Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697720176127.pdf (Canada)
APRIL 18, 1934 2267 1'he Budoet-Mr. Rhodc, 2.

"'ht were the total imporb frolU Great Britnin to Cana.da during the foregoing YUrI, na.minR: major commoditin and amounu!
MOTIO:SS FOR PAPERS Mr. DUFF: }'or :a nturn of an itemized Itatemeot thow ing the Pllrtieular underukin;'!l ....hich mike up tile expenditure of 1412,000 ditcloeed in the Auditor Genenl'l Report for 1933, Volume 2, ),1-8 for publie "'orb in Nova &eotia; allO an itenii~ partieu1ar IIndertakioga which make up the upconditure of in the Auditor General'a J390.000 ditclontl.

tran.. Nepart Cannda highway.


for 1933, Yolume 2, }J·S, .t.atemeDt thowing the for Cll~1'lo£-r:STREE CHANNEL BUOYS Mr. CHEVRIER (for Mr. Brassell: Fnr a copy of an correspondence and other documenta exchanged between the Department at of ~hrine, the Charlottetown, ialanda, county of Gaape, r"pectln; lIhlldalell the from October, 1933, to date.

buoya of Grande-Entr~ channel, department'.


penOlll any office of the and or PEDIGREED HOGS On the orders of the day: Mr. T. F. OONNELLY (Willow Bunch): Mr. Speaker, I should like to uk a qUetUOD of the &OVernmeDt based OD an article which 1D a CaDl appears iD this moming'l press.

dian PreS!

dispatch 1 notice that a quesuon \t"a.s asked ill the British House of Commollll as 10 ""hy Canada wu buyiDg sixty or lIC\'enty I~igr('ed pip from S1fedeD.
Mr. Thomas Mid that all but eight of these pigs were Dot I should like to uk produced iD England.

the house for the government whom the pigs are heing bought, what their J'l('dil;l"cea may be, or any information they may have in that coonection.

if it call tell Right HOD.

R. B. BENNEIT (Prime Minister): The hon.

member'lI question will stand 3S a notice.

The minister is ubsent to-d3Y.

THE BUDGET A:SNUAL rl:SA:SCIAL STAT£MtNT or THE MINISTER or FINANCE HOD.
E. N. RHODES (Minister of Finance) moved: ThRt :Ur.

Sl'le3ker do DOW le...e the ehair for the houae to liO into committee of waya and 1li1'3nt.

this year time in the course of He said: Mr. Speaker, the tbis prolonged first depreasioD it is possible to review the year'l operatioDs iD terms of bu90ellll impro\'ement, revivin& coofideDee and expaDdiDg reveoues.
for ltl2l-lH that \'eDtu:ed tbe hope Three successive budgcta have heell delivered in the face of a progressive decline iD buai· :0 oess with the illevitable disnppoiDtmeot reVellUCS and inability to meet neeewry upcnditures.

Last )'ear I uprelJStd the belief the turn iD tbis tide had heen rcacbed that and I importaDt developmenll which had occurred or were under way would Iud to aD earll' recovery of business acti\·ity.

Whu __as then a bor-' ran QOW be asserted with confidence IS a fact of experieDCt.
The fisca.l year which hu just closed bas heeD a year of reCO\'CT}' recovery tbat is uDmiata1.

":3ble ..nd of ~rt':I'~r magnitude tban maDy had tbought possible.

The evidence of business recovery is writ ten incontrovertibly in the recorded facts of I desire 1I0t to wea;'Y our industry alld trade.

you with statistical detail.


but as a thorougn appraisal or curreDt bul!ineSll conditions is an e5SeDtial of souod budgeting and as depreesiou too prevalent, 1 rathcr psychology is propose to review the ewntial facts as brieflY as possible.

still The most cornprebellsive measure of economic activity ill CallAda il the index Jf the physical volume of business prepared by It:1 tbe Dominion Bureau of Statislica.
bued on a compilatioD involviD.J (orty-five economic faclol'll, includiDg production of our leadiDg manufactured aruclel, mineral pro ducts, and electric power, as well I I freia:hl loaded, CODstruCtiOD cootracts awarded cars aDd the volume of trade.

1D February, 1933, "hen business reached ill low point in Cn· ada, that iDdex stood at 67'0.

In February, the la.test month for which the figure.

1934, the index had riseD to 86'4, are anilable, an increase of no Ius than 29'0 per cent.
DurinJl: the same period, maDufacturing pro duction increl!led by U·7 per ceDt, minersl production by 13·7 per ceot and total indu& trial production, includiog cOllstructioD, by 38 per cent.

These figures are of striking signifi· cance when compared with similar figures for the Ullited States.

According to indicel pre pared by the Federal Reserve Board, the cor responding incrcllses that country were for 31·1 per cent for manufacturing productioD, 15·2 per cent for millel'tl.!
output and 28·6 per industrial produclion.

Their cent improveUlcnt was conliderably more rapid their gains were than ours last.

lummer, but oot cOllsistently held; with us, recovery h&J been more gradual but also more persistent.

the ..me nory of business reCO\'ery io Canldl.


The total amount of cheques cashed at chat t1rarin~ honse tered iD thirty-two in 1933 over <!elltrel 1932 and another 23·4 per <!tnt in the first two Other iDdices of a general nature tell increaaed 16 per ceDt banks total for 2'268 COMMONS The Bwl!let-Mr. Rhodes the presenot year over the same months of period last yeaT.

Thetle bank debit figures reBect not only the volume of ordinary busi ne.ss but also increasing activity in financial transactions.
Tn this power age, impossible to regard power output increasing sales of elec trical eoergy are also lI.n indication of general increased busineS9 expansion, although the use of electrical appliances or proccS8e!l in home and factory and the inCfl'asing sales of secondary power for steam production make it tl6 an accurate measure of such expansion.

Since the 6rst of the output of central elect-ric stations has established a new record level In February the aver age daily output was 57!
million kilowatt hours, an increase of 24'1 per cent over the corresponding month of 1933, and 19·8 per cent over February, 1929. this year, for all time.

The increase in the movement of raitway is an even more significant revenue freight symptom of general busine88 improvement becau9C it points to better days ahead for our two great railroad ~tems.

In· the first twelve weeks of this year 491,279 ears were loaded, showing a.n increase of 23·9 per cent over the aame period last year.
The gain of 95,064 cars the present year ia the elapsed period of reflee!.ll a heavier movemeat the in ten of eleven commodity groups of the official classi fication, grain alone showing a slil!

:ht decrease Furthermore, as compared with .last year.

traffic is now practically up to the level the movement of two years ago.
of Again comparing February, 1934, with Feb· ruary a year ago, we find the following strik ing increases in productive activity in in industries; pig iron production, 100 dividual per cent; steel production, 369 per cent; new,.
prin.t production, 38·9 pcr cent; imporl<l of ra.w wool and :rarn, 143 per cent (in the tex tile industry import.s of raw material are the best measure available of productive activ ity); raw cotton imports, 84·2 per cent; exports of boards and planks, 178·6 per cent; nickel exports 57·7 per cent; and construction contracl<l awarded, 72·8 per cent.

During the past three months, contracts awarded, although still at a comparatively low level, were double the figure for last year.
in the construction indus This improvement try., which has been unduly depressed and which Iltimulates so many material manufae turing industries, is of special significance.

the first quarter of Expansion in t.be scale of operations should bring all enlargement of business profits if industry ill operating on a sound basis.

While the earnings of most busine!l!l organiza.tions duri~ the past year were affected a.dversely (Mr.

Rhodell.]
Rhodell.]

for by the declining trend of the early part of the year, im there is convilldng confirmation of the year as II.

whole in the provement figures of company prants.

A recent compib.

tion of the lat.est earnings state'Tllents of 79 important companies showed that 64 reported net profits aggregating $61,500,000 aft.er all charges., against 147,000,000 in the previous year, an increase of over 30 per cent, while the remaining 15 reduced their deficits from $8,600,000 to $7,100,000.
the depression r~ars.

Of more importance is the efft>Ct of this expansion in private business upon the ab~rp­ the most pressing tion of unemployment, aocial problem of In the twelve-month period ended on March 1, the index of employment rose from 76'9 to the 92-7, an increase of 20·5 per cent.
At beginning of March returns from 8,499 leading employers showed 153,688 more employees on payrolle than were reported at the same da.t.e a year ago, and· of this total, 114,214 repre sented increascs in industries other than high way construction and maintenance, and, pre sumably therefore, have not been affeded by governmental activity in connection with un employment relief.
On the basis of these from a limited group of employers returns it has been estimated that increase in employment in Ca.nada during the year was at least 250,000. the toto.l this There is one other economic factor upon stage, which I wish to comment at ll.

'l.mely, the movement of commodity prices.


The world de<pression co.nnot be attributed to any single cause but with a very considerable measure of validity it may be interpreted in in the world level of terms of the drastic fall prices with consequent inevitable disparities .in different groups of prices.
The result was not only substantial inequalities as between various economic groups but a serious dis equilibrium between cos!.ll and prices which impeded individual enterprise and threw the whole economic mechanism out of gear.
Re covery from the depression may be measured by the progress made in Teestablishing a reasonable equilibrium between the various parts of the price structure-a working equi librium between producers' costs and prices, between prices of primary products and those of finished products, bct.ween wholesale and retail prices, and between debtors and crcdito~, whether they be individuals, corporat.ions or countries.
Such restoration of equilibrium may be achieved either by a reduction of costs or by a rise in the gf-oeral level of prices, or by a combination of both tcndeneies.

During reduction of costs any depression a gradual and a considerable amount of liquidation always takes place, and up to a cert.ain point A'PRUL 18, 1934 The Budget-Mr. Rhode8 ".9 the working of these normal automatic foreel is highly beneficial.
But 80 catastrophic was the fall in prices from 1929 to 1933 and lJO rigid the price structure are certain elements of (!IIch as interest, reliance solely upon curing our economic ills would ha\'e involved such a measure of deflation and liquidation &!I would posllibly have imperilled the stability of our lIOCial and economic fabric.

this method taxes, etc.)

that of For this reason the rovemment has con· sistenUy pursued a policy designed to stimu· late a rise in prices by e\'ery sound means.
AJJ Ce.nAda is 10 heavily interellted in export trade it has been recognized that our most important need wu to I«Ure & rise in the world level of commodity prices.
Conse quently, at the Ot.ta.wa conference in 1932, .t the World Monetary and Economic con· (eTence in London last summer and in the negotiations whidl followed and which led to the ilr!ue of a joiDt statement on monetary and economic policy by the nat.ions of the British commonwealth, we did our utmost to IlCCUre the adoption of common policies de !

!igned to promote first a rise in, and later a stabiliution of, the world level of commodity pricee.
For reasons which 1 need Dot discuss at this time it proved impoa!ible to secure u great a measure of international coopen.tion and the emplo)'menl of as aggressive policie.

as ,,'as thought desin.ble.

Nevertheless, as I sh&ll show later, such action as has been taken has not been wilhout a considen.ble measure of sucCes!.
But our eflortll have Dot I been limited to the international shall have occuion later to refer to the steps we have taken and the success achieved in fostering within Canada a lowering of interest n.tel and cue in the money marketa, which constitute essential conditiona favourable to a rise in commodity pricea.
The inadequate machinery of our Finance Act hlL' been ad· ministered as far as practicable with this end in view, and, as you are aware, we are pro posing to set up a central bank which is designed 'to give us an effective mechanism for cooperating efJectively with other countries in a program to Mise and stabilize priee levels, so fat as may be possible within the lICope of monetary action.

l!phere.
l!phere.

In October, 1931, an order in council was passed prohibiting the cxport of gold from Canada except under licence.

That was the fina.!

step severing the chain 1\'hich bound us to the gold stalXiard currencies, then 6ubject ~o deflationary tendencies.
As you are aware, Jt was followed by a substantial decline in our foreign uchanges which improved the competitive position of, and the prices re· oeived by, our upon industries, although at '1tt2&-IUi that Fonune.tcly, the same time it increased the burden in volved in carrying our externll.l obligations.

Many have considered it unfortunate that, because of the more rapid depreciation of sterling, our currency, though at a substantial in New York, still remained at a discount premium in London.
I had oceuion last year to point out in fluctuating about half way between the United States dollar and the English pound, our dollar was workine out probably the most practicable compromise be· tween thOlle of our national interetltl which would be benefited by close and stable re lation.s with sterliDfl, and thoee on the other band which would be eeriowly hanned by a heavy and Buetuating discount in terms of New York.
lhe developments during the psat year in connection with these two basic currencies both of which affect our interest.ll so materially have been of a nature extremely favourable to Canada.

In February, '111'&8 quoted at an 1933, sterling in Montreal average discount of 15·9 per cent; in Feb ruary of there was an ave~ premium of 4·3 per tent.
In February, 1933, New York funds ruled at an average premium of 19-7 per cent, whereas in February this year this average premium had been reduced to *0 of I per cent.

During the last few day.

sterling has been quoted from 5-14 to 5'17 in Montreal and New York funds at a dis to i of I per tent.
These rates count of .. of course mean that our e:cporters obtain a slight advantage in the British market and Canadian debtors are at no disadvantage in meeting their obligations payablc in United States funds_ this year the fact that our dollar Much misunderstanding, however, seems to pe~ist in connection with these highly technical matters of money and exchange.

For instance, it is sometimes claimed that we should de· value our currency on the same be.sis as the United States have devalued thcirs.
This criticism appears to reveal a complete lack of appreciation of is currently selling on an approximate P1rity the United Statcs which has with that of been devalued by slightly over 40 pcr cent.

I have much sympathy with the deaire for stabilization which may be latent in this argu· ment, but in my view stabilization of our the cstablishment of a currency must await stabilized ratio, at least on a de facto basis, between the United States dollar and the English pound.
So mrongly are our interests tied up with both of these currencies that a policy of tying to one and nol to the other .....ould represent a poor second·best and not an ideal policy.

I would have to qualify this general statement if either of tbese currencies that ahould exhibit a defial10nary tendency; 1270 COMMONS would prob:l.hly for a T.1rlic::L!ly different decision, -it,untion calling involve ,1 rh~ng('d to fOl'ler len·J.

