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
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.