April 30, 1918


Alexander Kenneth Maclean (Minister Without Portfolio)


Hon. A. K. MACLEAN (Acting Minister of Finance) moved:

That the Speaker do now leave the Chair for the House to go into Committee of Ways and Means.

He said: Mr. Speaker, in presenting today the annual statement of the financial affairs of the country I deem it but fitting and proper that at the outset I should give expression to -what I believe is the profound and sincere regret of Parliament, that Sir Thomas White, the Minister of Finance, was unable to deliver the annual budget by reason of an enforced and lengthy absence from official duties. Regardless of party distinctions, and the inevitable differences of opinion that must prevail regarding the 'administration of the financial affairs of the country, I am sure that honourable gentlemen will heartily concur in the observation, that the highly important duties attaching to the Department of Finance, so abnormal! in their magnitude and exacting in their detail during the war period, have been discharged by Sir Thomas White with distinction 'and with conspicuous ability, fo his task he has applied great energy and industry, and in his labours he has been solely animated by the high motive of rendering faithful and unselfish service to the State. I iam confident the House will join with me in expressing gratification upon the fact that he has so far recovered his health that he proposes an early return to Canada to resume his official duties, after disposing of some public business now engaging his attention in the United States.

Topic:   THE BUDGET.


The revenue for |he fiscal year ending March 31, 1918, will, when the accounts are finally closed, reach $258,000,000, exceeding the revenue of the preceding year by $26,000,000, and that of the first year of the war by $125,000,000. Of the total amount of $258,000,000, Customs will yield $146,000,000 and Excise $27,000,000. From the various taxations apart from Customs and Excise, we shall have received nearly $25,000,000. The several sources from which this revenue was derived, and the amounts, might be of interest to the House. For the past fiscal year they are as follows: Business profits war tax, $21,271,283; banks, $836,724.28; insurance companies, $385,127.68; trust and loan companies, $267,917.68; Inland Revenue from railways, steamships, telegraph and cable companies, stamps, etc., $2,229,922.81; a total of $24,990,975.45.


Coming to our ordinary expenditure and taking cognizance only of expenditures for civil government, and disregarding all outlays on account of war, the expenditure for the fiscal year 1917-18 is estimated at fMr. A. K. Maclean.] $173,000,000. The total expenditure of $173,000,000 includes payment of interest, estimated at $45,000,000, and pensions of some $7,000,000, or $52,000,000 altogether; whereas prior to the war the outlay on interest was but $12,000,000, and of course the expenditure for pensions on account of the war had not yet begun. It is also inclusive of the sums of $25,000,000 and $7,500,000 voted and advanced on account of the Canadian Northern railway and the Grand Trunk Pacific railway respectively. For the capital outlay® beyond the ordinary current expenditure of $173,000,000 an expenditure of $30,000,000 is estimated. These two items of expenditure amount to $203,000,000, and represent the outlay of Canada for all purposes apart from war during the past year. With a total revenue of $258,000,000, and an ordinary and capital expenditure of $203,000,000, it will be seen that during the fiscal year 1917-18 the Government was able to meet all ordinary and capital outlays, including an increased amount for interest account and pensions over the previous year of nearly $15,000,000, and have a favourable balance of about $55,000,000 to be applied to war expenditures.

FISCAL TEAR 1918-19.

The main estimates for 1918-19 have been submitted to the (House, and supplementary Estimates will be presented later. Apart from the increased interest caused by our war borrowing, and the amount required for pensions, also arising out of the war, substantial reductions have been made in the estimates of practically all the services, and I anticipate that actual expenditure will be well below the amounts voted. These reductions, however, are more than offset by the additional sums needed for interest and pensions for the current year over the past year, and which excess I estimate at $25,000,000, so that ordinary expenditure for 1918-19 will increase materially over that of the previous year. Outside of interest'and pension account, ordinary expenditures should not exceed those of last year. Substantial disbursements this year will be necessary in connection with the soldiers' land settlement programme, and a substantial liability has been assumed for the year in connection with the Halifax disaster. The capital expenditure vote has been materially cut. It is estimated that for the fiscal year 1918-19 we shall be able to pay our ordinary and capital expenditure out of our revenue and have, as in the past two years, an appreciable sum over, which we can apply to war purposes. The unexpended balance of the Victory Loan will finance our war expenditures and advances to the Imperial Government until July next, when Treasury bills will be temporarily negotiated, until the proceeds of the next public loan are available.


