February 25, 1916


On the Orders of the Day:


LIB

Edward Mortimer Macdonald

Liberal

Mr. E. M. MACDONALD:

In view of the reports in the press as to the battle that is now raging in France, I would like to ask the Minister of Militia whether any of the Canadian troops are engaged, or whether the fight has extended to the quarter where they are stationed. Has he any information on the subject?

Topic:   THE FIGHTING IN FRANCE.
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L-C

Samuel Hughes (Minister of Militia and Defence)

Liberal-Conservative

Sir SAM HUGHES:

The fight that is now going on is north and east of Verdun, a very strongly fortified position, perhaps the most strongly fortified position in Europe, except Metz. The latest news is that the French have completely smashed the first attack of the Germans, and that the troops now coming on are reserves, and practically raw recruits. They appear to be hurrying them on in masses, but the French have held a very strong position. In two places, the first line trenches have been broken, but the second line trenches are absolutely intact, and all the accounts agree that there is no danger. The fighting is in the vicinity of the Meuse along a front of about 20 miles, and the Canadian lines are a long distance from that; I need not mention where they are. There have been no infantry attacks on the Canadian lines, but the artillery firing is very heavy. Two generals have been wounded. Brigadier General Macdonell of Winnipeg was wounded rather seriously by shrapnel in the shoulder and in the side, and Brigadier

General Leckie of British Columbia was shot in the thigh. These casualties are supposed to have taken place in the rear of the Canadian position, but they are chances that our men are faking every day. The casualty list is not very heavy. I get a return every night, and there are five killed and eight wounded in last night's list. These are heavy enough, of course, but not serious. The artillery firing, as I have said, is very heavy on our line* and our fellows are giving it back to the enemy in their own coin.

Topic:   THE FIGHTING IN FRANCE.
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NEW RICHMOND WEST POST OFFICE.


On the Orders of the day:


LIB

Charles Marcil

Liberal

Mr. MARCIL:

I would like to call the

attention of the Postmaster General to the post office at New Richmond West, in my constituency, which has lately been closed owing to the introduction of a rural mail service. This post office has been in existence for sixty years, and near to it is a school attended by 100 children. The institution of the rural mail service does not seem to have been accepted by all the people interested, and I have received copies of a petition, which I understand has also been sent to the minister, signed by a large number of people in that locality. The introduction of the rural mail service has had the effect of depriving those people of the outgoing mail on the same day as they receive the incoming mail-the trains meet at New Richmond-so that the rural mail service is not an improvement in that locality. I will send the minister the letters if he cares to see them, and in view of the facts I have stated, perhaps he might look into the matter and see if the old post office, which has been in existence for over sixty years, could not be re-established.

Topic:   NEW RICHMOND WEST POST OFFICE.
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LIB

Joseph Philippe Baby Casgrain

Liberal

Mr. CASGRAIN:

I would like the hon. gentleman to send me the papers he has.

I may say that the matter is under consideration now.

Topic:   NEW RICHMOND WEST POST OFFICE.
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THE BUDGET.


Consideration of the proposed motion of Sir Thomas White (Minister of Finance) for the Committee of Ways and Means, resumed from Thursday, February 24.


LIB

James Joseph Hughes

Liberal

Mr. J. J. HUGHES (Kings, P.E.I.):

Mr. Speaker, this is the first time that I have formally addressed the House since you were appointed Speaker, and I wish to associate myself with the other members of this -House who have offered you their felicitations on your elevation to that high and honourable position. The other day I had

the privilege of listening to the Budget speech delivered by the hon. Minister of Finance, and also the advantage of reading it afterwards in Hansard, and in my judgment the speech was concise, well arranged, and well delivered. But I thought I detected running through it a note of selfadulation because the hon. minister was not as extravagant in his expenditures this year as he was last year; and he seemed to take considerable satisfaction from that fact. T-here will be expended on ordinary account, or on consolidated fund account, some $10,000,000 less this current year, ending on 31st March next, than on the same account last year. But the hon. minister omitted to say that, on the same account last year, he expended some $48,000,000 more than was expended in 1911, and some $56,000,000 more than was expended in 1910.

The hon. minister compared himself with himself, but I wish to compare him with his predecessor; the hon. minister will not object to that comparison. When the expenditures, to which I have referred, took place in 1910-11, the revenues were abundant, and increasing rapidly. We were at peace with the world, and we did not have to consider anything beyond the development of this country, and beyond providing money for its development. At the present time, as we all know, we are engaged m a terrible crisis, in a world-wide war with a strong, powerful, and relentless enemy, and our resources are being taxed to their utmost. This is a time for economy in every branch of the public service; everybody has to practise economy except the Government. During this time of stress and trial the Minister of Finance, and some of his supporters seem to derive considerable satisfaction from the fact that he is expending even in this year from $35,000,000 to $38,000,000 more than was expended on ordinary account during the last year of the late Administration.

