Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697720016679.pdf (Canada)
FEBRUARY 25, 1937 1211 The BudfJet-Mr. DunninfJ Mr. CRERAR: 1.

Yea:.

2.

Pursulnt.

to Silary Deduetion Aet.

3.

The go,'eroor genual in council-the n.lel Bte bued on the wlge seale ptevliling in the district.

Mr. LACOMBE: 1.

'Vhat the marbt gardf'niq producl.& of CllI1lda in 1G35; 1110 in 1938!

lI'U the apprwmate "Ilue of 2.

Whit "II the value of tbe market garde.Q' i1l& pro<!ucll of tbe province of Queb« in IG35; ,110 ill IG3e!
Mr. ROGERS: Appronmlte of market gardcn vegetable crops in Canada: 1936, no information; 1936, S20,ooo,OOO.

value Value of ma.rkct garden- vegelable crops in Quebec: 1935, S5,4.42,OOO; 1936,16,221,000.

LA !lALLii-2.5OTH ,4.NNIVERSARY Mr. l\-lALLETTE: 1.

WilJ 2. b the death the 2.50th anlliversary of (If Ren~ Robert Cllveliel de II Balle be officially retognbed Oil March ID Ilezt!

the iovernmellt aware tbat the atate (If Louiaiana " making preparatiolUl to celebrate 1bia anllivernr1!

Mr. CRERAR: 1.
Mr. CRERAR: 1.

It is tbe inlention of the government to reeognile the 250th annh'ersary of his delth by providing for the erection, this year, of a memorial to La Salle.

2.

Yes.

QUESTION PASSED AS ORDER FOR RETURN NATlONAL J.£8£ABCO COUNcu.

Mr. POULIOT: 1.

'What ... tbe total ezpenditure for National Rea.earcb Council ,inee June, 193.5!

2.

Did that council mike an1 acientitie dil· tbe .coverJ durini that period!

3.
3.

If 10, ..nat member or empl01ee of tbat it, and when wu \fIJI council made it, what it made!

Mr. ROGERS: Return ta.bled herewith.

THE BUDGET ANNUAL FIN'ANClAL S'tA'n:MENT 0 ..

TOr.

: WINISTER 0" FINANCE Hon.

CHARLES A. DUNNING (Minister of Finance) moved: Th.t Mr. Spuku do now lun the ehair the houle to go into committee of w~ 'Mr.

Speaker, amonl my New Year'a rea:olutiotlo8 wu I &lent underl&kiDg thiI year Ibould be that my budj:et speecfi I mUit conI_, however, that thiI reeo- brief.
for Ind muna.

Be .id: lution btU /Suffered the fate of many of ita In preparing a budget, a be companioD5.

wildering alTll.Y of complez questions demand attention, if one is to give a TtIlIonably eam plet.e and accun.te statemen.t of the economic and financial position of Cauada in.

these diffi cult years.

To Ibbreviate further t.be able- ment which I now offer would mean present.

ing to this house aomet.hing 19 than ill eJ: pected in an aDnu'" review of UliI kind.
But, if 1 c&llnot brine you grester Mr. Speaker, brevi\y than l&!lt year, perhaps 1 can brin& you gree.rer eheer.

the A year ago I wu able to show that state of busine8ll &lid tr&de was generally en eaurapng and luggeated that we 'might reason· ably e.'tpect throughout t.be year a Itrengtben ing and broadening out of the foree.

of reeovery then clearly in ev~dence.

My ez· pectations of a yeu alO have been amply realized.

The 1111. twelve months have wit neue<!


a continued and increuiol vigour in the recovery movement, and the gn.tifying evidence of ezpanding b\1linese activity and more widely distributed eeonomic betterment stand!

elearly reeorded.

In many direetiolll the gains have ezceeded erpeclatioDII.
The strenglh of Canada" recuperative power, the lNC'Ctsll of our eoustructive dlON, both AI individuals and as tovetnmeoll, and the im provement in world economic conditioDll gen en.lly are seen in the &to-wing volume of newly created -wealt.b 60ding broader domestic and foreign markets Ind in the renewed lIpirit of confidence and enterprite on the part of our people.

the for Canida.

ahead.
ahead.

Viewing 1 sb.aJl have oceuion later to mer to the leas satisfactory upecl.e of curreu\ develop ments and to ce-rtaio signata which may point lituation to dangel' broadly, ho"Wever, j.Q the light of the progrtSll of the put year and the major underlying foreea at work, I believe I can f&irly say tha\ lince 1929 no N_ Year has dawned witb 1 IhaII be brighter promise time ned greatly dioJ:appointed if, by thill year, Canada haa not moved substantially further along the road of eeonomic recovery.
1 IIMII now ptel!en~, with u little resort to statistics as possible, a few of the more lignifi cant evidencea of our eeonomie prngress dur ing the paat year.

Consider, first, our most comprehensive measure of economic activity in Canada, the index of the phYlieal ,·olume of busint:ll8.

This indcz is lOade up from forty-five important faeto,.., aod meuUTe8 the ph~ea1 volume of output ira nearly all our leading iDdustritli u well AI freilht traffic on our mlways, OOllitruCtion activity, and d~ medic tr&de.
At the de this inda had pTtllllion in February, 1933, the low point of 1212 COMMONS The Budget-Mr. DUn/ling fallen to 67 as compared with 100 in 1926.

The average level of this same index for the final quarter of 1930 was Il9'3, no improve ment of over 78 per cent from the low point and of more than IO per ceat as compared with the )l18t quarter of 1935.

The preliminary index for January, 1937, the latest month for which the figure is availaule, stood at 117·3 ll.S compared witt.
106·2 in January, 1936. improvement This substantial power production and in business as a whole is confirmed by other broad indi cators of general economic activity such as carloadiogro electric During HJ36, thc output of electric power estabhshcd a new record, the total being 8'9 per cent higher than that for 1935, which was the previou8 record year.

During 1936 alBa the railways carried more freight, total car loadings increasing by 51 per cent.
The im~ in carloadings has been greatly provement accelerated since the beginning of the year.

Total carg loaded in January, 1937, exceeded the figure for January, 1936, by about 20 per cent, and were greater than in any previous January since 1931.
Railway freight traffic is substantially below the volume of the return of normal the years 1926-20, but grain crops in the 'Wcst and regtoration of con~ struction building material shipments would· eliminate much of this differential and produce a radical change in the earning position of the two railway gy~ms.

activity with normal still in lower Manufacturing of all kind!!

!

!howed a gener ally well-sustained growth during the past year.
The gain over the preceding yea.r was 10 per cent, and the output was greater than for any previous year since 1929.

Output of 1936 automnbile9 was somewhat than in 1935, but this was due to the produc.

tion of some of the new 1936 mod'el!!

in the fall of 1935.

In the·case of pig iron and steel production, one or our major capital good!

industries, the upward trend is now clearly defined, steel output rising by 18 per cent in 1936 to the h,ighest point since 1929.
In general, the capital goods industries which normally .sutTer so severely in depressions and thus con tribute !IO greatly to the spread of unem.ploy· ment, have in the past year shown a marked increa.o;e in activity, recording gains in out put of over 8 per cent.
This improvement, which may be regarded as one of the most the recovery ill 1936, significant features of may reasonably be expected to be accelerated during the present yesr, &9 the latent de mands arising from equipment replacements and plant extensions exert further impetus.

Activity in the forest products industries truly remarkable this index for throughout 1936 showeli gains over 1935, (Mr.

Dunninl.!

the general 1935, from December, In British Columbia.
group ha\'ing moved up more than 25 per to December, cent 1936. the lumber cut increased by about 15 per cen~.

Exports of plankg and boards to the United States in· ~reased by more ~han 55 per cent as com· pared with 1935, while sales to the United Kingdom were almost 40 per cent higher.

Ex.

panding output has brought a most heartening increase logging.

The reason ally adjus1.ed index for the final quarter of 1936 recorded :10 average improvement of more than 28 per cent over the same period in 1935.
Since the turn of the year, unfor tunately, activity in the industry has been retarded cond·itions too much snow in !lOme sections, too little in others.

of weather employment because of in industry.

The production of newsprint in Canada in 1936 with an soared to a ncw high point output of more thlln 3,200.000 tons.

Thia repl'esen!.'!

Il gain of 16 per cent over 1935, and of 66 per cent.
ovcr 1932, thc low year of Thia the depression in this output mcans that Cllnndian mills operated at an average of over 82 per cent of rated II.

whole.

effective capacity for and at 91 per cent of rated etTecth'e capacity in the last quarter.
The increase in demllnd for Canadian newsprint, chiefly in the United States but also to an increasing extent in other world markets, and the probability of a moderate rise in prices augur well for the immediate future of this importltOt industry which for so long hMl sufTercd from actual or threatened bankruptc)·.

the year lUi that for 1935, fOr mineral output An ever-mount.ing toL.

'l1 of wcalt.h continues In 1936 the value of to flolV from our mines.
our out.put reached the imposing total of over s:J60,ooo.OOO, an increa~e of more than 15 per the previolls peak cent o\'er in Canada.

At year current production le\'ela our mines arc turning out wealth at the rate of a million dollars ll.

day.
day.

While gold continues to hold the spotlight with an output of $130,000,000 in 1936, or double that of ten years ago, and coming into with many new mines such as production, yet nickel, COpper, lead and 1:inc, are finding an increasingly important place in the growing exports.
Canada's volume of our mineral base metl\1 industry has undergone remarkable ten years as the result changes in the last of an expenditure of almost 1100,000,000 in the plant extension refining, smelting, coordination of mining, fabricating and marketing facilities.
In the production of nickel, lead, zinc, the platinum metals, a..'Ibestoo and salt, newall-time records were established in 1936 and the output of the other metals, equipment still and and FEJBRUARY 25, 1937 The Blldgel-Mr. Dunning 1213 12 per coat wns greater than in any pre"ious )'ear since 1929.

As in the case of the lumber industry.

the mining inrlustl'y in its expansion is showing :J, stcadil)' mounting pay-roll.
The in 5ellSOnal!y adjusted index of employment mining Wall ol'er in cent higher than in Dt.-cember, 1935, D~nlber.

while the inde:a: of employment in metal ores mO"ed up about 20 per cent during the p.ut )·ear.

h is eztremely gratifying to note this movement of Our people ioto primary ind~ tries, ""here the,.. find profitable occupation in the output of natural products with which Canada is IlO bountifully supplied.

1936.
1936.

Agricultul':ll production suffered in 1936 unfavourable weather during the through Improved prices, however, gTOlli"ing 1ell5On.

resulted in a money return for field CTOPS greater Ulan in any ~"r since 1930, smounting to approximately 1600,000,000, an incrn.st of about 17 per cent over 1935.

With regard to wheat, the 1936 yield was about 52·7 million bushcls be..low thllt of 1935, and W:lS the amallellt CTOp ainee 1919.
Drought conditions again played havoc in certain areas, destro,..ing CTOps completely in some districts and reducing to meagre levels In .pite of the amaller the yield in others.

the value of thi.s crop 1936 yieJd, howe,·cr, Ili"U ISUbstantiall:y above the value of the 1935 crop due to greatly enhanced prices, which are llgain reaching lel'els which promise more profitllble the western farmer.

and stable conditions for During 1ll3(i an increasing volume of live stock Ili"U marketed, but with price.
slightly less favourable than those prevailing in the pre"ioU!

year.

The bureau of statiat.ica' index of !i,'e stock sales rose over 12 per eent above the dairy the previous year's average.

For industry generlllly, prices were moderately higher during the Pallt year.

There was a striking increase in cheese exporu, and the volume moving ahroad in 1936 was more than double the amount exported in 1935 with pric~ higher than at any time aince 1930.
As the house well knows, Recent price movemellU hal'e operated di~ tinctly in the direct.ion of reducing the farmer's handicap.

the farmer Wall particularly hard hit in the col lapse of ,prices followillg 1929, and we find that by ][132 the average level of prices for farm products was down to 48·4 per cent of the average level time, however, prices have greatly improved, par ticululy in the past year, and by the end of index had moved up 1.0 82·4.

1936 this prines of th~ga which the fanner While theh!
has lIell!l have been moving upward, the prices been ~Iatively little cba~ in.

in 1926.

Since that In fact, taking 1926 of things which he buys.

to 100, we find the retail prices as equal priCi!

in December, 1936, alandin!!

: at indel: 81'8, while, all noted above, prices of agri.

eulturlil producLs had reached the 82·4 levtol, after a rapid rise in thc last few months of the )·ear.

At t.he fanner''S relati\'e position, as far as prices were than in HI'2e.
concerned, was sligbtly better Wide disparity between prices of primary and finished producu is perhaps the molt significant feature of what we call a depres sion, and it is greatly to be hoped that this approximate parity between agricultural and oLber prices can be maintained.

the end of 1936, therefore, The general the bureau's level of wholeaaJe prices which had been remarkably .table in Canada since 1933 has finally begun to move sharply up wan:l.l!i.
During 1934, 1935, and the fint half of 1936, index 8uctuated nar· rowl)' around 72 per cent of the 1926 level.

the wbole- In the last haU of 1936, however, ale price inde:z rose by over 10 per cent to 79,7 at the dOEe of the year, an upturn that has restored wholesale prices to the level pre vailing at the end of 1930.

Thit rise in prices is a world-wide condition and the forees which hue brought it about continue to be effective.
One rna)' CX"press the hope that such fortct may not be allowed to get out of hand.

While they may correct the economic disparities from which we have recently suffered, and while the}' may give every evidenee of abound· ing prosperity for a time, they are likely, if the pate is too rapid, to create new dispari.

ties and plunge us onee more into the throes of depression.

t.herefore, the general An obvious indieator or .tate of our economic health is the volume of divi, dend distributions by corporations.
it It that gn.tifying to report, reliable estimates of profits for the past year were the highest since 1930, and reveal an increase of more than 13 per cent over the 19S5 total.

index of dividends distributed An unofficial Iltood at 117 for December, 1936, again~t 100·1 for December, 1935, and 62'5 at t.he low point in August, 1933.

Profits are the mainspring of economic activity in the ll}'stem under which Increasing profits are therefore we operate.
the best augury for increasing employment, the best indication of the approath of the day when private industry will be able to reluM) governmental bodies from the enormous bur.

den which they have had to bear in recent yeara.

In have remained generally favourable.

The year 1936 witnessed a stTiking increase in the volume of capital isaUell puhlicly ftoated.
Bond iaNea eonditiona financial field, the 1214 COMMONS The B1ldo('t-Mr. Dll/I.llillo of S7IS,OOO,OOO publicly offered in Canada for new capital and for refunding purposes, excluding treasury i$.iues, are estimated to have reached a bill compared with as tob.l $54.1,000,000 for the previous year, an increase of over 32 per cent.

Of total, and ,S242,000,000 was .$473,000,000 for refunding purpose.s.
Financ ing for Jlrivate corporations accounted for in 1936. or more '$232,000,000 of -than five timte the total of such financing .during 1935.

The increasing volume of such private corporate issues and the increasing pro portion of such issues offered for new capital purposes Me healthy signs.

this 1936 new capital the total for For short This heavy voluml' of bond ftotations i, in part a reflection of prevailing low interest ratte.
The wages of money, as measured by the yield on high grade bonds, averaged lower in 193$ t'han at any time since belore the war.

These [ow rates have made it p068ible Jar the the dominion government and for .e:lsteru provinces to refund outstanding obliga tiol1ll and to uise new funds at record low term money the dominion cost.

is paying on a yield basis of approximately three-<,!uarters of 1 per cent pcr annum, while on long term issues the rate 'hag been only ~lightly over 3 per cent.
Ex-cept for an in the ·terruption in September and October, -trend of high grade bond prices was steadily ,upward during 1936.

An ullusual number of actual or pending flotations and fears engen dered by the weak financial position of certain western provinces, coupled with unfavourable developments in foreign m.'l.rkets, hlwe caused some hardening of the rates during the pagt ,month.

The somewhat lower level:!


of bond prices resulting have attracted renewed in vestment buying and yields on high grade -securities lor the most part are still alightly above the levels prev.

'l.iling a year ago.

The continuance of interest rates 011 substantially the present basis will fOllter economic recovery by encouraging private enterprise to expand existing equipment and undertake new pro ,jecLs on a low capital cost basia.
It i$ unfortunately true, however, that ;he fin~ncial position of several ol OUr pro vincial governments is such th.

'l.t they are unable to take adV.

'lntage of prevailing low interest rates in order either to reduce their fixed Chaf!

;ell by refunding outstanding debt or to obtain new funds for relief and other expenditures.
Despite dragtic efforts to reduce expenditurl'8 and increage taxes, and dellpite a -long record nf honnurable dealing with their either .creditors, to balance their budgets or to ha.ve recourse to the investment market for the funds necetl -tlary to meet {Mr. Dunning.l their commitments.

unable have been they recount led the government This is a problem to which the govern ment has given the moat serioU8 and unremit ting attention since the day it assumed office.
I need not the efforts which were made last year to lind a solution.

The plan then evolved which would have made low tates available to the provinces as a result of dominion assistance under appropriate sale guards.

proved unac~ptable in scvcral quar ters.

The scute stage which the problem hll9 reached in Manitob~ and Saskatchewan during the reCl'nt past to m.'l.ke the decision which was announced by the right hon.

the Prime Minister (Mr. Mackenzie King) to the house last week.
That decision inveatigations which demonstrated followed what had long been recognized as a funda mental weaknl'.$S in the allocation of financial powers and respoll8ibilities to the provincial governments by the fathers of confederdinD seventy years ago.

The revenue-raising powers assigned to the provinces do not appear to be commensurate with the responsibilities which they were given Or which they have assumed in an age of increasing provision for govern It ia a bll9ic principle mental llOCial services.
that a government should be able to stand financially upon its own feet-that it should raising the revenue itself be responsible fOr look necessary to meet therelore with great confidence to the Te!lult.

!l of the investigation into thia whole problem 10 hem6de by the l'O)"al commi~ion whie-h It this investigation and is to be appointed.
report are as competent, as impartial and as they cOll8tmcti\'e lUI may well serve to point the way to such action as to make the year 1937 as significant in Canadiall history as the year 1867. the occasion demands.

its own needs.

I thiif go\·.ernmenl.


In this connection may I p.'l.y tribute to the assistance given by the Bank ol Can ada in conducting the preliminary investi gation of the financial position of these two provinces at the requl'st of their governments -8nd of T,tIe p1'O\"Ulce of Alberta has now requested a similar investi the bank has gation.

As the house knows, power to act, upon request, as the fiscal agent and the adviser of any provincial government.
We now have an i11ustration of the important contribution which the bank may make to the financial welfare of the dominiOn merely by prnviding a source of competent and dis interested advice to our major governments.

itselJ with ample reserves for the accommodation Qf commercial borrowcl'!.