I m:l.y add that Tn ::Htrlit;on to these rnp.


:l.surcs which have rise in the general 11 he~n tll.bll the international prict' \'I'hich was signed at Lon· whe,1' AIm!!

'mcnt don is rlcsil;ncd to r!fed by A better adjust ment of slIpply and demand the price of whl':l.t.

which is so imporunt a staple in 0111" domrstir rconomy lind SO important a con in the "'orld prirc le\'el.

Qllr effortlJ d:luent in prices by every sound to foster a ri!<' ml.
'lhorl In Partie'IIIM it is c:l:J)erled that our public works progl"3m .....ill contrihute 10 th:\l end by Ilrre!er:lotinjl; the pr~re!S of btl~inrM ru'o\'cry already hllppily under w:ly.

\l"ill not be relaxed.

the more the record or Gra.

:ttinlt that a risc in rommodih' ]lriccs is the ":I~t hiRhly 10 be doired.

year h:ts been distitleUy fa\·ourable.

From Febnl:try.

1933. to Febru3fY of this )'ear the ~ener:ll index of wholenle rrices in Can:tda fO!te h~' 13·4 per ~nt.
This ri-e ha.s been less r:lpiu lh:tn that in the United Shtes bUl more rarid Ih:'ln that of m{)'ll other counlrie!!.

The indrx of the United 5t3fes Bureau of official t.he Lohollr st:ttistics is ::lot )'et aV::lilllble fOf' monrh of February.

hut rapidly f1uctll/l.tiDg index compiled by Dun's shows a rise of 28'1 per ~nt durin/!'

the period men· In England wholeule prices have tioned.

ri~n by 9·2 rer cent nttording to the figures comriled by the Financinl Times of London.
to which the maladjustments between vllriouS price groups 11I1\'e ~en corrected in Can:ada, I may add th.

:lt wIllie the whol('Mle price inde:t \'1'35 rising 13·4 p!

'r cent, farm prices rose the inrlex for h.r no lc!.i than 34·9 per cent.

Furthermore thf' prir('s of !

'3W and p:lftly manufactured nrtidp!'

~holVrd a ri~e of 23·8 prr ('ent.

tl~ ('om· 1'.1r('d with onl."

nf 11'4 rer eC'DI fur fl1l1)' anrl It ~houlrl chiefj,· m,1nllf:H:-ttlrt'u pommoditi{'tJ.

the price of Nllmhl!r 1 Ill' notf-.J thM.


~orrht'rn whe:'lt III Fort William averaged 43·2 prr cent hi~her in F<.

'brllar.v this year ~hnn.

in February, 1933, while th<.'

corrcspond· lXood 1,000 to lllrrC:'ISe for (':'Ittle (steers, lllll; 1,200 Ih8J \\'llS 45·7 per cent.

II.nd far bacon hOIl:~ ar TOronto, 153'8 per cent.

A~ an indication of the extent ll'~O I IHll"e reFerred to the step.!!

which have been taken 10 promote a lowerinlt of in.f.erest rates.
rnt('re~t is one of the rigid factoN in our price rll1lrgcs s[ru('lure and the burden of C(Hlsed by the e:o:tr:l.Vagflnl borrowing of the :tj[!

::rllvatcd cnor· )'ears, war mOllsl.\· as it ha1 been by the filII in prices, and for pU~liC' bodies nl~o by the necessarily large rXPC'ndltutrs for uDrmployment relief during the dcpre~ion, hal been too frequently dis- eU~11 in this hOllie to need ebbor:atioll hl."re.

and poet-war fh:<.

'd 1:\(,.


Rhnd"'.1 rrinciple of For certain indi\·j,III:l1 ,{('hlors Ihe hurden has hel'Ome unbearahlf' the gO\'ernment pro :'I nil pose~ to brin!!

: down at nn early stajl;<.'

legisla· lion desi::;ned 10 prm'ide machinery whereby fnrmers who find themseh'cs unable to pay the fixE'd chaT'll;es 011 their out.sl.anding debts will be ablc by an e:o:peditiou8 and inexpeMive process to work 011t cOfT,promises with tbeir creditors and to obtain new working capital.
The :::mitlinll; this lell:"islation will bt' to "C'cure for the farmer a simplifiecj debt stnlrlllre r"duceu in size to a point where I~<.'

1'3!

'ryin:: tharyr;c:J will be wit,hin the capa~ (,lt~· or Ihe farm :!nterpri!e to r:l\'.

This will the part of I"OnceMion3 on i!l\'oh'e some creditor:!

hUI thr~ will be more than out· weiJ:hed hy the :tdv:lnt1ges which will foliolit' a8 n rC:!

!tllt of retaining the farmt'r on the hnd :ts :l williog :lnd effecti\'e prOOIlC1!r.

The re len.~ of eronomic ('n('rl!!


:Y lIO produred aDd the fDr dea :lUhlltitntiOD of hope :lDd goodwill ron,l~nr)' and discontent which are noW' pre \':lle-nt in rert:lin arf"as should result in a very lOin to ollr whole domestic economy.

real The cbim hM breD msde that tl som('what lI!mil:tr proredurc should be applied to certain in this coulltry.

This classes of public debt Question wall effectively dealt with in the statl.

"OIcnt msde by th<.'

Prime Ministpr ill this i._ tno laf'll:l!


Ind hailS(> It C'Omplit3led a subiect for mare than It passing referenre hv me al Ihis time.

Bllt as I h:lve oullinl.

"d o~r rroposals for de:lling Ivith rarm drbts, I wisb to mnke c11.

"3t why in my opinion the 8-'tme kind of remedy cannot be applil:'u to the problem of public indebted· neas.
f('w WCl'ka :lItO :lnrl to call the fact In the first place iii rorm of bearer bonds payable at that so large the direct: and gUllrllDteed s proportion of debt of the dominion lind the prm'inces is held by foreign investors.

Not only thltt but.

in the as a rC3ult of the method of financinll; of flost·war years a very Iilrll':e proportion these foreign and of domestic holdings ill in the the the holder in either two or three optioD of It is therefore impracticable, if not markets.

ind<.
ind<.

'cd entirely impossible, ft poliC'y that would seek to llilTerentiate bl!twl.

'en the Can:ulinn and the foreign investor.

Whnt,.. ever :lrf!

:lImr.nt may he advancer!

in (a\,our of a comprehensive poliry of scaling down all to ht'u ch.
'lrgl's due hy Can:'ldian debtors Can,uli:'Ill rrf!ditor!-:Ind this would in\'olve, what is too frequently o\'erlooked, a f('uurtion in paymcnfillo be made by as well as to Cana· insurance dian creditor companies, mortg:tl:e companies, trust com· p:loies and banks--I doubt whether there are m:my Canadians who would be willing to contemphlle :l progr:'lm which would involve institutions such J!I to administer APRIL 18, 1934 The Bud(Jet-Mr. Rhode8 2271 tapped.
to convert If we ere repudiation of our external even s. parti:a!

traditional In addition to our obligations.


altitude towards the carrying out of our obliga tions according to the letter of the contract, there is the compelling moth'e of self-interest Canada is a young country with a vast store of natural resou~es that bas only begun to t.bose be potential resou~ell into consumable wealth and -thus into a higher standard or living for our people, we will need tbe fructifying influ ence of foreign capital for :rears to come.
We have a right to expect that our foreign credi tors will not make it difficult or impossible for us to pay our interest and maturing debt obligations but, un~ess I am seriously mis any taken, delibera te action that would cut off or seri ously impede the flow of fON!ign capital for the development of our resources.

country will never take this the lut.


The second consideration I wish to place before you is that great as is the burden of our public debt, it is not beyond the capacity of our people to pay.
I am sure you will grant that I am in a position to appreciate to the full bow serious the burden U, not only to the dominion government but to llome of our provincial governments as well, and I 'I'I'~h here to pay a tribute to the splendid spirit of the Canadian people under the Atrain, and u.crifices of five years.

That spirit as well all the !lability and resiliency of our economic system have been beyond all praise.
Also worthy of commen dation are the earnest efforts which have been 'made by practically all public bodies to &dillSt to the new and trying condi their financel tions, despite the criticism of the well-mean.

ing arm-enair critics who find it eMy to solve the difficulties of public treasuries by neglecL ing part of the point I the problem.
But wish to make irI that, oppressive as our bur dens have been, they haye actually been borne through the worst of the depression and Ilt a level of taxation which is not abnormal when compared with the tax rates which cer taiD other countries have imposed upon them SClvell.

Furthermore, M I to demoD!trate, we are returning to more normal bllsine$S conditiOn!

and price level!

with a speed which a year ago few of us would have "cntured to predict.
With a normal volume of business and a reasonable price level I am convinced that we will be able to meet aU our obligations without undue stra.iD.

have tried Under loch circumstances the sound and practical policy appears to be to do our to expedite the processes of busioellll utrnOllt recovery and to facilitate those economic trends which wiD make for a lightening of of interest rates.

This in our whole interest structure, it interest charges.
I have alreldy discussed the question of railling the price level which auto matically serves to reduce the real burden of debt.

A second factor which works both directly aod indirectly is tbe gradual lower proeeS!

we ing hl"e also been endeavouring to fO!

!.er by every legitimate means.

A year ago I baa o~on to refer to the efforts being made to secure a lowerinc of the interest rate plid OD MYings depositA by banks, trust companiea and other institutionl.

As you are aware, these effort!


led to a one-half per cent re duction in the deposit flte which was followed immedill.lf'l)' by a correAponding reduction in to public bodiee the rate~ charged by hll.nkl and to lI.griclIJtural borrowetl.

It also contri huted to strength in our investment market".
Because the savinp deposit rate is the ba&ic is element to be hoped that our financial institutioIUl can see their way clear to make another similar reduction which t am sure would have an imllOrtant stimulating inftuence at this time.

The London loan which we flolted an sucre.

.

fully last August was iotended in part to re lie1'l!'

our own investment market and thUl make it possible for other public and private borrowers to l!eCUre funds at more favour able rates.
The continuance of our dome!tic conversion program to which :r shall refer later and the strenuous efforu which we ha,'e made and are making to balance our budget and thereby justify a high credit basis, have also rates.

conuibuted to a lowerinr; of interest The slriking success of the8e concerted ell'orU Ire perhlps not fully IPpreciated by the Cana dian public.
It seeR'.1 to me highly significant that the 4 per cent twelve-year bonds which we offered for public lub6cription last October at 961 to yield 4·38 per cent arc now selling at approximately IOU or on a yield basil of It is too much to expect thlt 3·71 per cent.

we ate within sight of a 3!

per cent basis for the dominion's medium or long term obli gations?

And if so.

will not the attainment of that objective be a convincing demonsttl tion of the wisdom of the policies which we ha"e followed?
tender I may also refer to the improvement in the In March lsat "I.'

short-term money market.

initiated a new development by offering for 115,000,000 term public treasury bills.

Those bill were aold on a 2-85 )"Ie'r cent blsie for the three months' maturity and a 3·12 per cent basis for the eight months' maturity, the lowest rales at which the dominion bas ever borrowed in thi, country.

I may add that yesterday, alter this stltement was prepared, we concluded short of 2272 COMMONS 7'he.
Budget-Mr. Rhodes treasury bills to acceptances of offerings for the extent of $15,000,000.

Of that amount we borrowed $1,600,000 of the July 1 maturity at a cost of 2'41 per cent, and $13,400,000, being the babace, of the October maturity, the rate of 2·71 per cent.

We hope to at continue this practice for our short-term re quirements and, particularly when the Bank of Canada is established we anticipate marked improvement in the oTg!l.oiution and develop.
ment of our short-term money market and a more efficient utili~atioQ of the funds avail able therein.

The figures I have given refer to rates at whicb recent borrowing hall been effected or at which our QUUltanding obligations are cur If we take the interest now rently selling.

being paid on all our direct indebtedne99 at present outstandiog, we find that the average is 4·62 per cent.
Eliminating the victory bonds which will mature on November 1 thi::r year and will be converted at I believe a substantially reduced rate during the next few months, eliminating also the 5 and 5; per cent tax~free issues which will not mature until 1937, and assuming that these war-time issues are replaced by 4 per cent securities (a very modest assumption), this average would be reduced to 4·35 per cent.
Even this I bclie~ be fa.irly Batisfaetory rate will further few yeal'& That appreciable relief is being obtained through refunding operations is illustrated by in 1931, before the conversion the fact loan was issued, the average interest paid by the dominion on its outstanding funded debt was practically,') per cent.
reduced during the next that this The strength of our investment markets is reflected not only in the rise of bond prices, or which is the same thing, the lowering of rates, but also in the volume of interest new securitie5 purehased by the public.

Dur ing the last calendar year $345,000,000 of long term obligations were absorbed by Canadian investors.

Of total $157,000,000 repre sented new capital.


This compares with a total of new bond issues in the United States of only S9OO,000,000 of which 1595,000,000 were for new capital.

During the first quarter of thi5 year our investment market has been active and strong.

Over $73,000,000 of new government and municipal issues were offered during this period, or nearly four times the amount for the corresponding quarter of 1933.
These healthy market conditions are full of the promise for interest burden now pressing upon public bodies, by the normal process of converting h.igh~interest-bcaring securities into new issues with a lower coupon.

reduction of the gradual (~r.

Rhode..] that The statistical presentation of improved conditions in Canada carries greater reassur anoe when viewed in the light of world For recovery has nl)t economic conditions.

It ha, been a development unique with us.

been.


world wide and its universal character SIlgglCsts it must have a basis more fundamental and probably more permanea!

It is than would otherwise be the casc.

now dear that in several countries it began, as in the United early 8.ll Kingdom perhaps even earlier, and that in practically all countries the improvement last year was substantiaL Though the rate of progress has varied and in 80me cases the gain.s have been.
more comnstently held than so world-wide in others, and generally so similar as to suggCfJt the automatic working of fundamental economic forOCB.

the summer of ]932, the movement is a before to be overcome Although encouraging progress has been made towards world recovery, it would be a mistake to under-estimate the difficulties tha.t have still full measure of world prosperity can 'be restored.

Unemployment still persists in all countries in International distreasingly large proportioo.s.
trade remains at a low le\'el.

