Mr. McMASTER:

I am always willing to oblige, and I happen to have carried those figures around in my pocket also. I am not prepared, perhaps, to give my hon. friend his answer just as he would like it, but I am sure he will be glad to let me give the answer* as I like it. In order to help the farmers of this country, cream separators, which had been protected before 1896, were placed on the free list, and what makes me believe in sound economics for this country is that cream separator factories grew up in Canada even though cream separators were put on the free list. Then there was Indian corn. Before 1896 *that was dutiable at the rate of 71 cents per bushel except when used for distillation purposes. The staunch temperance element in the present Administration was not present in the Conservative Administration prior to 1896, and consequently you could ge't Indian corn in free if you wanted to make whisky out of it, but if you wanted it for feeding hogs or cattle you had to pay a duty of 7) cents a bushel. That duty ' was taken off, and Indian corn allowed to come in free. Pig iron, which was one of the basic raw materials for a great number of manufactured articles, had been taxed under the old tariff at four dollars per ton. Under the new general tariff it was taxed at $2.50 per ton; under the preferential tariff, which was in force up to the 30th of June, 1898, it was taxed at $2.18| per ton, and after the 1st of July of that year at $1.87| per ton.

There was also a reduction in other matters, not as much as I would like-I am very much of the kidney of the hon. member for Springfield (Mr. Richardson), and should have liked to see my friends go a little further. But I say this: If I wish to go to Toronto do I join a number of men who are going in the direction of Montreal or do I attach myself to a number of men who are going in the direction of Toronto,

even though they are not going as fast as I would like to have them go?

Mr. RICHARDSON:

I should like to say that a study of the politics of this country for the past twenty-five or thirty years convinces me that more reductions were actually secured from the high-priest Tories than from the low-tariff Liberals.

Mr. McMASTER:

I would imagine that the applause to that sentiment was somewhat local. I would doubt very much if it came from those representing manufacturing interests in the splendid old province of Ontario. But there were a great many reductions made; duties running up as high as fifty and sixty and iseventy per cent were reduced to ad valorem duties not running over thirty-five per cent. It must not be forgotten that there was also the British preference, and without being unduly antagonistic to the hon. member for Springfield, whose views on many questions do not differ very largely from my own, I would remind him that this British preference was fought in the most strenuous way by those high priests of Toryism from whom he states he received so many tariff favours, and they fought it because they said: You are interfering with the market which should be reserved for the Canadian manufacturer.

I would also like to ask my hon. friend from Springfield (Mr. Richardson) and other staunch free traders on the other side of the House, whether the reciprocity agreement was not a great step in the right direction, and whether the Liberal Adminis-* -tration of 1911, who adopted that policy and went down fighting for it, were not entitled to the sympathy of those who, we will say, hold sound economic views on tariff questions? The fears of the manufacturers of 1896 proved groundless. I would think, and hope, that the fears of the large interests in this country would prove groundless in regard to the introduction of free agricultural implements.

But let me note the very pleasant situation in which we find ourselves to-day in discussing economic matters, especially when these economic matters deal with the United States. You will remember that a few years ago if you discussed economic matters in connection with the United States with some sections of our people you frequently placed your loyalty as a British subject in jeopardy. But, now, how different it is! We find the Prime Minister himself coming before the House and in gracious fashion thanking the United States

for having sold so many steel plates to us at a price no higher than they were charging their own people.

Mr. MURPHY:

And they are going to New York to consult the Finance Minister.

Mr. McMASTER:

They have always gone to New York when it suited their purposes. It is only the other day that the right hon. Minister of Trade and Commerce (Sir George Foster) told us that the United States and ourselves must fight this war as one economic unit. Six years ago, the friends of these hon. gentlemen were saying that if we adopted a certain trade proposition we would become an economic unit with the United States and then away with the Constitution, the Throne would tumble, and the Stars and Stripes would be substituted for the British flag. Really it is now very pleasant to be able to discuss economic questions without placing one's reputation for loyalty in jeopardy.

Sir SAM HUGHES:

Is it not very pleasant to see Old Glory flying side by side with the British flag and the French flag? They were not flying together then.

Mr. McMASTER:

It is splendid, and I do say for the political party with which I have always been associated, and with which I am associated yet, that we have never attempted to make political capital in the past hy endeavouring to raise antiAmerican sentiment on the North American continent.

I respectfully suggest that it may very well happen that the fears of those who believe that their own best interests, and, indeed, who perhaps sincerely believe that the best interests of the country are served by the maintenance of artificial security through the operation of a protective tariff, are groundless. I know what the reply of these gentlemen will be, and it will be this: ' We know our own business much 'better than any professional man who happens to be a member of Parliament, and we and not he muist be the judge of what is best for us." In reply to this, may I make this observation? The federal reserve banks, created by President Wilson, have been a great success and have enormously benefited the United States banking system, but the bankers, before the law creating these federal reserve banks was actually placed upon the statute-book, almost unanimously condemned the proposal. They thought they knew banking much better than President Wilson, but President Wilson and his advisers knew what was best

. reconstruction of the tariff policy I ain doing what is absolutely right.

I have endeavoured in my remarks to place before this House the serious financial situation with which this country is confronted. I have pleaded for economy, and 1 have advocated with all the force I possess the removal of the duties on agricultural implements, not only as it measure of justice to the agricultural interests in this country, 'but as a war measure. I have endeavoured to show that without a return to sound economic principles a most menacing future is before us. I have not painted the future in too dark colours. I have unbounded confidence in the ability, strength, industry and intelligence of the Canadian people. The future is not bright; the hill of difficulty is before us, but I believe that we can win through if we are a united people.

We on this side of the House have felt a great deal of pleasure this session. Why, Mt. Speaker? Because we have found some things which we had anticipated would occur have not happened. We had heard of a celebrated white horse. We had heard that this white horse was given to kicking, to rearing and biting. The horse was brought out, though not with the consent of the whole House. It required the united efforts of twenty-one men to bring that horse out of the stable. When the horse came out, we were pleased to find that it was a much maligned animal, that its behaviour was a great deal better than we had been led to suppose. Instead of rearing and kicking at us, the only kicks it gave were side kicks directed at the Minister of Justice; and it breathed kindly words about the gallant 22nd battalion. We found that this horse was not nearly such a vicious animal as we had thought he was.