While the volume of commercial 10aos there have receotly been indicat.io[lll of growth, and I moderate increase is expected during the prevailing present year.
Our banking system currently finds is abnormally low, Contrary to the FEBRUARY 25, 1931 The Budget-Mr. Dunning 1215 belief in some quarters, the banks will heartily welcome the opportunity thus provided to their funds at somewhat higher rates invest than have recently been available on gilt I~ is al~.

encouragin.g to edge securities.

note in recent banking statistiC&.


that debits to individual bank accounts in the clearing house centres of Canada-in other words, the cheques drawn by the public on their blink account& showed an increase in December, 1936, of 16 per cent over December, 1935.

We have to go back to 1930 to find an annual volume of debits exceeding the level reached last year.
This indicates, Mr. Speaker, tbat the velocity of circulation of cheque-book money is speed ing up with the rising tempo of business activity and the increase in public confidence.

This is the factor so frequently forgotten by ad vocates of monetary panaceas.

The volume of mooey-work done is the product the amount of money multiplied by its of velocity of circulation.
An arbitrary increase in the amount of money by the fiat of a government is likely to defeat iUt object by a than proportionate proportionate or more If the increa:re decrease in the velocity factor.

in the volume of money continues beyond a certain but unpredictable point, public con from fidence is lost altogether and a flight money occurs.

In the early stages of a severe and prolonged depression credit expansion may be an essential weapon to combat the deflation It must, however, be ary forces at work.
recognized as a very dangerous weapon re quiring the use of expert technique as well all great wisdom and caution.

The control of the volume of money and credit with a view to mitigating the extremes of booms and depressions is one of the primary functions of a central bank.

The easy money policy which has been followed in the recent past is, in my opinion, an illustration of appropriate action in a time of depression.
There will come a time, however, and it may come more quickly than many of us expect, when precisely the opposite policy will have to be followed, if the bes~ interests of the country are to be served.

Monetary policy has a role to play during depressions.

That role is an important Olle; although I am bound to say that as a medicine for depressions monetary techniques are far more effective when applied before rather than after the event.
During the present depression, more deliberate use has been made of monetary devices and remedies than in any previous depression.

This is largely to be explained by the great advances m:ide in monetary theory ll.nd central banking practice during the poat war years and, in so far as Canada is concerned, by the fact that we have only recently been building up the necessary mechanisms for control.

But monetary policy should not be 31111-17 regarded as a panacea.
It can, at best, only create conditions favourable to &Qund develop In a constructive program it should ment.

merely take its place as part of a much larger whole.

Fundamentally our need is fUI incre88l" in our aggregate national inoome--an increase in material wealth, not a different yardstick by which to measure it.

Real purchasing power consists in goods and services produced, not in the number of monetary tickets which are used to facilitate the exchange of t.hese goods and services.
the government all An increase in our nationsl weaHh and in come can best be l:iecured by facilitating the production of the many things which Canada is best fitted to ,produce; and by exchanging thesc products on as large a scale as 'Possible for products which Canada cannot ad\"sntage ously produce.
To these objectives the gov ernment has been energetically devoting Hself by opening up and expanding foreign markets for our basic products, by stimulating employ ment in producti,;e lines, and by endl!svouring to eliminate uncertainty and fear which para lyze initiative and retard industrial enter ,prise.
The suceess of these efforts is indi least-for I Jo not wish to cated in part at the credit for claim f()r the recovery which we have enjoyoo- in the statistics which I have already given, indicat ing encouraging expansion in nearly all lines of productive activity.

These statistics are the oonfirmed by preliminary estimates of national income for 1936.

By national income I mean the income of all the people of Can ada-I am not using it in the sense of govern income.
These estimates indicate a mental total of $4,520,000,000 as compared with $4, 094,000,000 in 1935.

This is an increase of over 10 per cent in the nationa.l income, that is.

the aggregate of the individual incomes of It is an increa.se in real pur aJl chasing power cre:atcd not merely by writing up a ~redit to' ourselvel!

in our natiooaJ bank account but by providing profita'hle oppor tunities for the production of goods and ser ~·ices.
While there is still a subst,antial di& tance to go, this ad.vance, like the others which I have recorded, is impressive Bod 8'!

'atifying In surveying the general outlook, however, we must not close our eyes to the fact that busine~ cycles in their course from depres recovery never completely con sion to full form to an established pattern.

We cannot deduce from past experience that the upward ine"itahly continue or that movement must it will proceed evenly· and satisfactorily in all directions.
The point I am making is tbis, that while the general movement is at present strongly upward.

y.et we must not lightly assume that we hnve solved 01lT problems, or the people.

1216 COMMONS The Budget-Mr. Dunninn lose sight.

of that ....e hll.\'e by ~ny means reached the stage wherl~ we can relax our \'igibncc or our econo mies.

We must.
We must.

not the fact that, in cerbin fields, impro\'ement has lagged, and that to a large number of our people the recovery of business h:ls not )'et brought the In other directions there ig expected relief.

more than a suggestion of a mentality that led to the deplorable excesses in the late twenties.

Greed and unreasonableness in industrial rela tions arc dangers that can paralyze our bcst efforts.
There are forces unleashed in the recovcry period that must be grappled with no less vigorously than those facing us in times of depression.

These rcalities must not be ncglected.

Furthermorc, disturbing factors in perpetunte relations much uncertainty in t,he world outlook.

To these le!S favourable factors I wish to devote a few moments.
internfltional still the most conspicuous Apart from those sections of OUr agricultural industry which have suffered from the tavages of drought, laggard among our major industries has been private construction.

While there Wall a very slight in total private building, and improvement a moderate increase in residential and indus trial building, the bureau's index for cOMtruc tion acth'ity aVeTnged slightly lower in 1936 than in 193,5, and stood at the deplorablY low le\'cl of 49·8.
The value of contracts awarded amounted to only SI62,OOO.OOO as compared with lin average of $428,000,000 in the prosperous yean!

from 1925 to 1!l29.

This is eSlleciallv unfortunate in view of the fact that so large a proportion of our unemloyrnent is to be found in the construction trades and It was the industries dependent upon them.
the home improvement for this reason that plan has been devised and it is confidently hoped thnt during the nc"t twelve months it repair lead to n substantial volume of will transfer and modernization work which will skilled craftsmen from relief rolls to pay-rolls, the sume time serve to protect and and at increase the value of an import.1nt capital assct, the homes of our pcople.
As already indicated, the betterment a.nd extension of indw,trilll plant and equipment should also make a larger contribution to emplo:rment nnd business activity during the Improvement should also OCl'ur present yellr.

in the field of housing construction.

long retarded by uncertainty as to continuance of employment and particularl}' by lJigh telll estate t:uation.

that these difficulties are in part at le:lst the result of a vicious circle.
Real est.ate tn"es arc high, for instance, because relief cost~ :l.re high; r..lief costs are high because unemployment to an is heavy; and unemployment is heavy, It is obvious, howel'er, IV•.

Dunni~I.1 is the repair inacti\'C, Convcr<!c1y, it behool'cs el'ery branch of important extent, bceau$C the building indwl the building t.ry industry is inncti\'e bcc:ll1sC all these othcr things are tnle, Wc arc no\v reaching the stnge in the reeOI'ery movcment whcn this In my opinion, vicious circle must.
he brokcn.

the thcl·cfore.

including the lending constmction industry, and finance institutions which erection of houses, to study the facilities now available through the gOI'ernmr,nt's housing programs and to usc the lItml'lst ingenuity in providing l\ sound product nt a re:\llonable price and in selling that product to the ultimate consumer.

Public works construction cannot be continued indefinitely on the scale recent years without building up an of intolerable burden for the fllture.
If it must be kept up in the late st..'lge8 of a recovery movement, what hope can there be that governments will be in ll.

position to usc public works requirl:'ffients as n reserve against future depression?

If the the industries.

In lumbering nnd mining, construction industry makes the he:l.rty cooperation of results will go far the effort which I have indicated, and if it receives, I\S it should.

the gencral public, to soh'e the next problem with which I wish to thnt of unemployment nnd relief.
The deal, statistics publishes monthly an bureau of index of employment whieh is re!lSonably It is based represcntative of al\ on l~turns submitted by about 10,000 firms 1,000,000 persons.

emplo}'ing approximately After adjustment for seasonal variations, this index stood at Ill·!

for January of this year.

Compared with January, 1935, this represented an improvement of about 5 per cent.

In the field of manufacturing, employment moved up 6 per cent, I'l8 it showed substantial me!ltioned previously.
trade em gains, while wholesale and retail the highest ployment In the construc December figure on record.

tion and maintenance industries, however, the index showed an actual decrease of employ ment which brought down the genernl average.

these figures, is the obviowt failure of employ· however, to keep pace with the striking gains in ment business activity previously reported.
Partial this is t.o be found in the explanation of full-time for p:Lft-time work substitution of the "slack" which and in the taking up of previously existed as a result of redundant staffs maintained by many employers who were really reluctant needed.

For thE' explanation rest!J invention and the im upon the progre!lS of in technical and managerial pro· prol'ement is a phenomenon cesses.

To this extent The disheartening aspect of to dismi" employees not in December was at the rest.
i~ FElDRUARY 25, 1937 1217 The Budget-Mr. Dunning which i, u!\.lally met with ill the early stages of recovery from depression.

As it indicates an increased efficiency in the productive to be de meehani~m, its results are not plored.

Us ill effecLs are temporary; in the long by cheapening production and upanding con· surner purchasing power.

As reco\-ery gathers momentum, ernplo)'ment will teod to conform more c1o!lely to expaosion in businellS actil-ity.
emplo}'ment iocrenes increases tun in it of that relief relief registratioo Still more dishearteoing to most observers is the f..i1ure of the number'!

00 relief to de cline proportionately with the revival of busi r~ipients ness.

The maintained by the national employment com mission, Ih~ results of which are 1l0W avail last month, able on a preliminary basis for indicates compared with January, as 1936, heads of families Oil relief rolls in Janu ary.
1937, had decreased by 8 per cent and the indi\'iduals on relief by 5 total number of in the per cent.

Excluding those Oil drought area, the respective declines were 11 per cent and 7i per cent.

These decreases imporlance to confirm our are of sufficient belief that with expaDding aeth'ity, industry will be able to re-ab30rb at least that portion of our relief recipients who are employable.

However, La Ibose observer'!


who look for an early end to the relief problem the decline during the past year will appear di!leouragiogly In addition to the factor'!

mcntiooed small.

above, the explanation for the slow rate of reabsorption is La be found in the fact that the new jobs opening up are being taken in large P.1lrt by per50ns who were unemployed but not on ~ljef, and by tbe new recruits who annually leave our !lehools and colleges to join the ranks of industrial workers.
for have the unemployed It is probably true, Mr. Speaker, tbat a hard core of unemployment and fE!lief will alwaYs remain.

Doubtless there will be a Dumber of those in the higher age brackets, who have been on relief several years, who may be in permanently "unemployable."

Even the best of times, we have always had unem· not ployment, but been "in the statisties" nor a charge UpOll to the same extent as to-day.

public fund.
public fund.

The depression will lea\'e us with a new problem "'hich will demand new methods of from the appropriat.f!

authorities.

treatmeot in the poli cies now being followed and in the economie forces now working with increasing momentum, the present and major problem will rapidly be redueed to manageable proportions.

The real coming, through the expansion of private enterprise, based on conditions favouuble \0 the more I am convinced, however, solution must come, that and is allil-rot industries.
real purcho.sing power relief dwindling in its proportions.

edensive de\'elopment of our primary and other The fostering of private construction along sound lines, as already indicated, will also make an important con· tribution.

As thus created becomes more broadly diffused through out our economy, we will find the problem In of the situation also demands the meanwhile.
important supplementary activities such, lor inslance, as the national employment com mission is sponsoriog as part of its contribu tion to the 3OIution of this national problem.
I refer particularly to the farm placement scheme, the home improvement plan, the co ordination of the efl'oru of "arious govern menl.ll.l bodies and private organillations with the organization of eom regard to youth, munity cooperation, lnd measures designed to bring about a more efficient and economical administration of direct relief.

It may seem ironical this speculative fever for me to Ilound a wllming about a problem of prosperity whilst we are still harassed by the problE!ma of de pression.
Evideoce is accumulating, however.

of the prevalence of a state of miDd whio:h II we may judge justifies a warning ligna!.

by the activity in brokerage offices, tbe rapid rise iD stock mArket prices, and the ratio of stock prices, particularly in some sections of the markel, to nearby earninp and divi dend prospecta, we are lorced to recognize II.

that get-rich..quick spirit which re,-ival of pro\'ed so disastrous in the pre-depression years.
and activity increases As bumneSll e!J)CCially if the commodity price level shows a rapid rise, is likely to become more widespread and more hectic, creating false standards of value and an un balanced development with their inevitable It is not aftermath.

to call attention to these potential dangers Ilnd to express the hope that adequate measures may be -taken with sufficient promptness to keep unsound developments in check.
The Bank of Canada has the power to control the totfll volume of credit in circulation.

but if the amount of credit flowing into the special channel of speculation is to be regulated there will be needed the cffective cooperation of the stock e~changcs and the bsnkiDg institu tioDs which will be called upon inc~asingly to finance speculstive activity.

We are, I hope, the neces sity of ord~ prog~ and well-balanced development.

too close to 1929 to forget too early, therefore, FinaUy.
a word sa international situation.

On the 6naocial and t:conomic aide, !he year has brought much of encouragement.

Perhaps the mmt Sij!

;Dlficant development iD to t.he 1218 COMMONS The I1udgct-Mr. Dunning for ll.

[)pears to have been cast loom larger in mcn's eyes bhan at any time in rccent years.
Rival ideologies clash in the press and the chancelJories of Europe: the doubt moment at least upon the value of coopera tive undertakings and the sanctity of inter national commitmen~; and an increasing pro into portion of n:.tion31 income goes ex~ pcnditure lor armament.;;.

Regret it as we realism compels us to face the facts must, squarely and take these potential dangel'll into our reckoning when we look to the future.
Perhaps the best ihope for peace lies in !Jl.e the dangel'll are so clearly realized.

fact bhat Where all can see t.he danger it.

may not be too much to hope that.

sufficient wisdom will be found among the nations to avert catas trophe.

I propose on this occasion to defer the review of the growth in our foreign trade and treaty negotiations with other also of our countries until I have d-iscussed the public accounts for the year.
GOV);nN~lENT ACCOUNTS, 1936-37 is that, because of With reference to the govern.ment accounts, mo.y r first point Ollt t.he e:trly date at which the budget being the figures which I shall pre· brought down, sent for the current fiscal year ending March 31 next nre estimatea only.

that our I estimntes of revenue aDd expenditure will be very close to the actual results diselosed when bhe books for the year nre closed, but they are approxi it will be rccogDized lihat.
mations only and, also, is especially difficult at !.his time to present.

our annual balance sheet.

trust that.

it last year, Following the procedure of I shrdl first, with the permission of the house, place on Hansard a number 01 tables giving revenues and ex a complete summary of the various categories and penditures under increase of net debt of the total deficit or for the current ye!lr, togcther with compara tive figures for the four preceding fiscal years.
The tables follow: this connection was the devaluation of the gold currencic..~ of continental Europe.

After years of resistance, during whieh continuing defla tion in an imporl,ant area constituted an im to world recovery, mo.st of portallt barrier these "gold bloc" countries fia.ally took the inevito.blc step ami adjusted their monetary units in order to correct the overvaluat.ion of In this opcr'..lt.ion they were their exchanges.
assisted by an international understanding the United States, Groot Britain and that }'rance would use all available meaDS for keeping their currencies approximately stable This eooperat;ve in terms of each o~her.

agreement, which Holland and Switzerland have since joined, marks a notable advance in international collaboration in the field of monetary management.
Not only has t.he de valuation thus effected with international sup port resulted in a greater degree of stability it has and certainty in exchange rates but.

placed the economic structure of the gold bloc countries in a position of better equili brium with other countries, an essential condi It ha.s also tion for sound world recovery.

removed one of the the major exchange controls, quota arrangements and other ,restrictions which have been strangling trade.
Already Borne tentative intem:l.tional steps have been taken in certain European to relax tariff barriers and trnde countries restrictions.

International trade has felt some impetus from this stimulus as well as from t;hc greater stability in exchange marke~ and par~icu!ll.rly from the rise in world priccs for primary commod·itics.
reasons for World trade as a whole, however, has not made the progress which one might have hoped for, and in some areas there are still financial or economic evidences of etrein.

in most countries, as in Can~ NevcrtheleS3, to continued progress if ada, only peace can be preserved and political friction reduced.

Looking back on 1936, how ever, one cannot pretend that political pro gress has kep~ pace with economic improve ment.

War and the fear of war appear to the signs point I~r.
l)ulIninl.1 FEBRUARY 2:;, 1937 The Budget-Mr. Dunning 1219 STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL 'rEARS Tax Revenu_ Cutom.

import.

dutiel.

'."""

_•....... , E%cUe dllUa.

, ............. ............. W.... \as revenues- BMk•.

"., ••.•••....•••.....•.•••••.•• IDMlr1lDee compMieli .........•.•.•.•..• IDIlOme taX.

.••••••.••••••.•.

........... &'le.
tax .............................. importatioM, &tampll, MiUluf...,t\lrers', tranaportation wei, etc ............. ........... Total revenue from tall'l...... ............. TIU Ollll:old ............. , ... Non-Tnx Hevenue_ Canada Gr..in Act...... Canada C ..sette .. , ..... Canal' .................... Cuu..l .................... ChineN revcnue ......................... Dominion I..nda......................... Electricity ........................ "..... FinIS and fOl'feiturell ..................... FishedM....... , ........................ C ... illllM:C.tioll...: ........... _........... IllIUrsnce UlIpeCt.lOll •••.••••••••••••.•••• Interest on iJ!vMUllenU., ................ Marille .................... , .... , ....... !ohrilll!rs" lund ........................... Milil.&l')' colle&IIl....................... , .• Militia perWoul'lllvenlle................. On:laance land•........ , ..... , .. , ... , .... Pa~t I.!
'd .COPyri&ht fees .... , ...... , .... PCllItentl&nel............................ PoatOftiOlll .............................. Premiunl, diaoollnt and f!1chl.lll:8.•....... Public: Wor.... , .. , .............•..... ,.,.

Radio lioen_................. , ..... ; ... R.C.M.P.

officers' penliona.......... , ...

Weight.

and mela'Un"I ........ , ....... · .. (000 omitted) ,,"'... • 70,on 37,llU '.128 ."
62,067 ~.IiH ",377 ,tl3:h14 I 35,'~ ...,.. '.336 '" 61,3llll 61,392 "".1.1 • 76,502 43,100 l,seD 76O ..... 'n,447 45,184 39,745 3,573 ....... • 74,0004 44,410 1,2:81 761 82,710 77,5.52 35,181 1,413 Eatim.ted 1136-37 • 81.500 45,500 1,255 102,000 115,500 38,100 '" -, 254,319 271,852 30l,444 317,312 384,618 1,445 8.1.