Little, if any, progress has been made in removing the excC!

the arbitrary sive interfereoccs with trade, quotas, the exchan-ge controls, and, the other defensive measures which have been devised to meet the dangers of currency depreciation and unfavourable balances of payments.

In recent months there hlUl indeed been increased stability in.

the foreign.

exchange market!!

but the integrity of certain currencies continues to hang upon a slender thread.
Another period of currency unsettlement with the threat of competitive depreciation must be recognized as a possibIlity at least and this suggests the desirability of a renewed con' sideration of the feasibility of concerted eflo~t for de facto stabilization of currencies by the lea.ding countries.

I 'am aware of the difficul~ ties which surround the problem which the world conference found it impossible to solve last summer.
But some of these difficulties ha.ve been lessened in the intervening months lind the need for early action is emphasized when one reali1.es that little progress can be made in reducing restrictions on international trade as long as currencies continue to fluc tuate and the danger of competitive deprecia tion persists.
the record for On the debit side of the past year we arc also compelled to record certain unfavourable political developments a scrious aggravation of political tell3ions in Europe and the Far East, an increasingly AP&IL 18, 1934 The Budoet-Mr. Rhode, 2273 unstable social equilibrium in some important count.ries, a succession of disappointments in the disarmament negotiations, and a threat ened breakdown.

of system which has been painstakingly built up during the post-war years.
the ten sion is less .serious to-day than it WIl6 at remains the year but the bewinning of a. international constrncti"e to deterrent cooperation.

It is true that collective the it As long as these adverse influences continue they mmt be taken into the to operate thaI reckoning.
The fact remains, however, the low point in the long depression has been reacbed and passed, that considerable pro gress has already been made in this and oth~r countries in the restoration of normad condi tions, and that present econnmic trends art' further progress.

This in the direction of should give solid ground for confidence.

if not for undue optimism.

TRADE OF CAN~D~ Evidence of improving conditions is sl$o found in· the statistics of external trade.
The declines tha~ have been a feature of world in increased substantial recent months, inconsiderable for trade in recent years have now, for Canada, been changed to increases, lor import.!.

exports and not In the twelve months' period ended March 31, l&8t, exporUl of Canadian produce increased by $105,500,000, or 22 per cent over the same period in the previous year.

Imports, advanc ing less rapidly at first but showing greater by ga.ins $27,300,000, or 7 per cent.
The improvement in aggregate trade was $132,300,000 over the same period Jast year, or 15 per cent, the tolal exceeding one billion doliars.

The im provement has been on an ascending scale since July and in the last three months im ports have increased by 40 per cent and exports by 50 per cent over the same period last year.

The preliminary figures the monlh of March, which will be released i:1 the course of a few days, show total import.
of $47,500,000, an increase of 45 per cent over 'March of last year.

Exports are shown at $58,300,000, which is a gain of 56 per cenl.

for A statement of the total trade for the fiscal comparative 31, with year ended March figures, follows: Trade of Canada (excluding gold coin and bullion) (000 omitted) .. .. .. .. .. .. ..
., .• Fiscal year ended March 31, 1933 , 406,384 Fiscal year ended March 31, 1934 (preliminary) • 433,779 I IOporh.. Export8- Cnnadian produce.. Foreign produce .. .. .. .. .. 473,800 6,914 579,368 6,312 Total - DecreaBe.

, " " , 887,098 $1,019,4.59 $132.361 Increue , 27,395 105,568 602- of the over exC'CSll exports As exports have advanced, tAking the period as a whole, more rapidly than imports, the result is that in the fiscal year ended Mareh imports 31, amounted, In other to nearly $152,000,000.
words, Canada has derived from the exchange of commodities with the world at II.

credit balance of $152,000,000, ava.ilable in international balnnces for the settlement of such debit items ae interest on indebtedne!l!

owing abroad and instalments of principal.

The favourable balance deri\'ed from trade in commodities was double the amount in.

the previous period.

large, It should be borne in mind that tradt figures are for merchandige only and do not inc-Jude gold.
The exports of non-monetary gold, chiefly the current production of Canll <hian gold mines, amounted approximately to 590,000,000, based upon the average price obtained upon sale in world markets.

Thi!

sum is an additional credit in the settlement of international payments.

The following statement shows the balano:e of trade in.

merchandise for the past five fiscal yean!

: Trade of Canadll.

(exe1uding gold ~oin and bullion) (000 omitted) Fiscal year ended },!arch 31st 1930 .. 1931.

• 1932., " .
• 1932., " .

1933. .

.

.

.

.

.

.

.

• 193'- .

.

.

• • .

.

.

.

-Preliminary.

Importl $1,248,274 906.613 578,504 406,384 433,779 E.I'porh $1,144,938 817,028 587,M6 480,714.

585,680 Balance (-)$103,335 89.585 (-) 9,062 (+) 74.330 (+) (+) 1051,901 2274 The al/llyl'l_.1/r.
Rhode., COMMONS The nenefirial elTects of the empire trade nnd hO:l.rds, appll'~, meats, copper and other Imports for more than hali of from the United Kingdom have shown (In expan.,ion in the del'en months' period of approximately $16,000,000, or 20 per cent.

The chief increases weTC in fibres, textiles and textile products, in iron snd its prnduete and COllI.

(I.!!

"reemcnts are shown in the expansion of metals.

Dnd cattle.

In the cleven months' intra-empire trade.


period enderl February 25th, the latest date for which figures by countries are al'gihble, from Canada to the Unitrd King.

exports incre:lSerl by 20 per dom, our lar!!

"~t market, cent, accountilll!

: the incre:!.sed sales abroad.

Exports to Australia.

increased by 54 per cent; to British India by t5 per cent; to British South Afrie:!.

by i2 per cellt and to New Zealand by six per cent.
Statistics of the United Kingdom show that in 1931 imports from Canada repre· wIH~l'{'a~ sented 3·8 pcr cent of their tot!

!.l purchase!

from abroad.

in 1933 Canadian products repre· scnted 6·9 per cent of the total.

Prominent among the commodities showing increa.sed ex· ports to t.he United Kingdom, were planb within the empire are as follows: The stimulus which the expansion of trade has brought iIlus trated in the renewed acth'ity reported in recent month!!

lit our maritime rorts.


Doth freij:ht received from and delil'errd to con nectiollS abroad have shown increases which in turn, have are very marked and which, prodll~ed substantial employment at the ports, the railways.

ag well as increa~d freight for trade showing the expansion of to Canadian business Fi.ll:ures is Intra-Empire Trade of Csnadll.

(Excluding gold coin aod bullion) Imports from Unitcd Kingdom Exports to United Kingdom Import.

from British Empire .. E:wortl to DritiBh Empire .

.

.
.

.

Eleven month ended february 28,1933 $ 79,356.647 170,195,271 109.229.815 204,773,851 Eleven month.

ended February 28,193-1, $ 95,277.635 204,H7.31:!

127,293.776 248,667,773 About one-third of our purchases abroad has been from empire coun·tries.

The pro· portion in 1929 was about one·fifth.

The per centage of exports to empire countries showed a further gain, while the proportion taken by oon-empire countries declined moderately.
It is noteworthy that a somewhat larger propor· the United tion of uports was taken by States.

A stalement showing the distribution of import and cx-port trade, excluding gold coin and bullion.

by percentages, follows: Unite<f Kingdom.. British Empire.. United StUes Other coLlntrie!

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

• • ..••... ,.

.

.

• .

.

.

.

.

• .

..


These developments in our external trade have been distinctly favourable, reflecting the soundness of the policies which have been pur· sued in coonection with the trade agreements, and testifying to the stability and efficiency of Canadian indmltry.

Revenues 1933-34 The recovery of business in Canada.

which I have described was reflected in expanding this el; revenues.
Unfortunately, however, pall.sion did not begin until the second quarter the fiscal year.

While the extreme low of reached in point February, business continued without notice· It was not, able improvement until May.

in business activity was 'Job.

RhooJ ...] Importll Jo;lel'en months ended v'cbruary 28 1933 193~ Per cent 21.25 29.25 57.32 13.43 24.67 32.95 54.14 12.91 Exports Eleven month.
ended February 28 1933 1934 Per cent 38.93 46.83 30.37 22.80 39.25 47 .66 33.40 18.94 lag of one or indeed, until June that the indez of phYlIieal production in Canada exceeded the figure for the corresponding month of the previous year.

There is also always a. two improvement and months between business the increase in government revenues.

In the the taxell case of t.he sales ,tax, for applicable to /lny given month are not rE!
reh'ed by the Departml'nt of Finance until the first few days of the second followinll; month.

As a rcsult, the first quarter of the fiscal year showed a sllostanti/ll loss a~ compared with the corresponding period of the previous year.

By July 8th our collections were down by 116,600,000, despite the additional measureS of taxation which were introduced in the last instance, APRIL 18, 193' 7'he Budget-Mr. Rhode& 22iS budget.
The acccler3tion of business anti the upward mo\'eme.ct of prices in the la·Uer part of the year re"ersed this downward trend.

By tbe eod of December the lost ground had been fullv teeO\'ered and the final accounts will sho~ a total rneoue from lantioD of some $17.500.000 in excess of t.be previow year.

The total receipts from taxation were S271,8O(l'ooo as compared with $254.300.000 In 1932-33.

The budget estimate!'.

after li!


:i"inw: effect to the Dew taxation, anticipated a total tax yield of S305,000,000.

The failure to reach the cstimat.ed revenue by some 133,000,000 haa natur311)· been disappointing, although we caD derive encouragement from the fact that there has been a sustained and gradually in creasing improvement in recent months.
Bad it not been for the low level of busine88 in the first Quartcr and the lag in revenues-in other words, had we bad for a full twelve months' period the revenue volume of the latll'r part of expectations the ycar-our would have been fully realized.

Customs Customs import duties yielded S65,900,ooo and remains the largest single source of rev- liquo~ tobaccos, enue, although showin« a decline from the le\'jed mainly previous rear.

Excise duties, to amounted and on $35.soo.000.


The revenue from income tn: was 161,400,000, only slightly less than in the preceding )'csr and about the same amount collected in 1931-32.

AlthouF;h based upon lower incomes and profits, tbe yield from this ~ouT't"(' has been maintained by reason of the changes in exemptions and rotes of taxation, and also as a result of the special lax of 5 per ('eot on interest :!ond di\'ideods imposed last session.
The collections from the latter lax amounted to 14,800,000 in the fiscal year.

Here again the receipts did not reach the estimate, due to the elimination of the prem ium on United States currency.

The sales tax produced 163,000.000 and the other special excise taxes, $43,500,000, these sources combined bringing in 124,300,000 more than in the previous year.
The following table gi\'es a comparativl statement of the revenues from taxation if the past five years: TazatiOD Revenues (000 omitted) - Culltoml Import Dutiel......................... Elcille Duticl........................ , .......... War Tal Re\'enues: Bank•...................................... Jnsuran«!

eompaniell......................... Dclayed bUlliness profit.ll.................... Inoome Tal ................................. ~IIlIlTa~ ...................................
ManUfacturer", importation, !~mp.

tranS(Xlr- Ullion tales, e\.C........... .............. Total receipts from T8.lation ........ NOD_Tax ReveDues Revenues derived from the services oC the various departments oC government, includ ing Post Otfief!

', amounted to 151,700,000, show ing a decre:ue from the pre\,ious year of about S5S0,ooo.

Post Office revenuel amount jng to 130,500,000 Bnd iDlerest on investments of Over 111,000,000, are the irnportllnt items under this head.
On reCerence to the upeDdi_ ",>-0, • 17!.!l!

615.036 1,408 74 173 59,021 «.859 1930-31 1~1-32 '932-33 Eatimat«!

IV33-34 • J31.209 57,747 • UH,133 <S,"" 1,,," 74 ,.

71,048 ZO,i84 1,390 " 3 4'11,25.5 41,734- • iO,Oi3 37,834 1,328 '26 - 62.067 56,814 2.~,371 • 65,926 3.5,871 1,34.5 '" - 61,399 fhJ,OOO .

(3,514- 18,.550 13,951 17,872 378,5.51 296.216 276,054 254,3)9 271.&7 it will be found that the ture statement, operation of the Post Office Department cost S30,SOO.OOO.
being $300,000 in exccss of re\' enues.

As the deficiency in the previous year was $700,000, in Interest on in tbe year of about $400,000.

\'estments was slightly less than in 1932-33.

A statement of the non-tax revenues, with four years, there was a net betterment the previous for comparisons follows: ni6 COMMONS The Budgel---Mr. RhooH Non_tM Revenu0$ - 1929--30 1930-31 1931-32 1932-33 Estimated 1933-;14 .... .... ...... Canada Grain Act... .. ...... ..... ...... Canada Gasette .. ...... ... , .
Canals.. ............ .. ... .... Cllllual.

...................... .... ...... Chine88 Re,·~nue ..... ....... ... ........ Dominion Lands..... .... .... Eleetricity ........... .... ... .... Finee and Forfeitures ...... ... .........

Fisheries.................. GlllIlnspc<ltion ............. ... .... ... .. .
InllUTance Inspeetion ........ Intere~t on Jnvestments.... ~Inrine..................... .. .. Mariners' Fund ............ .... Military College........... .. .......... Military Pension Revenue .... .... ... Ordnanoe Lands.... .................. Patent and Copyright Fees...... Penitentiaries .......... .... Post Offi<:e ........................

Premium, Disoount and Exchan/!

:o ...... Public Works..... ......... ...... ..... Radio L;<:cnoes.......................... R.C.M.P.
Officers' Pensions...... , .... Superannuation Fund ... ...... .........

Weight!!

and Measuree....... .......... Total Non.TlU Rev'lnues... • 2.

(K7.207 1},1,800 1,043,647 3,892,948 14,345 4,139, lIN 546,957 7-'8,3.

:1 110,724 100,763 138,780 13,518,205 184.637 209,m 19,820 158,881 30,277 574,918 181,024 33,345,38.

'i 458.390 408,151 407,762 6,471 • 2,179,IN7 71,197 1,026,671 3,210,394 21,996 I.

6.
6.