There is something else that has delighted ns in this House. That is the spirit of union which has been shown by members on the other side. We reciprocate those feelings. We believe that this nation will fall if divided; but we do not believe it will fall, because we believe that it will not be divided. We have a difficult future in front of us; we have a long hill to climb, but we believe that that hill can be climbed; we believe that, with unity, with the spirit of courage and perseverance, the difficulties which confront the 'Canadian people can be overcome.

Sir HERBERT AMES (St. Antoine):

Mr. Speaker, we have, for the past hour, been listening to an address which reminds the older members of the House of ante-bellum days, when the good old discussions on the relative merits of tariff and free trade were frequent every session, and when a large part of the time of members of the House was taken up in considering which system was the more beneficial for the people of Canada.

1 think we were all pleased this afternoon when the Acting Minister of Finance (Mr. A. K. Maclean) announced that there would be no tariff changes, not that the Acting Minister of Finance has not been asked to make tariff changes, because requests have come to him to make alterations in the tariff, but the Acting Minister of Finance, as the mouthieee of the Government, believes that this is not the time when nonessential questions that are likely to divide us should be thrown into the arena of this House.

1 have been waiting for an amendment to be moved by the hon. member for Brome (Mr. McMaster)inasmuch as I have presumed that, after spending an hour in elaborating an idea, he would test the will of the House in respect to his * proposals. He has not, however, seen fit to do so, although possibly an amendment along the lines he suggests may yet come from the other side. I trust it may not. I feel that it would, be very much like what Hinden-burg at present is trying to do, namely, to drive in a wedge between the point of contact of the allied armies.

It cannot be done.

Sir HERBERT AMES:

The line has bent, but has not broken, overseas, and I think I can assure the member for Brome that if he endeavours to make an attack upon the point of contact where he thinks the two forces can be forced asunder, he will make a mistake sc far as this side is concerned.

Now, I am going to ask hon. members to come back to the subject matter that was presented so earnestly and so ably thiB afternoon by the Acting Minister of Finance.

I think we need, upon many of the matters that he has laid before us, the very best counsel, the very deepest thought, the very closest consideration; and I trust that we may not be diverted from the great issues which he has laid before us to-day.

I was in this House when the Budget speech in the early part of 1914 was delivered, and I could not refrain from contrasting that occasion when I heard the

Budget speech being delivered to-day. The Finance Minister in the early part of 1914 in delivering his Budget speech, spoke of the prosperity of Canada. He had delivered a budget which had brought him congratulation, and which contained in it no cause for alarm. He had shown the House, I remember, that the total expenses of the year, on revenue and capital account combined, had been $163,000,000, and that entire sum had been met by the collections of that year, and that we had not added one dollar to our debt, nay more, we had decreased our debt between 1911 and 1914. Canada was in a thoroughly sound and healthy condition, financially speaking. It was well that it was so, for we were destined shortly to be submitted to a trial greater than this nation had ever before been called upon to endure. It was well that we were financially sound in the early part of 1914, because the great war came upon us that summer, and found us in that respect as in many others, ready. When Parliament met in August, 1914, we had a short session, but a very momentous one. We were under the cloud of a great menace, possibly a disaster. Parliament wasted no time in debate, I can assure you, in that session. We passed the necessary appropriation, $50,000,000, the amount we thought sufficient at that time to enable us to raise our first fighting force. We passed other legislation to enable the Government to be carried on and to cope successfully with the situation, and we adjourned within two weeks. Parliament at that time gave its pledge, and gave it unanimously, that in so far as Canada was concerned, we were in the war for all we were worth, and, that we would put into it all the men, money, munitions and food that was necessary to the extent of our ability, and we have kept that pledge. Qur forces have grown from 50,000 to 100,000, from 100,000 to 250,000, from 250,000 to 500,000, each increase with the consent of Parliament, one step after another. To raise, equip, train, transport and maintain an army such as we have had and1 still have in the field; to care for the dependents of the soldiers and to look after those in need of pensions; to carry on all the other activities of the war, and at the same time to keep the regular functions of Government in operation, is an immense task. In our war record stupendous figures may be found. In the first year of the war we spent $60,000,000 for war purposes; in the second year, $166,000,000; in the third year, $306,000,000; in the fourth year $348,000,000-a constantly mounting expenditure; a total to the end of March, 1918, of no less than $880,000,000. If any one had predicted in the war session of 1914 .that within three and a half years this war would cost us $880,000,000, that- man would have been told by every financier in the country that Canada would be bankrupt long before any such sum could be raised. Yet as war needs came we have sanctioned one appropriation Bill after the other, each year meeting larger requirements - $50,000,000, $100,000,000,

$250,000,000, $500,000,000; four successive war Bills aggregating $900,000,000, and we have had before the House this session another war Bill for $500,000,000, making a total of $1,400,000,000 voted by Parliament for war purposes since the outbreak of hostilities in 1914.

At the risk of laying before the House figures which are easily accessible to all and of repeating facts that all have heard, I purpose briefly to run over the financial history of the war to date so far as Canada is concerned. I do' this because I feel that, as a preliminary step to the consideration of the measures which the Finance Minister will base on his Budget of to-day, it is desirable that we should' be reminded of the various milestones which we have passed during the last four years; that we should realize what obstacles we have met and surmounted; that we should be able intelligently to pass in review those things which we have accomplished. To do that will make it possible for us more wisely to deal with legislation and more courageously to look into the future.

