April 30, 1918


There is a very direct connection not only between our domestic loans and the financing of our war operations, but also with our productions and our overseas ex-poit trade, and I think the matter well worthy of some consideration. Fundamentally trade is the exchange of products, and payment of the purchases of goods abroad must be made by the sale of goods or securities abroad. With us, gold is not a factor in international trade. All are acquainted with the fact that the war has disturbed the natural currents of trade rendering impossible the settlement of international trading accounts in the usual manner. Prior to the war, Canada had a favourable trade balance with Great Britain through the sale of her products and securities in that country, while we have always had an unfavourable trade balance in the United States. We settled the latter in London out of our available credits there, which was of course convenient to the United States because that country always had payments to meet there. The later stages of the war, however, have materially altered Great Britain's position, and circumstances have compelled her to purchase heavily of war supplies and foodstuffs on this side of the Atlantic, while her exports have been diminishing. She has thus become chiefly a purchasing nation, and is no longer a loaning but a borrowing country. In 1917-18 we had as a matter of fact a favourable merchandise trade balance with Great Britain of about $790,000,000 while with the United States it was unfavourable to the extent of $350,000,000. Normally, we would settle our unfavourable American trade balance with the moneys receivable from Great Britain for her liberal purchases of our high priced commodities. However, owing to the enormous purchases Great Britain Was obliged to make for herself and some of her allies, and so great had been the drain upon her liquid resources in the first three years of the war, that in July, 1917, she was obliged to secure loans or dollar credits for her Canadian purchases, otherwise, she would be obliged to practically cease purchasing here. In that event, commercial disaster would have overtaken us and we would have had- difficulty in financing our war expenditures. It was therefore important that immediate action be taken to meet this new condition of affairs. In order that our industries and our artisans might be employed, that our agriculturists be afforded an export market and encouraged to pro-



duee, and (that all our people might be paid for their exportable productions, which was of course of vital importance to all classes of our people, arrangements were consummated in midsummer last year whereby the Government of Canada agreed to make advances to Great Britain at the rate of $25,000,000 per month in order that she might purchase in Canada such of our products as she needed and which we had to sell. In fact, advances for cheese and meat products in excess of the agreement were made last y^ar. In addition, and for the same purpose, the Canadian banks agreed to make advances to the British Government, and altogether up to this date have advanced $200,000,000 on the security of Imperial Treasury Bills. Further, the Government of the United States last year agreed to establish credits for British purchases in Canada. These arrangements are still effective and are likely to continue throughout the year. In a word, the Government of Canada and the Canadian banks have been granting credits for Great Britain's purchases in Canada in substantial amounts since midsummer of 1917, otherwise, our overseas trade would have been seriously handicapped. I must point out, however, that while the Government has thus been making advances to assist in the payment of British purchases in Canada, Great Britain has been paying for Canada the upkeep of her troops in Great Britain and France, and sundry Government accounts. These payments by the Imperial Government for Canada nave been to date $100,000,000 less than the payments made for Great Britain by the Canadian Government, and there is that amount to our credit in this open account to-day. That is strictly the Government's financial position in respect to war and trade for this year. It might be interesting to consider the economic position of the people outside of the Government. The exact position of the people of the country, apart from the Government, is surrounded with additional difficulties. They must meet an adverse balance of merchandise trade with die United States and also the principal and interest of maturities there. They must as well pay for imports from Great Britain, which last year amounted to $81,000,000, notwithstanding we are the creditor country, and they must pay the interest owed by our people to people in Great Britain, and which amounts to about $135,000,000 annually. The combined commitments of the Government and the people are, therefore, abnormal and substantial by reason of the conditions I have outlined. . Relatively, our position during the whole of the last fiscal year was less onerous than it is at present. In the early part of 1917 Great Britain was able to pay for some of her purchases, and, in addition, Canada was permitted to borrow money from the United States to the extent of $185,000,000, which assisted in reducing our adverse balance with that country. In 1918, as far as one knows at present, we are prohibited from selling securities of any kind in the United States, and to that extent we are ^t a disadvantage this year in the settlement of our American purchases, and, of course, Great Britain is unable to pay directly for any portion of her Canadian purchases. The experience of all nations during the war teaches us that all problems change as we approach them. We may yet, during the present year, 'be permitted to sell in a restricted way securities in the United States. The United States may buy more from us during this year on account of war and other purposes than she did last year. I believe she will. We may, during the year, and should, as a people, buy less of the United States of non-essential articles. Great Britain may arrange with us to pay in pounds sterling for what merchandise our people buy from her, and what Canadians owe her people for interest, the Government collecting here under suitable arrangements the interest and merchandise accounts due the people of Great Britain by our people, and with it buying additional Canadian products and shipping them overseas. At any rate, there, in rough outline, is the problem of the Canadian people today in carrying on our part of the war, and in part our trade and commerce, and making possible the productions and activities of the manufacturer, farmer, fisherman and lumberman, and such in part is the method employed in bringing about that end. With these facts before the House, it might be interesting to consider what directly and indirectly are the commitments of the Government for this year. Approximately we must provide: For Civil Budget ..$230,000,000 For War Expenditure 425,0(00,000 For advances to the Imperial Government for financing in part our export trade with Great Britain 325,'000,000 In all $980,000,000 $980,000,000 To discharge this there will be: Revenue $ 2 7 0,0 00,1100 Advances by Great Britain to pay for maintenance of Canadian troops overseas, about.. .. 300,000,000 Unexpended balance of Victory Loan, as of March 31, 1918. 130,000,000 $700,000,000 $700,000,'0'00 leaving a probable balance for 1918-19 of $280,000,000 to be provided from loans in Canada or elsewhere if possible. This is not inclusive of our commitments for expenditure on account of the purchase of railway equipment and 'Canadian Northern Railway maturities. The latter we hope to extend upon small payments of principal under powers which we are asking of Parliament this year, and the railway equipment, it is expected, will be financed largely by the issue and sale of equipment securities. The figures which I have given are probably not exhaustive of either income or outgo; I merely wished to show by a few figures, approximately only, the dimensions of the Budget of this country. I have detained the House perhaps at too great a length in a statement as to ho our war and in part our trade is financed. I wanted to make clear that if we are to continue our part in the war, and maintain our overseas trade at its present dimensions, the people of Canada must loan to the Government the money to accomplish that end. That is, they must, year after year, purchase Victory Bonds. There is no other way of accomplishing it. It cannot be obtained elsewhere. We must rely on our own capita] and labour, so far as one can see, to carry on our present war and trade programme. I cannot too strongly state the imperative necessity of the Government borrowing from our own people, and the imperative duty of our, people to loan to the Government. No person can too strongly impress this view upon our country. This obligation rests upon all classes and upon every citizen. To enable our people to do this, it is necessary that they continue to produce wealth. The production of wealth means an excess of production above our own wants. We must continue to produce, and if possible in greater quantities, by a more effective mobilization and utilization of our man and woman power, notwithstanding the fresh requirements of our army for man-power, and the many other difficulties confronting 80i us. And we must economize in every way. Primarily, saving is not a question of money. It is rather a question of saving the things that money will buy. The less we consume of that which we produce the greater the surplus we shall have to sell abroad. The more we save of our productions and of our services the better able shall we be-to meet our increasing taxation, and the greater the power of our people to-purchase Government bonds. Of our imports from the United States, there is a. great volume of non-essential commodities, and luxuries. If we all ceased to buy of these, our adverse trade balance with the United States would toe partially redressed, the cost of remittances for our essential imports from the United States would be less, the cost of these essentials would be that much less to our importers and consumers, and a greater surplus would be available for payment of taxation and loans to the Government. We must learn to dispense with luxuries, and possibly with some of the things which we have hitherto regarded as necessities. In order to reduce this class of imports, it may become necessary to control the same by the licensing system. I am merely pointing out that which should be the aim and the purpose of the state and its citizens and which becomes more clear as the war is prolonged. I do not think it can be justly said that the Canadian people have altogether failed in this respect, notwithstanding the many temptations which a war prosperity has brought to us. An investment of over $700,000,000 in Canadian Government securities by Canadians is indisputable evidence of production and thrift, but better still, a token of stability, law and order in the days to come. The increase in our bank deposits is likewise ap evidence of economy on the part of our people. I feel -I am not subjecting myself to sound criticism when I say we can do better, and in very fact we must. In other respects are our people to be commended. -In our expanding trade and commerce one might well have looked for a period of speculation that would have later spelled disaster, but there has been no speculation in lands or stocks, municipalities have curtailed expenditures as they all -should do, building operations have been restricted to our w.ants, our financial institutions occupy a strong position, our currency is upon a sound basis, and the expansion of our industries can hardly be said to be unsound.