3,205 " , '" "" .. • 212 '50 11,221 178 IBO 20 '" 17 53' 12.

30,828 ."

,..

'."

213 12 1,236 56 878 3,6.."2 , 41' 44O .78 39 .88 20 140 11,148 " "" .. '" 18 m ".'"
'00 I ,!fIl 12 .110 1,205 10,DG3 '18 18. "

, 838 4,337 61' '" .. 00 " .,.

.. '" " '" '" • 174 16 1.487 40' 31,248 .58 1,213 '00 4,636 01 HI 10,614 ., , '" '" " .. '" .., 32."

" 178 16 2lil 1,~7{ II 401 .87 68 62,321 62,21Q 54,0:11 604,910 1,402 1,782 5,ol32 00 162 11,218 ., , '" ,I> '" " '" "" '" 00 34,310 - 32' '."
14 .. 20 '8.1 17 !>!l,770 Total ordinary revenuel .. , ................ 306,640 3U,()71 3M,475 372,222 «3,388 Special Re<:eipt..- Sundry reoeiptl .................. Other CrNlit_ Uefundl on cllpitllll ..ceount............. Crediu to !lon-..ctive lt~ounta........... 4,490 5110 106 '" .. OJ ~,397 80 21 32.
27 27 Total Reoeipu and Credita., ... , .......... 311,735 324,661 361,973 372,596 8,12lio '" " 4$2,123 • Incllldl'l fJI,ooo.OOO from Canadian Wheat Boa.rd to be taken into the ICt'OIInUU ..n oRset, ill pat~, to Iba di.b\lnemcnU in 1ll3:i-3G r~ 1':-1 Oll tll:lO wbeat pool ..nd .tabilill&Uon operslioou.

1220 COMMONS TIlt!

Budget-Mr. Dunning f';TATEMENT OF EXPENDITURER DY DEPARTMENTS FOR THE LAf';T FIVE FlSCAL YEARS (000 om it ted} Ordinaryexpemlitur{'ll 1932·33 .

.

AlI"riculturo..... .


Auditor <':oncraJ's Offi~ Civil ~rvi{'(l C'omlllill8ion .

E~tornlll AfTair~.

including Office or Prime .

Mini~ter... .

Finanr..~ .

Interest on l'uloli" Do;>bt Cost 01 Loan Flotations Premium.

DiS"Ount and Exchange (net).

Suhsidie~ to Provin"ell .

fpedll.l Grants to Provin~s_ Other Cmnts anti Contributions Civil pensions and lIuIJerannuation .

Con'rnment contribution to Superllnnullo- .

.

.

tion Fund Old Age PensioM Geneml E~penditure .

.


Fillheriell., Governor Geneml"lI Pccrotnry', Office Immigration and Colonization Indmn AITairs I/Illurnnce Interior...................... Justice.. .

.

Penitentiaries Laoour Technical Education._ Government Annuitiell-Paymen~to mainl"in NlllCrvo LeJ':illlation- , .

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_.

_. .

, .

.. .

.

.. .

.. .. House of C')mmons Lihrnry of Parliament.. Rennw.

.. General........ Dominion Frnnchise Offiee .

Chier Electoral Officer.


induding elections Marino .

.

.

Cana.lian Rw.lio Broadcasting Commiulon Mines and Geolo~ieal Rurvey .

~lovementof Coal and Domestic Fuel Act.

National Delence- Militia !

:'ervice Naval !

:'erviee Air ~ervice f';umlry Service•...................... National Re\'enuc (including Income Tax) .. Pen,iOn!J and Nationf\l Health Troalment and nft('r-eBrO of roturned .

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1933-34 , 103·1_15 , 193$-36 , 7,107 377 221 1,427 9,399 ""259 1,2!l0 138, .~33 2,8:::0 134,549 3,577 • 8,066 260 '44 863 134.099 1, li39 13,677 I, IlOO,,.

1,008 2,270 II.

513 2.050 I.

787 130 1,680 4,499 181,""2:691 2,870..., '112 '89 2,210 "7<7 81 3fi 5,802 149 1,00l9 1,220 8,710 2,167 1,731 1,133 10,846 6,996 376 221 014 IS!),72.
''i 2, ,')50 16i 13, i28 i.IlOO 396 1.0.12 1,98G 12,314 3,1.~2 1.596 136 1,:174 4,380 152 2,8J'i7 2.711 2,fi77 561 129 184 086 60 266 "32 5,439 1.025 909 2. i72 13,769 I. IlOO 467 '"' 1,948 H.W2 3,939 1,641 I" 1.269 4,362 1.~6 2, i50 2.718 2.667 3111 91 146 1,796 71 491 "' 1.545 146 5,142 1,249 OM 2,124 8,773 2,17l \,AA.~ 847 10,360 8,J!53 2,m 2.21'i1l 847 10,166 Estimllted 1036-37 • 8,929 423 '08 1,381 137,41l5 3,1:00 300 13,769 3,22'; ..3 797 2,02.~ 22,500 3.667 1,750 144 1,3~3 4,921 I73 2,963 2,780 2,H9 '"100 541 1,749 12 59' 76 46 80 5,723 873 1.180 2,300l J1.
416 4.SS1 6,229 LOOI 11,272 1.1.71i!)

3,97!

'i 736 854 1,875 16.764 3,735 1,710 131< 1,322 4,869 163 2,939 2.748 2,377 '"II9 272 l.4S6 76 401 5,' 4fJ8 \,089 5.85i 1,500 1,040 2,103 HI.HI 2,3110 3,in 870 10,003 , soldierll... 10.J27 43,232 ROO 30,252 46 209 368 Pensions, W"rand Militnry............... Henlth Diviaion Post Office.........

Privy Coundl .
Privy Coundl .

Public Ar('hivell... Puhlic Printingllnd Stationery........... PublicWorkll Railway.andCanals 12,0·11 43,092 880 32,417 46 161 11.5 14,643 4,204 2,420 104 .5,910 649 858 5,711 Canada Grain Act.. 1,827 Ml\il Subsidiea and steamship sabvention8f--;:':'.~08='+-_='C.=22"I~f_-::,,'C.
":::'+_::'::'-:',,":-!_-;:::='C'0,,",: Total ord inary expend iture...... ·I--_"'....;.c.._'+-_'_'_IC._"_I_ f_C"--,'C'7COCI-t-_C'C"C'C"C''-I__3C'CIC'800= 11.060 42,100 993 31,438 46 J65 169 9,90512,lH5 4,.581 4.,2.50 2,529 2,34-8 128 2705 6, 165 S,970 70s 395 762 146 3,4.58 3,~7 1.848 1,679 Royal Canadian Mounted Polk"..... .. .

Secretary fI!

Stato................. ... ..


Soldier Settlement......................... Trade and Commerce...................... 10,511 44,183 924 3J,607 47 114 231 13,IOB 3,6S4 1,922 318 5,820 606 819 3,276 2,026 9.571 42,!J"-3 802 30,554 49 l.57 172 10,827 3,315 1,989 310 5,.528 387 810 3,007 1,759 MaritimeFreightRBleaAct.

Railway Grade Crolllinlt Fund........... .. IMr.

DUnDlll.I.)
DUnDlll.I.)

FEBRUARY 25, 1937' 1221 The Bud(Jet-Mr. Dunning STATE~IENT OF EXPENDITURES BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-ContinuM -- C"PITAL E.xPl:lfD1TUIU: Canals ....... .................... .......... Hnil,,'ays.

................................. Public Worka................ ,.

......... ... Total capital e~penditures...... SPZClAL EXPENDITURE!I Unemployment Relief Act, 1930 ........... , Unemployment Reliel Act, 1931.
........ Unemployment Jwlicl Act, 1932 ........... Unemployment Relief Act, 193.~ ............ Unemployment Relief Act, 1934 ....... ,.

... Unemployment Reliel Act.


1935 ........ Unemplo)'ment Relief and Assi!ltanee Act, Administration .... ...................... GranU-in-aid to Provinces ..... " ...... Dominion share of joint Dominion-Pro- 1936- vincial pro~ect&- to March Projecta un ertaken prior 31, 1936 ..•.................. .... .... New Projects..... ........ .......... , into mining TranBportation facilities ILreall .•.•.
............... ...... ..... Hailway maintenance........ .......... Special DrolJu;bt Area Relief- Direct Relief........... , _.. , ............ Feed and roddcrl&nd rre~ht thereon..... , Freight chargee on movement of cattle ... - - - Dominion Projecta (Special supplementary cstimatcs)- Projects undertakcD priof to March 31,1936 New rOjectll........ ........... ......... Miscc lanoou9..... , .. .... ...... ..... ..... Public Works CODstruction AcUl............ Whfat Donus .............................. 1930 Whcat em, Equalization Paymentll 1930 Wheat Pool.., stabilization ................... Act...... to Canadian Wheat Boafd 0 Det liability auumed lLB at Dec. 2.1935.
I.o8s on 1930 oatil pool under k'llarantc6 of bank advances to Canadian C<Hlpera- tive Wheat rroduoonl Limited ......... Lou " Payment operations- - - - - 1,8H - - - (000 omitted) 1932-33 193&-34 • 3,156 1,659 4,234 • 1,986 754 3,8tO ,"'-'" • 338 526 11.243 1935-36 Estimated 1936--37 • '" '" 5,799 • 52 7J7 3,178 9.m9 6,580 7,107 6,5« 3,447 548 17,0'8 19,125 - - - - - - - - - SII,721 35,898 , 564 11,948 28,382 - - - - - - - - - - - - - - - - - - - , 52 26.
2,~20 49,1l4 - - - - - - - 61,987 - - - - - - 8,673 - - - - 1.152 olS,027 26 26 III '" - - - - - - - - - - - - 28,930 '" 3,700 9,m 1,3~ 2,750 49,836 46,OM - - - - - - - 29,581 6,6IJII 1~,856 '" 5,4110 ',160 "9,74.l 17,360 7,014.

"<I - - - - - Tot.ll.lllpecial etpenditures...... 38,532 3~,898 60,660 102,047 SO,U9 1222 COMMONS The Budget-Mr. Dunnina STATF.
:'IENTS OF EXPENDITURF.S BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS--Collcludnt (000 omitted) - 1$12-33 HI33-3~ 1934-35 1935-36 Estimated 1936-37 GOVIRNMCNT OWNI./> ENTIRPRISKII-CUOC.

Losses chllrl(oo to Coo!lOlidatl"d F ... nd- Canadian National Railway System.

O~· eRlitern lint'Ol............. ............ .. ............ BRlitern lioes.
Canadian Nation~i St,;~':"shiPll........... Nationnl Harbours BOlLrd .............. Total chnJ1l:ed to consolidated fund .... ........ ..... ....... • 53,423 8,717 - - • 62,264 6,692 - - • ~2,590 6,818 - - • ~1, 796 .5,625 270 1,126 62,140 58,956 48,408 48,817 Lo&ns and advances non-activo- Canadian National Steamships........... Harbour Commi$llions... ........ ..... Accountll catrioc!
lllI active aNet, trans- ferred to non.active DluleLt.............. 01,382 4,897 0062, !l38 ToLaI non-active advlLDCC•...... 66,453 '" 2, t10 - l,I1OO '" 1,242 - 1,729 '333 2,456 - 2,123 • 37,«9 5,&54 ,,, - <l,"" 01,500 2,419 - '" Total government owned enter- prilell ............ .......... 128,593 61,052 50,137 SO,94.0 44,47~ OTHIR CHARGIS Write-down of a.uetll chllt'fi:eabl" to Con- soli,Jat.cd Fund.- Reduction i" IIOldier ,"d gcoeral '~d settlement 101l0S, .

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Yearly eatablished 1000S in Reed "rain 'accounts-Department of and Interior.

..... ........ ....... ........ .. advances PacifiC Railway (Rcliel Actll) .... .......................

Active lllIo!Ietll transferred to non-active ... Noo-Active Accoun~ Canadian relief TOtlll other charges..... , ...... - 100 t,447 - I,,", t.766 " 1,1100 - 2,857 '" 21 - 11 501 ."
21 - - 515 '00 .. - fl8,7&5 19,310 Grand total expeoditure8...... , 532,370 458, 158 ~106 532,585 539,518 o Crodit.

00 Canadian National Rnilway_Loans for 193t-32 S-lI.tll,ooo; Suodry harbour eommi8sion_Advan~e prior to 1932--33 $21,817,000.

t Dominion contribution to Debt Adjustment Program being elT~ted io Provinces of :Manitoba and Saskatchowlln reijpecting DroulI:ht Area Relief that Willi financed by the Dominion to Jan. 1, 19:J!i-Manitcba $805,000.

Saskatchewan $17,960,000.


[Mr. Dunnior.J FEBRUARY 25, 1937 1223 The Budoet-Mr. Dunnino SUMMARY OF REVE~UES AND EXPENDITURES (OOOomittedl - 1932-33 1933-,1' 1934-35 J935-J6 Estimated 19.16-31 Otdinar)' cxpenditures ..................... Otdinnry revenues.. ........... ............ Deficit (-I or surplus (+) on orilinar~' account ....... .... ............... ..... ...... Spt'(lial eXpl."nditllres.

.......... Less special rl'(leiptll.

...... .. .......... ........... Baianee.

Add-Ga"italexpenriitUtcll.


... ..... Governmcnt Owned Enterprises.

... ....... Other chnrge~ ...... ..... .. .. .. .

..... .. ... ... " " Less olh("r credits .... ...... .. ... ........ Add deficit or deduct mlrplUB as above .....
I I I I I 354,643 306,640 351,771 324.011 359,101 358.475 312,539 372,222 391,860 443,388 317 + 51, 528 80,429 8,125 102,047 320 -48,003 - 38,532 4,490 34,042 9,049 128.593 1,553 173,237 605 172,6.12 48,003 21,700 35,898 409 35,~89 6,580 61,052 2,857 105,918 181 1!M,797 27.700 - 1,226 - 60.660 3,391 67.263 7,101 SO,131 50' 115,008 IOJ 114,907 1,226 101,727 6.544 50,940 515 159.726 " 159,672 317 72,3W 3,441 44,412 19,310 139, .~33 610 138,923 51,528 87,311.; Tollll d(ifidt or illcrene of dire("t nel debt 220,635 133,491 1I6,133 159,989 REVENUES 1931N7 For the year as a whole, we estimate that total revenue from taxation and all other sources will aggregate $452,123,000, This total is almost $80,000,000 in excess of that for the preceding fiscal year and is exceeded by the revenues of only one other year in the history of the dominion, the fiscal year ended March 1929, when total collections slightly ex· 31 ce~ed $460,000,000, Looking at it f~m an· other point of view, it represent!!
an IOCreastl of 45 per cent as compared with 1932-33, the low year of the depression, While taxpayers I may greet think it will be generally accepted as a striking tribute to the the Canadian cconomy and a convincing confinna· tion of the reality of the economic recovery which I have outlined in the earlier part of this sddrcss.

This increase of eourse is due to the increased taxes imposed last year, but essentially, revenues expanding government reflect and confirm the increase in national income.
this news with mixed feelings, recuperative powers of The revenue from all tax sources will amount to $384,618,000, an increase of $67,306,000 over last year.

To this increase, all our major form.~ of taxation contributed.

The sales tax is now the largest single f!ource of government the year we revenues.

For estimate a total yield from this tax of $115, iOO,ooo an increase of $37,948.000 over the preceding year.
As the rate of this tl,U was raised last ycar from 6 to 8 per cent, It rna)" be estimated, assuming no retarding effect on business from the higher rate, that $28,875,000 of thc increase was due to the increase in rate and the remainder to the improvement in bu~iness adivity and to higher price levels.

The second largest producer of revcnue was the income tax, which we estimate will yield during the current year $102,000,000.
Thi.s is also a gratifying increase over the prevIous year-Si9,290,ClOO-and is attributable largely to the improvement in corporate and individual incomes, although the increase of Ii per cent in the corporate income tax rate is estimated to be responsible for approximately S5,84{1,000 of the increase.

Of the total receipts, 158,4.00,000 will comc from corporations, $8,700,000 from the live per cent tax on interest and dividends, and $34,lKlO,OOO from the tax on individu:l!

incomes.
incomes.

Excise duties, imposed chiefly on liquors and tobacco, are expected to yield $45,500,000, an increase of slightly over $1,000,000 as com pared with last year.

source Receipts show an from customs duties increase of almost $7,500,000.

Last year you that S74,004,000 was derived from will recall this $76,562,000 during the preceding year.

We estimate a total yield this year of $81,500,000.
While this is 8till the customs revenue re ceived during 1929 or even 1920, the increase compared with less than half as 1224 COMMONS The Budget-Mr. Dlmning this year amounted to 10 per cent, and thero:l is evidence of an incre:l.sing rate of gain during recent months.

is, the that Non-tax revenu('!

;, Special excise taxes will show an iocrea!re (rom 835,181,000 to $38,100.000.
This increase is accounted for chiefly by increased receipts from the 3 per cent special excise tax on im portations and the tax on transfer of securities.

There was a slight decrease in receipts from the tax on bank noks due to the s~tutory decrt!asc in chartered bank note circulation.

re\'enues derived from invcstments and various depart menl.al sen,ic('s, are expected to aggregate 558,770,000, an increase of 53,860,000 over the previous year.
The largest increase in this group will bc attributable to post office rev enues which are estimated at 134,310.000 as compared with $32,508,000 for the year 1935 36.

The nominal surplus on post office oper In cal ations culating this Sllrplus we have inc1ude<l io ex penditures of the department the C<m of civil It has frequently been pointe<l government.
ont, however, that the POl:lt office accounts do not provide, on the expenditure side, for the rental \'alue and other costs of premises occu pied and equipment used, nor on the revenue to the post side do they include any credit offi(:e for services rendered to other depart ments through the free use of the mails.

is estimated at $1,893,000.


that we expect During the current fiscal year, we estimate receipts and other credits will that special total $8,735,000, as compared with $374,000 the previous year.
This is mainly accounted for to take into our by the fact revenues $8,000,000 receive<l from the Canadian reprcscnt an otTact Wheat Board which will in part to the disbursement of 515,856,000 which we provided {or last year to recoup the Board for the Det liability :l.ssumed when it acquired the wheat and wheat contracts held by Canadian Cooperative Wheat Producers Limited in connection with the 1930 wheat pool and stabilization account.
It is a matter of congratulation that a liability to our na tional finance9 of menacing proportions has been removed.
At the dose of the last fiscal year the position was such that the govern· ment felt it e!ISCntial not only to pay to the board the $15,856,000 referred to above, but the further substantial liability shown on the board's books on the basis of closing market prices on March 31, 1936, made it appear almost inevitable that an additional hea\)' loss would have to be provided for again this year.