Coming to next year, the year ending March 31, 1917, the hon. Minister of Finance told us that the expenditure on ordinary account would be $135,000,000. I am taking into account the portion that can properly be charged to the war, because it is only fair to take that into account; but allowing for the $20,000,000 that he estimated he would have to pay in interest on account of war loans, and for the $2,000,000 for the pension fund, he would still be expending between $25,000,000 and $30,000,000 beyond what was expended in 1911. Is there any

reason for this? Have public affairs been carried on better; has public business been better attended to; have the needs of the country been better looked after this year? Hardly any man will venture to answer yes to these questions. I have referred to the statement made in the Budget speech, but in the Estimates presented to cne House, the hon. Minister of Finance, and the Government, are asking for some $30,000,000 more.

He is asking for $158,000,000 on Consolidated Fund Account. He has made the statement to the House that they diet not intend to expend between $20,000,000 and $30,000,000 of that money. It appears to me to be a very strange thing indeed for the Government to prepare Estimates and submit them to Parliament when they do not intend to spend the money that they ask for. I do not know whether that is constitutional or not. It seems to me to be trifling with Parliament. There are only two reasons that suggest themselves to me why the Government should pursue that course. The first is that the Minister of Finance has lost control of his colleagues at the head of the large spending departments, if he ever had control, and he is obliged to come to Parliament and say that the Government intend to expend between $23,000,000 and $30,000,000 less than the Estimates in order to protect himself from his colleagues. The hon. Minister of Trade and Commerce (Sir George Foster) made a speech here the other night in which he advocated economy and declared that the time had arrived when everybody should practise that virtue. He further stated that he did not know whether he should speak along that line or not but he thought his grey beard and thirty-four years' experience gave him the right to speak in that way. I cannot help thinking that he spoke in the wrong place and to the wrong people. He should have addressed an argument of that kind to his colleagues at the Council board. Perhaps he did and perhaps they heeded not and he was appealing from them to Parliament and the country. If that is the case, and if the minister failed to make any impression upon his colleagues in regard to this important matter, his duty to himself and to the country is to leave the Government.

Another reason that suggests itself to my mind is that when preparing these Estimates the Government expected to have an election this year and they deliberately padded them in order to deceive the coun-

try. If that is the case we have a degree of political obliquity that is a discredit to the Dominion. In view of this extraordinary expenditure the Minister of Finance urges economy and the Minister of Trade and Commerce makes a strong and eloquent plea along the same lines. Is this large expenditure due to the fact that, after this Government came into power, to use the words of the Minister of Finance himself on a former occasion there was ushered in " an era of uncontrolled prodigality, utter wastefulness and reckless extravagance unparalleled in this or any other British country"? These are strong words, but I intend to prove their application to present conditions and to prove it from the Public Accounts themselves. This is the law and the testimony. I have the Public Accounts for the year ended March 31, 1915, and 1 invite the attention of the Minister oiFinance to them. First, we will take the account we have been considering-expenditure chargeable to consolidated fund. As I have stated, I will compare the administration of the present Minister of

Finance with that of his predecessor, and see how it will work out. The comparison is as follows:

Expenditure on Consolidated Fund Account.

Yearly average.

1896-1911 $876,985,606 $58,465,7001911-1915.. .: .. .. 473,128,655 113,282,164

Or practically twice as much. Is there any justification for that? Has the country benefited by that enormous increase in expenditure?

I will go on now to examine the acounts in the different departments which go to make up the total I will take them as they occur here, not perhaps in order of their merit, or should I say demerit. I have given some attention to the Public Accounts, and it is a book that will pay perusal.

Collection of Revenue.

Yearly average.

1896-1911 $232,492,843 $15,499,5231911-1915

142,580,587 35,645,147

Or two and a half times-250 peT cent- more. Then comes the account for other expenditures. I suppose this is the account into which are put miscellaneous matters that are not properly placed under any particular heading:

Other expenditures.

Yearly average.

1896-1911 $358,848,809 $23,896,6001911-1915

223,427,163 55',856,800

An increase in this account, under the present Administration, of two and a half TMr. J. J. Hughes.]

times the average expenditure -under the previous Administration.

'The next account I will consider is that of Civil Government. That is an account that should not increase very rapidly from year to year. I understand that expenditures on that account are made up of the salary and expenses of the High Commissioner in London, the salaries of the lieutenant governors, the 'salaries of the Civil Service and expenses of the offices at Ottawa. The expenses, therefore, under this head should not increase very rapidly. Tinder the old, Administration there was some increase with the growth of the country, but not much. I find that for the fifteen years previous to 1911 the total amount expended on Civil Government was $31,130,268, or an average yearly expenditure of $2,075,350. Under the present Government the expenditure h-as increased very rapidly. During the four years they have been in power they have spent under this head $21,649,896, or an average yearly expenditure of $5,412,474. Is there any reason, in the world for that increase? Can hon. gentlemen opposite possibly justify it? According to a return brought down in the House last year, some eleven or twelve thousand employees have been ad,ded to the Civil Service in this city, and that, I think, largely explains the increase in Civil Government expenditure under this Government. Although the amount under this head is not very large, the comparative increase is simply enormous, and the country cannot stand it.