TAXATION.


I now approach a consideration of the matter of taxation. It is the function of Government to secure from the people, from time to time, such revenue -as will meet ordinary expenditure and as much more as necessity and wisdom dictate. It will always, I presume, be a debatable question what portion of war expenditures should be paid from current taxation, but any principle is subject to variation according to the period over which the war is prolonged, the volume of expenditure, and the population and resources of a country. Again, inevitably there must be wide differences of opinion as to the form and degree of taxation that shall prervail. One might safely say that no system of taxation should be in force which has a repressive effect on production and trade, or as some one has said, no tax should paralyse industry of any kind, hamper enterprise, or breed discontent among our people, but that none should be avoided which are essential to provide the revenue required and that will distribute the incidence of taxation as equitably as conditions and experience dictate. Again, it is claimed and with considerable force that excessive taxation will deplete the source for investment in Government War Bonds which we must possess. It is comparatively easy to enunciate such principles as applicable to taxation, but in the trying circumstances and conditions which confront us it is a difficult task to provide any general scheme of taxation which shall completely fall within the rules I have just outlined. We are confronted by conditions, not theories. Many accepted economic principles of trade and taxation are hy force of conditions impossible of application to-day. It is further to be observed about taxation that whether you increase or decrease any taxation it is becoming exceedingly difficult to determine whether the purposes of revenue shall be accomplished or not. With the limitations and restrictions in export and import trade, and even upon production, throughout the entire world; with embargoes, licenses and fixation of prices; with the transportation agencies of most countries largely under governmental control, and subject t-o traffic priorities; with increasing production costs, increasing wages, and contracting labour markets; with the tremendous demand for raw .materials for war purposes, and with problems of exchange, one would be bold indeed to prophesy the course of the currents of our trade and commerce from day to . day, or the net results and effects of any taxation proposals. For the reasons which I have just stated, and others, I should not be surprised to find at the end of the fiscal year a considerable reduction in revenue from Customs and Excise as compared with the last year .and upon the present rates. The prohibition of the importation of spirits and beer during the war will alone entail an annual loss to revenue of over $15,000,000. With increasing interest and pension charges, due to war, we must, of necessity, from time to time impose fresh taxation supplement our revenues. Since Parliament last met and during the recess two taxation measures were enacted hy Order in Council. These relate to the Canadian Pacific railway and to the meatpacking and .cold-storage industry. Copies of these Orders in Council have been laid upon the table of the House, but I might (be permitted, in fact it is perhaps my duty, to state to the House the effect of these taxation measures. By an Order in Council, which is effective during the war from January 1, 1918, we shall jeeeive from the Canadian Pacific Railway one-half of the net earnings of that company from its railway operations after paymn t of fixed charges and dividends, and as well the income tax on the company's special income received from sources outside of railway earnings. It is further provided that the total amount to be paid each year shall not be less than the amount which the net earnings exceed the earnings fi r the year ending December 31, 1917. due to the increase in freight and passenger rates granted by the Order in Council of December 26, 1917, and further, it shall not be .'ess than the company's net earnings in any year from railway operations, in excess of ten per cent on its common stock up to $7,000,000. We estimate a revenue of $7,000,000 and possibly more from this source this year. In respect of the Order in Council relating to the packing industry, it is provided that the packers shall retain in addition to 7 per cent per -annum upon the invested capital one-half of any excess np to- fifteen per cent, the balance being payable to the Receiver General. The revenue to be derived from this source, is of course dependable on the volume of business carried on during the year by the industry and the profit, which is hardly capable of estimate at the moment.


L LIB
UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

We also deem it expedient to place a Customs tax of ten cents per pound upon tea. The importations of tea for consumption in Canada amount to about thirty million pounds per year, a per capita consumption of a little more than four pounds per annum. An excise duty of 10 cents per pound shall also be imposed on all tea held by importers and dealers, on the 30th day of April, instant, and on that day unsold, in excess of one thousand pounds. The importations of tea during the past three months have been equal to half the importations for the year 1917.

-The imposition of a specific duty of 10 cents per pound on tea, necessitates changes in the Customs duties upon coffee and chicory, in order to place the taxation upon these articles on a parity 'with the taxation upon tea. The principal change in the taxation upon coffee relates to green coffee. The Customs tariff upon green coffee is, British Preferential Tariff, 2i cents per pound, and General Tariff, 3 cents per pound. It is proposed that the British Preferential Tariff he 5 cents and the General Tariff 7 cents, per pound. The coffee tariff items are covered, by the West Indies Agreement and the Preferential rate for coffee from the West India Islands, which were parties to the agreement, must be at least 20 per cent below the General Tariff rate. This has been provided for in the several tariff changes in respect of coffee. Changes in the Customs rate of duty payable on tobacco, cigars and cigarettes compensating for the increases in the excise tax upon these articles will be submitted.

It is also proposed to increase the duties payable on beverages which require malt, rice or corn in their manufacture and when containing not more than 2j per cent of proof spirit. The present rate of duty upon this commodity is 17i per cent, plus the War Tariff Hate of 7$ per cent, or about 25 per cent ad valorem, and it is proposed to raise the rate of duty to '40 per cent ad valorem.

The resolutions which I shall submit at the close of my remarks will pjpvide for the repeal of the special war tax rates on sleeping car berths, and shall substitute the rate of 10 per cent of the price paid for each berth, with a minimum rate of 25 cents; and for the increase from 5 cents to 10 cents of the tax on parlour car seats; they shall provide for -an excise tax of 1 cent per hundred on matches, or fractional parts thereof; an excise tax of 8 cents on each pack of playing cards; and a specific

TMr. A. K. Maclean. 1

rate of Customs duty of 5 cents per lineal foot upon moving picture films.

The resolutions shall also provide for a special war excise tax of JO per cent upon the selling value of automobiles, jewellery, gramaphones, graphaphones, phonographs, talking machines, mechanical piano and organ players and records, when imported into or manufactured in Canada. The tax upon automobiles is applicable to all imported into or manufactured in Canada and unsold this day. Such are the taxation proposal^, and other than I have stated no tariff changes are proposed.

In conclusion, let me say that we may safely look to the future with courage and fortitude. Happy are our conditions in comparison with those of the belligerent countries of Europe. Armies do not contend for mastery upon our soil. Our undeveloped resources are tremendous. Immigration has been temporarily arrested, but shortly after the war we shall resume our growth of pre-war days and our financial burdens shall not then appear so onerous. We have assumed enormous responsibilities and we shall discharge them in the manner befitting our country, our cause and our race. The future of our country as well as the fate of civilization and democratic institutions will depend upon the result of this war, and no price is too high to pay for victory. We have already played a dis-languished and noble part in the titanic struggle of the warring nations, and- it shall not diminish for the lack of resources to be furnished by our people. We shall face coming events not without anxiety, not without a clear realization of our task, but with a strong resolve to use our strength to the utmost, confident that our Canadian people will patriotically and cheerfully provide for our expenditures, and the ways and means to support and sustain our gallant army in its stand for the political institutions which we cherish and which we pray shall not perish from the earth.