We were criticized for the provision then made.


We were told that we should the board's await It holdings before providing for any losse-s. seemed to me, then, and it seems to me now, th'\t it was only the part of ordinary business the complete disposal of [Mr. Dunnin,.l prudence to make at least a partial pronSlon for what appeared likely to be a hcal''y loss.
No one is happier than I am to-<iay to he able to welcome back to the treaSllry, as a result of good luck and sound policy, a portion of the funds then disbursed.

EXPr.YOITun~:s-1936.J7 In denling with expenditures, I wish to emphnsize lignin the importance of concen_ trating on the aggrf!gnte of our expenditures of Il.Il kinds and on our over-all deficit r:lther than on ordinary expenditures and the surplua or deficit on ordinary account.
However, for the purpose of analyzing details and makin~ I shall first comparisoll.

'5 with previous years, present the expenditures under the fil'c main categories in which they are now elMqified in the public accounts.

ORDINARY F,Xl't:NDrrURK3 for The ordinary expenditures for the year nre estimated at a total of $391,860,000.

This is $19.321,000 in exc~ of the expenditures for 1935-36.
As ordinary revenues are estimated at $443,3&8,000, the so-called surplus on ordin ary account would be $51,528,000, as compared last year with a deficit on ordinnry account of !317,OOO.

As I have indica.ted, however, this surplus on ordinary account h3S only slight significll.nce under present conditions.

The largest incrcnse in ordinary expenditures is in the cost of old age pcnsioIUl.

which are estimated year at 122,500,000, as compared with S16.764.OOO last year.
Most CJf this increase CJf $5,736,000 is explained by the participation this year for the first time of the prodnces of Quebec and New Brunswick in the old age pensions arrange ment.

incre:lSes were important S6,320.000 in the cost of national defence <including civil aviation): $2.856,000 in interest 00 the public debt; $1,698,000 in ordinary expendiluN.

'S on public works; $1,889.000 in the expenditures of the Department of Tr.
'\de and Commerce; and finally, an increase of 8979,000 in the ordinary costs of post office operaLions.

current Other fiscal the CAPITAL RXPENOrrUBES Total charged capital expenditures to only $3,447.000, a account will amount decrease of 13.097,000 as compared with the year 1935-36.

The chief item is S3,178,000 for public works construction.

to SPI!

:CIAL EXPENDITURI"-S We come now to that important group of items which are clas.~ified as special expendi relate solely to tures.
and which this year disbursements made for unemployment relief purposes.

During the ;year 1936-37 special FEBRUARY 25, 1937 The Budgetr-Mr. Dunning 1:!25 to are expected for grain ffill,rkeling expenditures aggregnte S80.~29,000.

The' dec::reue of S21,618,000 aa comp:1red with the total for 1935-36 is wholly t'lI:plained by the ab8ence this year of any disbursements 10l'llleS.

Under the Unemployment Relief 3nd A!sis~ anee Act, 1936, tobl expenditures are expected to rellch 146,064,000.
Of this total $28,930.000 will be accounted for by grant6-in..aid to the provinect for direct relief; 114,159,000 by the dominion'a ahare of joint dominioo-provincial projects; and $2,750.000 by the COllt of the speci31 railway maintenance program which it will he recalled "fU designed to pro\'ide "fork for single homeless unemployed men formerly t.:lken care of by the relief camps.
The serious drought which developed in the three Prairie provinces last summer necel sitated relief on 50 ell:tensive a IIC&le that the government felt obligated to regard the condition u a national emergency and aa one therefore which called for special d'ominion alllSistllnce.

To meet this unforeseen and emer funds we.


"'e appropriated by gent problem, governor general's warrants to a total amount of $12,240,000 in order chiefly to pay for the c~t involved in purchasing and dil tributing feed and fodder live stock in the drought-etricken area and the cent of to families living in providing direct the area.
Agreements were entered into with the three provinces under which the dominion relief for the protection of Ih'e stock, and 50 per cent of agreed to bear 100 per cent of the cost of direc::t relief in the drought area as defined, 100 per cent of the C05t of feed and fodder the cost for of moving live stock into other feed-illg areas and of the losses involved in ahippil1g low grade catUe out of the drought area to pack ing eompanie5 for conversion into tankage and boneless beef.
Theae sgreements contained special provisions for the through the msta.nee of repre lI:ovemment sentatives of the comptroller of the treasury'a It ill office located in the three provinces.

now e!timated that the expenditures under this prognm will not exceed 19,741.000 by the close of this fiscal year.

Of this amount 15,490,000 will the cost of direct relief and 14,2.51,000 the dominion'a !hare of the cost of feed, fodder and freight chargE'S.

The.
The.

coat of dominion projects carried on under authority of the special supplementary estimates for 1936-37 aggregated S24,fl24,OOO.

Of this total $li,360,000 represented the cost to March 31, of projects undertaken prior 1936, and 17,264,000 the co~ of new projects.

The following table, which I will place on Hansard, compares the expenditures msde or to be made for direct relief and \'anoW!
un· emploYment relief projects during the present fuJeal yesr, with !limilsr expenditures incUlTed in tbe preceding fuJeal year.
represent Uo.emplorment Relief ExpeDditure Gnnt..in-aid to pn;l'riDcs DolllinioD'a abate of joint dominiOD·prOl'iveial proiects Railway maintenanee worD DominiOD projecta: Department of Public Worlu Department of National Defence ·N'ational Barboura Board and Department of hlariDe .. Department of Interior.. Department of Agriculture Department of Railwaya and Canal... .. Mi.eellanf(lua and aundry departments., ... , .. .

.

.• .. .

•.. " .. .. .. .. S~eial drouaht area relief.. .. .. .. .. .. .. .. .. .
, 1935-1930 S2ll,2H,875 10,700,528 17.895,218 10,201,4008 5.437.008 2,294.ZllI 238.500 942,089 1.431.081 4,000,000 E.itimated 1936-37 S2JJ,1l30,OOO 14,159,000 2,750,000 10,314.000 4.32'?0!10 5,3n,OOO 1.879,000 1.00,000 539,000 1,37J,(}()() 9,74i,OOO 170,410.258 180.429,000 ODVERNM£NT OWNED EN'IERI'RI8£S The oext main cat.egory of expenditures ill that of government owned ellterprises in which is grouped the \oases of and oon·active sd· vances to loveroment owned eot.erprisea which are oper&~ed II Ileparate corporationa.
Calladian NatiollIl Rail....y Company Operating teVellUeI of the- Call1dian Na tional Railway Company increased ,bout 113,400,000 in the caJendar year 1936 over the cofT!8pOndioc figure for 1935, or 7·7 per cent.

increased by However, operating expenses revenue after the ll&l!le ratio and the net tilles, rentall, etc., avail~ble for intert;!t on debt was 16,600,000 as agalllit 16,800,000 In the previous year.

The increased operatill!


u· penses were due in part to the CON absorbed by tbe Canadiao National Railway Company under the varioul government unemployment relief programs and iocrealed "age rates.

After applying tbe 16,600,lIOO available from earnings to interest charges of 149,90(1,000, there resulted a net income cuh deficit of SiJ,300,ooo, 1226 Thc Budgct-Mr. Dunning COMMONS which amount has to be paid by the dominion and charged to dominion expenditure in the current fiscal year.
This cash deficit compare.'!

with 547,400,000 for 1935, the improvement being entirely due to reduction in interest chargC!s resulting from refunding of securities at lower rates of interest.

in It should be borne in mind that the there are certain non~ash charges raihvay accounts which should be taken into account in reconciling the above·mentioned figure of cash deficit with the net loss for the year as shown by the annual the railway company.
report of In addition to payment of the railway's deficit, the government will advance 59,916,000 loan to the Canadian Natiooal by way of Railways during the present fiscal year.

This follows; $7,053,000 on will be made up as account oj miscellaneous retirements the 1936 budget, and $2,863,000 repre under senting cost of equipment purchased under the special supplementary estimates.
Repay ment of $395,000 was received on account of loans made in the fiscal year 1936 for repairs Supplementary to Public Works Construction Act.

equipment under debt the fiscal year, During the the government made temporary loans aggregating 533,032,970 to the company to meet called or matured debt, the major item of which W:LS $24,220,000 Grand Trunk 6 per cent dominion guaranteed bonds, which were redeemed on SeptembeT 1, 1936.
These temporary loans together wHh loans aggregatillg $2,043,725 carried over from fiscal year, were repaid from a. public last issue of dominion guarauteed bonds dated February I, 1937, in the amount of 535,500,000. two maturities; This $15.500,000 2-1 seveu·year bonds cent yielding 2·39 per cent e..nd $20,000,000 3 per cent fifteell-year bonds yielding 3'04 per cent.
issue was sold per iu Canadian National Steamships the During year, the Canadian fiscal returned 51,500,000 to National Steamships the government.

This was due mainly to the winding-up of the Canadian Government Mer· chant Marine.

The amount of working capital &lld insurance fund that had been advanced as a non·active loan in previous years hM in addition to the surplus of been returned, $343,000 accruing from operations during 1936 prior to the sale of the fleet.
The operations Indies service in the calendar of year 1936 showed an operating surplus, after to the public, of $70,000.

payment of interest This is.

the first surplus recorded since the inauguration of the service and compares with a deficit of $270,000 in 1935. the West (Mr.

DWln;Ill[.)

Harbour Commissions is This John, composoo Assistance to harbour commissions appear total ing as expenditure in our accounts will of amount $2,669,000.
SZ50.000, representing the operating deficits of the harbour commissions at Halifax, SainI John, Quebec and Chicoutimi, The balance represents non-active advances of $443,000 for deficit on the Jacques Cartier Bridge, Mont real, and $1,996,000 for refunding of obliga the harbour commissions at Three tions of leas and Saint Rivers, Chicoutimi refunds of $20,000- representing advances in expenditures at previoua )'ears Halifax and Saint John.
The operations of the harbours are con duct.ed on a calendar year basis and 1936 represents the first full year under which the man:agement of the various ports previously administered by harbour commissions was cen· tralized.

While the National Harbours Board was not appointed until October last, central· ized control has been effective since Novem ber, 1935.
Net operating income of these harbours before interest on investment and depreciation showed an improvement in the calendar year 1936 of $1,128,000 over the cor responding figures for 1935. capital for owned To sum up, the toul amount treated as expenditures in our accounts in connection with the operations or the railways and other enterprises operated &!I government sepamte corporations was $44,472.000 all com pared with SSO,940,OOO for the previous year.
is exclusive or such amounts as are Thill carried in our accounts as active assets, to which reference will be made later.

WRITE DOWN OF ASSETS it Du!ing the fiscal year ill estimated that assets will be written down in the amount of from the normal write $19,310,000.
Apart offs in connection with soldier and general land settlement loans and seed grain and relief accounts, which altogether toul $545,000, this write·off item of SHI,3lO,OOO is explained to by the contribution which we propose recommend to parliament should be -made by the dominion in connection with a coopera tive program for the adjustment of indebted ness of farmers in the drought areas of Sa& katchewan and Manitoba, The proposal involves the writing off oC provincial treasury billa held by the dominion tl-l!
security for repayment of 10aD3 made to these two province~ to enable them to fi.Danc~ in the relief and seed grain expenditures drought areas during the period Crom May), to January ), 1935, plus such accrued 1931, thereon as has heen capitalized.

The interest FEBRUARY 25, 1937 The Budgelr-Mr. Dunning 1227 invoh'ed will not amount exceed 1805.000 in thc case of Manitoba, and SI7,960,000 in the cue of Saskatchewan.

In the 6upplcm!

!Dtary estimate!


for the cur rent year authority will be sought to tranmer thcs!!

treasury bills in the government'!
booh from "acti\'e assets" to "non-active 8lISCts" Final write-off and as at Ma.rch 31, 1937. cancellation by the dominion government will be made on receipt of proof the two prO\'incial go\'ernments, the municipalities con~ cerned and the mortgage lending institutions to farmers in the which have made loans drought arcas have also made the required ad justments in debt or tax claims, as the case may be, in order to provide relieI for farmers who have suffered from prolonged drought conditions.
that SUMMARY 0' EXPENDITURES and charges Ihe other If we add together the capital llnd special ~xpenditures.

flS well as losses of and non ~cti\'e adl'ances to government-owned enter repr!

!senting prises, write down of assets to which I have just referred, we find that the grand total of fOX IS re pcnditures for which the government fiscal year will sponsible during the current aggregate $539,518,000.
This is an increase of the grand total of expendi· $6,933,000 over It should tures for the total for that be remembered, however, item of S18, 1936-37 includes the abnormal 765.000 representing the write down of IORns made to Manitoba and Sltskatchewan during the fiscal year 1935-36. the years 1930 to 1935.

Had this item which relate.s to transactioll.8 of previous yeaTS not total expenditurCll for tbe been included, OUt current year would be SIl,83Z,OOO less than those for last yeaT.
the total total current expenditures revenue.!!.

Thll I'ERCEr;'-ACE DISTRIBUTION" OF REVENUF-S AND &XPE:SOITURES, 1936-37 In the following table an attempt ia made to show the percentage distribution of revenues and year.

[or Receipts from various taxes and olller 80ureea of revenue are shown as percentages both of of expenditures.
and revenues total the main items of ex Similarly several of penditure and groups of such items are 6hOWD as percentages both of total expenditures and form of our esti· of matee and appropriations, and the meUlod of to classifying accounl.8 make achieve precise accuracy in such calculation.!
those I am now placing on Hansard, and lUl I hope that by another year we may be able to introduce such changea in our procedure regarding estimates and accounts as will make it possible to determine more accurately the real costs of the variOUS important services of government.

!.hink members of the house have long recognized the need for the change I suggest.
However, the results shown in the table are sufficiently accurate to enable broad conclusions to be drawn as to the relative burdens imposed on tbe public treasury by ] several now place the table upon HallSl1rd without further comment: important services or obligatiow.

impOBSible it I PERCENTAGE DISTRIBUTION OF REVENUES AND EXPENDITURES.
19:16-.17 (000 omitted) Revenuu Amount (estimll~d) Per~ntRll:e 01 total Revenues PercentlLl,~ to total E%penditures Ordinary Revenue-- Income Till ...... .............. .. ...... ... ............ Customs Duties.
.. ......... ..... .... ... ............ E.eise Duties......... ...... ..... .... ... ........... ......... .......... SlIlesTa% .. Manuillcture~': 'i~"POttatiO~: 'e'tll'~p tues, ote....... Olhor tal revenues..................... , ............ Total Revenue [rom ta%\!s........... ... Non·ta% RevenuCl ....................... ... Total OrdinR~ Revenues ................. .. Special Rf!teipta and Cred'le.......................... .. Other RSl'eiptaand Credit.- Rerun,ls of capitll elpendilures ftnd re<:cipta on non- ... ............... Grand Total Revenue....................... Ilctive accounts ....... - $102.000 8l,WO 45,lIOO 115.500 38.100 2,018 S3S4.618 58.170 $443,388 8.125 '10 s.m,l23 22·56 18·03 loon 25·55 8·42 ."
s.~·o, 13·00 98·07 H10 ·13 100,00 18 ·{Il 1~'1I 8·43 21·41 '06 ·37 71-29 10·89 - - - 82·18 '60 ·12 ,.... 1228 The Bud(lct-Mr. Dunniny COMMONS PERCENTAGE DISTRIBUTION OF REVENUES AND EXPENDITURES, 1936-37-Collcllldcd (000 omittod) EX['ICmJitufes Ordin:uy E:rpendiUlrc~­ Interest on public debt.....

Cost of ~oan notntions- Amorti~tltionof !>ond discount, (ltc .•..... Charges of mann(!;cmcet...

.

.

Total puhlie <It'nt- cho~", .

Subsidies and special ~rants to Provinces Old Al;e Pcnsio1l3.

.
.

.. .. Civil ServlUlu'l'ensions and Superannuation charges.. .. .

.

.

.

Pensions llnd after-cnre of $(lldieT&- Pensions.

War and military Treatment, and nfter--eareor returnoo soldiers.

, .

Total.

.... .

.

.

Agriculture Fi~herie-s Legi>ll:ttion M.inc~an,1 Resourccs.... National Defence (ir.cluding Civil Aviation) Post Office............ Puhlic Works.......... Transport............... All other.

.

.

.

.

.

.

.

.

.

.

Total Ordinary E%penditures .... Capitnl Expenditure&- .
Canllis Rllilway~, Puulic Works.

.

Total Capital Expenditures...... Special Expenditure&- Unemployment Relief lind .-\86istanee Aet, 1936- Grant!t-in-Aid to Provinces All other assis!anCQ.

.

.

.

Total.

Drought nrea relief .

Dominion projects (special supplementary esti ,.... .

mllLes) Totsl Special Ewenrliwres ... Government Owned Enlerpr;lJe&- Lo:l-Ses c1"'rl(oo to COnlllllidatcd Fund- .

('anadinn Nntional Railways National Harbours Bourd lonnllllnd Advances NOII-R.ctive-- .
N:\tional Hnrhours Boord llnd Canadian NMional Sl.ClUllships Tot.,l Government Owned Enterprill('ll.

Other Charge_ Write-<Iown nll\ssell to ConllOlioated Fund .

Wrile..-Iown ul A(·t;ve ll.S:>eta to non-lle.tive a_la.

Total Other Chl'lr;ell .

Crand Total Expenditures... IMr.

DU"QOlI~.1 Amount (cstimatP.d) l'ereent.

'l/I;e 01 total Elpendillirea Perccntago tu tot.al Revenues 1131,405 3.000 ", $141,50:!

25·47 .

;2 ·04 26-23 30-39 ·so ."

31·30 S 16,W4 22,:;00 2,822 ."

I----'---+----'---f----'--'-- ."


3·76 4·118 3·t5 .·17 S 43.092 12.041 S sa, 133 • 8.929 1,750 2.626 12.701 23,4\17 32.417 14.G43 13,329 43,0\1 5391,860 • " 217 3,118 $ 3.H7 S~,930 H.13t S46,064 • 9.741 24.624 $SO.

429 $43,3(1.; 2,SO 5H,472 '" • 5.l.

:'i •19.~IO 18,765 1539.518 7·99 2·23 10-22 \·66 -32 ·49 2·35 4·36 ,.1)1) 2·71 :H7 7·98' ]2.63 .0\ ."

·59 9·53 '·66 12·19 1-01 ."

·58 2·81 5·20 H7 3·24 HIS 9'51 86·67 .0\ ."

·10 .6< 5·36 3·\8 8·54 Hl1 .." 14·91 8·02 ·0.

'1 ·11 S·~4 .\0 3·18 3·.


';8 -76 1>-40 3·79 10,19 2'lfl fl·4fl 17· ~9 '·58 .