Canada ie now in the fourth year of the war. Our expenditure on, war account for the year 1917-18 will approximate $345,000,000, of which amount $167,000,000 was expended in Canada, the balance, $178,000,000, represents our war expenditure overseas. Up to March 31, 1917, we had expended for war purposes $533,437,036.11,so that on March 31, 1918, our total outlay for war will be approximately $878,000,000. This amount includes all expenditures in Canada, Great Britain and France, and is also inclusive of the upkeep of our troops overseas. The amount does not, however, include any pay due but not yet paid to the troops overseas. During the past two fiscal years we have applied to war expenditure surpluses of revenue over ordinary and capital outlays the sum of $113,000,000, and our interest and pension payments attributable to war and covering the entire war period would approximate about $75,000,000.


The net debt of Canada, which before the war stood at about $336,000,000 has now passed the billion-dollar mark, and it is estimated that when the accounts for the year 1917-18 are closed it will reach, approximately, $1,200,000,000. The increase is almost entirely attributable to war expenditures. To provide funds for our war necessities, apart from the amounts we were able to spare from the ordinary revenues of the country, we have had recourse to' public loans, and from, time to time to temporary loans from our banks, which were subsequently liquidated from the proceeds of loans.

The statistics of our trade indicate that our exports, year by year as the war progresses, are showing a greater and greater increase over our imports. The year before the war the imports exceeded the exports by nearly $300,000,000. In 1917-18 this condition had been so -completely reversed that the exports exceeded the imports by almost $625,000,000, and our total trade, which passed the billion mark in 1913, exceeded the two and a half billion mark in 1918. It must be borne in mind, however, that this increase in our total trade is very largely attributable to war conditions, and as well the very favourable trade balance. It might be informing to the House to briefly state that in 1917-18 our exports to Great Britain were about $860,000,000, while our imports amounted to $81,000,000. Our exports to the United States reached the sum of $440,000,000, while our imports were $790,000,000.


The general impression I fear prevails that we have had practically no immigration into Canada since the beginning of the war. While of course it is proportionately much less than in years just prior to the war, still it is not a negligible quantity. In 1915-16 our immigration w-as 48,537; in 1916-17-it was 75,374, -and in 1917-18, 79,074; a total of 202,985 in the past three fiscal years. Of this total number 169,640 came from the United States and 20,124 from the British Isles. An important fact in connection with this- immigration is that it comprised a large proportion of agriculturalists. The Minister of Immigration and Colonization informs me that everything-clearly indicates a very large immigration into Canada, commencing shortly after the conclusion of the w-ar and' so soon as transportation facilities are available. A factor to be kept prominently in mind is that the employment of women and girls in occupations heretofore filled by men will continue in all the belligerent countries for many years at least, thus limiting the avenues of employment ordinarily open to men, and leaving a surplus for emigration, notwithstanding the heavy toll upon life exacted by the war.


Owing to the inability of Great Britain to settle in the usual way her trade balances, and to which I propose referring later, we are experiencing an acute exchange problem in Canada. During the past few months1 a very high rate has prevailed on remittances- of funds to the United States, which has imposed a severe tax upon importers and the public, and, if it continues, must diminish imports or -add to their cost. This high rate is due to the fact that we have to remit more to, than we receive from, the United 'States, and consequently the demand for United States funds is greater than the supply. Were we

able to sell securities in the United States the rates of exchange might easily have been adjusted or normalized, but Canadians were not permitted to do so. The Government did not require during the present year to borrow in the United States, even if we had been permitted, and consequently by such an operation it was not convenient or practical to correct the exchange. To redress the adverse rate of exchange with the United States, we must lessen our imports from that country, or the United States must buy more from us, or we must sell securities in the United States to the extent of a very substantial proportion of our adverse trade balance. Other considerations-, however, are involved in this matter, to which I shall refer later, but I might be permitted to say that the Government has been diligent in its endeavours to bring about such financial arrangements with the Governments of Great Britain and the United States as would! materially relieve our people of the burden of the present high rates of exchange. I hope that very shortly we shall be in a position to announce the successful conclusion of negotiations which have in view this end. In connection with the exchange problem it might be of interest to state that for the first three months of this calendar year our imports from the United States have decreased below that of the corresponding period of last year by over $36,000,000, while our exports have increased in the same comparative period by about $20,000,000.