Topic:   TAXATION.
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RESOLUTIONS.


I beg to give notice that upon the House resolving itself into committee I shall move the following resolutions: 1. Resolved, that it is expedient to amend Schedule A to The Customs Tariff, 1907, as amended by Chapter 5 of the Acts of 1914. second session, and by Chapter 3 of the Acts of 1915, and to strike thereout tariff items:- 24, 25, 25a, 26, 27, 28, 28a, 29, 29a, 143, 144, 145, the several enumerations of goods respectively and the several rates of duties of Customs, if any, set opposite each of the said items, and to provide that the following- items, enumerations and rates of duties be inserted in said Schedule A:- British Tariff Preferential Intermediate Generalitems. Tariff. Tariff. Tariff.24 Chicory, raw or green, per pound 5 cents. 7 cents. 7 cents.25 Chicory, kiln-dried, roasted or ground, per 10 "pound 8 " 10 " 25a Coffee, extract of, n.o.p., and substitutes 12 "thereof of all kinds, per pound 9 " 12 " 26 Coffee, roasted or ground, and all imita- tions thereof and substitutes therefor, including acorn nuts, n.o.p., per pound.. 8 " 10 " 10 "27 Coffee, roasted or ground, when not im- ported direct from the country of growth and production, per pound 8 " 10 " 10 "and 75 p.e. 10 p.c. 10 p.c.28 Coffee, green, imported direct from .the country of growth and production, and green coffee purchased in bond in the United Kingdom, per pound 5 cents. 7 cents. 7 cents.28a Tea imported direct from the country of growth and production, and tea purchased in bond in the United Kingdom, per pound When in wrappings, cartons or other 10 " 10 " 10packages weighing five pounds or less the weight of the wrappings, cartons or other packages to be included in the weight for duty. 29 Coffee, green, n.o.p., per pound 5 " 7 " 7 "and 1\ p.c. 10 p.c. 10 p.c.29a Tea, n.o.p., per pound 10 cents. 10 cents. 10 cents.and 10 p.c. 10 p.c. 10 p.c.When in wrappings, cartons or other packages weighing five pounds or less the weight of the wrappings, cartons or other packages to he included in the weight for duty. 143 Cigars and cigarettes, the weight of cigars to include bands and ribbons, and the weight of cigarettes to include the paper covering, per pound... $4.10 * $4.10 $4.10and 25 p.c. 25 p.c. 25 p.c.144 Cut tobacco, per pound 95 cents. 95 cents. 95 cents.145 Manufactured tobacco, n.o.p., and snuff, per pound 90 " 90 " 90 "147a Beverages in the manufacture of which malt, rice or corn is used when containing not more than two and one-half per centum* of proof spirit 25 p.c. 40 p.c. 40 p.c.657a Cinematograph or moving picture films, positives, one and on^eighth of an inch in width and over, per linear foot. 3J cents. 5 cents. 5 cents.2. Resolved, That it is expedient to provide that the provisions of the foregoing resolutions shall be deemed to have come into operation on the first day of CMiay, one thousand nine hundred and eighteen, and to apply and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that day, and! to have also applied to such goods previously imported for which no entry for consumption was made before that day. 1. Resolved, that it is expedient to impose, levy and collect on tobacco and cigars manufactured in Canada the following duties of excise; (a) On all chewing and smoking tobacco, fine-cut, cavendish, plug or twist, cut or granulated, of every description,-on tobacco twisted iby hand or reduced into a condition to be consumed or in any manner other than the ordinary mode of drying and1 curing, prepared for sale or consumption, even if prepared without the use of any machine or instrument and without being pressed or sweetened,-and on all fine-cut shorts and refuse scraps, cuttings and sweepings of tobacco made from raw leaf tobacco or the product in any form, other than in this Act otherwise provided, of raw leaf tobacco, twenty cents per pound; actual weight; (h) On common Canada (twist, when made solely from tobacco grown in Canada, and on the farm or premises where grown, by the cultivator duly licensed therefor, or in a licensed tobacco manufactory, twenty cents per pound, actual weight; (c) On all snuff made from raw leaf tobacco, or the product in any form of raw leaf tobacco or any substitute for tobacco, ground, dry, scented or otherwise, of all descriptions; when prepared for use, twenty cents per pound, actual weight; (d) Snuff flour, when solid or removed for use or consumption, shall pay the same duty as snuff, and shall be put up in packages and stamped in the same manner as herein prescribed for snuff completely manufactured, except (that snuff flour not prepared for use, but which needs to be subjected to further processes, by sifting, pickling, scenting or otherwise, before it is in a condition fit for use or consumption.