", ·20 9·84 ·12 4·15 4·27 HI(HIO 119·33 FEBRUARY 25, 1937 1m The Budget-Mr. Dunning OVER·ALL DEFICIT, 1936-37 Taking the total revenues for the year at expenditures at there will be the fiscal year of 1452,123,000 and the total $539,518,000, it is apparent an o"er-all deficit lSi,395,000.

that for This, of course, ~kes into account the railway deficit as well as other expenditures It for which the government is responsible.
compares with a total deficit last year of It is better than the figure of 1159,989,000.

100 milliona deficit which I set as our goal in the budget last year.

If we make allowance for the abnormsl write-otT of $18,765,000 which relates to the activities of previous years and also for the special receipt of $8,000,000 from the whent honrd.

is indeed a very much better sho"·jng than we estimated a year ago.
But while we have succeeded in cutting last year's deficit nearly in half, and while we are able to show a substantially smaller deficit than in any year since 1930-31 when the deficit was approximately the same as for this year, I think it will be realized by all membel'9 of the house that total income and our total outgo is still very broad and that it must be bridged at tbe earliest possible date.
the gap between our it LOANS ANn INVESTMENTS ACTlVE ASSI':TS loans taken of In addition to provision for the expenditures of the year as outlined, account should also be lind investments made which we regard as active assets in the public accounts.

For the year such Joans and invest menb are estimated s.t $36,785,000, excluding loans that may be made to provinces between February 15, Hl37.

and the close of the li.scaJ year on March 31.


Loans to Provinces important Loans made to the four western provinces which are the most item in this category have shown a marked decrease during the present year.

The Unemployment Relief and Assistance Act of 1936 restricted such assistance to a maximum amount measured by the pro"ineial share of the cost of unemploy If.eoL relief and undertakings during Febru ary and Msreh, 1936, and undcr any agreemenla entered into pursuant to the act.
Moreo\'er, the ect contemplated that any province de siring such assistance should establish the necessity therefor, and in practice we have required the submission of detailed state ments of the financial position of the prov ince.

the net Up to February 15, 1937, loans made under this authority hnve amounte<!

to $10,892,235 as compared with $42,304,150 made during the preceding fiscal year.
As of this date, loans made to the four western provinces under authority of the varioull relief acts were outstanding in the dominion's books to an aggregate amount of $127,419,400.

The totals for the various provinces were as follows; Manitoba, S19,415,8M; Saskatchewan, $51, and British 898,717; Alberta, $25,759,748; It will be understood Columbia, $30,346,080.

these to totals oul.standing figure8 relate prior to the write-off referred to previously.
I desire to place on Hansard tables showing loans made to each province during the net each of the last six ti!ICal yeaTS, and a classi fication of such loalls on the basis of the loans were general purpose obtained.

for which the NET LOANS TO PROVIKCES UNDER RELIEF ACTS BY HSCAL YEARS - ... ]931··32... ................... 1932-33 ..... 1933-34 ... ... ................ ....... 1934-3,~_ .

193$-36 .. 1936-3.

(to Feb. IS.


1(37) ..... Mlinitoba , 2,788,8l2 ~.171.904 2.273.283 2,874.631 2,3%,226 3,911,000 &skat,.

chcwan • 10,93-I,34l 7,578.!i.

'>f1 5.469.2~O 10,141.014 l.{,24~,478 3.530,088 Alberta.

• 4,097;7~0 1,902.041 4.050.743 1.~26.476 13,104.000 678.

H8 British Columui" , (.813.12~ \112.

(;30 1.321.if>1 7.000.714 IZ,558,(45 2.

77Z,,~09 Net Lollns OUUltanding .. 19,415.


856 1 Sl.Iltl~.717 2~.7S9.74f1 3O.34~.079 Tot.,,) -- • 22.034.017 1~.6Cl1i,137 13.115,027 22.908.835 42.Jl).j,149 10.892.235 -- IZ7.419.4oo 1230 The Bud(1et-Mr. Dunning COMMONS NET LOANS TO PROVINCES UNDER RELIEF ACI'S CLASSIFIED AS TO PURPOSE - ~bnitob" ... ..... ..... ... ..... Saskatchewnn .. .. ..... .... ... Alberta.

.............. .. ....... British Columbia .... .... ..... Loans specifically to meet maturinl!

o\)lill:ntions nnd lnlere:lt • 1.


139,4a5 3,934,341 8,517.000 11,190,509 Loans specifically for aJ::rieultural relief including ptlrchll.a(!
of lood grain • 243,400 13,892,633 3,152,748 - Loans for Provincial purposes Itener"lly including public works lind direct rellel • 18.033,000 34,071,743 14,030.000 19.154,571 Totnl • 19,.1I5.8as 51,898,717 2.1,759,748 30.345,080 24,841,305 17,288,78t 85.289,314 121,419,400 OTHER LOASS AND INVESTMENTS retirements, already referred Purchase of Loans to Canadian National Railways for repay less miscellaneous debt ments, to, to amounted 14,614,000. railway equipment for the Canadian National Railway amounted to $2,863,000 and for the Canadian Pacific Railway Company to $2,303,000.
In addi· ,£555,000 was loaned to the latter com~ tion, pany fOr railway betterment expenditures in connection wilh the government's unemploy ment relief program.

During the fiscal YUlr purchases of Canadian Farm Loan Board 3, the government'" per cent bonds will amount to $11,tOO,ooo, and oj the board's capital stoek to $794,000.

The total investment by the government of Canada reach approxi· in the farm loan board will mately 828,684,000 at the closc of the present fucal year.
The amount paid out by the government on loans a.pproved undet' the the ,terms of i~ expected to total Dominion Housing Act 81,218,000 during the current fiscal year.

The dominion's ~hare of such loans represent!

20 per cent of the lending value of each property fiuanced under the act, and is paid out from time loans are approved.

required after to time as During the year, $323,000 was advanced to the harbour commissions at Montreal and Van· couver.
These loans are considered B.I active assets, as both commissions have paid a sub atantial part of the interest accrued on their obligations held by the government.

Under authority of the Bank of Canada Ad the government plll'l:hased Amendment Act, 102,000 shares of class n 5tock of the Bank of Canada, of 15,100,000. representing investment an Repayments of $2,977,000 were received during the year in reduction of soldier loans and loans to provinces for housing purpose~.
The following i~ a statement of the amount or loans and investments made during the last fiscal year, which are regarded as active useta, and the comparable figures for the lour pre ceding years: FEBRUARY 25, 1937 The Bu.dget-Mr. Du.nning 1231 LOANS AND I~VESTMEKTS.

ACTIVE (000 omitted) - Canadian Katioonal Rail,,·ay•............... Can:'t!ill.n Pacific Railway .............•.... Call3dinn Farm Loan Board ................ Dominion Housing Act.
LoaM disburlled ... Haruour Commillllionen................... Province_under reliellegislntion.•........ Province_housing........................ C., Railway equipmellt purehn$('d .............

Soldier and gCDerallDnd l'ettltment ......... C•.

B.nk 01 Ganada-l'urehase of clll.Sll "B" ,harea................................. Other...•.

, ................. , .. , ........•.. ',10 lU65 139 C•.
- " e" - .69 I ,"".., • - - 14.677 671 1933-3< ,"'.... 1"""" (Estimated 1936-37) 2,02,3 • ... - - 1.6~7 13,IlS 213 e,.

- 2,492 C., - - I 16,~jD 3.13 393 22,009 - - '" e,.

- '" e,.

- - 39.266 • 3.6811 1,270 .. ,1133 82 1.438 ~2.:lCH.

3.003 C•.

7,2« I ,054 C., - - ~1l.903 I 4.614 OS> 11.894 1,218 :123 10,892 ',OOll ~,I66 '" - ~.100 ",786 32.001 1~.131 LOAN FLOTAT10S8 During the fiscal y!llr under review domin ion obligations were il!5Ued to the amount of $382,996,000.
In the cue of treasury bilb whicb have a three month,' maturity and are refunded as they mature each fortnight, only the increase in the total outstanding during the year is included in the above figure.

These issues, to the extent of $311,000,000 were for the purpose of meeting maturities and· the remainder was for the deficit and otber current purposes.

This financing was done at a very satisfactnry coat.

tn the government.
tn the government.

The rates of interest on new issues were lower tban tbose pre valing on maturing issues, resulting in a eon· to lbe treasury in aDDual siderable uvinl: interest charges.

At the 6!cal )'ur, interest.

on the fundel debt and treuury billa outstanding was 3·75 per cent as compared witb 3·9 per cent a year ago.

tbe average tate of the dose of Mr. BENNETT: Have you the figure with out the treasury bills r Mr. DUNNING: That includes the treasury billa.
Mr. BENNETT: Have you the figure with out the treasury bills?

Mr. DUNNING: 1 have not that figure in this 6tatement.

but I will get it.

LoUla weI'!

: .floated in botb the domestie market and in the United States.

The issue!

in Canada.

e,;dusive of treasury billa.

amount.

ed to $267.996,000.

Tbe first issue was made in June, 1936, to an amount of $134,703,000.
This issue was essentially a conversion loan, only 120,000,000 being i!l!lUed for cash, the balance being made up of conversions of Ii per cent bond!

due S~ptember 15, 1936.

2 per cent honds due October 15, 1936, and 5 per cent bonda due Novelllber 15, 1936.

The new issue was comprised of two maturities, 11 per cent, four year bnnda yielding 1'63 per cent and 3!

per cent thirty year honds yielding 3·30 per cent.

Cash subscriptions were accepted only in respect to tbill latter maturity.
The other m:ljor operation in the Canadian market was undertaken in SEptember when a $IOO,OCMl,ooo issue was offered.

This loan was also in two maturities; 145,000,000 1 per cen~ four and one·haU year notes 1lOld to yield 1'40 per cent and 155.000.000 3 per cent bonds (callable in thirty yeal1l) sold to yield 3'11 per cent.

The issue of perpetual bonds in the Canadian market represented • new departure in dominion financing.
h was step in • program intended IS the initial which is demgned to pro\'ide for tbe CODllOlida tion and simplificlltion of our public debt structure.

Annther purpose which we ba.d in mind was to facilitate tbe setting up, U soon as the conditinn of nur national finances make it practicable, of a general sinking fund to provide for the gradual amortitation of our Jong term debt on scientific lines.
The response of the investing public to this ex perimental perpetual indicated obligatioM might prove as popular in Canada as they have Inn8 been in the United King dom.

tbe house will approve the policy which we ba.ve the been following of preeent period of low interest rates to get as large a proportion of our debt u possible into the form or Inng term obligatinns.
The 533,293,000 5 per cent achool landl debentures due July 1, 1936, and held by the provinces of Manitoba, Saskatchewan and Alberta were renewed for a further period of one year at an interest rate of 4. per cent.

In this connee·tion.

I believe that taking adva.ntage of issue tbat 111l1-78 Hl'l&to amox 1232 Tilc Budgct-Mr. Dunning COMMONS The fortnighUy offerings of our treasury bi11.~ ::It public ten/ler ha\'e continued to meet r('~pon.~e dming the cur a hi;:rhly s:lli.~fnt:tory rent ycar.
The prcsent cost ui this short term money is around three-qullrters of one per cent.

The lowest rate realized by the govern_ ment W:l" '643 per cenL on September 15. these treasury 1936.

The total amount of bills now outstanding is 1150,000,000 as com pared with S120.000,000 at last fisca.l year, and the average cost of funds ob tained from this source during the year bas been ·775 per cent.

It w.ill be realized, how ever, that our purpose in issuh!!
: treasury bills is not primarily to obtain the borrowed Junds at such a very low rate but rather to provide an adequate supply of high grade, liquid instruments in order to make possible credit the organization of a more effective fhort term money market in Canada and to facilitate the essential operations of the Bank of Canada.

the close of two tax-free issues of It is a m3tter of common knowledge that the last the dominion floated during the war period wilt ,r ature dur iog the present calenda.r Ytar.
The first of these issues is the $89.787,000 5 per cent war loan b mds which are payable in Canada and New York and which fall due on March 1st.

As it was belic\"l~d that the major portion or this js,,-ue i~ uow held by United States in vestors, we entercd Ule United States market in January to raise the funds necessary to pay ofT this issue at maturity.
On January 21st we offered in tha.t market an $85.000.000 issue in two maturities: 530,000,000 21 per cent seven year bond:.i sold to the public at 99~ ,to yield 2·39 per cent and· $55,000,000 3 per thirty year bonds sold to the public at cent 98 to yield approximately 3'lQ per cent.

The remainder of the funds necessary to payoff the maturing issue will be provided dire<:Uy from the dominion treasury.
The interest saving from this refunding operation will exceed $1,700,000 per year for the next seven years at least.

The additional the interest saving from the refunding of last of our the $236.299,800 tax-free issues, 5!

per cent victory loan bonds.

which we expect to refund prior to their due date on December 1 next, should be substantial.
To this interest saving on both issues should of course 'be added a substantial increase in in· come tax revenues follo'.\ ing the elimination of these last tax-free bonds.

I now place on Hansard a statement sum the new marizing the essential details of issues made during the year: LOAN FLOT.o\TIONS 193&-31 Price Yield heue Date Maturity Oatil Inte~t Rille Where Pl:lYAble 1936 1~.

I .... June June , ... Jllne JlIly , ... JlIly ,.

,~ '.

,,,.

'.

,m >S.

,... '00' >S.

Sept. IS.. .

Mar.

>S.

19~1 ~pt.


15..•.

Purpetual ..• 1931 1~.

15.••.

Jan. 1M.

15..•.

1M.

% " " • , 3 " 3 To Public To Govern.


me~t' A< Public rriro % Canada ClLnl~da Canada (School Lanw.j Canada Canada New York New York 99,50 ".23 1,63 99.00 ............ 98.23 3·30 100.00 .... ....... 98.25 96.50 99.511 98,00 98,00 95,75 98.25 9600 HO 3·1l Z·33 3·lll Amount hs~eci At Price 10 Co.....rn- menL % 1·70 • '"0.000.000 ,·u <·00 54,703,000 33.293.471 1·46 3·13 2·52 3·21 43,000.000 55,000,000 30.000,000 SS.OOO.OOO • 352.996.471 30.000.000 IDcre/lM i~ .hort term treaeury bill.
outetMdinc Mll1'Ch 31.

1937 over March 31, 1938.. ................ ..... 'Price to pllblic, 1_ commiteiOll to underwriter.

or dcalen.

I 382,900,471 [M •.

Dunllina;.)

FEBRUARY 25, 1937 1233 The Budget-Mr. Dunning less sinking funds, will amount THE NATIONAl.

DEBT As at.

March 31, 1937, lhe outstanding un matured funded debt and treasury bill!!

of the dominion, to $3,275,574,000.


Adding to this amount $255, 419,000 of other liabilities, l:onsisting chiefly or insurance and superaDnuation funds, annuity.

post office saviflgs deposits and certain trust and contingent accounts, we arrive at grO!D u.<;eU, liabilitiC8 including cash on hand and investments, 13,530,993,00.

Active of amounled to $437,498,000.


After deducting figure from the grO!D liabilities, the latter we reach an estimated oet dcbt of 13,093, 495,000 as at the close of the fiscal year.

The last year of $87,395,000 repre- increase over the amount of the over-all seoti!

!, of course.

to which I have previously made deficit reference.


I now place on Hansard a statement show ing Lhe assets and liabilities of the dominion as estimated as at March 31, 1937, LIABILITIES MARCH 31, 1937 (eatimll.ted) BHnk Circulation R.c<lemlltion Fund ....... .. ............ ...... ....... 5... .... .

..... ln~ut'\nce and aup~rl\nnu~tionfunds- Go\,unment annuities ......... ....... .... .. .

........... ..... ... IllIluraoee fund, eivil servi~e_ ...... .. ..... .. .... ... ...... ........ Insurance fund.
returned.

8(}ldieTl.. ..... ... .... ... .. ....... ... ~tirem{'-nt.

fund ..... .......... ... .... .... .

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

..... Superannuation funds ..... ... .......... ... .... ... ........ .

... ..... 87,m,000 10,800,000 16,770,COO 8,782,000 ,')3,6Sl.0G0 Truat runds- Indian luorl!.

...... ........ ......... .

...... .... ...... ...... .

..... ('ommon aehool iunds......... , ... .. .

... .. ... ..... ........ .

..... ('"ntrll~t(}rS'accuritiu de))08ita.


.. .. ....... .... ..... .. ..... .... Other trUH funds ...... " ...... ......... ...... ........ .

, .. .

...... , l3,BOO,000 2.676,000 1,250,000 (J,595,OOO ..... ....... .

.... COlltin~nt !lnu speci:ll lunds.............................. Post 0ffice llIoney ordera, postal notes, etc., outiltnndi~... .. ...... ... .. ... .

...........

Province Ilcoocnts............... '.

... .

..... .. ... .... Poat Officp savinc~ hunk dcpo~its.
.......... ...... .... ...... ... " ... }'undell deht- 3,275,574,000 6,MI5,OOO Interest CQupons matured but not presented for ~yment......... ..... ......... .... ... .. lInmatl:red less ~inking funds ......... ........ .... ......... .

... Ml\tur~ but Hot IIl'P.l;('UteU for payment.

...... .

.... .. .

...... ....

'., .

... ..... .

...... ........ .... ... ..... .

... .

... ASSETS MAR.CH 31, 1937 (estimated) 5 7,020,000 l76,096,0lKJ 2,1,411 ,W" 6.
3-40, 00ll 2,814,000 9,624,000 21,800,000 3,282,139,000 1,700,000 5 3,530,993,000 Acti\'.. I\s.~ts- CMII, workinll; capital :".d\:~nccsand other current nssets Dank of Canada, clllU B ahnre8., Uold Bullion :Ic<,ount..... .

.

.

.

5 16.018,000 5.100,000 2.200,000 Leana to Provin~- Housin~ Helie!

Acta , , ,.

LO:ln!

to foreign governments- .

.

, .. , , .

4,730,000 S .............

'1_-".::".::,654.::'.

::,000'::"'1 .. .

, ............. 6.526.000 23,969,000 1---'..::'::'::':'''-1 .

.
.

59,446,000 23,755,000 Grecoc ROuffiflnia Montreal Voncouver LQllns to National Harboun Boord- New Westminatcr Harbour Commissioners..........••.......... Louna under Dominion Houaing Act Bon'l holding Ilcoount " .

.

11111-78i 113,384.,000 30,494,000 83,201,000 275,000 1,300,000 12,000 1234 'l'hc Budyct-Mr. Dunl1iny COMMONS M;5-ETS M.-\ItCH 31.

193'-C'J/lcludrd (estimnted) Rililway n.eoounts- Ad VRnccs under financinlt nets.

Canalli"n :\'lltionnl Ra.i[w:lYS.

Advanoo!

under vote 427.


Ganll.dian Pndfie Rnil"·IlY ...

LORn., for betterment or repair of railway e<luipmcnt- Canadian Nlltionlll ltailwnys.