'iS, 401 632,151 433,716 73,937 94,255 148,942 10,421,224 199,000 201,7G8 19,882 159,000 29,3M 559,646 183,288 30.212,326 • 1,484,826 73,590 976,MS 3,757,821 10,059 485,3601 402,189 233,512 40,519 81,359 149,902 9,330,125 191,lIO.

'l 184,485 20,045 163,2211 14,250 525,248 166, III 32,234,946 • 1,4«,840 73,8.16 8.11 ,roo 3,192,144 8.652 4.

'iS,934 2GG,3.
'i2 212.075 4,429 84,078 160,298 11,220,989 J78.1l8 179,461 20, lIB 166,414 16,677 5311,341 121,426 30,928,317 • 1,200,000 M,OOO ,",,000 3,~,000 7,000 408,000 422,000 18O,lXXl 40,000 74.000 149,000 11,205,000 195,000 182.000 20.000 164,000 17,000 409,000 8<,000 30,553,000 501,610 .... 362,391 468,093 6,357 ,........... ...... 280,591 528,92-4 14,787 145,938 .... 212,829 1,414,132 12,050 231,000 1,200.000 ~2,000 ..... ...... 407,248 410,750 406,529 394,222 400.000 62,787,204 63,29t,426 51. n7,161 52,318,688 51,764,000 After taking into consideration $39'2,000 of special re<:cipts, the total revenues for the year amounted to $324,000,000, a.s compared with $311,000,000 in 1932-33, as shown in the follow ing summary stat.emen~, which also gives comparisons for each year sin<:e 192'9-30: Summary or all Revenues (000 omitted) I 1929-30 1930-31 - Re<:eipte rrom Taration... ... ............ Non.Tar Revenues........ ...... , ... .. .. Con!lOlidated Fund Reeeipt.s...... ..... ......... SPKial Ueceipte................... ..... ...... Grand Total ....... EXP],;NDITURES, 1933-34 Ordinary Expenditures for The ordinary expenditures the year amounted to $347,700,000.
It will be under stood that as the accounts will not be finally the filtUres of the end of April, closed until expenditures are preliminary and may vary eomewhat from the final amounts.

TIle esti mates for 1933-34, in<:ludiug supplemeutaries and statutory items not printed in the e!lti- {~lr.

Rl",ol,... ] Esti- 1932-33 m.W!

1933-3<4- I 1931-J2 • 275.054 51.


757 • 291U76 53,291 • 378,551 62,787 • 254.319 52.318 "1.338 4.771 349,567 6.622 3U,8tl 7,028 H6,109 3S6,IStl 333, 8~9 306.637 <4-.493 311,I3( • 271,857 51,7M 323.621 '" 32~,013 therefore, In comparison with mates, provided for a total expenditure on ordinllry ac<:ount of $363,700,000.

The actual expenditurt!s, are $16,000,000 less ~han the amount estimated.

the previous year, ordinary expenditures show a reduction of 12,100,000.
This result must be considered, however, in creased expenditures were necessary on certain fbeed and uncontrollable obligations.

Interest increased by $4,700,000 and on public debt in the light of the fact that APRIL 18, 1934 The Bwlget-MT.

Rhode, 22i7 for Old Age Pensions in· the requirement creased by 11,000,000.

Other large expendi.


tures, over and above thOBe of the previoUll included $1,000,000 lor the Radio Com year, mission and an increase of 11,500,000 in the amount of the aubventions paid on movement!

of Canadian coal from the mines to centres of consumption.

A statement of ordinary expenditures for the lut five .fiscal yean, follow8: Statement by Departments ot E1penditurolor the LMt Five Fiscal Yean (OOOomitte<!)

Ordinary Account 1930-31 1931-32 1932-33 ''''"''' • '" 10,24 '02 Wi .

.

.
.

.

the Prime , • 10,119 .16 '43 928 .

... 121,291 I?

,~:t6 1,:::.

': 718 1,476 1,794 2,435 142 2,5" 6,069 178 8,104 2,338 3,237 707 .m',- '""2,2S6 1,121 78 8,030 ... .

.

.

.

.

.

.

.

.

121,566 .i2; ,i97 1,000 837 .

I,M5 2,006 2,426 17' 3,004 ',333 '69 8,i~ 2,591 2,561 '".13 ',33 1,610 74 '"80 46 8,9H .

.. .

.

.

.. .

.

.

.

.

.


,1,358 56 11,033 ~:~~ 1,92S 13,8« 8,494 40,032 1,390 36,551 58 zoo,..... v.. 19,819 4,122 3,093 3,100 454 1,362 1,i2 $14 10,963 ~:~~ 1,92!l 13,972 9,774 45,Ml 1,342 37,8\12 M 212 295 25,453 4,47ll a,61S 8,192 !~ 1,3", Agriculture Auditor General'.
Office Civil Serviu COmmiasion External Affair., :Minister.... .. .. Finanoe- includilli Office of Intere.t on Public Debt............. Promium Di.count and Erchana;B (Net)..... Subsidies to Provinooe.. ... , .... ... ..... .. Special GrantB to Maritime Provinces......... Other GJ1UItB and Contributions.

Imperial Eoonomic Conference Civil Pension.

!lnd SUperannu!ltionB General Elpenditure .

Fisheries Governor General's Secrewy'.

Office Immigr.tion and Colonization Indian AfIain InllUranO!)
Interior Justice : Penitentiariee........................... L.bour , , Te<:hnical Education Old Aile Pension........................... Lell:islatlOll- Hou~ of Commons Library of Parliament Senate GeneraL Cbiel Eleotoral Officer, including Ele<:tions Marine Canadian Radio Broadcasting Commission Mines and Geologieal Survey.............. MovementB of coal and Dominioll Fuel Act...... N.t!o,n!ll Defe.noe- .
Md!.tlalJervlCe.................................. ~tV~l~~.i~::::; ..::::::::::::::::::::::::::::: Sundryeervices................................. National Revenue (including Income Tal) Pensions and N.tional Hell.lth- Treatment and afU'r-eare of returned IIOldien...

friihbv.

:a~ !lnd military...... IvISlon................................ P p~~ogce .. ;........... P Y ounc'!.....................................

p~~l!e ~~hi.ves :......................... l'6 t IC rlntmg and Stationery ,.
.. Public Worke................ Railways and CMsls.. ~aritime Freight Rates Act................. ysl C.nadian Mounted PoIiO!).............

.. t1,{'lary 01 State.. T rade and Commeroe- DeJlflrtment........................... .... Mail subsidies and stellolllship subventions.. 'er Settlement Board.............. .. Cans.da Grain Act Total ordinary expenditure...... • 10,212 '36 '"99.

• 8,066 380 2H 863 121,151 134,999 728 .... • 7,025 316 221 977 139,730 75 13.727 1,600 398 .
1,302 3,159 1,593 131 1,393 4,37Z 152 2,874 2,452 2,148 S58 150 12,SOO 1,007 69 286 44 31 S,53S 1,025 940 2,750 13,677 1,&00 499 252 1,075 1,794 1,187 136 ],689 4,499 101 3,ol54 2,458 2,870 605 ' " 11,513 2,210 " 747 81 .. S,SOI HI!
1,6f8 1,220 8,843 8,719 tm ~:~ 1.078 10,846 198 10,336 l~,~ 45,079 924 31,607 41 174 231 13, lOB 3,667 1,921 1i,626 418 818 9,517 42,867 783 30,801 49 g~ 11, I4l 3,316 1,989 6,S50 378 141 1~,~..: I,~ 536 1,405 1,845 2,046 148 2,200 5,OBI 180 4,641 2,360 2,731 ll33 283 10,032 1,982 81 650 70 It, 1,262 1,264 121 9,700 ~:~ 1,3-47 13,920 11, 1M 48,249 1,246 36,052 63 212 289 17,648 3,997 2,555 8,.as 483 1,036 3,252 1,083 3,0&3 2.23S ·········I--='o'c'O','::--='O'o'o..,I--:o','o'o":I--::','O'"::1_:::"'0''':: 3~7, 702 4,955 1,323 6,417 2,999 3,2n 2,081 353,399 382,821 365,813 349,811 2278 COMMONS The Blulyct-Mr. RllOdea Capital E;;:penditurelJ Capital e:<penrlitures, including Hudson Bay railway lind terminals, Weiland ship caMl, St. Lawrence ship chanDel, and other puhlic works, amounted to S6,500,000, being a decrease of 12,000,000.
The estimates pro vided for an eltpenditure of $7,100,000 on capital account.

The saving, therefore, was $600,000.
A comparative IJtatement of capital cxpcndi hues for the live-year period, follows: Capital Expenditures (000 omitted) - ('lLnals..... , .... ... ... .. ........ ........... , .... Rllilwa~s, ....... .. ... ............... ..... ... Public Vorh.... ..... .......... ......... ... ...... Total Capital Expenditure......... .... 19~O 193a-11 1931-32 1932-33 I 9.324 6.66-1 6.574 I 9,84~ 6,311 1~,009 • 3,~99 11.242 1,439 • 3,lm 1.50.1 4.0tll 2'2,:;411 28.2'22 16.980 8.548 Esti- m:Ho,1 193:3":14 I I, 1187 707 3.816 6.570 Spceial Expenditures Special expenditures amounted to $42,900,~ 000. slightly under the figure of a yl!ar ago.
Inchltled in this amount is $36,000,000 for re this sum SZS,500,OOO was lief measures.

Of paid under the Relief Aot, 1933, and the balance of $7,500,000 represented commit· ments carried over from the relief acts of pre· vious years.

The expenditure for 1933-J4; may be summarized ll3 follows: Dirert reli!'f.

Provincial and municipal lVorks Bnd undertakingll.

Otber expenditure,.

includinll: Dominion project!....

.

.


..... ~5,870.ooo 2,180.000 7,3S0,000 S 36,000,000 The expenditures made by the dominion aD unemployment since 1930, have now reached $115,500,000, to which may be added the cost of the wheat bonus in 1931, amounting to $12,700,000 and 12,400,000 advan~d for relief employment $130,600,000.

in railway shops, a total of A comparative statem!


!Dt showing special expenditures under the different heads during the past five yeara, follows: Special Expenditures (000 omitted) - H129-30 I_ I 1931-32 1932-33 F:sti· mate<!

111;13-34 - Arijustment of War ('laims...... ........ ... ....... CQllt of Loan Flotationll........ ......... ... ..... Mi,cellaneoull Charges.... ......... ...... ... ...... Repll.rations- Claimll for Compensntion ........ ..... ..... .. Unemployment Reli!'!.
1930... ............. .. ... .. ... ... Unemployment n.·li('f, 1931.

..... ... .......... .... .......... ..... .. .. ... Unemllloytnent Relief.

19:12...... Unemllloyment Relier, 11133.

......... .... .... ... , , .. , .......... .. ...

Wheat Donll'....... ...

Reduction of Loan, to Soldier Settlen...... ... ... • " 17 3,021 6.700 I It 19:1 ~,955 '00 •.

43~ ... • 'I 1,350 ,,"00 I.

3:11 1:l.IOO 2';.100 .... .

... .... 8,59t1 .

10.008 .


... 1,81l Total Spe<'ial E~penditurel ..... ....... 9,839 1(1.1iJ9 55,476 43,365 [Mr.

Rh",l.,.)

I 1.639 2.1151 " ,..

17.

(WI 19.1~5 • 56 2,545 2.503 , 156 .. ........ .v" 28.'"

6.!~7.~ 1.800 42.90~ APRIL 18, 1934 2279 The Budget-Mr. Rhodes Loans to Provinces 1.0110$ lI'ere made to the provincial govern ml'nt.• under the Relief Act, to II net amount of 512,540.000 after crediting certain repayM ment~.
This addition to the loaDs of S38,M 200.000 ol.lU!tanding at the close of the preM "ious fi~c:l1 year, brings the total assistance of to thi.~ nature to the prO\'incial go\"cmments, $5<:1.700.000.

This provincc h~ not been able to meet and interest tendered treasury' bills in payment.
from its own resourees the hss At the Dominion·Provincial conference held in Janllary last, whkh WIIS attended by repreM it was unM sentativea of all the dominion govern Ilnimollsly Rgreed that ment should give special financial assistance to provinces where conditions warrant.

the pro\·inr.es, Tlm't' provinces, Alberta, Manitobll and Briti~h Columbia, received loans in cOllnec tion ~'ilh the payment of debt obligations to the public.
Albertll borrowed SI,968,OOO to meet a debenture maturity of the 1st April, 1934, pnyablc in Canada or New York.

Mani· toba secured $1,470,000 to mCt't an obligation due the SRrnc date, also pRYllble in CanRl!a or N('1'r York, British Columbia received loans of S1,435,OOO to meet interest obligations, The loans related to the financing of the other relief expenditures or provincial were for the purpose of placing the provillcea in funds to a!

'Sist municipalities to finance their share.


share of _budJl:etary position of to the special sitUAtion pr('vailing.

liB in the two previous ycars, fonn of assistance In granting the~ 101lns, Ollr policy hu to limit been, to the minimnm.

thi~ F.1l<:h application has heen considered ha\'ing rCj!

:/HCI the particular purpose of the loan ano the j!

:encral the borrower on the It is BUb- ordinl\TY services of government.
the policy which has been pllr millcd that ~lled in this respect has hel'n to the general adnlntll,lH' of Canada, cODsidered in the lijl;ht or the llnususl conditions prevailing and a!O s t"ml'nrll.ry mcasure until more normal condi tions prl'vail.

The province~ have paid interest on the loans a!

payments bfocame due, with the exctption of certain loan.~ made to the prov relief purposes.
ince of Saskatchewan for ,J" ~llmmllTY statement showing the loans to thl' !lc\'eral provinces outstanding at March 31, 1IJ3.t, and the purposcs for which they weTC granted, follows: Loans to Provin088 under Reliel ACUl Net Outstnndinlt March 31, 1934 lOOOomittod) -- Mnnitoha....

SIIHksu:I,ewlln:.

: .

"!herta.... nritilll Colu·~·bifl"".·... ...... ... ... ......... ..•.

LoM.
LoM.

~vering oo.ijtlltiona mat;<lting " New York • (,00.1 3.11:U 6.111 1.37'2 Loona for &llIIUltanl'(' to farmers, inclutlinji: purchll.lMl of BeCd l{I'Bin I '" 4.fl93 1<0 .