may be soldi by one tobaooo manufacturer directly to another tobacco manufacturer, andi without payment of the duty, under such regulations as are provided in that behalf by the Department; (e) On cigars of all descriptions, made from raw leaf tobaoco, or any substitute therefor, six dollars per thousand; (f) On all cigars, when put up in packages containing less than ten cigars each, seven dollars per thousand ; (g) On cigarettes made from raw leaf tobacco or any substitute therefor, weighing not more than three pounds per thousand, six dollars per thousand; > (h) On cigarettes made from raw leaf tobacco or any substitute therefor, weighing more than three pounds per thousand, eleven dollars per thousand; (i) On all foreign raw leaf tobacco, unstemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, forty cents per pound, computed according to the standard of leaf tobacco as hereinbefore established; (j) On all foreign raw leaf tobaoco, stemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, sixty cents per pound, computed according to the standard of leaf tobaoco as hereinbefore established; 2. In all tobacco manufactories where less than fifty per cent, of Canadian raw leaf tobacco is used, and where ten per cent., or more, of other materials is used, such materials shall be subject to a duty of twenty-three cents per pound actual weight 2 Resolved, that it is expedient to provide that no person shall grow tobacco in Canada in excess of the amount or for purposes other than those mentioned in section three hundred and twenty-five of the Inland Revenue Act without a license, that a fee of two dollars be paid for such license and that a tax of five cents a pound be collected on all tobacco grown with the exception aforesaid. 3. Resolved, that any enactment founded on the preceding resolutions shall be deemed to have come into force on the first day of May nineteen hundred and eighteen. Resolved, That it is expedient to amend The Special War Revenue Act, 19sl)5, and to provide that the tax to be paid by purchasers of a berth in a sleeping car be increased to ten per cent of the price for each berth, but in no case shall the tax be less than twenty-five cents for each berth and that the tax for a seat in a pullman or parlour car ibe increased to ten cents for each seat; that the definition of the word '^Consumer" be amended so as to include a person who buys the articles mentioned for any purpose; that medicinal preparations and compositions excepted at the end of section fourteen be limited' to those sold under the name used for them in the publications mentioned in the said section or any preparation manufactured and sold exclusively for the medical profession and on the labels of which no claim is made that the preparation has medicinal or curative powers or any description as to the amount that constitutes a proper dose; that manufacturers and importers of matches and playing cards :be required after the thirtieth day of April, 1918, to affix to each package of matches and playing cards an adhesive stamp of the value of one cent for each one hundred matches or fractional part thereof in a package and of the value of eight cents on each package containing not more than fifty-four playing cards, and that such stamps be placed upon all packages of matches and playing cards held by dealers for sale on the first day of July, 1918, and that such stamps need not be affixed to packages of matches or playing cards manufactured for export; that there be levied a war excise tax equal to ten per cent upon automobiles, gramophones, graphophones, phonographs, talking machines, cylinders and records therefor, mechanical piano and organ players and records therefor, articles commonly or commercially known as jewellery, Whether real or imitation, for adornment of the person, when manufactured or imported after the thirtieth day of April, 1918, on the duty paid value when imported and on the price when manufactured and sold, provided that such war excise tax shall not be payable when the articles are manufactured for export or in the case of jewellery where the total amount of jewellery manufactured by any one person does not exceed the value of one thousand dollars in any calendar year; that a war excise tax be collected upon all automobiles and jewellery imported into Canada for sale or manufactured in Canada on or before the thirtieth day of April 19H8, and which on that day have not been sold to bona fide users, of ten per centum of the amount of the duty paid value when imported and of ten per centum of the price when they have been manufactured and sold in Canada, but that no war excise tax be collected upon the same when manufactured for export in accordance with regulations; and that no war excise tax be collected on jewellery imported or manufactured and unsold on the thirtieth day of April, 1918, where the total duty paid value or price of the entire stock of the same held by any one person does not exceed one thousand dollars; and that there be levied a war excise tax of ten cents per pound on all tea entered! at Customs on or before the thirtieth day of April, 1918, and held by importers or dealers and which on that day had not been sold, where the stock of such importers or dealers exceeds one thousand pounds. Resolved, That it is expedient to amend The Business Profits War Tax Act, 1916, and/ to provide that paragraph (c) of Section three be repealed; that any business having a capital of not less than twenty-five thousand dollars and under fifty thousand dollars shall pay a tax of twenty-five per centum of the amount of the profits exceeding ten per cent per annum upon the capital; that the amount paid or payable under the provisions of Part 1 of The Special War Revenue Act, 1915, and The Income War Tax Act, 1917, shall be deducted from the amount payable under the provisions of the above Act, and that in computing the profits of such no taxpayer shall include any tax paid under the said Acts in the expenses of his business ; that the amount of capital in the excepted business mentioned in Paragraph (a) of section five of The Business Profits War Tax Act, 1916, be reduced from fifty thousand dollars to twenty-five thousand dollars; that dividends paid during the accounting period shall be considered as a reduction of the unimpaired reserve, rest or accumulated profits ; that the provisions of section three of the last mentioned Act be continued in force to the thirty-first day of December, 1918. Resolved, That it is expedient to amend the Income War Tax Act, 1917, and provide that "dependent child" shall mean a child under twenty-one years of age and dependent on its parent for support or over twenty-one and dependent on its parent for support on account of physical or mental incapacity; that paragraph (lb) of section three be repealed and that an exemption of two hundred dollars be allowed for each dependent child under sixteen years of age; that paragraph (d) of section three be amended by striking out the words "or from the net earnings''; that subsections one and two of section four be repealed and that it be provided that there shall be assessed, levied and paid upon the income during the preceding year of every person residing or ordinarily resident in Canada or carrying on any business in Canada and upon the income received by any person from any source within Canada the following taxes:- (a) two per centum upon all income exceeding one thousand dollars but not exceeding fifteen hundred dollars in the case of unmarried' persons and widows or widowers without dependent children, and exceeding two thousand dollars but not exceeding three thousand dollars in the case of all other persons; four per centum upon all income exceeding fifteen hundred dollars in the case of unmarried persons and widows or widowers without dependent children, and exceeding three thousand dollars in the ease of all other persons; and in addition thereto, (b) two per centum upon the amount by which the income exceeds six thousand dollars and does not exceed ten thousand dollars; and (c) five per centum upon 'the amount by which the income exceeds ten thousand dollars and does not exceed twenty thousand dollars; and (d) eight per centum of the amount by which the income exceeds twenty thousand dollars and does not exceed thirty thousand dollars ; and (e) ten per centum of the amount by which the income exceeds thirty thousand dollars and does not exceed fifty thousand dollars; and (f) fifteen per centum of the amount by which the income exceeds fifty thousand1 dollars and does not exceed seventy-five thousand dollars ; and (g) twenty per centum of the amount by which the income exceeds seventy-five thousand dollars and does not exceed' one hundred thousand dollars; and (h) twenty-five per centum of the amount by which the income exceeds one hundred thousand dollars ; and does not exceed two hundred thousand dollars; and. (i) thirty per centum of the amount by which the income exceeds two hundred thou-send dollars and1 does not exceed1 four hundred thousand dollars; and (j) thirty-five per centum of the amount by which the Income exceeds four hundred thousand dollars and does not exceed six hundred thousand dollars; and (k) forty per centum of the amount by which the income exceeds six hundred thousand dollars and1 does not exceed eight hundred thousand dollars; ajnd (l) forty-five per centum of the amount by which the income exceeds eight hundred thousand dollars and1 does not exceed one million dollars; and (m) fifty per centum of the amount by which the income exceeds one million dollars; and in addition thereto the following surtax, (n) five per centum of the tax payable upon income in excess of six thousand dollars but not exceeding ten thousand dollars; (o) ten per centum of the tax .payable upon income in excess of ten thousand dollars but not exceeding one hundred thousand dollars; (p) fifteen per centum of the tax payable upon income exceeding one hundred thousand dollars but not exceeding two hundred thousand dollars; (q) thirty-five per centum of the tax payable upon income exceeding two hundred thousand dollars; that corporations and joint stock companies, no matter how created or organized, shall pay six per centum upon income exceeding three thousand dollars, hut shall not be liable to pay the supertax; that the minister may permit any corporation or joint stock company the fiscal year of which is not the calendar year, to make a return and to have the tax payable by it computed upon its income for the twelve months ending with its last fiscal year preceding the date of assessment; that section five he amended by exempting the incomes or such portion of the incomes of judges and retired judges as come within the provisions of subsection three of section twenty-seven of the Judges Act and the incomes of incorporated companies whose business and assets are carried on and situate entirely outside Canada. Mr. A. R. MoMASTER (Brome): Mr. Speaker, my first word must be one of thanks to the Acting Minister of Finance, who so kindly handed me, a few days ago, some of the figures on which he based his statement, and which enables me to deal less inadequately with the financial situation which confronts this country than would otherwise have been the case. I apprehend that at all times, and more especially at a time like the present, the duty of an Opposition is to submit everything proposed by the Government to the closest and most careful scrutiny, and then to make the observations and the criticisms which occur to them with an eye only to the best interests of the country. In that spirit I shall deal with the statement of the Acting Minister of Finance. First of all, we were very glad to hear that the health of the Minister of Finance has improved-not the health of the Acting Minister, for he needs no remarks to be made upon his good health; as we say in the province of Quebec, c;a saute aux yeux, it leaps to the eye. We hear through the public press that the Minister of Finance has got as far as Washington, and we hope that while he is there no rude newspaper man -will poke in front of him any reports of the speeches he made at the time of the Reciprocity proposals six years ago, because it might give him a relapse. The Acting Minister of Finance has dealt with the question of the unfavourable