Canadinn Pacific Railway .....

Pureha!

!e of CQuipment lcR;(O<J to-- Cnnadinn I'ationlll Rail,,·a}'s Canatlian Pacific Rail"'·ay .

.

Canadian Farm LoRn Board........ .•.

SoldiHaml gencrRlland seltlement...

Seed ll;rain nn,l J'('licf n<lvane('s CanlidiRn government railw:l~'s open nnd stores lIcCQunls .

.

.

.

.
.

.

.

.

Dcferre<l dehits- Cmllnortized dillOOUnl nn,l oommission on loans .

Ket dent.

M:l.roh 3t.

1937 (estimated) .... Not D..ht ro.n-8I'nted by- A. Elpenditu.to and non-acti~·c allSCh.

Maroh 31, 1937 (estimnted).

41.:109,000 555,000 780,000 L2'0,000 ,';6,423,000 211.684,000 42. iJ5(i, 000 2,370,000 15.749.000 .19.6.f.

!,OOO 437.493.000 3.093.495,000 S • Capital eIpendituros- Public Work_ Csllnb................................................... Railways............. Puhlic buildings.
hllrooJr and river improvemenls........... .

~Iililflry property anti ~toros.

Territorial aeoounlJl.

J..o"ns Ilon-aeti\'e-- Callarii"n Nntinnal n.ailway~.. Railway account.<!

(old) Can:ldian NlIlional Stellmships wans w Provi"ce~ (Relief Acts} .

.

.

.

.

242,727.000 443,124.000 267,963,000 J2.IH'i.000 9.896.000 1------'--1 S National Rarboun Board- Quebeo........................ Chiooutimi.

HaWal Saint JDhn TlJroo Riven " Montreal (Jaoques Cartier Bridll:o)... .

.

......••..... _•......... .

,.


..........................••............... .

.

....•....... _ .

, , Seed Grain and relief advances......................•................

Soldier and general land settlement Miscellaneous ad vances...... .

.

.

B. ConS'llidated fund Balance.

eon;oolidat<'d fund.

btoul!

:ht forward trom Maroh 31.

1936 .. Excel\:!

of cXpt'ndituro over reV(,llU'!

!, fiscal YC:lf elided Maroh 31, .


1937 (estimated) 26,293.000 3,796,000 9,503,000 IM67,ooo 3,447.000 2.947.000 1.194,183,000 975.745,000 655,.i27,OOO 88,3!l11,OOO J4,OOS,000 18,765,000 61,4.

'>3,000 491,000 16.514,000 3,saa.ooo 64,874,000 1--.:c.:.:.-.:.

:.c.c..I-,~~ 1,259,057.000 3,003,495,000 S NO'fE.-The above Balance Shoot does Mt take into aceoUllt any loans that may be made to provinces take into acoount the the fiscal year.

bet1\'«n February 15, 1G;J7.


and the olose ot propo5C<Il\'ri~ffo( certain Treasury Bills of tho provinces of Mnnitoba and Sll.'Ikatchewan.

It does.

howe"cr, fMr.


Dnnninl.l FEBRUARY 25, 1937 123.> The Budget-Mr. Dunning The following table which I also wish to place on Hansard gives a statement 01 thll unmatured funded debt and treasury bills of the Dominion outstanding as at March 31, 1937, and the interest charges thereon: UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1937 AND ANNUAL INTEREST CHARGES Date of Maturity Rate Per Cont Where Payable Amount of Loan (a) 1939, Jan. 1937, July 1.

................... D~.


1........•.••........ 1.

... ............... 1938, July July 1.

................... 1.........•.•........ July July 1..........•......... Oct. 15 .... ...... "' .

.. ..... 1.........•••........ Oct. 15 .................... Oct. 15 .........•••........ Nov. 15 .................... J040, Mfll.

1.

................... June 1........•..•........ Sept. 1 ........••••........ 1941, Mar.

15 .........•••........ Nov. IS .

........•......... .


1942, Oct. 16 ....... ............. 1 ........•........... 1943, June Oct. 15 ........••••........ 1944, Jan. 15........••••........ Oct. 15.•.........•....... 1045, Aug. Hi ........••••........ Oct. 15 ................... 1\)46, Feb. 1 ........••.•........ 1947, Oct. 1.........•........ 1949, Oct. 15 .................. .. 1.. .. ................ 1950, July 1952, May 1.................. Oct. 15 ........ ............ "55 May 1.........•.•........ 1.
........... ........ Juno June 1 .........•••........ 1956, Nov. 1.................... 11lS7, Nov. 1..................•.

lOSS, Sept. 1..........•......... Nov. 1.

................... 1959, Nov. 1.. ... ........... 1.

................... 1.

.... .

.

.

.......... .

.

1960, O('t.

Oct. 15 .................... 1961, Jan. 1.................... 1066, June Pcrp.
Sept. 15 .................... 1967, Jan. 15 .................... Treaaury Billa due April 1, 1937 ... Treasury Bilill due Apri115, \1137.. Trea6ury BiUa due May I, 1937.... Treasury Dills due May IS, 1937 ... Treasury Bi11s due June 1, 1937 •... Treuury BiUs due June IS, 1937... • 'I 3 3 3 31 2 2 • 21 2 3 II '1 1 3 21 • • '1 :1 • II • • 31 3 3 :t • 11 • • 31 31 3 3 ·745 ·747 ·768 ·776 ·776 (ellt.)

·776 (ellt.)

• ,u.
33,293,47085 236,299,800 00 8,071,23016 18,250,000 00 10,950,000 00 15,056,000 66 90,000,000 00 40,000,000 00 47.269,500 00 7,933,000 00 20,000,000 00 U5,013,G3682 80,000,000 00 75,000,000 00 45,000,000 00 141,66a,OOO 00 40,409,000 00 20,000,000 00 147,000,100 00 30,000,000 00 50,000,000 00 70,000,000 00 88,337,500 00 45,000,000 00 4,888,18664 138,322,000 00 137,058.841 00 100,000,000 00 50,191,000 00 48,666,66667 40,000,000 00 !.is, 000,000 00 43,125,700 00 37.523,100 00 73,000,000 00 2711.0fl7,6oo 00 289,6fl3,300 00 9:l,lr.
?6,G6G GG 100,000,000 00 48,000,000 00 54,703,000 00 5.1,000,000 00 55,000,000 00 25.000,000 00 25,000,000 00 30,000,000 00 25,000,000 00 20,000,000 00 25,000,000 00 Canada Canada London London London London Canada New York Canada Canada ClIonada Canada Canada Canflda Canada Canada Canada CllJIada Cana!lp.
New York Canada New York Canada Cannda London Canada London New York Canada London Canada Canada Cannda Canada London Canada Canada London New York New York Canada Canada New York Cannela Canada Canada Canada Canada Canada Annual Interest ChargCII • ,u.

1,331,738 83 12,996,48900 242,136 90 547,500 00 328,500 00 526,000 23 1,800,000 00 800,000 00 1,890,78000 198,32600 400,000 00 3,450,409 10 1.200,000 00 3,375.000 00 450,000 00 7,0S3,150 00 1,212,27000 500,000 00 7,350,005 00 675.000 00 2,250,000 00 1.
900, 000 00 3,533,MlO 00 2,025,000 00 122,204 &I 4,841,27000 4 ,797 ,Mil 43 6,000.000 00 2,241,640 00 1,581,66667 1,200,000 00 1,650,000 00 I,940,6~ liO 1,6&8 ....,44 00 2,9~0,OOO 00 12,450,94200 13,036,198 50 3,7fi7,OO6 67 4,000,000 00 1,660,000 00 1,177,841 50 1,6<>0,000 00 1,650,000 00 186,2.1000 lRa,7.50 00 227.400 00 lW,OOO 00 155. nXJ 00 194,(100 00 Payable in Canada ............. .

.

.

... .. .. ............. PaYfl.ble in New York .. ......... ... ...... .. ... .. ......
Payable in London ..................................... Leu bondll Ilond IItoeks of the above loanll held Ilo8 sinking lunds (estimated) ............. ... ... ... .......... ............ ........ (al Tu free iD Canada 125,081,459117- 74·27% 13·450/0 12·28% 100 % 3,337,332,404 46 2,478.4ft4,R07 67 449,000,000 00 4Oft,B67,5oo 79 3,337,332,404 46 61,758,481 55 3,275,573,02278 7'he Bwlr;ct-Mr. Dunning COMMONS to there addition, securities arc other guaranteed l~olm;CT L1,\1IlLITlf.8 Bonds and uebenture stock:; beo.ring the guarantee of the dominion outstanding in the hnus of the public at the close of the fiscal ye-lI.r will amount to 11,003,000,000, an increase of S9.OOO.OOO o\'cr the same date a year ago.
This increase i3 due mainly to the issue of dominion refund matured or called debt of the Canadian National Railways which had not been guar· anteed.

In conlingent liabilities arising out of guarante-es gillen under relief and other acts.

During the ;year the only new guarontee was lhat in connection with the hom(' improvement pJ:l.n under which the government guarantees approved lending in 1titutions against loss up to 15 per cent of the 199regate amount of loans made by each lending institution.
The limit of the aggregatll this plaD will be loans to be made under 850,000,000 and therefore the m.1ximum can· tingent the government will be S7,500,000.

As at January 3t, 1937, the II.mounl of guaraulee WaiS the 11,501,000. total will be 00 March 31,1937, as an accelera· tion of lending activity is expected with the approach of the spring building !

;ea::lQn.
;ea::lQn.

I am glad to be able to report that as II result of the policy of orderly marketing aod the rise in wheat prices to which I have alre9.dy referred, bank loans which were made to the Canadi:ln wheat board unaer our guarantee have been completely paid 01T, as well as the loans made from time to time directly to the In a report made bo:ud by the government.
public on J:l0uary 4, 1937, the Wh"'at Board 8&a.ted that the tOlal wheat and wheat cnn tracts which had been taken Oller from Caoa~ dian Cooperative Wheat Producers Limited as loans subject It is difficult to estimat-e what liability of such to 31, 1936, July of December 2, !93,'i, amounted to 205,186,980 hllShd3.

As of that date the board ulso held OO,ISG,986 bushels of 1935 crop wheat making a total holding as of that date of 295,373,966 bushels.
The wheat 3nd eontr3cts taken o\·cr from Canadian Coopenllivc Whtlnt Producer;' Limitcd plus the total receipt.s by the board of 1935 cro;> wheat t.o the end of the crop year on 355,927.200 bushels.

By .Julr 31, 1936, the board's total holdings of wheat Flnd wheat contracts had heen reduced by sales to 86,729,4J3 bushels.

Evtln after giving effect.

as of March 31 last, to the payment of $15,856,000 which we made to the board, the board on the liability of that datc for guaranteed bank advances was stiJ!
sl1b~l:l.nLial.

To-<:lay the board has out· standing no loans from the chartered banks or the dominion goveroment or from any other source.

aggregated There is still outsl.D.nding the dominion's guarantee to the Winnipeg Crain and Produce Clearing Association Limited given to assure the due payment of day to day margin moneys which may be paysble by the wheat boord to the a5Sociatioll arising out of tr::msactions and tTildes in grain made by the board as a mem ber of the a&lociation.
These margin deposits are made 'daily and DO liability llccrue9 from d/lY to day.

The government's guarantee of bank adllances: for the purchase of oats by Cooperative Wheat Canadian Producers Limited fot account of the pro\'ince of Sask3.t chewan ia at the amount of bank loans February 1, 1937, out.standing subject to this: guarantee was $384,700.

outstanding.
outstanding.

also still All I now place on Hansard a table giving the principal amount of the bonds and debenture stocks and other indebtedness guaranteed by the dominion which it is estimated will be out· standing as at March 31, 1937: BONDS AND DEBENTURES STOCKS GUARANTEED BY DOMINION GOVBRNMENT AS AT MARCH 31, 1l13?

Date of Mllturity Issue· tnWTClIt Rilte % I, 1!l38 ..... MIlY Feb. 15, 1!l13.

1.

1\W4.

Feb. May ]9-14 ••.

I, Jul)' I, illiG, April I, 194!J.

Dee 15, 19SO, I.

1951, Sept. t'eb.


1, 1M:?

Ault.

I.

195:!.

~·eb.

15, 19$3.

July 10, 1953.

I, 1954.

Feb. ph.

Dunnillll'.]

Co.nadian National.

Canarlia., National.

Canadian Nntionnl.

Cll.nlldian Nll.tion,\I, Canadian Northern _... New Westminllter Harbour CommIS8ionen Canadian National............. ClIlladian National.

.. Canadian NlLtional.

Saint John Harbour Commis.sionere Canadian NationaL Canadian Northern Canadian NationaL .

_ .

.

.

.

.

.
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2 2 21 3 'I"3., 3, 3, 3 Amount Outstnnding • 13.400.000 00 M,OOO,OOO 00 IS,~OO.OOO 00 35,000.000 00 24,nS.000 00 700.000 00 20,~,OOO 00 50,000,000 00 20,000,000 00 007,9.

'\:1 04.

25,000.000 00 9.359,99lI12 50,000.000 00 FEBRUARY 25, 1937 1237 The Bu.dget-Mr. Dunning DONDS AND DEBENTURES STOCKS GUARANTEED BY DOMINION GOVERN~tENT AS AT MARCH 31, 1937-Collcludd Date of Maturity Issue I, 1955 .......... Canadian Kational (West Indies) Steamships Mar.
Limited .......... ...... ...... ....... ....... June IS, 19~ ....... ... Canadian National.. .. .............. .. .......

I.

1956 ..•..•.•.

Canadillll National.. ........... ...... .. ....... Feb.

I, 1957 ... ...... Canadinn National.. .......... .... .. .. .. .. .

July July 20, 1958.

.. ..... .. Can"dian Northern........... ..... ..... .... .. .

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1900 .

... ...... Canadian Northern Alberta.. ....... ... May May 19.

1961.

......... Canadian Northern OnUlriO.... .... ......... .. .

I, 1962.
I, 1962.

......... Grand Trunk Pacific ...... ............ ........

I, 1~2.

......... Grand Trunk Pacific ....... .. Jan. ... ..... .. ..... Jan.

I, 1969.

........ Canadian National ....... ..... ... ...... ... .. .. July I, 1969.

.. ...... Canadian National.

................. ... ... .. .. Oct.

I, 1969.

........ Harbour Commissioners of Monll'f!al.

.. ...... .. Nov. .... ....... ... .. ...... ClllIadian National.

.. ........ Feb.

I, 1970.


By drawilWl... ,.. ...... Canadian National, .......................... Vatioull dates, 1937.54 ... Cityo' Saint John DebcntUTelllWlumed by Saint ..

Serial Feb. 1 and AUi.I, 1931.s8 ........ ..... Canadian National Equipment ..G............. PerpetuaL ....... ....... Grand Tl'Unk Guatanteed Stk................. Grand Trunk Debcntul'f!

Stock ................ ....... Gl'f!at Weswm Debcntul'f!

Stock ........ ... Northen Railway of Canada Debenture Stock.
..... .... ...... ............... ............... Grand Trunk Debcntul'f!

Stock .... ............ " " " " John Bsrbour Commwion ..... ..... .. ... ...

Various Interest fu" % , 41 3 it !l , • , , , 2 • , • , • • Amount Outstluld ing • 9,400.000 00 50,000,000 00 70.000,000 00 6.

'i.000,000 00 7.896,54621 3,149,998 66 34,229,99687 34,m,000 00 8,440,848 00 GO,OOO,OOO 00 60,000,000 00 19.000,000 00 18.000.000 00 24.2O.
'i,6!1553 2,250,000 00 GO,833,333 33 1,197,641 " 20,782.4'J1 " 13,252,32267 119,839,014 33 ],499,97967 1,003,335,808 42 Other Indebtednen Guaranteed Rank advancea, re pro,'ince of Manltobs Savings Office ...•.. Rank advancea, re governm~nt of Newfoundland .

Bank Ild"anccB, re Dominion Steel and Coal Corporation (order for rsila) .

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re Canadian Cooperative Wbeat PrClducertt Bank advanceA.

Limited (Saakatchewan oats aecount) .... , .

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ReAerve of chartered banka on depoait in Dank of Canada ....

Guarantee of home improvement loana (15 per cent of aggre- gllte loans made) .

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E~timated principal amount outstanding March 31, 1937 $ 7,121,825 625,000 144,282 626,534 1l,894,127 (Feb. 20, 1937, 386,988 192,94,6,716 lFeb.

13, 19371 Feb. 17, 1937 225,1110 (Jan. 31, 1937) r now come to the budget forecast for 1937-38: BUDGET FORECAST-1937-38 to restore r have already atated that the over-all deficit for the current fiscal year is estimated at 187,395.000.

While it is the smallest deficit since 1930-31, nevertheless it.'
magnitude is such lIS to indicate the necessity of unceasing effort a balance between total income and total outgo at the earliest possible In the budget of last year I dis moment.
the dangers involved cussed in some detail in anoulII large deficits and defined the government's policy u one which sought "an immediate, appre ciable approach to a balanced budget as the first step in a definite, positive program which will assure the attaining of our final objective continuing ~eries of the I I hoped that thE!

current Yf'ar.

At within a limited period."

then indicated the measures by which it was propol.iCd to reduce the previous year's deficit by approxi.
matcly $60.000,000 to a figure not in excCl'S of $100,000.000 for that time, while I did not expressly state my expectations in \·iew of prevailing uncertain it would be possible to ties, to S50,000,000 for 1937-38 reduce the deficit nnd to wipe it out altogethcr the following It now seems probable that thi!l objec yenr.

tive will be within our powers of accomplish.

ment.
ment.

The the main estimates, which are intended to provide for the ordinary operations of government, call for I the expect the various departments, under of 1410,467,000, and approprill.tioDll house will recall that 1'38 T1:c BlIdflr.t-Mr. DllIl1lin{l COMMONS be t'Stim:\l.ClI which will consistent prNure ~'hich is being eXeTtcd to effect ceonomics anti hold down c)(penditurcs, to keep their attu:!.]

expenditures below the lllto'"TegmtC :\flrl'Opri:ttint'lll hy a., mllrh lU lh'c to ten million riollnD.
The speeial S\lflplc.

menw.ry tabled shortly :lnd are intended to make provision thOMl slXcbl or emergency 0«'(1, arising for out or the abnomll\!

cooditioM now pre\'ail irag.

im]i~te .. mnximuffi LOl.d expeoditurf!

of about 100,1)00,000.

Lnter, the usual provi sion "dll be necessary b)' limy of ordinary a modcr3te supplcmcnL"ll'}' for In this further amount of expenditures.

tho I wish to lI.nDouncc conoeetion.


government ha.a decided to recommend to the honse the restoration of the 5 pet' cent deduction from civil serVAnts' salaries, effective from the beginning nr the new fiscnl year, and the neccssnry provision will have to be made the 8tlpplemenl.a.l'y estimates.

