Preheat oven to 350 degrees F (175 degrees C). Grease and flour 2 - 9 inch round cake pans. Sift flour, baking powder, nutmeg and salt together and set aside.
In a large bowl, cream sugar and shortening until light and fluffy. Add flour mixture alternately with milk. Stir in nuts.
In a separate clean bowl, whip the egg whites until stiff peaks form. Quickly but gently fold into the batter.
Divide batter into 2 - 9 inch pans. Bake at 350 degrees F (175 degrees C) for 25 to 30 minutes, or until a toothpick inserted into the cake comes out clean.