balance in exchange of trade between us and the United States, and while he was speaking the thought occurred to me that if the Government of this country had not thought it best to limit the profits which the paper makers could have made in Cam ada at this time we might have had a greater development of paper-making here and more news print might have been sold to the United States. After all, the attitude of this Government towards the paper makers of Canada was not altogether fair. This Administration wished to treat the newspapers right, they wished to be kind to the newspapers, and they thought it would be a nice thing to exhibit their kindly feelings at the expense of the newsprint manufacturers. So they offered to the newspapers a continual treat, but instead of paying for the treat themselves they had it paid for by the newspaper manufacturers, who had to supply the newspaper proprietors with newsprint at a certain fixed price, a price which the manufacturers say is below what it costs them to produce +he paper. As to the loss of revenue because of prohibition I do not believe that the Acting Minister of Finance need be very much disturbed because, speaking for myself, I think that any loss which occurs through prohibiting the importation of wines and spirits into this country, or their manufacture herein, will be more than made up by the increased health and strength and wealth of the Canadian people. The super-taxes announced were not very alarming, nor the taxes on income, and I say this, speaking for our friends on this [DOT] side: that if the Acting Minister of Finance is attacked by any person for having too heavily taxed those who can best bear taxation, he can look to us for support and encouragement. The money must be found somewhere, and it should be taken from- the pockets of those who have the most of it. We should not tax the poor unless we are compelled to, we should see that the rich pay and pay in large measure. And to the honour of the rich men of this country let me say, that I do not believe there will be any serious objection to income taxes as long as they are applied honestly and fearlessly, and as long as no one who should rightly be taxed: is allowed to escape. As regards the excise duties on tobacco, I suppose it is a proper way of raising revenue, but I trust it will not work out that the tobacco for the poor man's pipe will cost him too much. As far as cigarettes are concerned I suppose the President of the Council will agree with me that the use of cigarettes is a pernicious habit, and therefore that it is auite proper to tax them. As regards the 10 cents a pound duty on tea, I am sorry to see that a Government which has made such an appeal to the ladies has, in return for their support and admiration, taxed their favourite beverage. Perhaps there is an explanation for it, but I would point out that on tea imported direct from the country of growth and production, and on tea purchased in bond in the United Kingdom, the following tax is imposed: British preferential tariff, 10 cents per pound, intermediate tariff 10 cents; general tariff, 10 cents. Some explanation is needed for the departure from that sound principle-which the Acting Minister of Finance should have learned years ago at the feet of that other great Nova Scotian, the member for Queens and Shelburne (Mr. Fielding)-that there is such -a thing as the British preference in this country. If seems too bad that tea coming from China, for instance, shall pay no more to get into Canada, or no more after coming in, than tea from Ceylon raised by a fellow British subject under the far eastern skies. 'Then, with reference to the duty of 10 per cent on autos: let me express the hope, Mr. Speaker, that this 10 per cent does not apply to farm tractors.


L LIB
?

Mr. M@

Of course, a farm tractor is an automobile just the same, I presume, as a truck is an automobile. I believe it might have been well to have differentiated between pleasure cars and business cars or utility cars. Surely, when the provinces are, and have been, spending vast sums of money to improve the roads of this country, it is a mistake to tax a truck which is, perhaps bringing in from the country thousands of gallons of milk to our town populations. I think there should have been a differentiation effected there. II have this also to say: as far as I can see this 10 per cent, which applies as well to automobiles coming into the country as to automobiles manufactured in the country, will practically give the whole market over entirely to the manufacturer of Canadian automobiles, because I believe I am right when I say that the present customs tariff on automobiles coming in from the United States amounts to 42} per cent, and if another 10 per cent is added it will make the duty 62} per cent, which ,1 should say, is an absolutely prohibitive duty. I consider that the 10 per

cent which the manufacturer in Canada will be taxed will be very little for him to pay in view of the market being practically given over to him. On these grounds, Mr. Speaker, I question the advisability of the tax as it is presently submitted. There is room, I presume, for the taxation of luxuries; but the taxation of luxuries should be so effected that no increase of protection should be given to the native manufacturer, at any rate not at a time like this.

Topic:   RESOLUTIONS.
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Mr. A. K. MAOLEAN@

If the hon. member will permit me, I would like to correct a statement he made a moment ago, so that the country will not be misled. The duty on automobiles does not apply, and is not intended to apply, to motor trucks of any kind.

Topic:   RESOLUTIONS.
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L LIB
UNION
L LIB

Andrew Ross McMaster

Laurier Liberal

Mr. McMASTER:

If that be so then I have to say that this legislation is very loosely drafted, because the idea I took from it was that " automobile " is a term of wide application, covering pleasure oars, express delivery vans, and isuch automobiles as the large trucks used by the Militia Department on the streets of this city.

Now, my hon. friend made some remarks which he thought were more or less hopeful about our having a favourable balance of trade. He told us that we were selling more to Great Britain than we were buying from her, and that we were buying more from the United States than we were selling to the United States. In the case of Great Britain the balance was favourable to us; in the case of the United States the balance was not favourable to us. I think that before going further, I should remind the House of the very essential fallacy wrapped up in the phrase " favourable balance of trade." Suppose a vessel laden with commodities grown in Canada leaves the port of Montreal for Great Britain, the goods on board being worth $100,000, and that it returns with a cargo of commodities useful to the Canadian people worth $120,000. On the unfavourable balance of trade theory our exports would be represented as $100,000; our imports as $120,000; and our unfavourable balance of trade, $20,000. But, suppose my hypothetical ship is lost on the voyage from Liverpool to Montreal, then the exports from Canada are set down at $100,000, imports into Canada, nil; favourable balance of trade for Canada $100, 000. It is not a wise thing to base any public policy on absurdities of that sort.

What is the situation in regard to our trade? The situation is that we are maintaining an army across the seas, and helping to maintain other armies across the seas, and in consequence our imports have been enormously swollen and our exports still more enormously swollen. To illustrate my argument, I have merely to Tefer to a table dealing with war trade, prepared by the Department of Statistics, containing the exports of certain Canadian commodities having a direct bearing on the war for the last normal year, which ended on the 31st March, 1914, compared with the exports of the same commodities for the fiscal year ended March 31st, 1917. These are the latest figures I have been able to obtain along these lines. The war has swollen both our pxports and imports, first, by greatly enhanced prices, and, secondly, by greatly increased quantities of certain commodities imported and exported for the equipment and provisioning of our army and for the use of our allies. I do not ask the House to follow me in a long list of figures, but there are some rather striking examples of my contention which I think may be of interest to hon. members. In the fiscal year ended March 31, 1914, we exported from Canada $446,000 worth of clothing. I leave the odd hundreds out. For the fiscal year ended March 31, 1917, this item had increased to six and one-third millions of dollars. Eggs jumped from just over $37,000 to just over $1,800,000. Explosives leaped from over $241,000 to over $281,000,000. Gutta percha, which we exported in the year 1914 to the value of $686,000, jumped to over $2,500,000 in 1917. In the year 1914 we exported 15 gasoline launches, worth a little over $9,000; in 1917, we exported 463 launches, worth over $15,000,000. The export of bacon has caused a good deal of interest in this country, and I note that from $3,750,000 in 1914 our exports have jumped to $43,000,000 in 1917, which latter figure, of course, includes the piice of the brine which was pumped into the bacon according to a well known process which occasioned a certain amount of interest throughout the country some months ago.

Exports of beef jumped from over $1,000,000 in 1914 to $5,750,000 in 1917, and canned meats from $95,000 to $1,750,000. Pork, showing the family characteristic, almost kept pace with bacon by increasing in export from over $200,000 to over $2,500,000. Among the metals a vast increase of exports was shown. Exports of aluminium

Toronto to see what sum less than $10,000,000 the people of Canada shall pay to the owners or the pledgees of the stock of the Canadian Northern railway for taking that stock away from them. There was room for a commission, but the commission should have sat for this purpose-to see what sum the owners and the pledgees and other people interested in the Canadian Northern railway should give to the Canadian people for taking their obligations off their hands. I greatly fear that for many years to come we shall find ourselves face to face with grave capital commitments.

I am glad that the Acting Minister of Finance (Mr. A. K. Maclean) has brought forward to-day proposals for the application of allowances, in regard to a man's payments on income tax, in respect to the children which he has. That is only fair and right. It is following sound British precedent. I noticed in Mr. Bonar Law's Budget speech that the British Government bad carried to a higher figure than formerly the exemptions for children.

The next criticism which I have to offer to my hon. friend's speech is that it discloses no proper nor adequate measures of economy.

