1. Was Col. H. A. C. Mach in employed by the government of the day, during or after the late war, or assigned to perform other duties than those attaching to his military rank? If so, what was the nature of such ?

2. Did he receive any remuneration for such services, other than his regular military pay and allowances? If so, at what rate per diem was he paid?

3. Was he also paid in addition anything for travelling or other expenses? If so, what amount?

Mr. JOHN CARRUTHERS (East AI-goma):

Mr. Chairman, in the first place

I wish the House to understand that I am not wedded to the theory of public ownership, notwithstanding Sir Adam Beck and hydro and all that, but I must confess that in regard to our railway situation we are faced with a condition not a theory. Ever since the union of the Canadian Northern and Grand Trunk under government ownership I have maintained that it is not feasible to conduct two great railway systems in this country in competition one with the other if we wish to be fair to the privately owned company. I am not a recent convert to this idea, for last session I spoke upon this question in the following words:

Let us look for a moment at the railway situation. In my opinion it is anomalous and cannot continue. Tme two great transportation systems comprise about thirty-eight thousand miles or more of road, built at a capital expenditure of over two billion dollars, large stretches of both systems running through barren territory which does not contribute any local traffic. In the next twenty years, even allowing for natural growth and development, there will not be traffic enough to pay interest on this immense capitalization. Yet Sr Henry Thornton states that he expects in less than five year3 to meet all overhead charges on the Canadian National lines, and I think he will be able to do it. If so, it will have to be done at the expense of the Canadian Pacific's business. Let our people be honest with themselves. This is a question of business competition, and as our business men realize more and more that every dollar they pay into the national treasury to meet our railway deficit is that much more added to their freight bills when they ship their goods over the Canadian Pacific Railway, there can be but one result.

C.N.R.-Minister's Statement

Further on I said:

It is soil-evident that the people of Canada will never permit the Canadian Pacific to absorb the National linos and thus form a huge monopoly which would own the political soul of this country, so the only alternative is for the government to take over the Canadian Pacific Railway, as iit Should have done long ago. I have nothing against the Canadian Pacific; I think it has been a splendid institution for this country and I would hate to see anything happen to it, but from the way things are shaping to-day I see nothing but ruin ahead, in time. _ Contrary to what a great many think, the majority of the stock of the Canadian Pacific Railway Company is not held by Canadians in Canada; in fact, only about 20 per cent of the stock is held in this country, 23 per cent in the United States and the remainder in other countries, chiefly in Great Britain. However, that does not matter. As I say, we do not wish anything to happen to this great institution, and I am therefore strongly of the opinion that the government should take it over in connection with the Canadian National lines. If these two systems were amalgamated they could be operated much more economically and the ocuntry would obtain the advantage in the lower freight rates.

That, Mr. Chairman, was my view a year ago. Since then I have travelled out to the Pacific coast on a trip of observation, going out by way of the Canadian National! lines and returning by the Canadian Pacific, and I returned more convinced than ever that our railway situation is an impossible one. For that reason, as I say, I think the government would be well advised to carefully consider this situation. It would at once relieve them of two or three very difficult questions that are looming up to-day. One is the reduction of ocean freight rates by means of the Petersen contract. If the Canadian Pacific were taken over immediately, its fleet of 59 ocean and coastal ships would be available and ^ in conjunction with our own merchant marine boats we should be well equipped to control ocean rates. Another difficult question is the equalization of railway rates, which could also be settled in that way. Thus, they could save the country from fifty million to one hundred million dollars a year-fifty million is the lowest and one hundred million the highest estimate I have heard mentioned. I tell the government that the people will not long stand for a continuance of two great railway systems once they realize that by amalgamation huge savings can be made annually.

I wish the Minister of Railways (Mr. Graham) to understand that my concluding suggestion is not to be taken as a joke. I believe $200,000 is to be spent upon the Hudson Bay railway this coming year. I think a portion of that money should be used to equip one of our merchant marine boats for the northern waters, and that we should send it up there to find out by prac-

tical demonstration whether or not that route is feasible. I think this is the only way by which this House andi the country will be convinced of the commercial practicability of the route. I would also suggest that one or two members from each of the parties in the House might 'be put on board that ship, and if they ever came back they could speak with authority as to the feasibility of the scheme.

Mr. CARRUTHERS:

Are there any on

lake Superior?

Mr. CARRUTHERS:

In the last two lines of the resolution it says "recognizing the priority of the Hudson Bay railway with reference to other transportation projects started subsequently." Does that mean that the brandh lines now under way will not be finished and that no more will be constructed until the Hudson Bay railway is completed?