The unqualified1 success attending the Victory Loan of last year, as well of previous domestic loans, is of such notalble importance and significance that it calls for more than a passing reference. The large investment made by our citizens in the securities issued by the -Government from time to time- since the beginning of the war is a matter of natural pride to all Canadians. Since December 1, 1915, d'-omestio war loan issues aggregating $746,000,000 have been made, and of which over $700,000,000 was subscribed for by Canadians-, a very tangible evidence of the productive powers of our people, their determination to sustain our army and our commerce by loans- to the State, and their faith 'in the -ability of Canada to honour in the future the financial obligations now so honourably incurred. That Canada possessed such a purchasing power it is needless for m-e to say was hardly entertained by -any person, even the most optimistic. Last November the fourth war loan was placed upon the market in -Canada. In the case of the three previous loans, for the-ir successful flotation, the Government of the time relied upon newspaper advertising methods alone to secure the required subscriptions, and no extensively organized campaign was- deemed necessary. In .the case of the last loan, ho-w-ever, it was felt that more- vigorous methods should be adopted in order that a -wider response to the appeal should be received from all classes of o-ur population, so that the alb-sorption of the loan would be rapid and that -by spreading the holdings over as -many people as possible, the -subscribers- would be more strongly protected so far as the market price w:a-s concerned. The Minister of Finance, with the cooperation of some of the most active of the business men of the Dominion, organized a central committee called the Dominion Executive of the Victory Loan Campaign, which in turn organized associated committees in every province. These again created committees in various counties, cities and towns. By addresses, advertisement and canvass, ;by the united efforts of all these countrywide organizations, the results far exceeded -the expectations even o-f those best qualified to anticipate the result of an appeal of this -character. The -bonds were of five, ten and twenty year maturities. The prospectus called- for -an amount of $150,-000,000, but the loan was an open one and the right was reserved to- exceed -subscriptions- above this amount. In response to- the appeal, subscriptions to the amount of $408,000,000 from -approximately 600,000 subscribers, a subscription from about one in every nine of our population, a -subscription of over $58 per capita, -was received. This was slightly better than the results of the Liberty Loan of 1917 in the United States, where some 9,400,000 subscriptions were received, or about one in more than eleven. The subscriptions in -the four western provinces were particularly gratifying, and indicate in these new provinces remarkable accumulation of wealth, which fact is- pleasing to the older sections of the Dominion. The Victory Loan Committee state the subscriptions of A'llberta amounted to $16,515,150; British Columbia, $18,814,700; Saskatchewan., $21,777,050; and Manitoba," $32,326,600. Opportunity was given to the overseas forces to subscribe, and we received over $1,500,000 from soldiers who cashed in their faith in their fight and country. The total subscription was cut down to an allotment of $398,000,000 of now money, not counting holdings of previous war loans which were convertible and were converted into Victory Loan Bonds to the amount of over $150,000,000. When all the charges are computed and paid, the cost of the loan will approximate II per cent, which is comparatively small in such a large operation and extending over so wide an area. The banks received 1 of 1 per cent as remuneration for their services and to compensate them for the labour entailed in all their branches in taking the subscriptions; issuing temporary receipts'; delivery of the scrip; receiving the five instalments from January to May; transmitting the cash to the Department of Finance; in delivering the bonds to subscribers in exchange for scrip; in paying at par all over Canada the coupons and interest cheques during the whole period covered by the loan. The probable subscribers of the larger amounts were 'solicited by the agency of a special committee and upon these subscriptions no commission was paid. The local canvassers received i of one per cent on all subscriptions received by them to, compensate them for their time and labour; and finally, the bond dealers and brokers who co-operated most heartily and energetically in the work and who placed the services of themselves and their several staffs at the disposal of the committee were tio be allowed such remuneration as was deemed reasonable by the Minister of Finance. It is estimated that the total charges will amount approximately to $5,000,000, or about II per cent. When the issuing charges for all our other previous loans are considered, it will be found that this may be regarded as exceedingly reasonable. I wish to acknowledge on behalf of the Minister of Finance and the Government his and their thanks and 'appreciation of the splendid and patriotic services of all the committees and workers whose efforts in a noble cause proved so successful; to the press, also, and to the public spirited citizens who, in an honorary capacity, gave valuable assistance in this great campaign, I desire to publicly and gratefully acknowledge their valuable services. Preparations for the next Victory Loan have already commenced, and the Government have also under advisement the matter of the sale of War Savings Stamps, a borrowing scheme very successfully employed in the United States.


April 30, 1918