It has been my lot recently to read a certain number of budget speeches which have from year to year been delivered- in the House, and a certain number of financial criticisms, and with all respect in the world fo-r those members of this Hoarse- who have made speeches and those criticisms, there is a -certain sameness about them. When the Liberals were in p-o-wer their expenditure was denounced in words- eloquent and bitter by the present Minister of Trade and Commerce (Sir George Foster). To-day no longer does he denounce, at any rate in bitter tones, the Government's extravagance; the eloquence has remained, but the bitterness h-a-a gone. Here are his words, uttered when he was financial critic of the Opposition in 1908:

The rapid pace which has been set and the recklessness of the expenditures that have been undertaken have obliterated all the old rules, the old lines in reference to expenditure. Whither are we rushing?

The expenditure which was animadverted to in such eloquent tones amoamted in that year to $76,000,000. In 1911 the present Prime Minister, then the leader of the Opposition, issued a manifesto to the-Canadian people, who were -then called upon to de- -cide which of the two great parties in this country -should direct the country's des-

tinies for the next parliamentary term, and he wrote these m-ost severe words:

The increase in what is known as ordinary controllable expenditures of from $36,000,000 in 1896 to $79,000,000- in 1910 is proof of extravagance beyond any possible defence and establishes a prima facie case of corruption.

It is a sad commentary -upon the value of election promises and upon the frailty of mankind- to- -know that the Administration. of my right hon. friend the present P-rime Minister increased the consolidated fund expenditure- or what we may call the expenditure on current account from $98,000,000 for the year ended March- 31, 1912, to $112,000,000 the succeeding year; the next year it had increased to $127,000,000, the next year to $135,000,000, hack again to $130,000,000 the- next year, leaping up again to $148,000,000 the- next year, .and the expenditure stands at $173,000,000 for the year just closed, exclusive of all war expenditure except pensions and interest on the war debt.

To compare the first four years of -the Conservative Administration with the last four years of the Liberal Administration- of course, in regard to this part of my remarks the Acting Minister of Finance is no more responsible than a babe unborn-we find -that the expenditure of the Conservative Administration exceeded by about 45 per cent that of their predecessors, though the country was certainly prosperous in the last four years of Liberal Administration, and although part of the first four years of the Conservative Administration was passed in war time, when extravagance ceases to be -a fault and becomes -a crime. To those who find it difficult to believe anything disadvantageous concerning the -Conservative party and although the name Conservative has disappeared from political -history we cannot think that -all Conservatives have lost their Identity in the sea of Unionism- and to -those who may object that -my remarks deal only with consolidated revenue account, I need only say that the capital expenditure -accounts of certain spending departments of the Government show the same high, and in my view unjustifiable, increases. In all governments there are forces working for economy and 'forces working for extravagance, and -the history of this country shows in the most plain and unmistakable manner that the forces of economy have been relatively stronger under the administration of Liberal leaders than under the administration of my right hon. friend the present Prime Minister, or those who have preceded him in guiding the affairs of the Conservative party.

But now, face to face with the sternest situation that has ever confronted the Canadian people, let us admit frankly that whatever virtues of thrift and economy our people possess as individuals, these qualities have not been adequately reflected) in the management of the nation's business. Having signalized! the fault, let us see what conditions have led to it.

'In a democracy the people get the Government they deserve, and I ask the question: Why have the Canadian people had extravagant governments? The first cause has been a lack in the Canadian people of a feeling of responsibility for the good' government of their country. Many there have been who have frankly stated that they took no interest in politics; that they were too busy to do so; and what is still more astonishing, some such seemed to take a considerable degree of pride in this shameless sort of selfishness. Perhaps, a feeling of colonialism felt by certain classes in our country, especially in years gone by, has beep responsible in part for this condition. The second cause has been the fact that we were collecting our federal taxes almost altogether through a customs tariff and, excise, and no one knew what he was paying to the State.

These two causes, in some measure, will be removed' by the war. The people of this country are now feeling as they have not felt for years how nearly and closely politics-the science and art of Government- touches' every individual member of the State, and many persons are now learning, as direct taxpayers to the federal authorities, that they have a direct interest in the economical administration of the country's affairs.

But there is a third cause, and I believe a most potent one, consisting in a widespread misapprehension about the surpluses which the governments of this country have declared on current account, or consolidated fund account, for a number of years past.

For the fiscal year 1899-1900, we had a surplus on account of consolidated fund of just a little over $8,000,000; the next year, the surplus was a little over $5,500,-00O; the next year, a little over $7,250,000: the next year that of 1902-3, the surplus had increased to over $14,250,000; the next year it went to $15,000,000; the next year it was almost $8,000,000; the next almost $13,000,000; for nine months of the next year it was almost $16,500,000; the next year it amounted

to almost $19,500,000; but in the year 1908-9, which followed the commercial crisis of the fall of 1907, the surplus was reduced to a little more than $1,000,000; the next year, however, 1909-10, it increased to over $22,000,000; thd next to almost exactly $30,000,000; the next year, 1911-12, to almost $38,000,000; the next year to $56,500,000; the next year, 1913-14, it was almost $36,000,000; the next fiscal year saw the outbreak of the war, and for that year, 1914-15, instead of the usual surplus a deficit of almost $2,500,000 occurred. This was changed, however, the succeeding year, to a surplus of almost $42,000,000, and in the year 1916-17, the surplus amounted to $84,000,000, while for the year just closed it amounted to $85,000,000.

On the face of things, these surpluses demonstrate a truly marvellous condition of national prosperity, but I ask the question : Can we regard these surpluses as an indication of the excess of money furnished for taxation by the people of Canada out of their earnings over and above the necessities of the Government? In other words, during these years is it a fact that after having earned large sums of money the Canadian people have contributed, indirectly it is true, either through Customs duties or excise, such large sums by way of taxes to the Government that the Government has had these surpluses? My answer is: Far from it, because the revenue in these years in which these wonderful surpluses have occurred-in the history of the country the surplus never reached 10 millions until the year 1902,-largely represents taxation on our own borrowings. Perhaps I could better explain what I mean by an illustration-. Let us suppose a man in business has for many years been conducting his affairs at a profit, and in order to provide for his declining years he has been placing in a fund a part of his profits, which he calls his surplus fund. And let us suppose further that experience has taught him that the easiest way of doing so is to put aside each month, in a special account, 5 per cent of his gross receipts. Let us further suppose that it becomes necessary for him to enlarge bis establishment. For that purpose he borrows $10,000. Will he, if he be a prudent business man, regard this sum as a gross receipt and put $500 of it in his special account? Assuredly not, because he knows that no part of it can be treated as revenue. It is capital which he has borrowed, and to put it, ot any part of it, in his surplus fund would

Topic:   RESOLUTIONS.
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L LIB

Andrew Ross McMaster

Laurier Liberal

Mr. A. B. McMASTER (resuming):

It would be an occasion for deep regret to [(Mr. 'M (Master. ]

those who closely follow and understand the needs of our own soldiers, those of our Allies and of the civil populations overseas, to know that there has been one very serious omission in the able speech delivered this afternoon by the Acting Minister of Finance, and the omission is this: He has announced no policy of taking off the duty on agricultural implements and machinery to increase food production. I take it that it should not be necessary for me to speak at any length on the need of food at this time, but if proof is required it is at hand. In the Canadian Food Bulletin, published by the Canada Food Board, on 28th March of this year, I find a call for greater production from the Prime Minister himself. He wrote:

The campaign for increased production of foodstuffs now launched by the Canada Food Board is of the most vital importance to the victory of the Allied cause. Because of our geographical position the United! Kingdom, the Allied nations are depending on Canada for food as never before. Specific suggestions will be issued from time to time by the Canada Food Board for the guidance of the people; and it is the earnest hope of the Government that every citizen will realize his or her personal individual duty to adopt and carry out these suggestions. (Mere perfunctory observance will not be enough ; the crisis is grave and urgent beyond possibility of exaggeration; and it will only be through an earnest sense of individual responsibility that Canadians will be able in this matter to honour their obligations to their heroic soldiers overseas, who are defending our liberties at a cost besides which any personal inconvenience or discomfort on our part is insignificant.