Now I come to the Immigration Department. Under the previous Administration immigrants came into this country by the hundreds of thousands. The cost of managing that department from 1896 to 1911 was $9,926,394, or a yearly average of $661,760. Under the present Government the expenditure has been, $6,343,589, or a yearly average of $1,585,897; that is, although very few immigrants are coming into the country at the present time, the present Government is spending on immigration nearly three times as much per year as the late Administration did. Can any explanation be given for that increase? I say it is absolutely unjustifiable; to use the words of the Minister of Finance, it is "uncontrolled prodigality, utter wastefulness, and reckless extravagance."

The Indian Department. The previous Administration expended on this department during the fifteen years they were in power $16,752,817, or an average yearly ex-

penditure of $1,116,854. The present Government, in its four years of office, has spent $8,157,850, or an average yearly expenditure of $2,039,462, practically twice as much. Have the Indians increased in number, or are they better looked after than they were under the former Government? Can any reason at all be given for this increase? It is unthinkable that such a sum should be expended on this department.

Public Works Department. The late Administration during their fifteen years of office expended on public works $80,313,281, or an average yearly expenditure of $5,354,220. The present Administration in the last four years has spent on this department $62,164,036, or an average yearly expenditure of $13,041,000; more than twice as much.

The cost of collecting the customs revenue for the fifteen years previous to 1911 was $21,282,332, or an average yearly expenditure of $1,418,822. From 1911-12 to 1915 this Government has expended under that head $13,219,069, or an average yearly expenditure of $3,304,800; practically three times as much, and that is something to consider. Have these matters been considered in Council? Have these enormous expenditures received the consideration the Government should give them? Can the country stand such expenditure? A country can be driven into bankruptcy just as an individual can. Was it these expenditures the Minister of Trade and Commerce had in mind the other night when he spoke so eloquently and forcibly in this House? Yes. If so, he was speaking in the wrong place; he should have addressed those remarks to his colleagues. Of course, if he had already spoken to them, but without any effect, he did well to address his remarks to Parliament.

Now I come to the Dominion Lands Department, and this is the worst of all, because expenditure in that department is increasing all the time although the revenue is falling off; less work is being done, and more money expended. The previous Administration in its fifteen years of office spent on this department $5,736,870, or an average yearly expenditure of $382,460. During the last four years the present Government has spent on this department $11,727,381; very nearly twice as much as the cost during the fifteen years previous.

Topic:   THE BUDGET.
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LIB
LIB
LIB

James Joseph Hughes

Liberal

Mr. HUGHES:

I am reading from page 73 of the Public Accounts Report, comparative statement of expenditures on consolidated account. As I said, this department is the worst of all, for the revenue is falling off. For the first time in thirty years there has been a deficit in that department in the last two years. I think the deficit in 1914 was $250,000, and last year about $900,000. The receipts over expenditure during the last year of the previous Administration amounted, to over $1,000,000. I think .some explanation should be given of this increase.

As I see the Postmaster General in his seat, I wish to call his attention to the fact that the previous Administration in its fifteen years of office expended on the Post Office Department $72,438,037, or an average yearly expenditure of $4,828,536. The present Government during its four years of office has spent $48,838,088, or an average yearly expenditure of $12,209,522; that is, they spend on the average practically three times as much as the previous Government did. Sir William Mulook, when he was appointed Postmaster General, introduced business principles into the conduct of his department, and the effect was very quickly seen. Under the Conservative Administration the deficit was about $700,000 a year for some years. During the first two or three years of Sir William Mulock's Administration the deficit in the Post Office Department w'as reduced, but not completely wiped out. After that a surplus was the order of the day, and I think that the surplus during the last year or two of the previous Administration was pretty nearly a million dollars. Under the present Administration the surplus quickly evaporated, and a deficit took its place. Under the late Administration the postage rates were reduced from three cents to two cents on domestic letters, and, I think, from five cents to two cents on letters to Great Britain and all British dependencies, a very large reduction; but notwithstanding that the business management of the previous Administration brought about the condition of surpluses to which I have alluded,. Under the late Postmaster General (Hon. Mr. Pelletier) business methods were discarded, and patronage committees from the Atlantic to the Pacific took charge of the Post Office Department, and the results were quickly seen. The present Postmaster General (Mr. Casgrain)-I have not the

honour and privilege of his. personal acquaintance-has, amongst those who know him best, the reputation of being an honest man, but those who know the late Postmaster General do not make the same statement about him. If the present Postmaster General is to sustain the reputation that he possesses he will have to get busy, because, although the receipts are increasing, the expenditures are rolling up, and so are the deficits. The deficit last year wae $3,000,000; this year I understand it will be about $5,000,000, and yet the Postmaster General is asking, in his Estimates, for about $800,000 more than he asked for last year. That is a serious state of affairs. Can the country stand an extravagance of that chraoter? It is time that the matter should be made known publicly, because very few men would believe that any Government would conduct the public business in such a manner. I have to borrow the language of the Minister of Finance in order to describe this extravagance properly, because I myself cannot do it justice. That is the situation so far as the civil expenditure is concerned, and there is practically no let up, even under the trying conditions through which we are passing at the present time.