.

.

.

.

LoH.nl for provin"inl PLlTpO!e1'I inrluding public "'orka find ,liroct reliof • ~.1;9 14,728 4.8"" 5.676 15,020 5,337 W.383 Tou!

• !0,0~6 2.1.M~ 10.~1 7,0(8-- 50,740 I.oans snd Advances, Non·Active l~nder this head are included amountll.
paid by way of loan ,,;hich are trested as non-active and which, being non-interest producing, are considered in the accounts 8S additions to the net debt.

They include the amounts paid in connection with the operation of the Cana· the deficit of the dian National Steamships, Montreal harbour bridge, and loans to a number of the harbour commissions.

The net IImount of such loans in the put year was slightly over three million dollars.
For the operation of the Canadian National Sleamships, we paid $985.000, made up of $968.000 being the cash deficit on the Wert Indies Services, and $18.000 being the cMh deficit on the operation of the ships remain ing in the Men::hsnt Marine fleet.
Owing to in the number of ships further operated, the Canadian Government Mcrchallt Marine has found it pOllSible to return to the government an additional one millioD dollal1l from the insurance fund which has been accuM mulatcd during the operations of the company reductioDs 22SO The Budget-Mr_ Rhode8 COMMONS the is a credit of $14,000 for the year 00 since 1919.

After receiving this amount, result account of Canadian National Steamships.
The amount paid by the dominion gQvern ment for the operation of the Montreal har bour bridge was $489,000.

This represents the loss incurred by the bridge, Dot including de preciation and after crediting the annual con tribution of $150,000 each from the province of Quebec and city of Montreal.

The non-aetive loa08 to the harbour eom~ missions at Chicolltimi, Halifax, Quebec, Saint John and Three Rivers for expenditures on capital aCCollnt, amounted to 11,600,000.
Other capital expenditures were incurred by several of the Commissions during the year, special arrangements for financing having been made between the commission.s concerned !Lnd the contractors, with the 'approval of the gov ernor in council.

The following statement gives the record tbe of non-active loana and advances past five fiscal years: for Lous and Advances, Non-&Ctive (000 omitted) 1930-31 1931-32 Lo:l.ns to Can.

National Railwaye., Loans to Cen.

Na~ional ~tearMhipe l.onna to narhoo.

Commi.


't8ioners MisceJltl.MOU9 Non_Active Accounts Can.

P:ulific Railway (Relief ACUl) .•.•...•.

, .. 1.,.

Account!

C<lfTied 118 Active A~te tmnalerrod , .. .

.

.

to Non-Active .

• 2,933 2,4.91 2,821 17 .

• 1.827 3,llal Estimated 1933-31 • • 1,190Icr.)

1,913 1,383 (cr.)

4.898 1,4.47 ·G2,938 .

• 2.UO " 1,000 8,262 3,112 67,900 3,096 " .. "Canadmn NallOnal Rallway_Loan~ of 1931-32 Sundry Harbour CommiSlion_AdvanC6' prior to 1932-33. .
$ 41.121 21,817 In addition to the non-active loans to har bour commissions, ·there were loans of $449,000 the Montreal commission and Sl,2{l8,OOO 1.0 to the Vancouver commission for port de \'e]opmenta, and the amount of $19,000 to New \Yestminstcr.

As interest is received on these loans, they are treated as active assets and are not part of the net debt.

F(If purposes of record, I include II.


sts.te ment of ·the advances 1.0 harbour commissions in the past five years nnd of the amounts out standing at the dose of the fiscal year.

Advances to Harbour Commissions (000 omitted) 1921)-30 193G-31 1931-32 1932-33 E9timated 1033-3.

C!liooutimi.

HaliflU _.. , Montreal.

Montreal-Bridge deficit New WC9tmin91er.

Queboo Saint John .

Three Riven.

Vancouver..... .

• 815 1,212 4,336 .. , .

.

.


.................... 2,821 1,711 "6 24 • .. 3,539 2,291 no 3,m 1,094 1,544 2,802 • .., 2,152 1,4.12 58' 139 1,319 S,764 747 800 • 324 1,023 58' 395 58 341 2,6.\4 160 1-~::I--:-:=I----c~I----:-;::I--::-= l1,43~ 15,117 14,051 S,547 • 332 '" 44' <S, " 107 '" 107 I,'" 3,186 1:o.lr.

nhocl ... \ APRIL 18, 1934 2281 The Bu.dget-Mr. RholU8 Advanee.

to Date .
to Date .

.......................••.......... S Chioolltimi........ Halifax ........................................................•........... 'Montreal.

.....................................................••.......... Montreal-Bridge Defieit....................................••••••........ Ne..... Westminster..............................................••.......... Quebee............................ .
................••........... S'l.intJohn .....................................................•........... ThrceRiver•.•................•........ ; ..................•..••..... Vancouver.......................................................•....... • 3,282 8,768 58,422 1.683 215 26,257 12,748 2,694 22,625 136,659 Canadian Farm Loan Board The dominion continued to purchase at par the board's five per cent honds to the ex.tent that loaning operations required.
Bonda pur chased amounted t<I S4OO,OOO and a eubscrip tion of $16,243 was made to capital stock.

The capital furnished to date from the dominion the board the operations of treasury for aggregates 18,503,358, divided as follows: Initinl eapital.. .. .... .. Purchase of bonda.. .. Purchase of capital stock.. .

.15,050,000 .. 3,000,000 453,368 $8,503,358 The- board has paid all iuterest due the government as it accrued.
being substantially maintained, Canadian National Railwa)'ll AJIl the annual report of the trustees of the Canadain National Railway system has shawn, railway operating revenues suffered a further d.ecline of $12,500,000, or nearly 8 per cent, in the calendar year 1933.

The loss io revenues was almost entirely covered by a 8I\ving in operating exppnses.
However, as the manage· ment had made its budget for the year on the basis of tbe gross earnings of the previous )'lear the Amount required from the dominion govero· ment for the payment of deficits exceeded the estimated figure by $4,300,000.

The amount provided by the government and taken inlo the public accounts as an expenditure in the deficit on the Canadian respect National Railway s;rs1em, after payment of interest on obligations in the hands of th~ public was :)f 11,100,000 from the previous year.
The net J088 of the syostem S8 shown by their accountfl, amounted to $97,650,000.

The difference be tween this sum and the contribution of the C'Overnment above referred to, is made up of 136,000,000 for interest on loans from the $58,900,000, cKlcrease of a government.--such interest being accrued in the railway accounts but not actually paid -and 52,600,000 for oortain other non-cash items.
for for for that time, interest the first The amount paid' for deficits is made up of the Bjmem, excluding two parts: the eastern lines, $52,200,000, and that eastern lines, $6,600,000.

In the dominion accounts of previous yeatS and in the budget statements, it has been the practice to include the loss on the eastern lines under ordinary f!xpenditures.
That praMice bas followed naturally from the days when the govern in railway operation was ment's limited to the Intf!rcolonial and other linea known as the Canadian governmenot railway!.
following the lest year the Royal Commission recommendation of On Railways and: Transportation, the whole raHway deficit W&$ taken into the accounts of the dominion as an expenditure, but th~ portion for the eastern lines was shown under ordinary expenditures and the portion for the the B)'stem was shown as a specisl rest of charge to consolidated lund.
For the purpose of clarity in the presentation of the figures, the amount for eastern lines deficit has been excluded this year from ordinary expenditurell, and the necessary adjustments have been the previous years made in the .6guree for in order the comparisons may not be that disturbed.

The amount required lor railway including eastern lioes, will be found deficit, in the summary statement of expenditure8 under the special category of railway deficits.
There has, of course, been retained under ordinary expenditure!

involved in the 20 per ooot freight rate subsidy author iJed by the Maritime Freight Rates Act.

the atn<lunt In addition to the provision for deficits, the railway company required 11,900,000 for capital expenditure8 and $11,300,000 for retire ment of debt, these itellUl totalling 113,200,000.

Against this sum, ,the company had $5,000,000 COMMONS the that the year, :-.
'otwithstandiog of working capital avail:l.ble, leaving $8,200,000 to bc ~upplied by the government by way or loan.

operatin~ results were le6lI favourable than anticipated at the commencement of the com pany kept within its budget, the additioD11 amount required for deficits having been made up by II.

saviog in cap:t'tl expenditures.

the debt of the Canadian National RaiLway system out standing in the hand~ of the public amounted to $1,253,000,000, having been roduced by 110,000.000 in the P&3t year.
Of the amount out.5landing, $962,000,000 are obligations guar anteed by the dominion.

As at the end of March, 1934, During the lint three montha of the present there has been & decided im calendar year, provement in railw&}' earnings and the net revenues from operations are some $4,000,000 iD exce-"S of those of the correspondiDg period in 1933.

Th!!

for Hl34 wm rnilwa}' budget tots I 185,800,000.


Of this amount, 148,800,000 is the estimated requirement for deficits, and if this result is attained it will Olean a lessen ing of the burden on the dominiOD treasury as compared w:th last year, of over $10,000.000.

The cOOlpany will require 14,200.000 for capi tal expenditures and 532,soo.OOO for retirement of capital obligations, including ainking fund nnd equipment principal payments.
On Sep tember I, $17,000,000 of Canadian Northern dominion guaranteed 4 per cent debenture stock will fall due.

summarizes requirements The following statement of in respesct of the the Canadian financial the National Railway systenl ealendt.r yenr 1933, all compared with their require figures and with the actull budget ments in 1932; Canadian Natlonal Railwaya FI"ANClAt REQUlRF.lolII:NTI'I Deficit:- System (eI ealtern lineal E&lItern linea .

.

('apital e'\IClnditurel.

Debt retir!!ment....


Lela ""orking capital availahle .... Aotual 1933 B"d.u;ct '933 • 62,263,819 6,691,569 58,955,388 1,958, II II ,269,98.5 72,I~:~ 5,000, • ,17,94::~ 6,611, M,552,395 5,993,121 12,265,58-1 72,811,100 5,200,100 Ael.lJal I'" • 63,422,661 6,M5,W 6O,MS,506 79'.1,158 11,510.178 72,367,1142 4,2a1,1l97 Amount required .
67,183,"89 67,611,000 68,135.845 Summary of Expenditures Having dell!t with the expenditures for the year under the appToprillte headings, it is now po!

!Sible to present a aummary statement of al!

expenditure~ for including railway the year, ia 1459,200,000 u defieits.

The ·total amount eompared with S48S,726,OOO in the previou!

ye:lr, a net reduction of S9,500,000.


Actually the statement shows a total expenditure last this a-mOllnt relIT of 1531,700,000, but it will be remembered that $62,938.000 of reprosented IOlln~ made in previoua years to harbour eom· misaiollil lind the Canadian National Railways which were written down from active to non aetive llilSets, and strictly are nc>t assessable against last year's business.

The summary of expenditures for the r,ut fh'e years followed: l~fr.

Rhod••.

!
Rhod••.

!

APRIL 18, 1934 22B3 The Budget-MI'.

Rhode8 Summary 01 Erpenditu"", (000 omitted) - 1929-30 1930-31 1931-32 1932-33 Estimated 1933-34 Ordinary expenditures.. .... Capital erpenditurell.................... Special e:r:,nditurea..................... Loana an a<!vance_non--active ......... Can.

Nat.

Railway deficit:- Syat.em ex.

eaaUlrn Iinea-............ ............ ... ..... E&8lern !iDell....................... 4,308 6,712 .
..... 6,632 I 353.399 22,56t 9,839 8,262 I 382,827 28,222 16,789 5,'" I 365.873 16.980 M.ti6 3,112 I 349,811 8.548 43.365 67.900 63.4Z3 8,717 I 3t7,702 6,.570 42,904 3,096 62,264 6,692 398,369 440,038 448,073 531,764 469,228 - .Correspondine: ~rea ror operationa in the yean 1929, lvaO and tvat were 19,918,000, 128,426,000 and $62,256,000 respectively.

In reapect of thelle 10_8.

12,932.000 W&8 taken inw tbe iovemment account.ll a8 lIOn-active loan.
in 1929-30. repreaentinp; the 192910. after credititl& certain aurplu8ll.

ill previous ye&.Ill.

Tb.. lu&BU ill 1930 and 1931 were financed by loan.

and/or guarantee 01 lIecuritie.. Government loan.

or 141.121,000 in fe.pect of 1931 operations appear ill the above statement under LoaDJII and Advance.
NOD_ Active, for the year 1932-33, ' Deficit for Year With ordinary expenditures of 1347,100.000 and ordinary revenues amounting to 1323,· 600,000, it will be seen that the deficiency on ordinary account was $24,100,000.

The com parative figure for the previous fiscal year was 143,200,000.

Notwithstanding the failure of the re\'enues <to reach ,the anticipated figure, it will be observed that on ordinary account a net improvement of $19,100,000 took pla.ce.
After taking into considera.tion capital ex~ pendi~ures and special expenditures, including unemployment relief, it will be found that ,the deficit for the yenr on government operations, amounted to 176,300, 000.

This figure is further enlarged when there are Itaken into the government accountll the losses on operation of the Canadian Na tional Railway system amounting to $58,900, 000.

The resulting increase in net debt dur ing the year on all accounts is $135,200,000.
The corresponding figure the previous year was $157,700,000, indicating a betterment of $22,500,000.
less special receiptll, for Reductions in Expenditures In view of the interest in the question of the cost of govcrnmcnt generally in Canada, it may be appropriate to present some figures briefly au-a.ly.zing the purposes to which the outlay of the dominion government is applied, and indica.ting the extent to which, by the various measurcs of economy which have becn adopted, controllable expenditures have been reduced since 193G-31.
the purpose of and these railway fluctuating ex- are deficits lind unemploymcnt for relief, extraordinary comparisons, amounts required For the eluded from the figures, but all other expendi turcs of the government are included.

-totalled 1364,000,000.

Of In the year which has just closed, such expenditures this amount, $230,000,000 was required for pul' poses classed as uncontroH8ble and $134,000, {)()() for controllable.
In other words, out of every flOO expended S63 went for expewe8 and 131 for designated as uncontrollable services that are ordinarily regarded as con trollable.