When Parliament assembled six months after the outbreak of the war the outlook was far from encouraging. There had -been throughout the country a dislocation of business, a great uncertainty as to. what might happen. All our borrowing was suddenly cut off, and Canada, wbicb had been a debtor country ever since Confederation, found herself no longer the happy possessor of moneys pouring in at the rateof a million dollars a day. Our customs revenues' 'greatly declined. We found ourselves faoe to face with a diminishing income and) an increasing expenditure. A demand was made- that public works should cease; I remember that I myself supported that demand. We now recognize that the Government did wisely in not suddenly putting to an end the public enterprises being prosecuted on capital account. These were continued in order that men might be able to find employment, that contractors might be kept solvent, that

she needed. We then turned to the United States, but the United States at that time was not at war, and it would have been an unfriendly act had the United States lent to Canada money to be expended in arms and ammunition to fight a nation with whom the United States was not then at war. While, however, the letter of the law could not be broken, there was a way in which the spirit of the law might be evaded. We were able to borrow from the United States on the understanding that the money thus secured would not be spent for war purposes. We, of course, used that money for purposes of peaceful development, but we were enabled to that extent to set free other moneys for purposes of war. We borrowed $45,000,000 in New York and paid it back within two years, and then, by the Public Service Loan of 19,16, we borrowed $75,000,000 more. It was not long before the United States decided that- they could lend us no more money. They too went into the war and we, .shut off from Great Britain and from America, found it necessary to fall back upon our own resources. Canada appealed in confidence to her own people, and she did not appeal in vain. Then began that wonderful career of Canadian domestic borrowing, a performance we have every reason to be proud of.

Our first Canadian loan was floated in November of 1915. We called for $50,000,000 and were very timorous as to whether that sum would he raised; that was shown by the fact that we got the banks to underwrite it; But when the subscriptions came to be opened we found they totalled $100,000,000, eighty millions of which came from the Canadian people and only twenty millions from the banks.

Eleven months later it was necessary to float another loan, and it was again to the Canadian people we turned in October of 1916. The second Canadian war loan called for $100,000,000 and you all remember that $201,000,000 was subscribed.

Seven months went by and again we appealed to our people to help us finance the war, and in March of 1917 the third Canadian war loan of $150,000,000 was issued and $265,000,000 was subscribed by our people; nothing whatever was taken or asked from the banks. When certain conversions had been made it was found as a result of that loan that 70 per cent of that $265,000,000 was new money which the Canadian people had loaned to us for carrying on the war.

Needless to say, the Finance Minister and the Government were encouraged at

the splendid manner in which the Canadian people on three successive occasions, had responded to the appeal that had been made to them to put their savings in the hands oi the Government for war purposes. Then the fourth, the great Victory Loan, was launched. We have heard this afternoon from the Acting Minister of Finance of the preparations that were made, of how widespread and extensive and intelligent they were, of how it became possible to bring the necessities of the Government and the advantages of the loan under the notice of practically every man, woman and child in Canada. Nominally the loan was for $150,000,000; that was the sum that was asked of the Canadian people. It was known, however, and generally admitted that the Government would take whatever sum was subscribed; there was nb limit to the amount they were prepared to receive. The Victory Loan brought in $398,000,000 of new money besides about $150,000,000 of conversions which, of course, do not count as new money.

Let me recapitulate for a moment the history of those loans because I think when we see them in their magnitude and in their completeness we shall realize that they give us cause for congratulation and ground for hope. We put confidence in our own people, and that confidence we found to be well placed. Of our entire outstanding securities, $75,000,000 of the war debt is in the hands of Canadians, or 85 per cent of the whole. Just think what that will mean after the war. We may have hard times and it may be difficult for the Government to finance in years to come after the war is over, but our war debt is not held by a stranger nation that can take us by the throat and make us pay whether we will or not. Our war loans will be held by our own Canadian people with whom we can treat and from whom we can always be sure of sympathetic consideration.

Now I want to call the attention of the House to a remarkable feature of these loans1-a feature which I think gives us the greatest of hope for the future, and that is the ever-widening distribution among the people of Canada of our securities. To the first loan one person out of [DOT] every three hundred of our population subscribed; that is, about one-fortieth of the families of Canada may be said to- have bought a bond. To the second loan

one person in two hundred and thirty of our population subscribed, and to the third loan one in one hundred and ninety. To the last loan one

in ten of our population subscribed; in other words, computing five persons- to a family, it would mean that in every other home throughout Canada there has lodged a bond of the Victory Loan. The average subscription for the second and third loans was $6,000; that means there must have been a great many large subscribers and that the earlier loans' must have been mainly taken up by the capitalists. Bat the average subscription to the victory loan was $500, showing that there must have been tens of thousands of small subscribers in order to bring the average down to that figure. It we compare this record with that of the American loans I think we have cause for congratulation. The second great American Liberty Loan-we cannot speak of the third because it will not be completed until the end of this week-was for three billion dollars-twenty times our loan of $150,000,000. One to twenty does not adequately represent the difference between the wealth of the United States and that of Canada. It should be far easier for the United States to raise three billions than it is for us to raise one hundred and fifty millions, and yet we find that while their loan was over-subscribed -only 54 per cent, our loan was oveT-subscribed 180 per cent. One in eleven of their population subscribed to their loan, and one in ten to our loan. But lest we might be unduly conceited comparing ourselves with others on this same continent, we have only to cast our eyes across the seas and note what is being done in the Motherland when they appeal to their people to take up their borrowings. The British loan of 1917 had eight million buyers, a little better than one in six of the entire population, which means pretty nearly a bond for every home in England. The next time we float a loan in Canada we shall have the British standard to endeavour to measure up to.

Just here and now may I put in a word with Tespect to the next loan that Canada must float. -She will need every ounce of strength she has to raise the money required. -She will need the hearty co-operation of every member of this House in his own constituency to explain to his people the financial condition of Canada, to arrange for the widest possible publication of the needs of the case, and every man here should feel that this summer his duty lies in his own constituency to help in every conceivable way in making the next great loan that will be financed in Canada a great success.

We have been listening this afternoon to some new taxation proposals. Each successive budget since the war commenced has brought in new methods of taxation. In the new budget some of the present taxes have been increased and new ones have been added. The taxation that we have had in the last four years has in the main been just, based upon the principle of not reducing the productivity of Canadian enterprise, but it is not entirely without criticism, as I shall venture to suggest before I take my seat. We are now called upon to consent to greater taxation, and exercising the time honoured privilege ever since Magna Oharta of a member of an assembly such as this, we shall one and all criticise these taxation proposals if we see fit. Our criticism of them and our counsel regarding them will, I think, be wiser if we briefly go over together the previous steps that have led up to these proposals, because knowing what has already been done we shall perhaps be more ready and willing to do what is necessary in the future.