Now, Sir, one would have thought that, when the war broke out and we were confronted with the enormous expenditure that would have to be made under war conditions, the extravagance that had been practised during the previous years would disappear, but it seems that, instead of that, ttie flood-gates were opened and grafters aid middlemen from all parts of the Dominion flocked to Ottawa as flies gather around a molasses barrel. The revelations made in the Public Accounts Committee last year, although they only touched the fringe of the matter, shocked the country. In that committee evidence was submitted to show that, when representatives of business firms came to Ottawa to try to do business with the Government, they were told that they could not do it direct; that middlemen would have to be employed. Shaver, the Toronto representative of Bauer & Black, Chicago wholesale druggists, who made a specialty of field dressings, made the sworn statement before the Public Accounts Committee that, when he came to Ottawa wishing to do business with the Government, he was to'ld that he would have to employ a middleman, and in that way Mr. Garland, the late member for Carleton, came into the business.

In Kings county; N. S., there were in regard to horse purchases revelations which discredited the country. Horses that were lame, blind, spavined, ringboned, wind-broken, or old enough to be rejected at the time of the Boer war, were accepted and paid for, with very few questions asked. Of course, the men connected with this matter had to leave Parliament and were read out of the party. A few days ago 1 put upon the Order Paper a question asking the Government whether the horses that had been purchased for army purposes in Prince Edward Island and also in the other provinces were found to be suitable and satisfactory, and I got the answer " yes " in both cases. I was told that 114 horses had been purchased in Prince Edward Island, and I know that the Davidson Commission, after examining into that purchase, stated that everything was right; that the man who made that purchase had acted honestly and squarely with the Government; that he had got good value for the Government. But the Government left off buying horses in that province. What, Sir, can be thought of the answer which I received in reply to my question whether the horses purchased in the other provinces were suitable and satisfactory? The minister said " yes," and when I questioned the accuracy of his answer, he stated in the House a few days afterwards that he saw the horses that came from Kings county, N.S., and that he never saw a better lot of horses. That is the kind of information which we get from Ministers of the Crown, notwithstanding the sworn evidence before the Public Accounts Committee.

There is published in my province a paper which gets articles written in Ottawa or inspired in Ottawa, and in it I saw a statement that the speech recently made by the Minister of Militia and Defence had completely exonerated the Government from any impropriety in regard to the manufacture of shells and all expenditures of the Militia Department. I just want to read to the House an extract from the Daily Mail, a paper which is published in the city of Montreal, and which supports this Government. This paper, the president and managing director of which is a brother of the Minister of Finance, had this to say in its issue of January 28 with regard to the statement of the Minister of Militia and Defence concerning war munitions:

It is not so long since Sir Sam launched an attack of the stereotyped Hughes quality, at the head of Mr. D. A. Thomas, for the reason that the latter gentleman questioned the econ-

omic and other capacities of the old Shell Committee. Sir Sam then asserted in his vigorous cocksure manner, that all was well ana no change would be required or would he tolerated.

But a change' has been made; a reduction in price was brought about, and an increased production was thus secured. And now Sir Sam quotes this right-about-face as a justification of his wisdom or initiative.

General Hughes' comparison of shell prices in Canada and those in the United States, like a great many other statements made in his speech on the Address, are based upon information the sources or bona fides of which he does not establish or reveal. If these statements are in keeping with the General's allegations as to the politics of some of the so-called mushroom manufacturers of shells in Canada, they are not worth considering.

It will be remembered that in his statement the Minister of Militia said that as many Liberals as Conservatives-and he gave some names-were making shells. The Daily Mail says that a statement of that kind is not worth considering. The article goes on:

We are in a position to say that he has named exceedingly good Conservatives in the mushroom business, and styled them Liberals.

I want to examine for a moment a matter with which the Minister of Militia and Defence is most closely connected, and which concerns a contract given to the Midvale Steel Company of Philadelphia. In his speech in the debate on the Address, the Minister of Militia said that the people of Canada could do anything that any other people on the face of the earth could do; that they could manufacture anything that could be manufactured elsewhere. There was only one thing that we could not manufacture-shovels. That m;ust have been the reason why a contract for 25,000 shovels at $1.35 each was given to the Midvale Steel Manufacturing Company. I am informed that at 500 different places in Canada these shovels could have been manufactured at from 30 to 35 cents each. Why was this order given to the United States firm? The only reason to be offered is this: no investigation could subsequently be held into the transaction. The people of the United States are not amenable to any court in Canada, not even to this Parliament, and no investigation into the giving of this contract could be held. Last session, over eleven months ago, I got an order of the House for the papers in connection with this transaction, and they have not yet been brought down. My impression is that the Minister of Militia and Defence has no intention of bringing them down; he intends to flout and disobey the order of the House. This year the matter is before the Hi -