The main services under uncontrol lable are interest on public debt amounting to '139,700,000; war pensions, $41,700,000 and treatment aod after-eare of returned soldiers, 19,500,000.

These three items alone account for 83 per cent of the expenditure included under the category of uncontrollable.
There sre, '15,300, 0Cl0; old age pensions, $12,500,000, snd some minor items which do not add great·[y to tbe total.

All other expenditures whet..her on ordinary or special account, or capital or non acti\'e loans and adl'ances.

are induded for the purpose of these computa.t.ions under the beading of controllable.
in addition provincial subsidies, I should point out that there are included in the latter classification many items of a statutory nature which Bre not controllable, in the sense of being subject to reduction at ,the will of the government but they are in cluded in that category because they pertain I to the ordinary services of government.

might cile, for example, dry dock subsidies and the similar payments made in connection with the establishment of cold storage ware hOllses.
As compared with the year 1930-31, the un 1I"ere controllable expenditures 1933-34 for 74728--145 .r;v'SED I:llITIOS Thc Budgct-Mr. Rhodc3 COMMONS to-day on the ordinary controllable sen'ices of government are less than they were in 1913-14 considered on a per capita basis.

The figureS" are at $9.60 a head in 1913-14, !l!

com pared with $9.03 last year.

is In appraising this result, note should be taken of the cost of new services added in It now costs 15,000,000 more the interval.
annually to collect the public revenues than in 1913-14, due to the amplification of the taxation system.

While the percentage cost of collection is lower, the actual expenditure has naturally been increased.

The cost of administering the public debt included under controllable expenditures and requireS" about $500,000 more than in 1913-14.
Other new items are $1,000,000 for the Radio Com· mission, 5320,000 for radio serviceS", 11,600,000 for the Aviation Branch of the Depa.rtment of National Defence, $380,000 for National Research Council and $2,750,000 for the move ment of Canadian-mined coal.

These items alone total $11,000,000.


There are other items, S"ueh as" the new the eoS"t of operation of Weiland S"hip canal, increased expenditureS" in connection with the grain act, amounting to S"ome 11,300,000, and other expenses such as those the statll8 of labour, workmen's compensation and the eight-hour day, which have added, and quite properly so, to the cost of certain ser viceS".
from improvementa ariS"ing in Viewed in the light of these eompariS"ons with the expenditures of 1913-14, and not desiring to minimize the neces.~ity for the closest scrutiny of the cost of governmental services, particularly in view of the weight of our fixed charges, it docs appear that the controllable expenditures have now been re duced to a point from which it will be diffi cult to effect further aubstantial savings with .
out curtailment or discontinuance of services which are considered to be eS"S(Jntial.

A comparison of the expenditures in the years 1913-14, 1930-31 and 1933-34, divided under the headings controllable and uncon trollable, is shown in the following statement, which also shows the percentages of the total required for the various services.

greater by S19,OOO,000 due mainly to increased charges for interes~ on public debt and old age pensions.
The controllable expenditures, however, have declined from $217,000,000 to $134,000,000, a reduo~ion of $83,000,000, or over 38 per cen~.

After allowing for the election expenses of two million dollars in 1930, for which there was no corresponding charge last year, the improvement stands at $81,000,000.

This de crease has been brought about by a curt.a.il ment of 550,000,000 in ordinary expenditures and a reduction in capital and other expendi .tures of S31,000,000.
To achieve this result, thero has necessarily bC(!n a rigid scrutiny and control of departmental activities and per sonnel.

From 1930 to 1933, government em ployees, including fluctuating as well as perm anent staffs, were reduced by over 12,000 in number.

The $!lving in salaries and wages exceeds 510,000,000 a year, not including the saving of some $7,800,000 arising out of the 10 per cent $!llary deduction.

In the fiscal year 1913-14, There is further comparison which may be illuminating.
the ordinary controllable expenses of government amounted to $87,000,000, as compared with S123,000,000 last year.

While these figures indicate an increase of $36,000,000, in a period of twenty years' growth and development of the country, there are important adjustmentll to be made to hring them to a comparable basis.

Of the increase of $36,000,000, over $17, 000,000 is applicable to the Post Office de the services of which have neces partment, sarily expanded in twenty years.
The in creased expenditure has heen compensated for by a corresponding addition to the revenues and is not a contributing factor to the deficit the government.

Eliminating post office of the eomp:lTable figures become expenditureS", $73.000,000 for J913-14, as compared with 193,000,000 in 1933-34, an increase of m, 000,000. the population of inereaS"ed from 7,600,000 to 10, Cannda haS" 300,000.

The cost of maintaining public ser vices has necessarily heen influenced by the growth in population, a!
well as the addition of new services.

Yet the actual expenditures In the interval, (Mr. Rhod...l APRitL 18, 1934 2285 The Budget-Mr. RhQdc3 Expenditure, Unoontrollable and Controllable (000 omitted) 191~14 1931)-31 1933-34 - lrt GlIltl'lll Uneontroll4bl_ Interest on public debt.... .... EUrt)pean war penlionl.......... .... Old Bie penlionl..................... Other rrnlionl Bnd luperannuatioll ... .
Care 0 returned aoJdierl........... Subsidiel to pro,'inces... ... .. ... .... ....... Other item•.... Conlrol/4l"l_ Ordil<l:n"...... '.

... .. ......... Agriculture ....... Filhenn........ Indian Alfain... ...... ..... ..... ..
Interior ....... , ................... JUltice...-including penitentiariu, .... Mari_includilll: radio (l(lmmiuion Mine_includin&" movemenlJl 01 00£11 National Defence........ ..... Kational Revenue..... ............. Polt Offioo .... ......... .... ..... Public '""orb....................... •and Canal•......... , ..... RailwaC Royal anadian Mounted Police... Trade and Commerce ... ....... Other lIerviool........... ....... CGt:.a1- iI.a)·1 ... .... .......... Canala........ ....... ..... ..... Public Worka.
...... , ......... .... Sptci4/, incllldi>tq m~uUane01l' chD~,.

Lo"IlI and <!dronce, non-lU:tit:e..... , .. ..... Total controllable, ......... .... Total uncontrollable and controllable.

... Nol indwdtJ in 1M Gbotlt- Canadian National Railway_ Pcrcent- Eati- age of total cx· m..'" elpendi.

penditur't' eetimated ture Percent.

ageo!

"'.., ,."

elpendi· Actual expend.. "'" • 12.894 9·36 .... .... .... .... .... .. ... ".

11 ,280 3,101 Actual Per«nt-- agc of elp.mdi· M., expendi- "'" "''' • ,.""

121.
121.

290 44,234 10·31 • "."

139,130 ,."

,."

,."

41,171 12,500 4,561 9,511 15,321 7,076 4·44 1·16 0·28 ..... '8:19 2·25 6,031 9,114 19,036 6,657 38·36 11·41 3·43 ,."

,."

2,61 4·21 28,031 20·35 211,686 49·36 230,488 63," 3,271 1,628 2,120 5,132 2,469 4,915 74' 12,011 6,124 13,566 20,288 2,279 1.101 5,323 7.009 87.'"

7,103 2,847 10,100 20.060 " Z,612 ,., 0·" 1·36 1·89 J·35 1·87 0,45 0·51 3·26 ,."

8·83 ,... 0," 0·70 5,,,, 10,119 2,276 6,847 8,104 5,175 '.'"
1,934 23,626 13,972 37,892 25,453 4,043 3.00.> 8,407 16,723 7.Q2.\ 1,433 4,139 2,874 '.200 "'''' 3.690 13,M2 10,336 30,801 11.141 3,189 5,367 6.'"

11,241 175,20.5 40·85 123,512 9.842 6,371 12,009 ,."

,."

1049 1,987 767 3,816 2·37 '·20 '·04 3·73 J·79 3·57 0'" 8·72 3·12 9·85 14·73 ,.., 0·'" 3·87 5·" 63,17 5·16 2·07 7·33 14·66 ".m~ 6,570 '.063 0·" Z·21 9,4~ '·90 4,325 1·00 1,639 1-93 0·" 1·)4 0·79 1-43 1·01 3,72 ,.'"

,."

8·U 3," 0," 1·47 1·91 3·" 33·91 OM 0·21 '05 ,."


...., 0·57 109,698 79·65 217,208 50·.. 133,784 137.729 100·00 428.81l~ 100·00 364,272 36·73 100·00 Deficit.

excluaive of e&IIlern linee.

Eutern lines deficit.

.......... gnemployment relief.............. anadian Government Railway_ Cnpital and deficit, ........... .. Rbilway eubllidiea.... , ... .. ... .... .. ......... ... " ... ... .... ...... .. .. ....... .
...... ·28,42:1 .......... 6,112 ... ....... 4, l32 ... .. ..... tiZ.264 6,692 .... ...... 36,000 ... .... ... .... ...... .... .

..... .. .. .. ... .......... 17,295 .. ........ .. ........ .......... .. .... .. 19.036 ......... , .... ..... • Not tak(:Jl into Government accountl in 1930-31.

2286 COMMONS The BIld(Jrt-Mr. Rho""" Loan Flotation!

,In the past fiscal year, the dominion had securitiea falling due amounting to 1279,900,~ 000.
New issues were made for these maturi ties, as well as for new money which it was required to rai8i!

for governmental and rail way purpO!lCS.

An issue of 4 per cent registered noele dated September I, 1933, and maturing Sep tember 1, 1958, Willi made in London.

The stock Us callable 00 or after September 1.

1953, on giving three months' notice.

The issue was offered to the public at 100, yielding .. per ceot.
As the dominion had Dot been • borrower in the London money ma.rket for some eight!eD years, the response of the in vesting public wu a"aited witb keen upec tation.

The issue wu an outatanding sueceu, the applieations totalling 20,000, representing over £SO.ooo,OOO.

The .uece.

of the offering.

tribute to the fin.Deial and economic wa.s II.

stability of Canads and reacted mast lavour-.

ably on the market position of dominion securitie1ll at home and abroad.
The atoek hu risen to a premium and ill now selling on a basill to yield leu than 3t per cent.

The terms of the issue provided for a sinking fund of one-balf of one per cent per annum.

rellnanciog a like amount of An issue of , per cent treasury nGles dated July I, 1933, was made in New York for the purpose of , per cent notes due Oetober 1 and called for payment on August.

1.

The new issue runs for 15 months from July 1, 1933, and is call able on or after 12 montha.
The issue wu gold to tbe Chue National Bank of New York :l.t a price of 98·875 and accrued interest.

4i~ per cent tre:u;ury bills held by the chartered banks of Canada matured August I, 1933, Ind provision was made for renewal of this obligation by the i!Sue at par of a similar amount of bill.

to run for one year, bearing interest at 31 per cent.

An issue of 550,000,000 of issues of Two other treasury bills were In May last, 140,000. made during the year.
000 of 3t per cent treasury bills due in aix month!

were lold tG chartered bank!

at an interest cost to the government of 3i per cent.

These bills were converted into longer term securities on their maturity in November.

A further sale of trellSury bills was made by public tender.

The amount of the issue was 115,(100,000, dated March 1, 1934, and maturing either JUDe 1, 1934, or November 1, 1934.

Of the 3-months' bills 12,450,(100 were sold at In average cost to the government of (1.1:.
mood...1 2·85 per cent and of the 8-months' bills 112,550,000 at an average cost of 3·12 per cent.

On -November 1 last, provision had to be for $169,90(1,000 of maturing victory made loan bonds, the balance remaining outstand~ ing of the 1918 issue.

To meet the obligation aad provide funds for current purpose., a domestic loan of S225,OOO,OOO wu launched.
The bonds were dated October 15 and were issued in three maturities: 2-year bonds with interest at 31 per cent Ind 8 and 12 year bonds with interest at .. per cent.

The 2-year bonds were offcred at 99·50 to yield 3·75 per cent, Ole 8-year at 99,00 to yield '·19 per cen~ and the 12-yesr at 96·50 to yield ,,38 per cent.
The 12_year bonds were made aub- jed to call, at the option of the government, after 10 years, Ind the issue price represented the lowest yield basil on which long term dominion securities bsd ever beu olIered in the domestic market.

By way of inducement.

to holdcnJ of victory loan bonds, a bonus waa offered for o\'er 1139,OOO.

(XXJ of the maturing victory bonds were tU1'tled in for exchange.

The baoks abo converted 140,000,000 of 3t per cent treuury bills sold to them in May.
The tobl cub of subscriptions which 145,700,000 was accepted.

inlel"" esting to note t.hat illvmor pal"" the tnnall ticipated to a large estellt in this offering, U out of a total of 22,663 cub .ulncriptioDS there were 16,426 from subscribers for amounU of $1.000 or there were lubscriben who turned in thcir many mlall maturing bondl for the new i_ue.

176,700.000, It ill In addition, eonvenion, amounted prompt less.

aod to The amount including bonu.


issued of 2·year bonde wu $89,300,000, of the 6-year maturity 147,200,000,. and of the 12-year maturity 188,300,000.

The average interest cost on all maturitie.

w... for 4·17 per cent, after prompt conversion and commillSions paid to banks and dealers, The expenles of issue, including commissions, advertising, printing, etc., were less than one~half of one per cent.
H is a matter of considerable Illtisfaetion the year's financing has been carried that through so successfully at interest that have been progressively favourable.

Over 1858,000,000 of wor and victory loans bonds have been coovertC!d into Dew securitiu since 1930 in connection with whicll there has been a J!wing in intcrest in excesa of 19,000,000 a year.

rates of The direct obligations of the dominion in.
the form of unmatured funded debt and treuury bills are following statement: listed in the APRiIL 18, 1934 The Budoet-Mr. Rhodes Unlllatl,lr&d Funded Debt and TreMury Bills as or March 3t, 11134 and Annl,lallntere8t Char~ Date of maturity Rate, % Where payable Amountof .

loan Annual interest charges I... 1.... IB34-June July Aug. 1...................... Ort.

Nov. 1..... Nov. 1935-Aup;.

I....... .

.

I... 1 fa)... Ort.

15...... Ort.

15.... 1113&-Feb. 1 Nov. 15........... , 11l37-Mar.
1 fa).................... Dec. 1 (11)......