Was the relative importance of food production altered by the great German offensive which began on the 22nd day of last month? Not, at any rate, in the opinion of Lord Rhondda, the British food controller, who from London, on the 10th of April, cabled the Canada Food Board as follows:

In these stern days it is inspiring to learn that Canada is tackling the food problem with redoubled energy. The terrific pressure on our military front makes it all the more imperative that those behind the lines should strain every nerve to defeat the enemy's avowed object of destroying the British Empire. Germany hoped first to starve the Old 'Country by the submarine campaign and then to smash her land forces. She (has failed to starve us and she will fail to smash us but we cannot achieve victory without food. There never was a time when it was more needed. The Canadian farmer and the Canadian farm hand now have the opportunity to make an effective reply to the enemy's present onslaughts by bending their undivided energies to the increased production of those food supplies for which we depend to such vital extent on your great Dominion.

Our own Dr. Robertson has assured us that the world faces a food situation which

is nothing short of appalling. The increased dependence of our Allies, France, Italy and Belgium, upon us for food production is shown by the following facts: In France the average yearly production of wheat for the five years preceding the war was 317,000,000 bushels. In 1916, the production had fallen to no less than 214,000,000 bushels, and in 1917 the crop was estimated at 161,000,000 bushels. Likewise, in . Italy, the average pre-war production for five years amounted to 183,000,000 bushels. In 1916 this had dropped to 176,000,000 bushels, and in 1917 the estimate was 147,000,000 bushels. In Belgium the average pre-war production was almost 15,000,000 bushels. It fell in 1916 to almost 12,000,000 bushels. The estimate for 1917 only amounted to 9,000,000 bushels. The total reduction in those three countries amounted to over 198,000,000 bushels, representing a reduction from pre-war production of nearly thirty-eight per cent. In view of these facts Canada finds itself one of the most important factors, if not the most important factor, in the food .situation. Supplies from Eastern Europe no longer exist. Supplies from Australia and Africa are too far away to be moved. As Lord Rhondda has said: What we ask from the United States and Canada we cannot procure elsewhere. As between ourselves and the United States we have a far larger exportable surplus of wheat than she has. In the past year our exportable wheat surplus amounted to 154,000,000 bushels, while the United States had only one-third of that amount. Canada is called upon to be a factor in saving a world which is face to face with starvation. She has illimitable quantities of the choicest wheat lands awaiting the plough; she can add enormously to her exports of foodstuffs, especially of grain, in a single year if-and, Mr. Speaker, there is so often an "if"-ishe can command sufficient man power to do the necessary farm work. Face to face with this situation the Government has conscripted for the army men from the farm. The decision has been made, and I have no desire to re-open the question- the responsibility is upon the Government. But I have merely to say this-and I will not use my own words last it be thought that party spirit, or something of that sort, had affected my judgment, but I quote the words of Lord Rhondda-"Unless the Allies in Europe are able to import the necessary supplies for the feeding of their armies and their civil population, victory may slip from our united grasp." God forbid! But 81

if disaster should overtake our armies in the field:, and if that disaster should be due to a failure of food, I am glad that the responsibility is not upon my shoulders. The Food Board has been created in Canada at vast expense. It has issued some rules and regulations, and has distributed some useful information. Whether the board has justified, is justifying, or will justify the immense amount of money spent upon it, is a matter to which it is now too early to dogmatise; we will leave that question for decision to the future. But there is one means of encouraging food production in this country which the Government has refused to adopt, although it is simple and easy. You will remember, Mr. Speaker, the old story of Naaman, the Syrian, and how he came to the Hebrew prophet seeking to be healed of the disease of leprosy, and the prophet said to him: "Go and bathe in the River Jordan and your skin will be again like the skin of a little child." He disdained at first to follow the direction, and why? Because it was too easy, too simple. I ask the Government of the day not to refuse my suggestion on the same ground, that it is too easy and too simple. What is my suggestion? It is this: That all agricultural tools, implements and machinery of all sorts and kinds, from the rake and hoe to the great tractor and thresher, be placed upon the free list, and that either by drawback or otherwise, the manufacturer of such be placed in as good position in respect to his raw material.

I cannot imagine what adequate reason the Government oan offer for withholding its consent to this proposal. It cannot be that the Government fears the lack of revenue, because with two such Ministers of Finance, one acting in Canada and the other in the United States, we can face the future with a certain degree of confidence, and the Government cannot be anxious about the loss of revenue which might be incurred by placing these useful articles on the free list. A Government which is borrowing by the hundred million, and which has presented to us a budget for war purposes alone of $500,000,000, cannot baulk at a mere two million dollar loss of revenue, for that is all the duty realized at the Canadian Customs houses from the entry of agricultural implements during the past year. If there is any reason for refusing my request, it must be based on some other consideration than the loss of revenue. Can the manufacturers of such implements complain of the proposal? If they complain,

The clock we have pushed forward For gardening after tea;

But as for farming implements-

We can't admit THEM free.

What opposes this needed reform? What are the forces impeding the freest possible access to tools which are necessary aids to greater production? They are two: first, the attitude of the .agricultural implement men; second, the attitude of certain of the big interests of this country.

Let us deal with the first; the objection of the .agricultural .implement manufacturers. The question of free .agricultural implements is not a new one. It was discussed very fully in the debates of the session of 1812-13. On that occasion the hon. member for Brantford (Mr. Cockshutt) spoke as follows:

Speaking for myself and. for my own interests I would he prepared to say that if we got all our raw materials at any equally reduced duty, either no duty or a dtoty commensurate with the amounts knocked off implements, we ooulfl afford-there is no question about that-to reduce the duty on agricultural implements, hut it would be at the cost of displacing probably 100,000 men in the Dominion of Canada in all these implement works and their tributary industries that supply them with raiw materials.

These avowals made by the hon. member for Brantford go far along the line advocated by toe, though they do not go the whole way; and he has very prudently and properly attempted to. .speak for no other than himself and his own interests. In this connection I have two points to submit to the House: first, that the agricultural implement business has reached the stage when, given raw materials, duty free, it can .stand and should .be made to stand upon its awn feet; second, that the fear of displacing 100,000 men in tributary industries is grossly exaggerated, if not altogether unfounded.

As 'to the first point. The number of employees who were engaged on salary or on wages in the agricultural implement business in 1915, according to the postal census of that year, was 7,609. The value of the raw materials used in that year was almost $6,000,000; the value of the products was over $13,372,506, and the exports amounted to over $3,500,000. The war must have greatly affected the export business of this trade, because during 1914 almost $8,000,000 worth of agricultural implements had been exported. Even in 1915, a year of war, the exported product was about one-fifth of the whole, which indicates that the industry is native to the soil, is soundly organized, properly .managed-, and needs nothing more than a fair field and no favour for success.

[Mr. (MdMaster.l

As .to the second point raised by the member for Brantford, the probable displacing of 100,000 men, can it be said that 100,000 men are employed in those industries which make the raw material which enters into the machinery .made by the manufacturers of agricultural implements? I do not think so.