Public Accounts Committee, and 4 p.m. some light may be thrown upon it; but certainly no thorough investigation can be held. In my judgment there are doings in connection with this transaction that are more reprehensible than anything that Garland of Carleton, Ont., or Foster, of Kings, N.S., did. It is known that a young lady, a stenographer and typist in the office of the minister, got a patent on a shovel and made perhaps $25,000 out of it. The thing was worthless;

6,000 of them were sent over to England, but never got any farther. Is it possible that a young lady in the minister's office could have had sufficient military know-eldge to enable her to invent a military tool or arm that the generals- of Europe, with their years of experience, would not think-of? This young lady has been made wealthy at the public expense, and my constituents have to bear a share of that burden. I do not want them to bear it; it is not fair that they should. There is no surer way of injuring the country than by destroying the faith of the people in the impartiality and rectitude of its courts. This is the highest court in the land; the Prime Minister has its honour in his custody. Garland and Foster are out of the party; they are punished to the full extent of the minister's power for doing something that, in my judgment, was not as reprehensible as certain things done by another gentleman who was recommended for knighthood.

Considerable discussion has taken place in this House and in the press of the country with regard to shell contracts. That will be discussed at length before the session is over, and I shall not go into it now, except to say that the facts that I mention show the enormity of the graft which characterized the operations of the Shell Committee. The Minister of Militia says he is responsible for that committee, and that he will stand by it as long as it has a button on its coat. I just wish to mention that Mr. Jones, manager of the Canada Mr. D. A. Thomas, special representative of Mr. Lloyd George, secured by his intervention, the cancellation of certain contracts and saved Canada and the Empire $21,000,000 of excessive profits. These contracts were re-let at a price saving $21,000,000 in profits. It is not too much to say that there are men in the Dominion of Canada who will be multi-millionaires in consequence of some of the operations of the Shell Committee. An investigation has so far been refused by the Government, the reason advanced being

that the greater part of the money expended belonged to the v British tax-payer. And that is our idea of loyalty, that is our idea of guarding the British taxpayer, who is carrying a burden at the present time, and will be after the war, greater than has ever been imposed on any man in the world, who is bleeding from every pore at the present time. And these super-loyal men are piling millions on millions of graft upon the British taxpayer-and yet the Government so far refuses an investigation I Other things are going on that are nearly as bad. There is at present pending in the city of Quebec a suit between a middleman and a reputable shoe manufacturing company. The John Ritchie Shoe Company is being sued by a Mr. Belmar for some $40,000 or $50,000 as a middleman's profits on

150,000 pairs of canvas shoes, an order foi which he claims he was instrumental in getting from the department. This suit is contested, but a contract has been submitted, signed by the John Ritchie Company, acknowledging Mr. Belmar to be the middleman who obtained the orders for them, and it is known that on a previous order for boots they gave him a very considerable commission. The iniquity of the whole thing must be apparent to everyone. Under the present purchasing committee, which was appointed last year to do things properly, it appears that an order for trousers was given in Toronto at $40,000 more than the price at which the lowest tenderer was willing to make them. One company got a small portion of that order, some twelve thousand pairs of trousers, upon which they made an excess profit- because I presume the lowest tenderer was calculating on a profit-of over $6,000. That is going on at the present time, or it was quite recently ,and so it is all along the line.

Turning to the purchase of horses in Canada, I have been trying during this session to get some information from the Government in regard to their purchases of horses, but I cannot get any. Why should not the Government try to dispose of the surplus horSes fin this country? The situation appears to be that the Govern ment started in to purchase horses foT the Canadian troops-and we have seen the kind of horses they purchased. That discredited the horse industry of the country. Whether or not the horses were sent to Salisbury I am not aware, but I presume some of them were, and that they were very little good when they arrived there. Later on the Government put an embargo

on the export of horses, they passed an Order in Council prohibiting the exportation of horses from Canada. Then, almost without warning, the men who came from Great Britain and France to purchase horses were turned out of the country; the Government would not allow them to purchase horses here and they went to the United States. That embargo, I under stand, was removed, but there have since been no horse purchases worth speaking of in Canada, and there is a large number o', horses in Canada for sale, probably one hundred thousand. I wish to refer to some answers which I received to questions placed by me on the Order Paper. On page 794 of the unrevised Hansard, these questions and answers will be found:

1. Did the British or French Governments purchase any horses in Canada for army purposes since 1st August, 1914?

2. If so, how many, and when did they stop buying horses in this country?

3. Has the Government made .any representations to the Government of Great Britain or France in regard to the number of horses obtainable in Canada? If so, with what results?

4. Are the British and French Governments purchasing horses in the United States for army purposes?

5. When'did the Canadian Government stop buying horses for military purposes?

Sir Robert Borden:

1. The Government is informed that the British and French Governments have purchased horses in Canada for army purposes since the first of August, 1914. I understand also that the French Government is buying horses in Canada at the present time.

, 2. The British Government has not. been purchasing horses for some months; I think since about November. I would not feel at liberty to give information to the 5 1 ousy as to the number of horses purchased as it would be against the policy which the British Government has pursued in such matters. The Britisn Government does not give information as to the numbers of horses, or munitions, or anything of that kind which they purchase.