I.... 1. , IS.....

I........ 11l36-July July July 1............ July 1..... 1113Q--Oct. 15...... 1114o-Sept. la,U-Nov. 15........... III43-0ct.

IlI44-0ct.

15........... JII4~ct.

15......... II146-Feb. 1.... 11147--Qet.

lllso-July 1... lD52-May Oct. 15.................. 11l56-Nov. 1..,..................... 11I57-Nov. 1......................... 19M-Sept. 1........ III58--Nov. lllW-Nov. 1 (b)........ 11l6O--Ort.

1...... ..... Oet.
1...... ..... Oet.

1........... TreMury Bills due Jun.e I.

1\134 Treuury Dills due Nov.

I, 1934.. , ..........•.. Canada ..

I....... ... 1 I...... ,........... ....... 4 4.1 .
• • 3t London........... Canada........... 6 3f Canada........... !5~w york........ 4 4;::~ada........... 6t Canada........... Canada and N.Y. 5 Cannda........ 4 3.1 Canada........... New york........ 5 Canada........... Canada and N.Y. Ii 5t Canada........... London........... 3 London........... 3 3 London.... ....... 3t London........... 4 Canada........... H Canada........... Ii Canada........... 6 Canada........... 4t Canada........... 4 Canada........... 4,1 Canada........... London........... 3t LondOIl........... 5 New york........ 4 Canada........... 4.1 Canada........... Canada.......... London........... tS:~ada...........
I;,~nada........... London........... New York.. Canada...... 4 4 .. 23,467,200 27 33,2i13,470 SO,lJOO,OOO 00 88.337,500 00 45,000,000 00 4,888,185 64 137,058,841 00 100,000,000 00 56,1111.000 00 43,125,700 00 37,523,200 00 73,000.000 00 276,687.600 00 2811,693.300 00 93.926.G6666 100.000,000 00 2,450,000 00 821,35222 1,664,673 54 1,937.500 00 2.400.000 00 1,-400,000 00 12.221,926 75 43,700 00 1, 000, 000 00 3.128,755 00 1,800,000 00 3.\176,760 00 4..489,355 00 12.9116,48900 242,136 90 ~;::~.
526.ll6O 23 1.8110.78000 3.375,000 00 7,0d3, 150 00 7,350.005 00 2,250.000 00 3,633.500 00 2,025.000 00 122.204 64 4..797,0511 43 5.000,000 00 2.247.64000 J,94<J.656 00 1.688,54400 2.1120,000 00 12,450.94200 15,933,131 60 3.757,066 67 4,000,000 00 'r:-:c12c'o'5Q-;;'-'OOO,:::cOO"f--;::-:::-:;;:::: 13J,811O,28788 2,858,556,45724 Payable in Canada .

Pl<yable in Canada and New york ......•.........

Payable in New york .

Payable in London I 2,083.2211.220 85 90,661.100 00 300.000.000 00 384.668. t36 39 .
Le!lll bonds and stocks of the above loans held as sinking lund..........

I 2,858,558,457 24 6\1.406.434 43 72-88% 3'179'" 10'4(1% 13·46% 1000'/0 (a) Tar Cree in Canada.

(b) 5i% to Nov. J,I934.

I 2,789,152,022 81 Indirect Liabilities Bonds outstanding at March 31, 1934, bear of the government of ing the guarantee Canada, amoun.ted to $993.000,000, having been reduced by approximately 13,000,000, in the year.

.
.

During the year some further contingent liabilities were assumed, under the authority of the Relief Act.

.In June last, 5 per cent trusury bills of the provinces of British Col umbia and Manitoba were guaranteed to the respec amounts of 1626,533 and $5,894,127, tively, in order to enable these provincea to raise monies required for the payment of obligations due in New York.
Also in the month of June last, two guarantees were given in connection with the production of 30,000 tons of steel rails by the Algoma Steel Cor poration and 50,000 tons of steel rails by the Dominion Steel and ConI Corporation, both orders being for the Canadian National Rail the dominion ill ways.

The guarantee of 22S8 The Budget-Mr. Rhode8 COMMONS to whether there will be any ultimate 10Sll to the dominion tre/LSury as a result of this It is fairly generally recognized, guarantee.
however, that the assistance which has been given in this direction has been of material advantage to wheat producers in particular and to the cOllntry &9 a whole, as otherwise thc selling pressure at certain periods of the year, without some stabilizing influence in the markct, would undoubtedly have resultcd in harmful and depress-ing fluctuations in grain priccs.
The guarantee authorized in 1932 in rcspect of bank advances of $15,538,500 to the Beau harnois Light, HeM and Power Company, was amended slightly to accord with the re organization of the capital structure of this company, Recently a public issue was made the .first mortgage bonds of a portion of securing the guaranteed bank advances, and as a result the guaranteed ad· vances outstanding will be reduced by about one-half.
the amount of The guarantecs ginn under the relief acts, as at March 31, 1934, amounted to $93,296,000, apart from those relating to wheat which are not for a stated sum and fluctuate from day to day, The list is as follows: Guarantees under Relief Ad, Principal amount of guarantee ollt.standing :March 31, 1934 " " _, .. Office..

Province of British Columbia. "

, ' , Province of Manitoba ..


Province of Manitoba Savings ._ " ., Algoma Steel Corporation._ Dominion Steel poration., and Coal Cor, ., .. , _ ,.

Canadian Pacific Railway Com, ., .. Bcauharnois Light, IIea.t & Power ., , Co-operative Wheat Government of Newfoundland .. Canadian ,_ , ... _, " Company .. pany,. "

., " ., .. ,. "
., " ., .. ,. "

" " $ 626,533 5,894,127 IO,844,S53 660,000 540,000 60,000,000 14,105,558 625,000 " " Producers Ltd., The statement of bond issues guaranteed by the dominion government, outstanding at March 31, 1934, follows: ,.

Unstated " limited to $660,000 in the ease of the Algoma order and 11,100,000 in the Dominion Steel and Coal order.
The amount of -the guaran tee represents approximately one-half of the involved in the purchase and is fe amount Inted to that portion of the cost represented by wages lind materials that had to be bought.

The government to pay interest at 5 per cent on the amount of the the rails are de guaranteed advances until livered.
undertook also advances dominion For the purpose of enabling the Canadian Pacific Railway Company to meet capital obligations and indebtedness, payable partly in Canada and partly in the United States, the and guaranteed intl!rl'st thereon to the amount of S60,OOO,OOO obtained by the company from Canadian chartered banks.
In view of existing condi the company found itself unable to tions, make a public issue of in the markets in which such financing would ordi narily have been done_ The bank loans are secured by $100,000,000 ,par value of Cana dian P3,cific Railway Company 4 per cent perpetual consolidated debenture rlock.

securitics In 1933, go\'ernment.
Reference has been made in the previous budgets to the assistance givell by way of to western wheat marketing guarant~ It may be observed that in con agencies, nection with the marketing of the 1931 and 1932 crops, the advances which were obtained by the pools in Manitoba, Saskatchewan and Alberta, under guarantee of the dominion, were repaid and no liability W9.3 incurred by the marketing the Dgt'ncics were able to finance their operations without government a!lSistanee, An order in council passed in April last under the Relief Act, HI33, continued the gUarantee given to Producers Cooperative Wheat Canadian Limited, in respect of advances obtained for Lhe marketing of the 1930 crop and the ourchase of gr:1in contracts made and to be made in order to secure the advantageol18 In 80 far sale of wheat under their control.
as the latter guarantee is concerned, it will all depend, as Iltated before, upon the world wheat situation and the course of wheat prices u 1~lt.

Rhode-.1 APRiIL 18, 1934 The Budget-Mr. Rhodes 2289 Bonda Guaranteed by Dominion Government as at March 31, 1934.

Date of Maturity .

hsue Interest Rat> Amount Outlltanding .

.

Sept, 1.1934...... Feb. Hi.

1935...... Sept. 1.1936......... Oct. I.IWO...... Dec. 1.1940 July 1,1946.,... April 1.1948.... Sept. 1, 1951.
1,19.S2...... Aug. July 10,19503..... Feb. 1,1954...... Sept. 15,19504..... Mar.

1.1955.... June 15.1955.... Feb. 1.1956..... July I, 1l1.~7........... July 20,1958..... May 4, 1960..... May HI, 1961...... JlllI.

Jan. Dec. July Oct. Nov. 1,1969..... 1,1910................. }·eb.

B~' tendersordrawingll........

Various date.

1934-504... .... 1, 19ti2.... 1,1962....... 1.1968..... 1.1969...... 1.1969... .

.

.

Can.

Northern .. Can.

Northern .. Grand Trunk Grand Trunk Can.

Northern .. Can.
Northern .. Can.

Northern New Weatminst.

(lr Hlirbour Corom .

Canadian Kational.

.

Saint John HarbourComm .. .

.

.

.. Can.

Northern .. Can.

National.. .. CM.

National.

.

Can.

National (West Indiell) Steam&hipll.

Can.

NationaL .

Can.

NationR.!

.

.

.

.

.

Can.

National..... .

Can.

Northero Can.

Northern Alberta Can.

Northern Ontario Grand Trunk Pacific Grand Trunk Pacific .

Can.

National.

.

~~n.

NationaL .

i;'yllll.

National .

Harbour Comm.

of Mootreal.

.. Cllll.


National.

Can.

National.

.

.. City of St. John Debs.

assumed by St. .

.

John H8fbour COmm'ra .

.. .

.

.

.

.

.

.

.

Serial-Feb. 1 and Aug. 1.

11l34-3S .

Can.

National Equip.

G Perp,etual.

........................ Great Western Debentllre Stock Grand Trunk Guaranteed Stoek .

........ Gmnd Trunk Debenture Stock ...•...... .

.

.

........ Grand Trunk Dehenture Stock ........................ North.

Ry.

01 Canada Deb.
Ry.

01 Canada Deb.

Stock .. • • 11,060,333 33 1\ H 6 7 7 il ., 5 3 5 '!
5 H .\ 31 3 '1 5 ;1 • , , , , , • , • • 2 Varioul 11,000.000 00 24,220.000 00 23,140.000 00 23,119,000 00 24.238,000 00 100,000 00 50.000,000 00 661.953 04 9,359, IXl6 72 50,000,000 00 26,000,000 00 9,400.000 00 50,000,000 00 10,000,000 00 6.5.000,000 00 1.896.551 31 3,149.998 66 34,229,1l96 81 34,992,000 00 8,440.848 00 36,000,000 00 60.000,000 00 60,000,000 00 19,000.000 00 18,000,000 00 21,118,103 00 1,266.01880 6,160.000 00 60.833,333 33 20.182,491 61 13.262.322 G1 119,839,014 33 1.499, 1119 61 '993,216,5041010 Completing the statistical presentation of the dominion, a lltaternent of the affairs of the assets and liabilities as at March 31, 1934, follows: Liabilitie., March 31, 1934 (Estimated) Dominion notes outstanding.. Bank circulation redemption fund .
.

.

• .

.

.

.

.

.

Insurance and lupera~I!-uation fund_ .• •• .• Government annultlCII .

.

.

.

.

.

• .

.

.

.

.

.

• .

.

.

• • .

InJlurance fund, civil lervice .. IlUurance fund, returned IOldiera • .

.

.

.

.

.

.

• .

.

.

Retirement fund.. Superannuation fund... .. •• •• .. , • • • .

.

.

.

.

.

• .

• .

.. .. .. .. .. •• .. .. .. .. .. .. .. Trult fund_ .. ..

I ndian fundi.. .. Common eehool funds.. .. Contractora' aecuritiea depoJ:ita .. Other trust funds .

.

.

.

.
.

.

.

.

.

.

• • • .. ..

., .. ..

Contingent and Ipeeial fundi ...•...• £Olt .Office money orders, poshl notes, etc., outltamling .. rOVlnce accounts .

•,.Olt Office lIavinga hank deJXNliLs .. unded lh·bt-- Unmatured !lbtured but not prelented for payment .. .

Illterl'st coupoll.!


l1~tured but not pr~ented .for payment .. , 34,660,060 8,440,000 12,313,000 7,.528,000 46,335,000 13,631,000 2,G7ti,000 118,000 2,180,000 2,789,1.52,000 2,.500,000 t172,f00,000 6,486,000 109,27G,Ooo 18,604,000 3,105,000 4,280,000 9,623,000 23,300,000 2,791,652,000 1,745,000 '3,140,471,000 ",.

Tile BudfJrt-Mr, Rhodes COMMONS Auet., March 31, 1934 (Estimated) Active As~t_ Cash, working cllpital advance.

and other current &lII:Ietll.


Specie reserve.. .. .. Advance9 to bllnkB under Finance Act .... LoIIOS to provinces- .. .. .. .. Housing Relief Actio.. .. .. .. .. .

.. Loan.

to foreign governmente- Greece .

ROLlmania • • .

• .

• • .

• • • • Loans to hllroour eommiBBioncrs- .. :Montreal.. Vancouver .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

• • • .

.

.

.

New WestmiIlllter.. .. .. .. .. .. .. .. •.

.

.•••••• .

.

.

.

.

• • .

.

.


Canadian National RailwaJ1l .•.• " ..••...•.... .. Canadian Farm Loan Board.

_ .. .

Soldier and general Seed grain and relief ,dyanceB.. .

Canadian govl!

'l"nment Deferred debite- .

()pen and aWe9 accounts land settlement .. railwnYlI Unamortbed dilJeount and commi.ion on loans .... .. .. .. .. .. .. .. Net debt :March 31, 1934 (estimated).

Represented by- Capital expenditure_ Non·active AlISetll, March 31, 1934 (eatimated) Public worka, Canals .

.

.

.

.

.
.

.

.

.

.

.

.

.

.

.

.

.

.

.

• .

.

.

.

.

.

.

.

• .

Railways .

.

.

.

.

.

.

.

.

.

.

.

• .

.

• .

• .

.

.

.

.

.

Public buildings, harbour and ri1'er improve- ment• .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Military property and storel .. Territorial ae<:ountll.. .. .

.

Loan.8, non-active- Canadian National Railways Railway acrount8 (old) ....•.