War taxation is always heavier than other taxation and that for two reasons. Usually in war time there is greater prosperity, there is more money going from hand to hand, and also in war time -there is a greater willingness on the part of the people to give, and give liberally, of their means when required for the defence of the State. Therefore, taxes which in peace time would be resented by mu people are accepted willingly at this time, especially if they are satisfied that the burden is being distributed impartially.

When our first war Parliament met very little additional taxation w-as proposed. The war had only commenced and the Minister of Finance had had very little time to prepare for the raising of additional revenue. All that was done to bring in increased revenue w-as to make a few changes in the excise.

In the next war Parliament we found that the Minister of Finance had had time to carefully study the situation and he came into the House with thoroughly considered proposals designed to increase the public revenue. The War Appropriation Bill, brought down in February, 1915, called for $100,000,000. The minister's estimate of the total requirements for the year, current and war, was $285,000,000. The revenue in sight was $135,000,000. So that in the second year of the war, the Minister of Finance looked forward to- a deficit that had to be overcome of $150,000,000. The measures that were resorted to to increase the rev-

declarations that I had been hoping to hear were not uttered. It will be a disappointment to some of our people if the business tax is allowed to remain another year as it is. II think it is excessive as amended last session, and I cannot but feel that the Government were stampeded then when they increased the rates of that tax. I am making no plea for individuals, I am not asking that the money which reaches an individual should be in any way exempted from the full taxation that it to-day bears. The plea that I am making is in the national interest, not in the interest of the individual; tax him as heavily as you like. But the members of this Government and the members of the House must look forward; they must remember that the day is coming when this war will end; they must remember that the day is coming when they will need that every industrial enterprise in this country shall be solvent, be able to pay its debts, be able to continue to employ its workmen, and be able to find places for the thousands of returned soldiers that are coming back to us. There will necessarily be after this war a tremendous readjustment; there will necessarily be a considerable deflation. Where- are the industries of Canada to obtain the additional capital that they will require after the war to enable them to readjust themselves to post-war conditions?' They cannot get it in Great Britain; there will be no more capital coming from Great Britain for some years to come. They will not get it from the United States because the United States will also probably have absorbed nearly all its liquid capital in the'enormous loans that they are now placing with their people. They will not get it from our banks in Canada, became our banks after the war will be making arrangements for deflation, and they are not going to allow any money to be put into bricks and mortar-that we may be sure of. Where are our business firms going to get money that is necessary to niake the readjustments that must be made after the war? There is only one place they can get it: they must save it now as they go along; consequently if the business profits tax is so excessive that it does not permit a corporation to retain a reason-^ able amount of undistributed capital so as to be strong after the war, and to make the necessary adjustments, that corporation will then be at a tremendous disadvantage. My contention is that the sliding scale of the business profits tax is too abrupt; it is far more onerous than the American business profits tax.

If, for example, you had two firms on opposite sides of the Detroit river, one at Windsor and one at Detroit, and each had a capital of $300,000, and those two firms each made 25 per cent profit on a year's business, the firm on the Canadian side would pay $24,750 in taxes, or one-third of its total profits, and the firm on the American side would pay $12,150, or one-sixth of what it had made.

What is going to happen after the war? American and Canadian firms will be called upon to compete in the markets of the world. American firms have already had two years' start. They had two years before they were taxed at all during which they made enormous war profits and laid aside great sums of money. Hereafter they can put -aside each year twice as much as we can. Of these. two firms, the American company would have $400,000 capital at the end of three years, and the Canadian $360,000. If we are going to compete in the markets of the world with our friends to the .south of us we must permit our industries to have the same chance to live that they have. What I point out is this: In Canada the state takes one-quarter of all the profits between 7 and 15 per cent. In the United States, if a corporation can show that they have been making seven, eight, or nine per cent in pre-war times they are allowed exemption to that amount. On profits between 9 and 15 per cent they would only have to pay 20 per cent, against Canada's 25 per cent; between 15 and 20 per cent, the American rate of taxation is 25 per cent, or one-half that in Canada for the same percentage. The rate in Canada for profits of 20 per cent and over is 75 per cent, in the United States 35 per cent for profits of 20 to 25 per cent. Consequently it will be seen that we take away from our Canadian firms under certain conditions twice as much as would be taken in the United States under similar conditions. Only the other day I saw the statement of a business firm in which this significant clause occurred: "We have during die last year declared dividends on our preferred and common stock, but the tax we have paid the Government is a larger sum than those dividends combined."

- Now, my contention is this: Earnings

should pay taxes at their destination, not at their source. If you take these dividends and tax them before they are distributed while they are still in the hands of the corporation, they can be used to increase its.

productivity and the productivity of the country at large. That it is not the place to tax them excessively. When these dividends have been distributed, when they come to you and to me and reach their final destination, tax them then as heavily as you like, because so long as these dividends are undistributed in the coffers of the corporation they are used1 for the public good in increasing the production of the country. But when they come to me,

I can do anything I like with them, I can spend them in any frivolous way I want to. It is proper for the Government to say: we are going to take such a large amount of your dividends, which are your own exclusive personal property, that you will not be able to indulge in these frivolities, but that money will have to go for war purposes. That is fair to my mind. But, in my judgment, it is unwise to tax too heavily undistributed earnings of industrial enterprises of the country.

I have even another proposal to make to the Government, a proposal that I wish other ministers were present to listen to. It is this: If you cannot see your way clear to reduce in any way the severity of that schedule where it takes 50 and 75 per cent, then permit a company to take part of the money which it would pay you in taxation, half of it, let us say, and invest it in Government bonds. You get the money immediately just the same for war purposes. Let these bonds be registered bonds if you like; let them be non-interest bearing bonds for the time. Make it impossible for these bonds to be disposed of unless the minister's permission is given. Now, what do I mean by that? I mean just this: that these business firms, who will have to make industrial readjustments after the war will feel that if they go to the minister and show him that that money will be used in necessary alterations to their plants, the minister will release these bonds and allow them to be sold for the credit of the company. In that way, a company will feei that it has something to fall back upon, and that it will be able, after the war, to find that capital which it cannot find in England or the United States, or secure from the banks of Canada. It would thus be able to get a certain portion of the capital required for its development.