3. Representations were made to the Government of Great Britain with regard to the number of horses obtainable in Canada, and the British Government was asked to communicate these representations to the French Government. The result was that in August last an arrangement was made between the British Government and the French Government, by which the French Government should be permitted to purchase horses in this country.

4. The Government is not aware whether the British and French Governments are purchasing horses in the United States for army purposes.

5. The Canadian Government stopped purchasing horses for the reason that an arrangement was made during the past summer by which the British Government would purchase whatever horses might be necessary, not only for the British forces but for the Canadian, forces as well. That arrangement was made in the early part' of August, and I believe that since about that time the Canadian Govern-

ment has not been purchasing horses for military purposes.

Remember, the Prime Minister stated that he could not give me the information in regard to the number of horses purchased by the British Government, or anything of that kind. I have here clippings from the Ottawa Journal which are of interest in this connection. They are as follows:

Kansas City, Mo., Fob. 18.

No more American horses for use of the British forces will be purchased for some time at least, according to Major General F. W. Benson, of the general staff of the British army, who is in charge of the purchase of horses. The British Government has secured enough horses for the next three years.

New York, Feb. 18.-Records of the exports of horses to Europe show that more than 500,000 . horses valued at $125,000,000, have been shipped there from this country since the beginning of the war.

The prices show a declining tendency. The average price in 1914 was $240, against an average of $207 in November last.

So it appears that the Major General, who is purchasing horses in the United States fo.r the British army, gave out the information that we could not get in this Parliament. It appears also that the British authorities have purchased half a million horses in the United States at a value of $125,000,000, while the farmers and stock breeders of this country cannot sell a horse, and the Government appear to be helpless. Whatever interference, whatever action they took, would appear, so far as we can discover, to have been futile. Their Order in Council appears to have been ill-advised. Sending the representatives of the British and French Governments to the United States to purchase horses was surely a suicidal act. It reminds me of what the Agricultural Department did some years ago in sending an officer of that department to Washington to tell the people of the United

States that our potatoes were diseased and should not be allowed into that country. Horses are what the British and French armies want, and if the Canadian horses are not sold for army purposes, they will not be needed at all, for there is no local demand for them. Is there any reason in the world why an industry in which the farmers and the stock breeders of the country are so deeply interested, should not find a market if the Government would only interest thmselves in securing it? But they seem to have done nothing; they have simply destroyed the horse trade in this country. We read in the despatches that the British

Army have secured in the United States sufficient horses for the next three or four years, so that we cannot expect to sell horses in this country for army purposes, and the surplus stock now on hand will be practically useless.

I would like to read a part of the answer to a question which I put to the Prime Minister. The Prime Minister in his reply said:

1. The Government is informed that the British and French Governments have purchased horses in Canada for army purposes since the first of August, 1914. I understand also that the French Government is buying horses in Canada at the present time.

I then put a question on the Order Paper asking where the French Government were buying horses in Canada, and what the names and addresses of the parties representing the French Government in this country were; and the answer of the Prime Minister-I am not able to put my hand on it at the moment-wjas that he could not give me the information. He understood that the Hudson Bay Company was doing something in that line, but he was not sure; that was the purport of the answer. That is the condition of affairs; the Government do not seem to know anything at all about the matter. If they do, they will not give the information. Why should there not be some place at headquarters in Ottawa where information of this kind could be obtained? Why withhold this information? Why should the Government not be pleased to give the members of this House such information, information that they could convey to the people. They should be willing to get the information from any source in regard to a matter of such importance to the farmers and stock breeders of the country. There seems to be something radically wrong in regard to the matter. If the Government haive inform- ' ation in regard to it, they are withholding it for some reason or another not yet understood, and in all probability no information will be forthcoming. But this matter will be fully investigated before this session ends.

Sir, I have brought to the attention of the Government some matters which I think deserve consideration. In the dying days of the old French regime the Intendent Bigot, and those associated with him, introduced into the colony a carnival of corruption, graft and dishonesty. We are not in that position; but we are at war, and a great many people in this country are taking advantage of the war to make pat-

riotism pay, and some of them are the men who most loudly proclaim their loyalty. The Government are either protecting them or they seem to be powerless. Notwithstanding the revelations that were made in the Public Accounts Committee last session, the people of this country did not slacken their efforts or moderate their determination to see this war through. When demands were made upon them for the Patriotic Fund, for the Belgian Relief Fund, for the Red Cross Society, and for other funds, everybody responded. In my own small town, when we heard that there was a scarcity of machine guns at the front, and that our soldiers were not having a fair show against the Germans, we subscribed to a fund to purchase three of those weapons. One man alone subscribed an amount sufficient to purchase a machine gun. He could afford it; he is a member of the other Chamber. Another man in very moderate circumstances subscribed for another gun, the town collected money to purchase a third, and that same man subscribed $300 to the second fund and was ready to give everything he possessed in the world to help on the war. That is the spirit which animates the people. Even the school children subscribed, giving their pennies. But while that is the spirit among the ordinary people of this country, the grafters are getting away with their millions, and the Minister of Militia and Defence says he will stand behind them while there is a button on their coats. That is the state of affairs.