Canadian National Steam.hips .. Harbour commiasioner..- .
.. Quebee Chicoutimi.. Halifax , Saint John Three Rivers.. .. Moutreal liIOutb shure bridge .. .. .. .

.

.

..

Seed grain and relief advanees Soldier and general .

Miscellaneous advances .

.

.

.

.

.

• • .

.

.

.

.

.

.

.

land settlement .
CODlilOlidated fund- 31, 1933 Balance, c0D801idll.ted fund, brought forward from March Excess of expenditure over revenue, fieeal year ended Mar~h .. 31, 1934 (e!ltima.ted) .. $ 10,169,000 50,740,000 6,525,000 23,969,000 58,422,000 22,625,000 275,000 , 242,092,000 444,314,000 251,061,000 12,03:1,000 9,896,000 • 26,257,000 3,282,000 8,768,000 12,748,000 2,694,000 1,588,000 $ 14,263,000 71,509,000 40,144,000 60,909,000 30,494,000 81,322,000 17,305,000 8,503,000 U,402,000 2,393,000 15,749,000 20,782,000 '408,775,000 $2,731,696,000 959,398,000 6:15..527,000 88,399,000 15,353,000 55,337,000 675,000 16,5l4,OOO 3,527,000 811,417,000 125,549,000 936,966,000 $2,731,696,000 Ways and Means, 1934-35 With higher prices and expanding volume of business., the outlook for the revenues in the current fiscal year is distinctly favourable.
A substantially increased income Over the past year is assured even with only a maintenance of the gains already made and there are indio cations tha~ the upward movemen~ is being continued.

The collections in the first two weeks or April have been most reassuring.

As (Mr.

Rhod".!

the ordinary expenses of government have been ke,pt closely to the amount disbu"ed last year, and as there is ground for eXpl!
(!ting a substantial reduction in the requirements for it unemployment seems re&lJOoably clear that we can anticipate a greatly improved budget p~tion wi~hout adding to the existing rates of taxation.

The taxation proposals therefore are not eXotensive, lod railway deficits, relief APRIL 18, 1934 The Budget-Mr. Rhodu 2291 Income Tax Tax on Gold No changes will be made in the schedules of income tax rates and exemptions.

The five per cent t.ax on interest and dividends will be retained for another year.
The Income War Tax Act, however, will be subject to a number of minor amendments, designed primarily to remove existing inequalities in its application.

Sa-lea Tax There are a few, but very few, alteratiolL!!

proposed in the various taxes at present le"ied under the Special War Revenue Act.

I shall now enumera.te these, oommenting very briefly where any particular item calls for explana~ tion.
h is not proposed to make any change in the nte of sales tax nor to alter mat-erially the existing schedule of exemptions from this tax.

There will be transferred to the exempt list bakers' cake and pies, certain sugar bush equipment, and milk albumen used exclusively in the production {lf animal or poultry feed.

Otherwise the aales tu will remain unaltered.


Excise Taxes With respeot t<l excille taxes (apart from the changes to be mentioned in connection with beer and some of its ingredients wbich are in future to be dealt with under the Excise Act), the following changes are to be made.

The present tax on sugar will be reduced to one cent a pound.

Glucose and gra.pe sugar, except when used in the manufacture of leather and ar.tificial silk, will in future bear the rate of one~balf cent a pound.
These changes in the tax on sugar will become effective as of July first.

On sparkling wines the tax will be reduced to seventy-five cents a gallon.

The .tax on cigarette tubes imported into or manufactured in Canada will be re duced from four to three cents a hundred tubes.

to all imports under the With respect ~ritish preferential the !peda!

excise tariff, tal: will be reduced by one half, that i.e from three to one and one-half per cent.
The re duction will aJSCI apply to certain comm{ld itiea which under empire agreements enter Canada at rates of duty than those obtaining under the British preferen~e.

.

The stamp ·tax {ln pOMal notes issued in the .mount of $1 and under is to he reduoed to one cent.

lower To repbce the revenue lost by the reduc tion in the tax on sugar, it is proposed t{l lC\"y In this con a tax of ten per cent on gold.
nection one must keep in mind the fact that since our '8.bandonmeo.t of the gold standard, the price of gold in Canadian currency has risen from $20.67 an ollnce to approximately $35.

This is an increase io the selling price of the prod~t {lf our gold mines of about seventy per cen-t. the extra~ ordinary increase in the profits which accord ingly accrue to gold producers finds its origin in eiJlCumst8nces entirely external ,to this par~ tieu/ar industry.
That the reasoD for this increase iD price is to be found in the chaotic conditions of world currencies, the depreciation of our d{lllar in the foreign ex changes and the dcvaluation of gold by certain countries.

Furthermore, is to say, The proposed ten per cent tax will be de ducted from the proceeds of all gold deposited at the mint for sale.

On such gold as is 'In acceptable for treatment at 'the mint and is exported, the tax shall be collected under regulations to be made by the governor in council.
In order that the tax shall not apply when t.he conditions giving rise to these for tuitous gains accruing to gold producers have it is provided that to a degree disappeared, the tax shall no.t operate the to reduce amount paid for gold below sao an ounce in In view of the tax the Canadian currency.

present handling charge incidental to the dJs.. posal and sale of the gold will be discontinued.
is perhaps ex in advance a partial that I Buggest pedient the circumstances which I belie,·e view of make this form {lf tax more desirahle than any alternative form which suggests itself, such as, for exalIlple, an excess profits tax {In the matter gold producers.
This aspect {lf has received !.he most careful c{lnsiderati{ln and we are convinced that ,",'hilst a tax de signed to reach excess profits bas cerbin advantages, the form of the tax as proposed is, on balance, best adapted to rp.eet our par~ ticular situation.
In announcing this t.ax, it For example, y{lU are aware that many of {lur mines in Canada in the process of pro ducing gold, produ~e o!.her metals as well, and that in some other mines where base metals are the major products, considerable gold is recovered in the process.

The difficulty which would arise in such CB!lC5 in the levying of an Thc Bur/gct-Mr. Rhodes COMMONS (xcess prolit.s tax would be that of determining for taxation purposea the profitB due to the increase in the price of gold.
The proposed It may also bc tax avoids this difficulty.

cmphasiled that the tax will be extremely simple in administration and can be collected with a minimum of cost.

An excess profits tax, on the otber hand, would necessarily be more complex and would involve additional e:<pense administra.tivc machinery.

Fur,therrnorc, the present tax will immediately nlurn substantial revenue, while a tax on profiL~, unless m:Lde retroactive, would not the current provide 3dditional revenue for and y(:~r.
Ag3.inst the contention that injure the gold mining industry, the .proposed t3!i will It C:ln be asserted that litUe if any of our pro Juction is obtained at present on such II.

to be vitally n::mow margin of profit as affected by the proposed tax.
Also, there i$ reason to believe that many of the r~ent!y discovered bodies of orc are such that profi~3 would be re:dized cven if the price of gold were at the usual S20.67 le\-el, thc price under I mllY point out, we attained the which, position of second largest gold producing country in the world.

it Finally, is believed there can be no !egitimaU:!
objection to a tax which will oper ate merely to establish a market price for go:ll of approximately $31.50 an ounce fine under present conditions, especiaUy when it is remembered' that the average price received by our gold producers during the last caten d~r ye:lr was only $28.72 an ounce.

This was a ~'car, as you are aware, of great proaperity in the industry and of intense activity in the exploration llnd development of gold mining jlroperties.
EllCise Duties The principal change in connection with e!icisc duties is a consolidation of the existing dUly of three centB a pound on ma!t and the g::1.11onage lax of twelve and one·ha1f cents on beer now levied under the Special War into a single excisc duty of R~venue Act, scI'en and one·half cents a pound on malt.
result While this change will in a slight reduction in the rate of taxation to which bel!r is directly or indirectJy subject, if calculated th<J it on 1\ ga-tlonage basis, total revenue forthcoming win at least equal tht currently obtained from malt and beer.

The new method of administration will assure not only more economical but also more cer- is believed that r~fr.

nbod~s,1 tain collection of the tax.


Furthermore, since the duty is to be levied on the malt alone, the time of payment will be advanced and the rcvcnue secured belore the malt goes inlo production.

In accordance with the abovc-mentioneti chang1!

the existing duty on beer or fermented beverages made from substances other than malt has becn increased by the appropriate amount and the excise tax on beer imported becomes an excise duty.
The existing tu of twenty cents a pound on mdt syrup ia to be reduced to se\'entecn cents to allow for the increase in the duty on thc malt used in its production and will be levied as an excise duty_ In view of the incrf!ase in the duty on the existing tax on sweet wort ia to he malt Thoese changes in excise duties .repC!Lled.

become effective July 1.


Amendments Custom8 Tariff to the Customs Tariff are relatively few in number, but not without inU:!rest, and are summarized as follows: 24 Reduction under all Reductions und'er British preferential .. t:lriffa.. .. tatiff only.

_ .. under Reductions general tariffs only ... __ .. __ .

.. .. intermediate and .. intermediate and/or Inereasea under general tariffs.. Increa.ses under all tariffs.

_ .. _.

.. Clarification of.

wording .. _.

_. .


_ 15 13 2 1 17 12 tariff Itcms of major commercial importance on which reductions are confined to the BriLish include jute yarns, wide preferential in i!.a steel plate, salt cllke, crude oil not natural state, impregMted canvas and spun yarns of artificial silk.

chemical ar~ the more imporlant returncd to the free list, these being gum amber, alumiuum Icaf, of synthetic ingredients flotation rcagents, rcsins and synthetic kryolite.
commodities Numerous of The solitary instance of upward rcvisioll under 80M tariffs is that or jute twines, the pro· posed ratc!!

being the result of an inquiry by the tariff board.

Duties are imposed, under the intermediate and general tariffs, on crude peanut oil and arc increased on certain ferro-alloys.

The former action provides an empire preferen~e contemplated by the imperia.J.
economic COn ference but not hitherto made effcetive; the is intended to proted an important latter the only one of its Canadian key industry, APRIL 18, 1934 2293 The Budget-Mr. Rhode3 the question kind in the dominion, against able commercial practices of certain Europea!1 producers.
The drawback of duty hitherto granted on imported bituminous coal, uged in the produc tion of coke in by-proGuct recovery coke ovcns, has beoo widened in terms t~ cover coke "produced by any method," with the amount of drawback for item reduced from ninety-nine to fifty per cent.

entire the Tariff Board Since it!!

inception in the early part of last summer, the tariff board, under Part I of The Tariff Board Act, has reported to Par liament upon eleven references made to it by the Minister of Finance.
The subject matter of these reports is as follows: salt cake, impregnated canvas, jewellery finding!, glass bases for imitation pearls, firearms anJ parts, button blanks, sailcloth of Egyptian cotton, collodion liquid.

As bronze powders respect!!

all but the Board's report!!

are directly reBected in ~ever.1.l of the tariff proposals being announced to day.

These reports will be tabled forthwith.


In addition, the tariff board has prepared an interim report on the wool reference, whi~h arose out of an application by the British producers of woollen goods.

The latter report will be tabled shortly.


yarDS and and telegage the three last named, twines, jute in the United Kingdom, Following representations by His Maiesty's government this government contemplates action by order in council whereby the British content require ment shall be reduced from one-half to one quarter, in respect of a wide range or chemi cals, drugs, and chemical commodities.
Revenues 1934-35 It is estimated that the total revenue ror the current fiscal year, after giving effect to the change8 which have been enumerated, will amount to $360,000,000, made up a8 follows: Taxation revenue: ~ull~ma d'!tiell.. xel8e dutlell.. .. InCQme tax.. Salu tax.. .. Manufacturers', .. tion and other apecial .. .. .. .. .. .. .. lItamp, .. .. .. .. .. .. .. .. importa- tuea.. ..S 78,000,000 ~O,OOO,OOO 61.000,000 72,000,000 55,000,000 $306,000,000 Non·tax revenue: POlt office.. .. .. Interelt on invcltment8 .. .. Other 10UrcCl!..
.. .. .. .. ..S 32.000,000 1l,300,000 .

.

10,700,000 .• • 5~,OOO.OOO Tala!..

.. .• .. .. .. $360,000.000 The ordinary expenditures for 1934-35 are estimated at $351,200,000.

The anticipated revenue, therefore, will provide fuliy for thetlll expenditures and leave a surplus of S8,800,000 to apply on capital and extraordinary ex penditures.
lowering of While the demands upon the trej1.5Ury have not permitted any general the rate of taxation, it is felt that the reductions, remissions and adjustments already outlined will have the effect of easing the burden in those cases where it hall borne most heM"ily, and that the single increase in taxation will not result in undue, if any, hardship.
Thoughtful observel'1l have with one voice the process of expreMed the opinion that recovery from this unprecedentedly severe and prolonged depression would be gradual.

In deed, it may be fairly asserted that too rapid recovery would present the danger of an un· healthy reaction, and that we would be far better off in the long run if improving con· ditions should conform to the truth of the old adage, "slow, but sure."

At the same time.
At the same time.

while the improvement it hM not oaly been sus has been gra.dual, tained but ha.s progressively increased.

This is evidenced by the splendid increases in both imports- and exports for the month of March, which show a proportionate advance in volume of trade hitherto unprecedented.

It is generally recognized that this depre,.. sion and its blighting effects have been world wide.
This fact of itself has had the tendency to produce a "depression psychology," followed termed a "depression by what might be weariness."

The result is that we do nO-t IlO readily recognire and properly appraise the incontrovertible evidences of reviving activity which have made their appearance.

These signs of .improvements are 80 marked as to indicate beyond question that we are on the road to recovery.
May we with re fresh courage and firm Iltep newed hope, press on towards the goal of better nnd happier dan which lie not far ahead.

RESOLUTIOSS Mr. Speaker, I beg to give notice that when we are in committee of Ways and Means I will move the followinlil: resolutions: I NCOM£ \VAft TAX Acr Resolved.

tha-t it ill expedient to amend the Income Wllr Tax Act and to rrovide:- 1.

That income Rhall include ren·ta.

royaltiel.


reaervationa and other like conaid·~rationa which fluctuate aecording to the production from or the ulle of the prQpert)' leased or lIold.

2.

That CQmpaniell from taxation llnder section four, par'l:Taph {kl of the act exempt