43, 45, 53; in Leeward Islands,
58; in Windward Islands, 57
Shepstone, Sir T ., 30
Sikhs, 8g-go, g8
Simon C~mmission (India), 94-5
Singapore, 10, 67-8, 70, 74-5, 196
Smith, Ian, 81
Smuts, Jan, 34, 36
Sokoto, Sardauna of, I 2 1, 129, 133
Sonderbund, 163
South Africa Act (I gog), 34, 36
South African parties, 37
South Australia, 144, 146, 149, 152-3,
182
Soweto, 35
Sprigg, Sir G., 30
'Stability and Growth' law in Ger-
many, 193
States, position of, in Australia, 193; in
Nigeria, 137-g; in West Germany,
192
Supreme Court, importance of in Fed-
eration, 8, 175; in South Africa, 36-
7; in Switzerland, 165
Sydney, 144, 155, 180
Tamil language, 86, 179
Tanganyika (Tanzania), 37, 40-1,48,
53
Tasmania, 144, 146, 149-50, 152
Tax, direct in Nigeria, 126; tax revenue
equalisation in Canada, 188; transfer
in East Africa, 50
Tiebout-Musgrave model, 187, 195
Trades and professions, tax on, in In-
dia, 105
205
Traditional Rulers' Councils (Nigeria),
140-1
Transfers (grants), in Australia, 150; in
Nigeria, 141; in Switzerland, 167; in
USA, 186-7
Transvaal, 29, 34, 37
Trinidad and Tobago, 55, 58, 6o
Trudeau, P., Igo-I
Tunku Abdul Rahman, 67, 6g-7o, 72,
74
Uganda, 37-8, 41, 53
UMNO party in Malaysia, 67, 6g, 72-3
Urban-rural problems in Australia and
Switzerland, 159, 17g-8o, 191, 193
Urdu language, in Pakistan, III
Uttar Pradesh (UP), go, 103
VAT (Value-added tax), 184, 191-2
Verwoerd, C., 33
Victoria (Australia), 144, 146, 149, 152
Vietnam, 196
Villiers, Sir G., 29
Western Australia, 144, 146-7, 149
Westminster, Statute of, 38, 93
Wheare, K. C., 195
White settlers, in Central Mrica, 76, 78,
174; in Kenya, 39; in Rhodesia, 44
Williams, Dr E., 65
Willink commission (Nigeria), 130
Windward Islands, 55-6
Yahya Khan, 115
Yorubas, 12o-1, 128, 133
Youth Movement, in Nigeria, 124, 128
Zambia, 51, 81 (see also Northern
Rhodesia)
Zamindars, 104
Zanzibar, 40
Zaria, Emir of, 129
Zik, see Azikiwe
Zug, canton of, 158, 163
Zulus, 26, 31
Zurich, 158-6o, 165