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CON

John Hampden Burnham

Conservative (1867-1942)

Mr. BURNHAM:

I may point out that when you wish to shield a man you stand in front of him, not behind him.

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LIB

James Joseph Hughes

Liberal

Mr. HUGHES:

That is very smart. The .people of this country will see the war through; they are determined upon that, but when it is through I think they will turn their attention to the men who betrayed them, to the men who have made enormous profits out of the terrible crisis through which we are passing-who are making money .out of the agony of the nation.

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LIB

William Stewart Loggie

Liberal

Mr. W. S. LOGGIE (Northumberland, N.B.):

Mr. Speaker, before addressing myself to the subject matter before the House, perhaps it would not be out of order if I referred Ho an incident that happened when I last addressed you. It was my pleasure on that occasion to congratulate you (Mr. Rhodes) on your elevation to the

rail-. J. J. Hughes.]

# ^

position of Deputy Speaker, and I regret that I have not the pleasure on this occasion of addressing the Speaker of the House, because I have not addressed the House when that gentleman was in the Chair, and I would like to tender my compliments to him.

I want to say, with reference to the circumstance that I have already referred to, that when I was addressing the House a voice came from my left saying that there was a bad fire. I cast my eye To the left and I could see a reflection in the hall. The rapidity with which the fire seemed to surround the chamber was marvellous. Within a few moments I rushed across the House, but I was not able to find an exit. I, with six other hon. members, made two attempts to find an exit, but failed. A short time afterwards we got through the same door as that at which we had prev-ously failed. It is regrettable that on that occasion some persons unfortunately lost their lives, and especially in this connection I would refer to our late colleague, the hon. member for Yarmouth (Mr. Law), and I desire publicly to express my heartfelt sympathy with his wife and daughter in their bereavement. I think I should also congratulate the members of the House and those who were in the Parliament buildings at the time upon their 'wonderful escape under the circumstances.

Now, allow me to make a few remarks on the subject matter before the House. We are told by those in authority that we require half a million men from Canada to go to the front in order to win this war. The hon. Minister of Finance (Sir Thomas White) tells us that we need $250,000,000 for war purposes this year. I am sure we are all impressed with the fact that men and money are needed to maintain the rights and privileges that we at present enjoy. My son, who has been in the trenches in France, and who was wounded in October of last year, said to me in a letter recently that it would take money to win this war. What we are able to offer, whether it be men or money, we shall offer, I am sure not grudgingly. We have volunteered to raise half a million men, and we are endeavouring to devise means by which we can raise $250,000,000 to pay the cost of what we have so laudably undertaken in our desire to aid the Empire at this time.

The question comes to me: what is our urgent duty on the present occasion? That brings me to the statement which has been

made to the House by the Minister of Finance. That hon. gentleman intimated [DOT]that there were in the Estimates votes to the amount of about $30,000,000 that the . Government does not propose to expend this year. In these critical times, in these days- when we have extended the life of this Parliament-our own parliamentary life, if you like-we might depart from the procedure of the past and eliminate votes that we are told it is not intended to expend during the coming fiscal year. I commend this suggestion to the Minister of Finance. It seems to me that under the present circumstances it would be a move in the right direction. Another suggestion I would make to the Government is that we, as a people, and as a House of Commons, should rise to the dignity of the occasion and adopt the attitude towards public affairs which was so ably presented to us by the hon. junior member for Halifax (Mr. Maclean), and by the hon. Minister of Trade and Commerce (Sir George Foster), who spoke with particular reference to what I might describe as the patronage system disease. This disease is working into the very vitals of our country and undermining our best interests. I agree with the Minister of Trade and Commerce in the statement that really no good comes from it to any party, but that in the end nothing comes from it but evil. In every town, as I understand it, where soldiers are billeted, orders for supplies are given out by a patronage committee. A patronage committee tells whom to ask for prices for supplies, and notwithstanding that a firm may have the necessary stock, is doing a legitimate wholesale business, and could supply the goods at reasonable prices, it is passed over, and firms named by the the patronage committee are asked to supply the necessary food for the soldiers.

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LIB
LIB

William Stewart Loggie

Liberal

Mr. LOGGIE:

And without tender. We are giving our life-blood to pay for these goods. You propose to tax my earnings to pay for these goods and yet you say that all the firms in a town that are to pay should not be treated alike. I think that this is an opportune time to cut the patronage system out of our political and national life. Let us be as one man in our stand for liberty based on righteousness. If eternal vigilance be the price of liberty, it is the price we ought to pay to-day to maintain a standard of liberty based on righteousness. We are paying the price in money and blood to maintain our liberty. [DOT] Surely this is a

time when we should rise to the occasion and cut out this evil of the patronage system. Our King and his representatives call to us for men and money. We are responding to that call to-day and to-morrow shall be as to-day, but the response will be much more abundant.