I do not think so because, according to the Government census of 1915, there were only 59,361 persons engaged in that year in the steel and iron industry, and they certainly could, not all be displaced by reason of the loss of soine custom of the agricultural implement manufacturers. Secondly, although the implement manufacturers are good1 customers of the iron and steel manufacturers, they are not their only customers-far from that. As stated before, the raw materials which in 1915 *went into agricultural implements amounted to almost $6,000,000. Would I he wrong in assuming that 80 per cent of this, or say, about $5,000,000, consisted of iron and steel products in some form or another? I am not an expert on this matter, hut as a representative of an agricultural community I am able to look a plough in the face and tell it from a harrow, and it would appear to me that most of these agricultural implements were made of metal, and that the wooden parts represented- a very small proportion of the value of the whole. Perhaps- I may take 80 per cent as a fair working basis as to the proportion of iron and steel products which go into the making of agricultural implements. From the investigations I have made, I do not believe that more than one-fifth of the iron and steel manufactured in this country goes into making agricultural implements. In other words, I do not believe the agricultural implement manufacturers- are customers for more than one-fifth of the iron and steel produced in this country.

Before we leave this question, there is this third consideration: The duties on the raw materials entering into agricultural implements- are very low. Most of this raw material will be found in one or another of the following schedules. I might just say, en passant, that it would- be interesting to know what principles, if any, underlaid the tariff. It seems to he the strangest sort of hodgepodge of all kinds and conditions of things that one can imagine.

Item 379 reads:

Rolled iron or steel angle beams, channels, angles and other rolled shapes or sections of Iron or steel, not punched-, drilled or further manufactured than rolled-, weighing not less

than 35 pounds per lineal yard, not being flat, oval, or round shapes, and not being railway bars or rails, per ton, British preferential, ?2; intermediate, $2.75 ; general, $3.

That is a specific chity. There is to be added to that, under duties which were added a year or so ago for alleged war purposes, British preferential, 5 per cent, intermediate and general, 7i per cent.

Item 386 reads:

Rolled iron or steel in bars, bands, hoops, scrolls, strips, sheet or plate, of any size, thickness or width, galvanised or coated with any material or not, and steel blanks for the manufacture of milling cutters, when of greater value than 3 \ cents per pound, British preferential, free, intermediate, 5 per cent.; general, 5 per cent.

To that would have to be added British preferential, 5 per cent; intermediate and general, 7i per Cent.

Item 396 reads:

'Seamless steel tubing valued at not less than 3 J cents per pound, adopted for use in the manufacture of agricultural implements, British preferential, free; intermediate, 5 per cent.; general, 5 per cent.

The duty is now British preferential, 5 per cent; intermediate and general, 121 per cent.

Item 412 reads:

Iron or steel nuts, washers, rivets and bolts, with or without threads, nut, bolt and hinge blanks, and tee and strip hinges of all sorts1, n.o.p., per hundred pounds, British preferential, 75 cents; intermediate, 75 cents; general, 75 cents.

There is to be added to that British preferential, 10 per cent; intermediate, 20 per cent, and general 25 per cent. Now, of course, you will have to add an additional 5 per cent duty on these articles if they come from the British Isles and an additional 71 per cent if they come from elsewhere.

Item 444 reads:

Mould boards or shares or plough plates, land sides and other plates for agricultural implements when cut to shape from rolled plates of steel and not moulded, punched, polished, or otherwise manufactured, British preferential free, intermediate, free, general, free.

The duty will now be British preferential, 5 per cent; intermediate, 71, and general, 71. It would seem to me reasonable to argue that the removal of these duties cannot have that injurious effect dreaded by the >hon. member for Brantford (Mr. Cock-shutt) when he was dealing with this matter a year or two ago. It would appear to me that the economic case for free agricultural implements with which to help win the war, is absolute, complete and sound.

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UNION

William Foster Cockshutt

Unionist

Mr. COCKSHUTT:

Will the hon. member kindly state the date of ithe Hansard from which he is quoting?

Mr. lMoMASTER: For some weeks past I have been carrying a copy of the hon. gentleman's remarks around with me in my pocket. The hon. member for Brantford addressed the words which I have quoted to the House and which are reported in volume 6 of Hansard of 1912 at page 10,512. I have also carried around with me some other words of the hon. member which are to be found at page 10,517, and I think that the House will,he interested in hearing them. The hon. member said:

The quality of the manufactured goods turned out by Canadian manufacturers is of the best, and the fact that they have competed in the markets of the world against all competitors shows that they are able to compete with the world in quality and in price.

If that is the fact, I would think it well that the farmers of this country should' have the benefit of free agricultural implements in order that they may grow more food and, in that way, help to win the war.

I now propose to deal with the attitude which II believe has been assumed by the big interests of this country to the proposal for the introduction of free agricultural implements. I do not think I am breaking any confidences or saying anything that is not known to the world pretty generally when I say that the presence of stalwart radicals in the Borden Administration of to-day is viewed by the large interests of this country with a certain degree of perturbation, if not of fear; and of course, the attitude of the large interests is not at all due to the character of the representatives in the Borden Administration. That, of course, would cause them only joy and confidence. (It is the economic views-

Sir 6AM HUGHlEiS: Might I correct the hen. member? 1 understood this was the Borden-Rowell administration.

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L LIB

Andrew Ross McMaster

Laurier Liberal

Mr. McMASTBR:

I shall not be deflected from an economic discussion by any pleasing, agreeable and humorous pleasantry of the honourable and gallant member for Victoria (Sir Sam Hughes).

The attitude of the big interests in this country in regard to free agricultural implements is not unlike the attitude - they assumed over reciprocity. Though the interests of the protected manufacturers of this country were safeguarded in the most ample manner through the care of the hon. member for Shelburne and Queens (Mr. COMMONS

Fielding) and others of the Administration of that day, the financial and industrial interests of this country thought they saw in reciprocity the entering of the thin edge of the wedge into what they regarded as their tariff privileges, and therefore they opposed reciprocity and opposed it in a most interesting manner. It can hest be illustrated by a reference to a story in Holy Writ. You will remember, Mr. Speaker, that when Paul and his companion Silas were travelling around the country preaching the gospel, they came to a place called Ephesus, where there was a great temple of Diana of the Ephesians, and they were so successful in their preaching that the business of the people there who made little images of Diana fell off, and a man Demetrius called together the association of craftsmen of that city and said: This man Paul and this man Silas are hurting our business. Let us put a stop to it. Did they go out into the market place and lay complaints against these two men for hurting their business? Not for a moment. They raised the loyalty cry. They went out into the market place and for the space of two hours they cried, " Great is Diana of the Ephesians," and they raised a riot so that Paul and Silas got into trouble. That was one way to stop competition. In the same way the large interests of this country, in the summer of 1911, did not go out into the market places of Canada and say: These Liberals are going to hurt our business. They could mrt say that, because it was not true to begin with. So they raised the loyalty cry so as to hurt the Liberals who were pressing for reciprocity, a measure which, I believe, would have been of great benefit to the Canadian people, and I know that some hon. gentlemen opposite share in that view. The whirl-a-gig of time brings round its revenges. Those who supported the Conservative opposition of that day, and whose life blood was opposition to the very name of reciprocity, saw that same party when it came into office take the duty off wheat, wheat flour and semolina-the very keystone of the antireciprocity arch. The attitude- of the big interests which opposed free agricultural implements is not unlike the attitude assumed by some manufacturers in this country in the days of 1896 when certain reforms in a downward direction were effected by those in charge of the tariff affairs of that day. You will remember how that stalwart old war-horse of the Conservative party, Sir Charles Tupper, [IMr. MoMaster.]

said that the sorrowful wail of the manufacturers was heard abroad in the land, and we know that after a reduction had been made in certain duties and after the party which made those reductions was able to go on with its work, there was a great era not only of general prosperity but of manufacturing prosperity in Canada; our manufacturers never made greater strides than they did between 1896 and 1911.

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?

Mr RICHARDSON:

Will the hon. gentleman tell us what the total reductions in the tariff by the Liberal party, after 1896, averaged?

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April 30, 1918