Making in allowances for these additional expenditures, we may estimate the total expenditure for 1937-38 at about $520,000,000.
f'Stim:Hcs thnt it lor to eatimate \'ery difficult realize that at The house will is tbi!

early the date revenues for nut year witb the &arne UlIUr ance as in previous budget.!
!, However, iudg ing by the way re\'enues have been running during the last lew months, and based on the twelve months, r tati outlook lor the next mste that the fi!e:al year 1937-38 our tax structu~ 1ri1l produce an .ggre present gate revenue of S485,IXXUXXl deriyed lrom the usual sources as rolloW1l:- Tu:ation Rl!venue- CuttOmJ dlltie.,.

Euiae dutie.., IDcome t.x S:lle- tas .

Manuf.cturera', ltaDlPt, importa· tiou and otber .pedal taXet.
Banka and inlurance rompanin .. • ~.OOO,OOO 47.500,000 113,000,000 131,000,000 42,000,000 2.000,000 .. .

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.. .. , Total ta:Ulion revenue .. '.2:1,500,000 NOI1·tu Revenue-- Post office recciptl llllere~t 011 Other in-'utmenta .. .

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36.000,000 11,600,000 1l,900,OOO Tutal non-tu: revenue .. • .59.50<1,000 Gnnd totlll revenue .. '48MOO.OOO This estima~ takes no account of any receipt.!!

and credit.!
and credit.!

and representlJ apecial a lower rate of increase than took place dur ing the prescnt year even after making .Ilow this year's increase ance for in receipts which wu due to increased tas rstes.

that portion or If this estimate of total revenue is f80lised .lnd if aggrepte expenditures are kept 'lII'ithin the t'Stima~ figure of S520,llOO,ooo, the over· I:\I •.

D...........

I I for the coming yea~ should not all deficit Stating my expectntions exceed $35.000.000.
shall be greatly diSKp in another way, pointed if we cannot keep Ollr total deficit represented by lo:l7..JS within the limit for the net ~sh deficit of the Canadian N3tional If we c:m sttain this objec l':lilWl1y s~..stem.

tive in 1937...18, I am confident that it !hould not be Ix-yolld our powers to wipe out the dcfici~ altogether during the follo'lll'in,; Yellr :md begin the period ...hen.

progress eRn.

be made in liquidating the accumulated deficits .hich have been funded durin,; the depres sion.
That ia the g031 .hieh we must steadily keep in sight.

Lan year.

the gap between toul income and total.

outgo made it essential to impose a substantial increase in tu:ation.

levie:J.

The public accepted the imposition is true, of these new burdens, not glfldly it but nevertheless with a lure lense that it thB.t a seriolls thing to do, Wall problem exi:sted and that it had to be faced aquarel)', thous;h aaerifieell might be involved.
Fortunately the increase in the total income of the people has reduced the weight of the the progre!S that haa burtlen.

B.lready been made and the outlook lor the immediate am in.deed happy to I inform the house that it is not my intention to rerommeod any increa.ws in taution lor the coming year.

the size of In view of the right future, Tuation Changes The income tax will con.linue OD the present to Furthermo~, no alterations are basis.

be made in rata of taXe& either under the Specis!


War Revenue Act or undcr the Excise Act.

The only changes proposed are a lew minor addit.ionl to the llChedule of exemp tions under the Illes tax.

Articles specially the blind are to be designed for use of gh'cn exemption.

Art work and printing plates made therefrom for non-advertising purposes in periodicsl publicltions will also be exemptOO.
Other items to be added to the list of exemptions are raw and salted hides, certain refractory materials, spinal braces and ingredients used in eannin;{ parts thereof, fiJlh, and part.!!

for grAin and seed cleaning machines.

TRADZ AND TAItT"1 I turn now, Mr. Spuker, to msttef3 relating to trade and tariffs.

The expan.sion or our foreign trade is undoubtedly the out.staading lestun!
of the recovery movement in Canada duriag the put year_ The acceleration of fOn!ign demand lor our producu hu probably been the most.

important single ClU!Ie of the It hu increase in our productive activity.

provided expanding and profihble mmetlJ FEBRUARY 25, 1937 The Budget-Mr. DUllllin.g 1239 for our great primary industries and as a reo sult of this impulse ncw virour has been infused int.o all our industries.
Foreign Trade increase is all In the calendar year 1936 Canada's export the trade passed the billion dollar ma.rk, higest le\'el since 1929.

Indeed, taking account of the lower level of prices, the physical volume of our exports was about equal to the 1929 le\·el.

The value of our exporLs, including commercial gold, reached a total of $1,027, 901,000, a gain of $189,559.000, or 23 per cent over 1935.
This the more significant in view of the lact that agricultural and vegctable products which accounted for 47 per cent of our total exports in 1928 were only 34 per cent of the total in 1936.

Imporla for the year amounted to 1635,191.000, which aceeded the 1935 tolal by 18(,876,000, an in crease of 15 per cent.

Our total foreign mer chandise lude for the year amounted to $1,663,()93.000.

This was an improvement of tbe previous year, or an $274,435.000 over increale of 20 per cent.
The latest avail able figures for exports show a percentage increase for January of this year, even greater thsn that for tht whole year 1936.

The in crease in January, 1937, over January, 1936 waa nearly 29 per cent.

As a result of our gains in 1936 Canada bas movcd up from fifth to fourth place among the nations of the world in ex· port trade, wbile retaining her position of fiHh place in total trade.
that the improvement is by no meens This expansion of our foreign commerce of course reftecls in part in world trade conditions, more stable currency relations in foreign exchange markets.

and a improvement in the demand for raw general the material!.

But whole story.

For while the total internatio:lal trade of the world, as indicated by figures for 73 countries published by the League of Natiocs, is estimated to have improved by about 8 per cent in 1936.

Canada'a total trade showed an increa9l!


of 20 per cent.

As our own trade gain is 80 much above the average of other countries I think it is not un1'f!lson· able to interpret this as dear evidence of the success of the government', t.rade policies.

.... statement of tolll merchandise tTlide for the twelve months ended December 31, 1936, with comparative figures for 1935 follon: Imports .

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: Caoldio.n produce.. }'oreign llroduce.. .. •.

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.. Trade of Canada.

(indudes commercial gold but not monetary gold) Calendar Year 193G $ 5:iO,314,551 1936 $ 635,190,8U 825,284,114 13,058,945 I,OU,20S,43S 12,696..5 HI '1,388,657,610 $1,Ga3,01l2,798 Increaae • 84.876,293 • 274,435,188 189,021.321 -362,426 The flgurl!l!l just given show that Canada established on merchandise trade account a If to very substantial net credit balance.
the export figures already given we add, as we should, the gold earmarked during the year snd held by the Bank of Canada for clients abroad, that is, gold of our own pro duction which would otherwise have gone abroad and ls, in fact, owned abroad and paid for so far as we are concerned, then the excess of our exports over our imports would have amounted to the very impressive total of $452,000,000.
The credit balan~ on com modity trade aloDe, excluding gold, was 326'9 million dollars, and was the largl!l!lt reeorded aince 1925.

Preliminary estimates of tourist trade ahow In inereasiDg stream of visitol"8 to our country, aDd aD expenditure here lut year of about $250,000,000, an increase of more !.han 24 per cent over 1935.

After de ducting estimated Canadian tourat expendi tUrI!lI abroad there still remaiDf a net credit balance on tourist account of $165.000,000.

Adding thi" to our merehandi.


!e credit just referred to gives a total credit balance of no less bhan $617,000.000 on account of mer chandise and tourist trade combined.

This credit balance, Mr. Speaker, gave Canada an ample supply of foreign exchaage funds with which to meel interest and divi· dend payments to foreign creditore as well as other invisible debit items in our balance of payments, and at the same Lime enabled us reduction in our net capital to effect a very sub>lantial indebtednes.s abroad.
In examining the distribution of our trade among countries during the put year we find that the United Kingdom purcha.scd from us just over $400,000,000 worth of goods, which was about 39 per cent of our total exporl.

!, a percentage slightly above that of the previoua year.

The British Empire, as a whole, took about $486.000,000 of our total sales abroad as compared wit.h S382,000,000 in tbe previous year.
While the greater part of thia additioQAI !2~O COMMONS 'fhe l1udoct-Mr. Du.ming \'olllinc ~otjl within t.he elllpire went to the Unite'd l\in~,loln, nc\"crl.hclcM South Afric:l, AII.4ralia nml New ~e:.lland nlso pllrchnsed slIhsl:lI\t.i:llIy morc from us th:l.n in HI35.

Imports irom the United Kingdom IVere s!i\:htl.v hiA:hcr tolnl of $123.0nO,OOO ns cO/np,lfNI with .~Il7,OOO,OOO in volume, re:J.ching :l for the previous YC:lr.
From the empire M a wholc our purcha£es IVere up over $15,000, 000 in Hl36 :lS compared with 1935.

I desire now to place on Honsard figures lr:\lle with lhe United Kingdom a.nd showing: with the empirc ll.S a whol!

!, for the calendor )'O:lr !

!)3fi.

with comp:l.Tati\'e ligures for HI35: Trade of C~n"<l" with Empir!!

Co"ntrie~ (indlldL~ commel'!

!i"1 golt] lIut llot monetnry ~ol<!)

IIllI>ortl< from the UnIte,!

Kingdom Exports to the Unite.!


Kin~,bln ImlJOrts from the Briliah Emrirc .. Exports to th... Rritish Empire .. .

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for tol.lll ratCll on January 1, I 8.ln sure it will be a matter of spedsl interest to the house to observe the growth trade with the United Slates, us we in our full ye~r's cxpericnce under the now have II opcrntion of the ngreement which established nelv 3chedules of !936.
During the year our trade wilh the United SUites, including commercial gold, amounted to $787,000,000 as compared with $683.000,000 for 1935, 3.n increase of $104,000,.

If we exclude commercial 000, or IS per cent.

gold entirely from the figures the lwo year3 under comparison we find that the trade increase in 1936 w&s just over 22 per cent.
Calcullitcd on lhis same basis, exports to the United States were greater by 26 per cent, while imports from the United States were It will be noted that higher by 18 per cent.

these percentage appreciably increases above the corresponding increll.llU in our trade eountries.

The increllSe in trade with all with our ncarest neighbour is ample evidence of the benefits whieh follow a policy of serking wider msrketa through trade agree in summary I ment.'!.

the strps which have been taken by fl\.5hion.


the government in this direetion during the past year.

shall now review, are TRADE ACRf:EMENTS A.'!

a result of negotiations, Russia rescinded an order of April 20, 1931, which had pro hibited an importing organizations :Lnd trade representativcs of the Soviet Union from pur chasing any goods of Canadian origin, as well lI.ll from chartering Canadian v~els.

Can3da., on hcr part.


rescinded lhe Order-:n-Council of February 21, 1931, prohibiting the importa tion from the Soviet Union of coal, wood pulp, pulpwood, lumber, IIlIbestoa and dressed furs.

trade A provisions!

flgreement waa con cluded with Germany on October 22, 1936, whereby each country conceded to the other a guarantce of mosl-favoured-nation treatment {)'lr.

Dunninr.'

C"lendar Ycu 10:15 $116.670,227 3Ui.714.


:'ltH li3.888.810 382.:222.!l52 1936 $122.1171.264 400.749.316 18n.31n.021 485.G19,218 in tariff matters.

Associated wilh this was a. that "pnyments agreement," which provides exchange accruing from German expor!.tl to ClInada shall bc made a.\·ailable for the pur chase of C3.nauian goods.
Definite percent ages of this exch:loge are allotted for the pur chase of commodities of' such interest to Canada as wheat, apples, cheese, honey, fish, fox skins, asbeatoa and lumber.

The Cat!adi,'tn-Po!ish oon\'ention of com merce was brought into operation, providing for exchange of most favourcd nalion treat ment between Canada and Poland.

and for special concessions on both sides with respect to a limited list of artieles.
intermediate tariff in return for most A former arrangemcnt with Brazil, whereby to Canada coneeUed her Brnzil favoured nation treatment, was termiD::l.ted by Braz.il on July in pursu:lnce of her policy of cao 30, 1936, celling all old trade agreements.

Following ncgotiations, Canada retained the benefit of the Brazilian minimum tt1riff (which is about less than the maximum) on al1 one-<\uarter the goods, Canadian intermediate t.ariff.
in return for granting to Brazil treatment '''ith another South AmeriC:lD country, UrugUS)', Canada signed an agreement on August 12, 1936, which providcs for exchllnge re oj most-fAvoured-nation gnrda customs ullties and related quutions, including l'Juotas and allocation of exchange for commercil'd transactions.

Uruguay is to accord Canada her normal thus ensur ing C:J.n.

'l.dian goods a.gainst a tariff one-half higher, which, under Uruguayan tariff regula.
tions, may be applied to countries not offering reciprocity.

tariff, as The trade agreement of 1932 between Canada and New Zealand, which was drawn for only one year, has been kept in operation by several renewa.ls; on July 22, 1936, the agree ment was extended until September 30, 1937, without further amendment.
FEBRUARY 25, 1937 1241 The Budr;ct-Mr. Dunnin~ sir, All you now know, Canada-United Kingdom Trade Agreement regarding the These general observations expansion of our import and export trade con stitute a fitting introduction to the presenta_ tion lo parliament of the new trade agree ment which has just been concluded with the United Kingdom.

The speech from the throne intimated that agreement in principle had been reached between the two govern the new ments.
trade agreement was signed on Tuesday of these this week, anr!

at the conclusion of lay it upon the table of the remarks I shull should state that house.
At by arrangement with the government of the Unit.ed Kingdom, which is as anxious as we are to put 'the tariff changes arising from the the earliest possible agreement moment, it has been agreed that the provisions of article 9 and schedule "E" of the 1932 agree ment shall cease to have effect from 12 o'clock to-night, when the provisions of articles 6, 7, and 8 and schedules IV and V of the new agreement will be in effect.
into force at this point I realize in almost The extent and importance of Canada's trade with the United Kingdom would enable me to give a much more imposing statistical presentation than I used earlier in these re marks.

But in this matter widely known and well understood facts make mere figures seem that Canada's superfluous.

We all most prized market has been and continues to be the United Kingdom.
Every Cana· dilln minister of finance, every budget speech, has had occasion to refer to In going last summer to London that fsct.

to initiate the negotiations which have re to be tabled this sulted in the agreement afternoon, Canadian ministers realized that they were setting out upon a mission the ob.

to jective of which was not hold the most valuable market this dominion has ever known.

As to how or when or by whom that great market was gained for Canada is not a matter about which we need dispute.
Former Liberal administrations were pioneers in seeking it out aod securing it, for they first conceived and put into operation the principle of gi\'ing to British goods a pre· ferred position in our economy.

But th!!

good work initiated in 1897 has been carried on by all succeeding governments in Canada., however greatly the \·iews of the major parties might differ as to the best means of attaining the objeeti,·e.
While those of us who sit right, Mr. Speaker, may not now to your tile same methods as our predecessors, adopt believing our own to be better, we readily they and we have been and are admit actuated by a keen desire for the beat good to capture but that of our country.
Our objective, may I l(:pellJ, at London lust to rf!tain for l!ummer was Canada a magnificent market; and I am cer the opinion of this house and the tain that country will be th/l.t the ground which hilS been won over maoy years hns been held and consolidated at n minimum of cost.

Careful examination of Time will permit me to review only briefly the general principles underlying the agree ment and to summarize its main pro,'isions.
the articles in the agree Needless to sa.y, all the items comprising the meot as well as schedules thereto, will be open to ~b.e fullest discussion when the House is in committee.
the provisions of the new agreement, which can only be made in committee, will I think, convince the house that a successful effort has been made to bring the policy of Briti.sfJ preference, which successive Canadian governments have main· tained for forty years, into closer alignment with the trade policy to which this govern ment stands committed.

The present agree· ment is in no sense a simple renewal of the trade agreement between Canada and the United Kingdom signed at Ottawa in 1932.
The detailed differences between it and the one which it will supersede will be developed in committee.
From the beginning, however, it should be clearly understood that through· out the negotiations which resulted in the the Canadian government present agreement, has insisted on brosdening the opportunities of international impairing the trade, without the Bl'itish prefer practical effectiveness of ential system, and hAA endeavoured to apply within that Ilystem the principles of com¥ mercial policy which it hopes to see realized in the economic relations of Canada with the rest of the world.
The measure in which these objectives, which were in large part shared by the government of the United King dom, have been attained, can only be' ap preciated by a close examination of the text of the new agreement and its comparison with the Ottawa t.he corresponding provisions of agreement of 1932.

The goal of both the United Kingdom and in int.ra-imperial.
the Canadian government as in international is the lowering of trade, tariff barriers and the freeing of trade from fettering restrictions; and the preamble to the agreement is evidence of a new emphasis on the importance of increasing the volume of international and intra·imperial trade, and a departure (rom some of the earlier forms of preferential policy, which were too much concerned with diverting a diminishing volume of uneconomic channels.
trade into unfamiliar and 1242 COMMONS 'the B'ul"el-Mr. Dunning tht!

pro\'isions of sholV tha.t !\n examillation of the changes in the .struc \'lr~ of the Canadi:J.D tariff resulting from the applic.

'ltion of the new 'lgreement will the emphasis on trade expansion in its preamble is not mis pl:lccd.

Alt!Jough actual margiTLi of prefer ence on li9 item.;!

enumerated in schedule IV will be incre.

'l.Soo, in each case this increase is a consequence of a reduction in the duty against the United Kingdom.
No preferences 11:1\'e been enlarged or created b.r increasing rates of dutY against third countries, and t.he concessions madc to the United Kingdom have been by way of lowered duties.

H should not be neces.


;;ary to stress the fundamental difference between this approach to the prob treatment and that which lem of preferentinl resulted in the 1932 agreement, in which a brge proportion of the preferences guaran to the Unitcd Kingdom were created by teeli raising the intermooiate and general tarilTs, and coupled, in a number of cases, with higher duties again8t the United Kingdom itself than had formerly been in force.

H will be found.
in comparing the tariff itcms in schedule IV on which the preferentill.l rate is reduced, with those in schedule I of the Canada-United States trade agreement, in which special reductions below the interme diate tariff were accorded the United States, there are very few item~ which occur in that both schedule~, The explanation of the fact that to the United Kingdom and to the United States are largely made OD different commoditie~ lies in than competitive the complementary rather the bulk of Canadian imports character of from our two chief customers and sources of supply.
enumerated conceS8ion~ tariff i~ the elTort further evidence of The reduction in the number of tariff items on which margins of preference are boun,1 against decrease, from 215 in the 1932 agree ment to 91 in schedule V of Lhe present agree menc.

tb:lt hn~ been made to reconcile the principle of preferences with the necessity of removing barriers that stood in the way of internation:lI trade.
The new agreement achieve~ a radical and far-reaching revision of the re~trictions which its predecessor put upon the freedom of Canada to negotiate for the reciprocal reduc tion of tariff rates witb third countries.