Mr. CARRUTHERS:

Would the hon.

member permit me a question before he leaves that point? He has spoken of the prosperity of France. Would he explain how that country is more prosperous than Canada when the value of the franc is at such a low figure whereas our dollar is at par?

Mr. LeSUEUR: In answer to my hon.

friend I would say that if you study the rates of the exchange for the franc during the last year you will find that the franc has remained practically stable at its present rate of exchange. You may say that the value of the frame has been stabilized at that figure, and has remained there for a very considerable time past.

Now, let us look at the question of expenditure, and in order to get possibly a broader and truer conception of our present financial status, I should like to consider not only the last budget but a few preceding budgets. But before doing that let me refer to the question of the guaranteed railway bonds brought up by the hon. Minister of Justice. I can say that so far as I am concerned in this discussion it is of very little concern to me whether we call the bonds

[Mr. LeSueur.J

which are guaranteed and from time to time floated on the security of the Dominion direct obligations or indirect obligations. The substantial nature and the incidence of our railway obligations make them as direct a burden on this Dominion as our so-called direct obligations, no matter what difference in name we may adopt, and while, to avoid argument, I am calling our railway Dominion-guaranteed debts indirect obligations, I am -Hearting both our so-called indirect and our direct obligations as equally active and equally proximate in their burden.

Let me illustrate why this must be the case. For some years back our railways have required a certain amount of money each year. Prior to 1924 it appears to have been the practice to advance the greater part or the whole of the railway requirements in cash, and to meet either a small amount or none at all of those requirements by the issue of bonds guaranteed by the government. Since the year 1924 we have advanced a smaller proportion of the requirements of the National railway system in cash, and a greater proportion by way of bonds guaranteed by the Dominion. For example, in 1923 our railways required about $77,863,000. All that amount was advanced in cash to the system and naturally it appeared in our balance sheet as affecting the direct public debt. In the year 1925 our railways required 82 millions and some odd thousand dollars. Of that amount $18,000,000 or thereabouts was advanced by way of cash and of course appeared as directly affecting our public debt. The balance of $64,000,000 or thereabouts, was raised by bonds guaranteed by the Dominion and then handed over to the railway system and appears as an indirect obligation. The substance was the same; only the form was different. It is merely a matter of convenience with the Acting Minister of Finance as to whether he raises the money by way of guaranteed bonds and hands it over to the railways, or makes direct advances to them in cash. Now proceeding on that basis, and including the cash advanced to the National Railways and the money secured for them by guaranteeing their bonds, we find that our total expenditures were for the year 1923 about $434,000,000; in 1924, about $420,000,000; and in 1925, about $426,000,000. If we go further and look at the estimates for the coming year ending March 31, 1926, we find that the estimates for ordinary and net capital expenditures and the requirements of the National Railways as tabled this year represent about $409,S78,039. If we add to that an amount for special expenditure equal to what

The Budget-Mr. LeSueur

was paid out therefor in the year just closed, and also allow, say, $10,000,000 for supplementary estimates which are yet to come down, we have an expenditure for the coming year of approximately $424,000,000 or $425,000,000. My point is that our total expenditures have been running more or less the same for three or four years past, and it looks as if they will be the same in the coming year.

Now then let us look at the details of those expenditures. We naturally expect that such expenditures as pensions, Soldiers' Civil Reestablishment and so on, will, by their very nature, and apart from legislative addition, decrease year by year. Such is actually the case. The interest charge on our public debt we would also expect to decrease gradually year by year. Money is now more plentiful and interest lower than when that debt was incurred, and with each refunding operation we can expect a reduction. Such is actually taking place. From $137,000,000

in 1923 our interest charge is now $131,000,000, or a saving of about $6,000,000. Likewise in our expenditure for Soldiers' Civil Re-establishment we can expect a gradual and automatic decrease. From about $13,365,000 in 1923 it has dropped to $8,340,000, or a saving of about $5,000,000. Likewise our expenditure for the adjustment of war claims has dropped from $0,784,000 in 1923 to practically nothing to-day. But outside of these expenditures, which are legacies from the war, which must naturally decrease as we get further and further from the war, the expenditure in what is properly civil government remains to-day practically the same as it has been, for the three or four years back. lor the purpose of illustrating this I have prepared a table taken from the Public Accounts of the years 1922, 1923 and 1924, and based on the estimates which are tabled for the years 1925 and 1926. I might go through the whole list, but with the permission of the House I will place it on Hansard:

1922 1923 1924 1925 1926

(based on (based on

estimates estimates

submitted submitted

to House) to House)