That brings me to the resolution which has been proposed as a means of securing a portion of the money that we require to carry on the affairs of the country and to meet the interest on the money borrowed for the prosecution of the war. I see that the resolution is divided into two parts, or rather it refers to two classes of persons or companies as being subject to taxation. One class is spoken of as incorporated companies and the other as " persons." It is laid down that the expression " person " means " any individual or person and any partnership, syndicate, trust, association, or other body, and any body corporate," etc. There is one point on which the minister might enlighten me right now. I suppose there are companies that are bodies corporate but are not really incorporated. I am not quite clear why such a company should not be called a partnership, instead of a body corporate. If there is no such thing as a body corporate, outside of an incorporated body, the minister has no right to say that a person is a body corporate and tax all his profits above ten per cent. It does seem to me that the term "body corporate" is not in its right place. Perhaps the minister will explain.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I have not had my attention drawn to the point to which my hon. friend refers, hut I shall be very glad to look at it with a view to discussing the matteT when we are in committee on the resolution.

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LIB

William Stewart Loggie

Liberal

Mr. LOGGIE:

The other clause refers to incorporated companies, and I think every hon. member clearly understands what an incorporated company is. The minister, however, in his speech the other day said:

It will be observed that incorporated companies are taxed upon a higher basis than individuals and partnerships. The reason for this is that capital in the case of joint stock companies frequently represents intangible assets or capitalized earning power or good will.

Even if that were true, I think that i? we are to put this legislation on the statute book, we ought to be big enough to undertake to arrive at a fair valuation of those assets. That should not be an impossibility; and if it is, the resolution as brought down should be amended before being dis-

. COMMONS

cussed in Committee of the Whole. The minister goes on:

We found it a practical impossibility to go behind the capitalization of companies and endeavour to ascertain the precise cash value of their assets as can be done in the case of individuals or partnerships.

There should not be any great difficulty in doing that, although of course it might not be easy to arrive at the precise value of the assets. But I venture to say that the Government will not be able to arrive at the precise value of the assets of any company or person. Would the minister undertake to say that he will be able to arrive at the precise value of the assets of the J. R. Booth Company of Ottawa, for instance? I do not think he will. And yet he is providing for that being done, for I understand the Booth Company is not incorporated. I do nui, think we should let these apparent difficulties stand in our way. If we are to collect taxes in this way let us treat the people of the whole Dominion alike, let us do the thing fairly and equitably. I maintain that under the present proposals there will be positive discrimination. I of course realize, as the Finance Minister says, that there will.be difficulties, but they should not be insurmountable. We ought to be able to arrive at a fair value of the assets of any company doing business in Canada. The Minister of Finance illustrated the difficulty in this regard as follows:

The cases of railway, public franchises, and so-called holding companies, mining and other corporations, illustrate the difficulty to which I am referring. In addition there is the further fact that shareholders have purchased their shares and receive their dividends upon the basis of issued capital stock.

I do not care one iota what dividends shareholders have received upon the basis of issued capital stock. To me the only fair thing seems to be to put all the companies in Canada on the same basis; we should value the assets of every company in Canada, and form a reasonable fair value of the assets, deduct all direct liability. That would give us the capital on which the money is made, and that, I take it, is what the Government really desire to tax. It cannot possibly be that the Government desire to tax anything other than the earnings of a certain amount of money invested in a business. [DOT]

I think this resolution is unfair in another regard. I have read the minister's speech very carefully, and I cannot see that he has explained why the profits of an individual or partnership should be taxed only above ten per cent, while incorporated com-

panies with the same amount of capital are to have. their profits above seven per cent taxed. Is that fair? Let me give an illus-' tration. Suppose I started an incorporated company twenty years ago, with an original investment of $100,000. That $100,000 is not sufficient to enable me to carry on the business, and I borrow money in the ordinary way of business. Supposing in ten years I have made $10,000 a year. As I am indebted outside, and the business is expending, the money is left in the business with the result that in ten years I have a surplus of $100,000. I go on, and in ten years more have a surplus of $200,000. That gives me a surplus of $300,000 last year, and that $300,000 has earned me $21,000. What would be my position with relation to this resolution? If the resolution carries in its nresent form my position will be this: My original $100,000 will have earned $21,000, and I shall be called upon to pay one-fourth of $14,000, or $3,500, whereas I have earned only seven per cent on the total capital. But the hard part of it is that if I were an ordinary company, I would not have to pay a cent, because I would be entitled to 10 per cent on $.300,000 That is not equitable, and the minister ought to make some announcement before this resolution is passed and amend or add something to it so that we can discuss what the minister proposes to do in order to get out of this difficulty. [DOT]

I do not understand why the minister has arbitrarily fixed $50,000 as the capital for a person and not fixed any sum for an incorporated company. Let me illustrate how unfair that is. Suppose I form a partnership with my friend, Mr. Turriff, in the dry goods business in a town of five or ten thousand people; I invest $30,000-and $30,000 invested in dry goods in a small town will give a very nice stock and will enable us to compete with any other person or firm doing the same class of business. Suppose I make ten per cent, fifteen per cent, or twenty per cent on the $30,000-

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February 25, 1916