As regards income tax, I have only a few observations to make. Until the war came, the Federal Government always relied upon indirect taxation for its revenue. The business war profits tax and the. income tax were the first real measures we have

82}

had of direct taxation. We used to leave direct taxation to the provinces. I believe British Columbia is the only province which has really imposed that tax to an extent that the people feel. The war has forced upon ns the direct tax, and we are likely hereafter to secure a very large portion of our revenues from such taxation. Last year, w'hen we met here, we passed the income tax. At that time the United States was considering amendments to their Act. Since Parliament adjourned a year ago, the United States have passed an amended income tax, and I "was glad to-day to see that the Acting Minister of Finance was proposing to modify our income tax very much along the same lines as the American income tax of October, 1917. I wonder if he realizes what it is going to mean to reduce his exemption from $3,000 to $2,000, in the case of married men, and from $1,500 to $1,000 in the case of single men? I think our exemption has been too high. I .have many a time said from the public platform that unless a man was earning $10 a day every working day of the year, the income tax would not touch him. That is quite true. A single man has had to make $5 a day in order to pay income tax. Now, we are going to tax incomes from. $2,000 upwards. In addition to that, there is to be an exemption for each child under the ages where they cannot work. What did the United States find when they reduced their exemption from. $4,000 to $2,000 in the case of married men., and from $3,000 to $1,000 in the case of single men? They found that it multiplied the number of contributors eight times. Our income tax at the present time will touch only about one per cent of our whole population. I very much doubt whether there will be one hundred thousand people paying such a tax this year under the legislation passed last year. You will have eight times as many under the new proposals, if our experience is the same as the United States. And that is right, because the experience of every one who has touched the great heart of the Canadian people at this time since the war began is that the people as a whole are sympathetic. I have had experience with the Patriotic Fund for four years, and I know that we get thousands of subscriptions from people making less than $10 a day, and I know that the. people are ready and willing to bear their fair share of the war taxation, and the widening of the base of taxation suggested this afternoon will meet, I think,

Mr. O. TURGEON (Gloucester):

Mr. Speaker, in rising to make the remarks which I believe it is my duty to make on the present occasion, I wish to say that at this hour I intend to be as brief as possible. I wish to express a few sentiments which it has been my pleasant duty to express in four Parliaments in succession before this one which it has been my privilege to attend as a member of the House of Commons. In facing the House to-night I find myself in circumstances quite different from those in which I have been during the last eighteen years I have sat in this House. In former years, sitting on the same side as the acting Minister of Finance (Mr. A. K. Maclean), I was always ready to stand by him and to applaud his remarks which were in favour of free trade or tariff reform for Canada. To-day I find that he has taken another position; that he is in the new Government called the "Union Government." I have no doubt that, impelled by conscientious motives, the Acting Minister of Finance and some others of our friends have left our revered leader and the Liberal party on this side in older

duce no munitions for the Allies, we could send another half million men to strengthen the man-power of the Allies. These are conditions which we must' bear in mind when we seek to throw a wet blanket on the patriotism of the people of Canada, and more particularly on that of one nationality.

Like my revered leader, I am for the prosecution of the war. If in his vision of the future he had been listened to by the majority of the electors, Canada would perhaps be in a better position now than she is to assist the Allies, even with man-power. To-day, with all my desire to see every young man go who possibly can go to the assistance of our Canadian soldiers, to reinforce them, and to reinforce the armies of the Allies, we are in a position now where we cannot possibly do that which our patriotism inspired us to do at the outbreak of the war. In the beginning of the war it was only manhood that was required. There was food in every country at war. France was provided with food for the year to come, and England had provided for her necessities. They were in such a position that there was no immediate danger of food scarcity or lack of production. We have sent our men, or we might say that they have gone in spite of us, impelled by their patriotism. There was no want in the first period of the war. We thought, as t'he people of England thought, that the war would last six months or a year, and we did not make the necessary provision at once for food production. But the war has lasted for four years, and it threatens to last another year or two. God only knows if by that time we shall have succeeded in driving the Hun out of Belgium and France. Unfortunately, everything points to the conclusion that we have a long and arduous task before us.

The latest regulations to be issued summoning every young man from 20 to 22 years of age will, especially at this time of the year, prove a serious impediment to the production of food for the Allies. I am not worrying so much about Canada, although we shall suffer as a result of the want of help for the farmers. It will not be the Canadian people who will suffer the most, it will be the allied aimies and the civilian population of the allied countries that will suffer if there is a shortage of food.

That position will affect, more or less, certain portions of the country. In Canada there is not only production of food from the farm, but there is also production of food from the sea. In the Maritime Prov-['Mr. Turgeon.]

inces, as the Acting Minister of Finance knows, we produce food not only from the soil, but from the sea, and that sea food is just as much needed to-day, for the sustenance of our Canadian soldiers and of the British and French armies, as is the wheat and the barley which is grown in the West.

Let me describe the situation which will be created in my constituency by the fact that all the young men of from 20 to 22 years will be taken away by conscription m the course of a few days. We have in that county what is known as the Gloucester Fishing Fleet, composed of some two hundred and fifty-six vessels of an average of twenty or thirty tons each. This fleet is manned by from eleven to twelve hundred men from the county of Gloucester, and the tribunals sitting in the county have heretofore exempted every young man so engaged during the fishing season" in order to maintain that fleet complete, and so that the production of fish might go on unimpaired, and those exemptions have been sustained. The idea was to continue the obtaining by this fleet of from four hundred to five hundred thousand quintals of cod and other fish for the use of the Canadian and British soldiers, that being the quantity secured last year and the year previous. Very often the crews ,of those vessels in the fishing fleet consist of four or five men, two or three young men of a family with the father, and perhaps some of their neighbours. There are hundreds of these young men, who, after having been exempted in the past because their aid was necessary in the production of food, will be called upon in a day or two to join up. The greater part of the crews of the fishing fleet will then have to remain ashore, and the Allies will be deprived of an immense quantity of food from this part of the Maritime Provinces which would serve to sustain our Canadian soldiers for a month.