Agriculture ,. t 0,758,636 $ 7,169,381 ) 7,787,107 $ 6,809,085 $ 6,703,855Customs and Excise .. 8.250,557 7,779,930 8,017,227 10,052,315 10,688,259,. 8,017 371 (1) 4,895.906 4,905,754 Immigration and Colonization.. , .. 2,052,370 2,354,975 3,482,986 4,101,235 3.393,770Indian Affairs .. 3,217,108 3,306.232 3,830,690 3,827,058 3,779,5167,097,341 6.897,912 6,947,575 Justice .. 4,113,893 4,191,729 4,252,565 4,111.298 4,073,855Labour.. .. 1,884,933 (2) 2,209,631 1,429,274 1,641,715 1,610,930Legislation .. 3,941,747 (3) 2,653,566 2,367,036 2,378.713 2,288,863Marine and Fisheries .. 6,518,302 6,316,077 7,345,975 8,612,774 8,502,370Post Office .. 32,003,188 31,180,814 31,733,351 32,797,725 32,593,363Public Works .. 12,855,082 12,078,280 14,034,923 15,633,652 14,060,610Railways and Canals .. 14,504,973 (4) 15,350,295 7,945,908 3,740,501 (6) 3,814,929 (6)Trade and Commerce .. 5,939,101 (5) 4,641,851 5,075,022 5,210,763 4,401,870

Note 1. This figure $8,017,371 includes costs of loan flotation $3,302,674. Cost of loan flotation for 1923 and 1924 were $3,065,095 and $7,705,543 respectively, though they are not included under this heading of Finance in above figures for 1923 and 1924.

Note 2. These figures include $500,000 spent in relief of unemployment in 1922, $944,877 in 1923, and $4,273 in 1924. which accounts for their variance. Nothing is included for relief of unemployment in the estimates of 1925 and 1926.

Note 3. This figure includes the cost of the 1921 Dominion elections-$1,739,988-which accounts for the variance between the years.

Note 4. The figures for 1922 include $6,326,800 paid to Canadian Government Railway system to make up deficiency in receipts to meet working expenses; the figures for 1923 include $5,695,609 paid for same reason; no such sum paid in 1924. This accounts for the variance between the years.

Note 5. The figures for 1922 include cost of Dominion Census of 1921 which was $1,664,088.

Note 6. These figures do not include any expenditures under Canada Highways Act 1919, which in 1924 was $4,066,210.14.

It will be observed by one who reads these figures that there is no appreciable difference in the expenditures of the various departments during the period covered. Some variance of expenditures in the above years may appear in these tables, but they are explained as noted on the table as being for special items, such as Dominion census or Dominion election and so on. The point that the above facts and this table bring to the attention of hon. members is that the only material reductions which have been made are in those legacies or burdens which we have derived from the war which have automatically decreased, and that in all other departments our expenditures remain at practically the same level. This I say is essentially wrong, and I maintain that we should make a very aggressive attack on the expenditures

The Budget-Mr. LeSueur

of the several departments of our government. Let us now look for a minute at the revenues we are collecting. They are as follows:

1922 About $381,000,000

1923 394,000,000

1924 397,000,000

1925 344,000,000

In that $344,000,000 I am not including the $4,000,000 which we received by way of bonds in lieu of back interest. If we treat that merely as a better security for interest already due, then we should not include it. If we treat it as a receipt then our receipts would be about $348,000,000. I have not seen any estimates for 1926, but if the government expect to get a revenue more or less equal to that of the year 1924, namely $397,000,000, then allowing for the reduction in revenue of $21,000,000 made in the 1924 budget, we have left $373,000,000, or a deficit of nearly $51,000,000; and if we look to our greatest revenue, which was in 1920, of about $434,000,000, and again allowing for the reduction of $24,000,000 as provided for in the budget of 1924, even then we have a deficit, and I would point out that the year 1920, was a year of great boom and inflation, a condition we cannot hope to have recur in 1926.

Let us look at three or four of the salient or outstanding features which obtrude themselves from this statement of facts. In the first place we should note that the war is over and has been over for six years, but that we are still collecting practically full war taxes. The revenue received from these extraordinary-taxes, such as income war tax, stamp tax, sales tax and other nuisance taxes, would run about $181,000,000 for 1923, $182,000 000 for 1924, and possibly about $150,000,000 for this year. But we are still collecting all these war taxes, while the war has been past these six years, and we are still piling up deficits. Our direct and indirect obligations are still mounting, and have increased in the last three or four years about $150,000,000. This is in marked contrast with the United States.