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Preheat oven to 350°F.
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Grease a 9-inch square baking dish.
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Set aside.
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In a large mixing bowl, combine sugar, flour, baking powder, baking soda and salt.
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Cut butter into small pieces.
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With a pastry cutter, two forks or your fingertips, blend butter into flour mixture until it resembles fine cornmeal.
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Take half of it and press into the bottom of the baking dish.
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In a small bowl, combine milk, egg and nutmeg.
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Add to remaining flour mixture along with chopped walnuts.
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Spoon over the mixture in pan.
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Bake for 4550 minutes until toothpick inserted in center comes out clean.
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Let cool in pan slightly before turning out onto a wire rack to cool.