I waited upon the Minister of Militia (Major-General Mewburn) in connection with the matter, and I must say that I was received with great sympathy. However,

I obtained no promise from him, and there is not in the statement made by him to the House to-day any indication that the conscripting of these young men will be delayed in order to facilitate food production during the coming season. The Minister of Militia has in his possession a petition from the fishermen and the people engaged in the fishing industry in Gloucester county, which I only received yesterday, urging the Government to exempt, for

the period of the fishing season, the young men to whom I have alluded. In presenting the petition of those fishermen I am not pleading the cause of slackers. Eleven hundred of these young Acadians, members of the same families as those for whom I am now pleading, have already gone voluntarily to the war. Every one of the young men in the fishing fleet has a brother or a cousin at the front; those who have remained at home have done so in order to carry on the necessary industries of the country, and to keep up the production of food, which is just as vital for the Empire as it is for Canada to-day. I am not now opposing the law which is now in force.

It has gone into effect, and the young men for whom I am asking consideration are willing to submit to it-; all they wish is to be exempted until the fishing season is over. The Minister of Militia, when he made his statement on conscription to-day, said that the calling of men from the farm would be deferred as late as possible until the seeding was over. But how is he going to arrange for the necessary 'labour when the harvest time comes and the young men who in ordinary times have helped in that harvest are not available bv reason of having gone to the front? In the ease of the fishing industry we would like, as I already said, to have the services of the young men, who form such an important part of the fishing fleet, retained during the continuance of the present season. The season usually lasts until about the 15th of September, but if their calling up was deferred until the 1st of September these young men would then be willing to go as quickly as they could be sent to the assistance of their brothers and cousins. In addition to the petition which I yesterday presented to the minister from the people of Caraquet, I received the following telegram on the same subject from Shippigan:

Strict enforcement of Conscription here ties up fishing fleet with heavy expenses already involved ; if no compromise by judicious selection locality and trade will suffer severely.

Signed: A. J. Trudel, parish priest,

A. D. Chiasson, merchant,

G. D. Leriche.

In dealing with the tariff question we should not only bear in mind the present needs of the country, but also pay due regard to future requirements when the war is over. We must be prepared for the future and put ourselves in a position to meet the conditions that will arise after peace is concluded. We should so place ourselves that when the munition factories are no longer operating we may direct the

efforts of the working people employed in them into other industrial channels, and so be to stand the transition period between the close of the munition factories and the opening of other industries. We must be prepared. For that very reason, we should also be prepared to secure the good will of other nations. Free trade, or low tariff, has been the basic principle of the prosperity of the British Empire. Her prosperity and happiness have been sustained by the freedom of her institutions which in turn have been sustained by the principle . of free trade. Free trade creates mutual interest, and mutual interest creates good understanding between nations. Even nations on the Allied side have made a mistake during this war in seeking to effect an economic combination against the enemy countries after the war. While we are fighting for liberty and justice in the world, we are bound to win. We have done this from the beginning, we have done it voluntarily, as was so eloquently said a few days ago in this House by one of the greatest orators of the United States, Mr. Samuel Gompers. He said that Canada was not bound to enter this war, that Australia was not compelled to enter this war, and that South Africa did not have to go into this war. We have all gone into it voluntarily because the British Empire was exposed to danger. Canada, South Africa, Australia and New Zealand have gone voluntarily into this war because of sentiment and interest in behalf of the British Empire, and' not because the British Empire imposed compulsion upon its daughter nations,

That sentiment of generosity towards our Crown was not created by blood and iron, it was not even by conscription; it was merely by the breadth of their love for the Empire that millions of subjects blended into one common soul, under the smile of Providence, to fight for the maintenance of British institutions, liberty and justice all over the world. It is in recognition of this sentiment that Canada to a man has gone freely and voluntarily to the help of the Empire, and that same principle of freedom and justice must be maintained during the war and after the war. Let us not make the mistake of desiring to establish again after the war protection against the nations which we are now fighting. That mistake may perhaps have

been made at the Paris Economic

Conference held two years ago, when, owing to the influence of the men favouring protection on the British as well as on

the French side, it was decided to wage economic war against the Central Empires after the war. That decision has given the Kaiser and Prussian plutocracy the chance to make their people feel that after the war they will have to fight the allied nations to maintain their economic existence. Eet us not repeat that mistake to-day. Every nation will be welcome to the principles of justice and equality all over the world through democracy. We are talking and writing of democracy these days, yet we have been on many 'occasions introducing Prussian methods into this country. While the exigencies of war compel a certain centralization of authority, and an apparent lessening of democracy, v e must at the same time be on guard against this tendency holding sway after the war is over.

There is another tendency which exists in the present Cabinet, and which existed,

I may say, in the late Government. As my right hon. leader said, this is the same old Government; there has been some new blood introduced into it, but it is the same Government. To-day we see our friends who have left our side and gone over to the other side proclaiming the very doctrine that they fought against until the last day of the last session of Parliament. On the other side of the House every hon. member who rises to speak on behalf of the future success of our armies seems to take pleasure in saying that they have no consideration for the constitution of Canada. The other day my dearest friend on the other side, the Minister of Public Works (Mr. Carvell) whom I regret not to see in his seat to-night-a friend with whom I have co-operated ever since we have been in Parliament together, who has had no more sincere and devoted follower than his humble servant the member for Gloucester -said that if -it was necessary to win the war to puncture the Constitution he was prepared to do it. My hon. friend was not prepared to do it during last session or previous sessions. I am sure that the Acting Minister of Finance was never in a mood to transgress the Constitution. Yet the Constitution was transgressed when the Order in Council was passed taking from the provinces the right of issuing securities and putting control in this matter into the hands of the Federal Government. My hon. friend the Acting Minister of Finance and all the members of the old Government know that when I criticize this action of the Government it is not a new inspiration with me. They know that for the last ten years I have always been advocating the

maintenance of every clause of our Constitution.

I find it almost incredible that certain gentlemen from, the western provinces who have deserted! the Liberal party have deserted also their belief in the principle that provincial rights should !be maintained-a principle which they advocated so eloquently and so forcibly when they were at the head of affairs in their respective provinces of Saskatchewan and Alberta. No condition created by the war could possibly justify the course taken by the Government in this respect. Conferences of representatives from the provinces have been held in the interest of production, and good results have been obtained from, them. Why was not a conference held in this, case? I do not say that the Federal Government should not be able to control, as far as possible, the borrowing facilities of the different provinces, but I do submit that the matter should have been discussed at a conference with the premiers of the different provinces. The Confederation which was brought about by the efforts of such great men as Sir John A. Macdonald, Brown, Howe, and others, will last as long as the British Empire lasts, but only by providing that every principle embodied in our constitution is respected can we have absolute harmony and absolute agreement between different races and creeds within our country.

Reference was made during the last election campaign to the province of Quebec.

I do not represent a Quebec constituency, but I am a native of that province. When I left college I went to another French section of the community, and have devoted my lifetime to extending the principles which brought about Confederation. The French Acadian people in Our part of the country have lived in harmony and happiness ever since Confederation. When I hear it said that the people of Quebec have not been loyal to the Empire in this war,

I feel sometimes that I cannot but resent the suggestion as much as if I were still living in that province. I feel on the subject as a Canadian, if not as a QuebeceT, and also as a citizen of the Maritime Provinces, where the French minority receives,

I must say, generous treatment at the hands of the majority. If any nationality in the Maritime Provinces has declared special devotion to British institutions, it is the French-Acadian population. I affirm that my admiration for British institutions is not surpassed by that of any British-born in this country. I am here as a Canadian, as a Frenchman, as a Catholic, protected

by the British flag, and I resent the attitude taken during the last election by certain gentlemen with regard to the province of Quebec.

It. has ibeen suggested that the people of Quebec are not loyal because they have not enlisted as numerously as the people of the other provinces. There is only one reason for that state of things. Every Canadian knows that that condition is due to the fact that the Nationalist school was established in 1909 and 1910-and the doctrines of that school were made the chief topic in the province of Quebec during the elections of 1911 by the Conservative party in order that they might win. They sowed the seeds of discord, of disloyalty, using their own money and their own friends for that purpose. In twenty-two or twenty-three constituencies Nationalists were returned in the elections of 1911, having been inspired by disloyal sentiments; having been educated to the theory that we owed nothing to England and that we should not send one man across the seas for the defence of the Empire at any time ot under any conditions.

I lay it at the door of the leaders of the Conservative party that they favoured and encouraged that school of disloyalty in Canada. I admit that it was a school of many attractions and many allurements. Its chief exponent was one of the ablest men Canada ever produced, one of the greatest orators the French Canadian people ever heard, a man with a most versatile pen. They took advantage of his talent; they even paid him to disseminate his doctrine in the province of Quebec. Doubtless these false doctrines appealed to many when a young speaker went through the back settlements of Quebec-Drummond and Arthabaska for instance-and told the people that Laurier wanted to take their children and send them off to fight in the army and navy of England. Even the Minister of Trade and Commerce (Sir George Foster) sent a famous telegram to Drummond and Arthabaska- and he has since had time to repent and to be haunted by remorse for having encouraged such a doctrine.

I lay upon the Government all the blame for all the results that that school may have brought about in Canada, because the morning after the election, when they were able to secure the reins of power in Canada with the assistance of those twenty-two or twenty-three Nationalists who were elected because of 'their doctrine that Canada should not participate in the wars of the Empire, my right hon. friend (Sir

Robert Borden), as a reward for the doc-' trine which they had propagated in the province of Quebec, rushed those men, one after another, as vacancies occurred, into the Cabinet or upon the bench or upon various commissions. To-day, my hon. friends opposite say that the people of Quebec have not been as loyal as they should be. Separate the Nationalist element from the people of the province of Quebec, and the other half of the people of Quebec were as faithful and generous in their response to voluntary enlistment in the beginning of the war as the people of any other province of Canada.

It has been stated on many occasions, and I have seen it stated in the press of the western provinces, that the French Canadian people of the Maritime Provinces have enlisted more freely than the French Canadian people of Quebec. There is a good reason for that. It is that the Nationalist doctrine did not take root amongst the French Canadian people of the Maritime Provinces. They resisted it. I appeal to-day to my colleagues from New Brunswick, the hon. member for Westmorland (Mr. Copp) and the others who may be here. 1 regret that the Minister of Public Works (Mr. Carvell) is not in the House.

I say that amongst all those men who have worked to stem the tide of Nationalism in New Brunswick the member for Gloucester (Mr. Turgeon) has been one of the chief instruments. I have been assisted by my younger colleague, the hon. member for Restigouche .and Madawaska (Mr. Michaud). The people of New Brunswick have paid no heed to the doctrine of Bourassa, because we Liberals, knowing the danger of that school, stemmed the tide at once. For that reason the French Canadian people of the Maritime Provinces have enlisted as freely as the English-speaking people of those and the other provinces. The reason why the French Canadian people of Quebec have not enlisted so freely is because they have been corrupted by that .school which has been the mainstay of the Government.. It was stated only a few days ago by the ex-Minister of Militia (Sir Sam Hughes) that, had it not been for Mr. Lavergne and Mr. Bourassa, his friends would not have been in power in 1911.

The Conscription Bill which we opposed is now the law of the land. My right hon. friend the leader of the Opposition stated that the moment it became the law of the land it would be respected by himself and by the people of Quebec, and whatever incidents may have taken place since then

it is easy now to see that the people of Quebec at large are accepting the conscription -daw as patriotically as the people of any other race in Canada. We can see now that my honoured leader, owing to his energy, owing to his vision of the future, owing to his ambition to create harmony in this country, was right when he took that stand against the Nationalists of 1911, and to-day, owing to his constant efforts, he has stamped out from the province of Quebec that Nationalist inspiration, and not a single Nationalist was returned at the last election. There have come into this House sixty-two members from the province of Quebec, every one a straight Liberal, at all times opposed to the doctrine of Bourassa and the Nationalist party. The right hon. leader of the Opposition has been able to redeem the province of Quebec from the state into which it had been misled by the Nationalists with the assistance of the Conservative party; he has been able to bring Quebec back to the condition in which it was in time past. And for that reason alone, if for no other consideration, our hon. friends who, from conscientious motives have left this side of the House to follow the leader of the Government, should cross over to this side of the House and support the leader of the Opposition.

'Canada will live as long as the British Empire lives, and I hope that will be as long as the world exists. We have a great future before use. Peoples of different races and creeds have been placed here to live together in harmony, in happiness. It is only lately that that harmony and that happiness have been destroyed. Let us hope that that harmony will be renewed and that it will continue for all time to come. I have, with great regret, read on many occasions in many newspapers the statement that we should have one flag, one school and but one language. Confederation has made Canada a country of two languages, and that ie bound to be the case -as long as the British Empire exists. What are tho-se languages? We have the English language, the language of Shakespeare and -Milton who have given it lofty aims; the language of Edmund Burke, of Daniel 0 Connell, of Gladstone who have given it eloquence to stir up the masses, to impel the Governments and Parliaments of the British Empire in the establishment of justice, equality and democracy throughout the world; the language of Adam Smith in regard to trade and commerce which has reached every shore of every ocean, which has penetrated throughout every part of

every country where there is a store or a bank, or a shop, the language which always leaves in its train the impression of moral character and fraternity. That is the beauty of the English language. The other is the French language, the language of love and affection, the language of the arts, the international language to-day, the language of international treaties, the language in which is written the treaty ceding" Canada to England with all the privileges of the French people as to language and religion, the language in which will be written the treaty of peace when peace is declared, I hope, for all time to come.

If the British nation has been able to expand its trade and commerce to such an extent that it has become the greatest industrial and commercial nation of the world, and if the French nation, with a language expressing more sentiment than words can tell, has been able To become the most artistic nation of the world-if these two nations have been able to become the two greatest nations of the world, what a great nation might not Canada become if there was harmony between those speaking different languages? Canada has immense natural resources, of the mine, of the forest, and of the soil, and great water powers. The future of Canada ought to appeal to every Canadian here. It will surpass in prosperity that of any other country in the world. I think of her future as that great British-Canadian, Joseph Howe, thought of Canada at the time of Confederation, when he predicted that in the West our resources would bring a population and lead to such a development that perhaps the seat of the Empire might be centred in Canada. But even if that never comes, we shall be able to help maintain here the principles of liberty and of democracy with the assistance of the United States. It is said by some that after the war Canada -should join with the United States and that these two countries should remain apart from the rest of the world, far removed from all its dangers. Canada,

I repeat, has a future, and in my judgment it will better serve the purposes of humanity by remaining a part of the British Empire than by joining in with the United States with its one hundred millions of people. A magnificent destiny awaits Canada if we will but take advantage of our opportunities. Immigration will pour into this country after the war, and we shall have a population which will be imbued with- sentiments of justice and liberty- liberty and justice for your neighbour and

for your neighbour-nation too. We shall have here a nation ready to put an end, if necessary, to troubles that may arise in the different countries of Europe. Do not let us think that our country will be a nation of idleness or indifference after the war. It has a mission in connection with the future development of all other nations. I have always stood firm in my belief in the Tight hon. leader of the Liberal party, stood firm when we have been under the lash, if I may say so, during the last six months, and it is because I realize that he is possessed of the very sentiments that the greatest statesmen of the Empire have expressed on different occasions since the war began. General Jan C. Smuts is a great British statesman, not of Great Britain, not of Canada, not of Australia, but of South Africa, and he was so much admired at the War Conference in London last year that he was made a member of the War Council. Speaking at the banquet of the House of Lords and Commons in London recently, he said:

I pray that you may have the clearness of vision and purpose, and the strength of soul in the coming days which will be even more necessary than strength of arms. It will depend largely upon us whether in the present struggle the prize is achieved or whether the world shall once more be plunged into disaster. The prize is . within our grasp, if we have the strength of soul to see the thing through until victory crowns the efforts of our brave men in the field.

Further on in the same speech he expressed sentiments in harmony with the sentiment which ought to prevail in Canada. He said:

Even nations which have fought against the British Empire like my own, must feel that their interests, their language and their religion are as safe and secure under the British flag as are those of the children of your own blood. It is only in proportion as this is realized that you will fulfil the true mission which is yours. Therefore, it seems to me that there is only one solution, and that is the solution supplied by our past traditions of freedom, self-government and fullest development.

Those words attracted not only the attention of his audience, but the next morning the Daily Telegraph, of London, in an encomium upon the eloquent words of this great statesman, had this to say of another great statesman whom we all know and admire:

There is one other great Imperial statesman who will certainly applaud and endorse that statement-Sir Wilfrid Laurier. It is exactly the point upon which he has always laid stress when Imperial Federationalists have seemed to press forward at too rapid a pace.

If the views of this statesman, so eloquently expressed, as to the future greatness of the Empire, have been acclaimed by the British Empire, and if the sentiments of that other great imperial statesman, Sir Wilfrid Laurier, so nobly expressed on different occasions, have evoked the admiration and applause of the people of the British Empire, I say, Mr. Speaker, that I am willing to stand as proudly by Sir Wilfrid Laurier to-day as a good Canadian and British subject as a citizen of South Africa is proud to stand by General Jan Christian Smuts. I recognize in Sir Wilfrid Laurier the firm upholder of freedom, justice and equality in Canada. Sir Wilfrid Laurier has always been in Canada, in his vision of the future, in his conception of the high destiny of this country, in his aspirations for the welfare of Canada, and in his ambition * to see British principles and British institutions established more firmly all over the world, what Jan Christian Smuts has

.V-

been in South Africa.

In conclusion, permit me to ask pardon for having kept you so long. I had not expected to detain the House at such great length when I rose to speak. This is an occasion when sentiments have to be expressed, and I thought I should take advantage of the indulgence granted me to express the views which I hold on some of the questions which are engaging our attention to-day. I thank you, Mr. Speaker, and the House most cordially and I hope that it will not be necessary for me to again trespass at such length upon your time.

On the motion of Mr. A. K. Maclean the House adjourned at 12 o'clock midnight.

Wednesday, May 1, 1918.