Many items on which the differential margin be tween the British preferential and intermediate tariffs had operated either to limit Canadian trade tre.
'lty negotiation~ with foreign countries, imported or domestie to maintain price~ of goods at unduly high lcvets, or in which five years' experience had ~hown that United King dom industries had not made.

or were not the preferences flill use of likely to make, [~lr.

Punninl]:.1 afforded thcm, have becn dropped from the .schedule, and, in twency-one case~, the mar gins of preference on items remaining hnve been reduced.
In addition to the limited number of fixed margins of preference provided for in schedule V of article 8. there is provi~ion in article 7 for a sliding margin of preference on United Kingdom ~oods, which nre enumerated in schedule IV, dutiable under that schedule and "not of a claS3 nr kind made in Canada."

I might point out that the obligation to main tain preferential mnrgins on goods in this special category i~ terminable at any time by the reduction of thc British preferential rate to free entry.
Further, eithcr government is free at any time to modify or suspend any of the margins of preference set out in schedules III or V, if it is satisfied that a combine or monopoly of exporters is exploiting its domestic consumel'll by virtue of there provided for.
the preferential margins that The gradual chaDge and diversification of trade between Canada and the United King dom has given a very real point to the grievance frequently voiced by British indus trialists who have been heartl to complain that while competitive Canadian goods could enter the British market free of ordinary duty and free of dumping duty, and in some cases be sold th£re at prices below the fair market value for home consumption of the !Ilme goods in tried to if the British manufacturer Canada, meet dumping by dumping, his efforts were effectively blocked by ordinary duty plus spe· cial duty, wbich kept the Canadian market a closed and profitable preserve for our pro tected manufacturers.
Such situations I know were not very frequent, but they could occur is sufficient justification for the inclusion in the agnemt:nt of a special provision article 12-under which the Canadian govern· in circumstanccs such as I ment agree that, have described, they will exempt particubr classes of United Kingdom goods from dump it ing duty.
This article is self-<!xplanatorv; think, be recognized as neither more will, I nor lei5!l than an assurance of fair play both for the British manufacturer and the Cana· dian consumer.

this evidence I hope that afforded by the presence of this article in the agreemen~r the government's determination to give no shelter or protectinn to unfair practice in e)irort or in itself lcad offenders to abandon the practice complained of, and make it unnecessary to apply the procedme provided in the agreement.
From this rel'iew of the a~pect.s of the new treatment or it will, agreement affecting the '"-:ff British goods imported into Canada, trade, will internal FEBRUARY 25, 1937 The Budoct-Mr. Dunninu J213 1 think, be recognized that the Canmdian gO\'ernment has succeeded in translating into polie)' thOEe principles by which, in opposition, its leaden mt:l&lred and criticized the C".1wa agreement of 1932.
It will be remembered that thl principal counts on which that agreement wu then judged and found ",an ling were, firn, th.t preferente h1d been increased by raisin, thin:!
eouolriee instead of lowtr rates Ilglinst thl1t ing them in fnom of Britain; second, an inordinate number of tariff rates were bouod against decreases; and, third, that the term of the agreement-it was fixed for five years 011 against three for the new agreement--was un duly long and restricted the independence or action of succ~eding parliaments and govern ffil'nts.
Under each of these heads, the new the conditions which the agreement meets prCl;f'nt Prime Mini!ter laid down when leader of the opposition, and.

taken as a whole, } think it can be regarded u the complement within the commonwealth to the United Slatell trade agreement in the internalional field.
for confirming, 10 Canada of Turnin&: now to those provi!ions of the new agreement bearing on the tariff Lreatment cf imported into the United Canadian goods im Kingdom, 1 need nol emphasiu the vital a portance further period of years, the Ilssurance of un restricted free cntr}' into the United Kingdom market, which perhaps more lhan any other einlle factor has &65isted Canadian economic Ion these years of constricted inter reco\·er}'.
trade, when high tariffs, exchange national reguilltions and quantitative restriction.
of ev~ t,'pe hl\'e limited Canadian C%port enlry into the United opportunities, Kingdom market has .,'eel the Canadian prohably economy could Dot import~ anee of external mark.ets to a country gKred inlo a ",orld economy needs no expounding and of exlernal marke1.S no other bas con through Canadian history to offer tinued all to the Canadian lumberman, farmer and fisher milD the f.reedom of ac<:ess which he enjoye in the United I{ingdom.

from strains Lbat ha.ve withstood.


it The free the continuance of The assurance in article I of the new agree free entry for ment of :::anadian produca i!

undoubtedly the great In main· aduotage which we nceive from it taining free entry into the United Kingdom induding manufactured for Canadian goods, products, we have kept open for.

further term of years a door that.

once seemed to be rapidly It is a motter of common knowledge clO!liog.
interesta, with appc that British indu:strial titee edged by their ~ceDt taste of tariffs, are anxious to round out their present protective system by the imposition of duties on manu factured gonda imported from Canada-nor to the continulInce of are Briti!h agriculturists by ..ny mesns recon ciled.

free enlry for empire produ~.

The fact that, in spite of the inl1ueoce of the!\!


powerful eeooomic groups, the gO"ernment of the United Kingdom were prepared to renew the assurance of free entry for Canadian produce is e"idence of their appreciation of the magnitude and ",lue of the reductions in duty on United Kingdom goods contained iT!.

schedule IV to the Dew agree ment.


factory, treatment the te8t of The trade figures that I am tabling in a separate document indicate much more clearly and vh'idly than any summary I could com· press into this speech, the runge of Canadian fisherifS, commodities, produce of forest, farms and mines, that are now being It is this exported to the United Kingdom.

i!
i!

in nat physical mO\'ement of goode: that the lut analysis tbe value to the free enlry into and preferen Canada of import lial market which the terms of this agreement usure us.

We are all aware of the import ance of lumber ~nd /l3.lmnn and apples and wheat-we are Jf'88 likely to realize thlt it is also a market for iron and steel products---for motor can aod machinery, manufactured of many kinds.
The exchange of goods between Canada and the United Kingdom is no looger merely an e;<;change of finishl'd goods.

in the world's grestest the British market raw materials for goods for I do not propose to enlarge on the items on ""hich the United Kingdom bu agreed to reduce or atabilize its lariffs.

The re- increased duction of duty and coosequent m:ugin of preference on natural !illt Itockinga will be of value to an export industry that hu, in recent yean, been supplying an in creasing shan!
of the United Kingdom's import 'l'l'hile the as!Urance that neither requirements, the duty on motor can and their parts, nor prefCTential content qualification their treatment, will be increased without the con sent of the government of Canada will remove two sources of uncertainty which have caused a major export inrlustry a great dcal of anxiety.
il might be noted that schedule In pllSSing, II contains the fint ratea by reduction of the United Kingdom in a t.rade agreemeot in mOllt of with a commonwealth country; the trade agreements concluded by the United }{ingdom in recent.

years that country has rerUl!l!d in tariff, to make any reductionl and confined its concessions to undertakings to inc:reue existing rates of duty.
Dot for As regards those commodities on which Canada is guaranteed the benefits of definite margins of prererence, I might point out that there are no articles in schedule IlIon which 1214 COM~ONS The Budget-Mr. Drmllil!9 m.ugin3 of preference were not bound in one or other of the ngTcoements ennelud~ by the UnitC11 Kingdom with the dominions in 1932.

Tl:ere were ::l number of commodities on which the same m.'l'bins were guaranteed t.o two or more dominions.
and there were o~her eonunodities on which a margin WAS gunr.

/l.nl.t!ed to ooe dominioD but of which lOme other dominion W:\S actually the United King doni'" largest supplier; for instance, the mar cin 00 honey \¥u bound in the New Ze.land .greement but C.n:u!a 8eIlt more honey t.o the United I{ingdom than did Kew Ztoaland, while the m/l.r;in on chilled lnd froren almon Wlll bound io the Nelvfouodi:l.nd agreement, aitholiloth Caoadn was as large an exporter of this product as Newfoundland.
In oego~in~iog the pre~eo~ agreement, we not ooly consoli dated the preferences !hown in schedules B and C of tbe Clnaoo·United Kingdom agree ment.

but added a number of preferences, which the United Kingdom was alre1dy bound to to m1intain and which Ire important Clln:ld;t. It is III Not only Ire no new commodities bound.

hut in 00 CMe hal'e existing margins of preference been increased.

true to the Uniled Kingdom as for Canada 5lIY for incorporated in the new tha~ no conce$llionl Igreement have imp.
'lired the tariff I.ret.tment In this ~nneetion, .. point of lhird countries.

Ihn is often overlooked by critics of the ~·!tem of prefereDce3 might be empba.siled.

Thc preferences enjoyrd by Canada in the United Kingdom market are realty extremely moderate and llre much lower in moat cases than ~he measurll of domestic protectioll eo jo)'ed in home marketa of foreign count.rie, by competing producers of those commodi ties.

The Id \'a!orem preferellces are .. a rule ten per cent.
and in no case ueeed ;ifteen per coent; the preferences e:rpreyed as lpCCific duties on foreign goods are approzi· to thit nately equivalent, at prescnt prices, 'llnge of ad ...,lorem rates.

Article 5 fall, into two parts-the first part, I'elating ~o b1COD and hams, corre9pOnds to srticle IV of the 1932 agreement, which as.. lured free entry of bacon Ind blUn up to a m~ximum of 2..500.000 hundredweight or 280,· 000.000 pounda per annum.
The new agree ment contioues the assurance of free entry and confirml the m.uimull'l of two and a baU the million hundredweil;ht lll.rgC!t actual shipmeots made by CAnada It U!ures Clnadian in any ye:u to dat!).

lumen an uninterrupted opportunity of ex· trlde toward that mni· psnlling their export mum 'lnd precludes the United Kiogdom from (almost double IMr.

DWlnin• .1 it.
DWlnin• .1 it.

part, agreel the usur:'loce of hringing importa from Can~da within ita gen trol I}'stem of supply regub.t.ion, ullius their rate of expe.nsion becomes "Ilbnonnal and to endanger the effective \Vorkin.!

; of such :II the syst-em of sUflply reg\llation"-.111d then only after conSIlIw.tion with the ClIDI1dian to government, which, for continue to furnish as close estimates as pos sible of the forward movement.s of baenn and ho.m to the United Kiogdom ID/l.rket.
The importance of f3vourable entry into the profitable and protected Britilh m:uket for bacon-which ii, incidentally, the only import market for bacoo of any conse- quence in the world to-day-is dCflrly shown in the supplementary statistical material which I propole to have printed for the convenience of members of the house.

At this time it is enough to 5lIY that in the last calendar yeAr, toLliI ex~that is Canadian eJ:.

out of pora-of bAcon and ham.


of 158 million pounds, 9S per cent of the tot.l, or more tban 154 million pounds, valued in e:llCest of $"...5,000,000, were Ihipped to the United Kingdom.

The safeguarding of this market, and the main.

tenance of our opportunity to expand our !Rles in it.

are in themselves major advan tagr.s of the new Agreement.

tbat It WlI, The special provisions of the Igreemeot re· lating to b!lcon Ind cattle represent In adjust.. ment oi differing types of economic orpni ution.
The generll assurance of e:llemptiotl from import.

duty hsd to be reinfort'ed-for these commodities-by guarantees the system of I!IIlpply regulstion which the gov· ernmeot of the United Kingdom hu adopted tor the protection ot it, domestic agriculture would not frustrate the purpose of the pte flOrence which Lhey were ready to accord to Canadian produce.
therefore, Deces cry in each cue to work oul in collabor:t.tion ~..ilh the United King-10m a method of lIl'Cur_ ing for Canadian farmers the opportunity to de\'elop their nports to tbe United KinpJom, without attempting to dictate to tbe United Kingdom government its domestic policy should take.

This method we think we have fioally fOUlld in article 5 of tbe new agreemeot.
which safeguard.ll Caoadian in1eresu Ind at the same time enables the United Kingdom to proceed ..ith a policy of marketing orpniution which they hope will in suble Ind remunerative priceJ for result baenn and beef, from which of eoune every CanadiaD producer of bogs Ind cattle will beoefit.

form that the The detailed Irrangements affecting clttle Ind beef are complicated and I shall reserve their fuller discussion for committee.
At this stage I shall only point out that our produce", FEBRUARY 25, 1937 124.5 The Budget-Mr. Dunnillg as the that that are guaranteed absolute freedom from import duty, the value of which is enhanced by the preferential margin creatlXl by the imposition 18 from December 1, HI36, of a dut), of a cent and a half a pound On foreign chilled beef, and a proportionate dut)· on foreign frozen beef.
Within the framework of the regulating the import of general scheme for cattle and beef into the United IGngdom, Canadian export!

of fat cattle and b!ef would bt free (rom all qUlntitnti\'e control 80 long 18 the aDnual quantities shipped do not exceed what "recent agreement describes is, 1933 and 1934, when the levels," number of fat cattle exporLed to the United Kingdom a"eraged 50,000 head as against.
In 6,{XX) odd in 1935 and 33.000 in 1936. pawng I might point out the irregular volume in ",'hich Canadian catLie move to the United Kingdom market, which in 1934 took 85 per cent of our exports as against only 7 per ce:'lt in the next year, illustrates the basic difficulty of adjusting our interest.

in resen- ill now a ing the right of access to what ~ondary market for our cattlemen, with the in United Kingdom's not unnatural securir:g a stable and uninterrupted supply of meal.
irom countries whose interest it would be to cooperate in its endeuoura to stabilize !Upplies and prices at a remunerative level.

I In the light of think, be agreed that the United Kingdom has gone :I.

10l:!g way to recognize the special charnc~r of the C:tnadian cattle export trade and to make !pecial allowances for ita: main teo.1nce under the international meat scheme which it proposc!!

to set up.
to set up.

thnt in the prcsent agreement to articles 5 and 18 of the 1932 ngreemeu' does Dot mean that the United Kingdom proposes to revert to the condItions which gO\'erocd the importation of live cattlc from Canada prior to 1932, or that Canada has any intcntioo whalever of alter ing.

to the disadvantage of the United King dom, wle regulatioWl for the importation of pedigreed slock from lhat country.

this situation it sbould, there ill DO counterpart The fact ioterest Cencro!
considerations of the 8ame order account for the disappearance of articles to to 17.

Surely this country has Bufficient interest in maintaining an efficicnt and Jaw-abiding customs administra.tion to makc onHded pro\,igions, such ILl article 16 of the old agree ment.

entirely unnccessary.

QUCBtiolll of de partmental procedure and organilltion, which are properly each counky'S domestic responsi bility, have been returned to its jurisdiction.
Formal changes of Lhis eharacter are of course subordinate the agreement and will not involve any inter ruption of arrangements thst bave been work· to the main purposes of ing to the genernl satisfaction of bot.h coun~ tries.

the those embodied are chiefly IV and V to Concessions in the Lariff treatment of United Kingdom goods which are to be made by Canada in schedules agreement.

Schedule IV enumerates the proposed redu~ tiol1$ in duties, while schedule V lets forth such fil.
:ed margina of preference III tbe Cana dian government undertakes to maintain in favour of certain IIpecified commodities origin ating in the United Kingdom.

For purposes of bre\'ity and clarity, it is ad\'isable to refer separately to these two schedules.

Schedule IV enumerates 4.25 tariff CI&.5Sifica tions of goods on which thia country giVell an undertaking not to increase duties of customs against Great Britain in excess of those therein set forth.
Of the 4.25 items, 2-16 appear for the purpose of binding as a ma:ximum the duty at present effective, and 179 for the purpose of reducing the exiaung rate on United Kingdom products.

Aa an indication of the scope of the reduction.a in duty, it may be stated that.

in the fiscal year ended Mareb 31, 1936, imports from the United Kingdom of the goods co\·ered by the group li9 items which are to be reduced were of valued at between 27 snd 28 million dollars.
Mr. BEKNETI: Are the 179 items to be bound at tihe reduced mte?

Mr. DUNNING: Yea, bound against crease.

in ObvioUllly, these represcnt time at my disposal will not permit detailed refer[!nU to the great num ber of commodities affected by the reductions in rate under $Chedule IV.

BC)'ond any doubt, the most extensive however, downward revision of duti<!S on United King dom products made at aoy one time since the inception of the British pre£erence.
These reductions cover an extremely wide range of semi-processed and fully manufactured goods of t.he kind which enter into the daily living of our people:- In foodstuffs and othcr edible commodities, reduced rates will apply on meat extracta, chocolate and cocoa preparatiODS, unsweetened biscuits, pickled and presCTVed veget.s.blea, marmalades and prescrv[!S, canned herring, and confectionery of all kinds.

Reductions ue proposed also on cigarettes.

15 well as on ale and beer.


A wide field of paper productll is affected.

including greeting car&, camera filma, elec trical insulating board, wall-papers, wrapping paper of all kinw, and "all manufactures of paper n.o.p.... including envelopes and &tationery.

1246 7'hc Budget-Mr. Dunnino COMMONS firebrick, earthenware tilell and block.!

for P:linls, varnishcs and lacCluers.

as well 83 I\'hitc lead, oxitlCil nnd fillers.


will bear lower from the United impo.sts on importation IGngdom, M will alao certain clay products.

not:lhlr and churns crocks, flooring, sanitary earthenware of all kinds, and variow types of English-made stonew:ue and earthenware.

tableware, cut glass ware, and certain sites and weights of plate glllSll are lowerl.

'd, and r:ltcs on all unenumer ated m:tnu(aclured articles ol glus lue also reduced.
The duties on gb.SlJ fox-lencing; ReductioM will apply on numerow primary and sccondnry products of iron and ateel, including hot_ or cold-worked bars Ind rod.ll; rounds and squarell of defined sizes; hot-rolled strip and hoop st~; poundage Ind other lorm; corrugated metal alloy steels in fbt tem s!

'leets and enamelled I ~eeta; saw steel, pered; fully finished atn.
'ctural steel; lOl'linp of iron or aleel; rsihray axles; cast iron and eut steel.pipe; wire cloth and netting, includ ing netting for coal-cluning machinery; ore and rock crushers, grinding mills, coal cutters and rot:lry coal drilb; blowers and rotary kilns lor metallurgical pur po3es; office machinery ol all kinds; vllcuum cleaners and sewing machines; lawn mower,) lod bllll and roller bearings; nuts, balta, butts IDd hingC!
; vitreous enamelled ware and other ihchen and dairy hollow-ware; sanitary ware ol iron or .steel, coaled or not; steel wheels tracklcaa trolley for buses; traM dynam08, engines; formers, generators and electric motors; elec trical precision io.strnmenta of various kinds; f9.

!teners, files and rasps; buckle!, Deedle.s and pins; aDd lurniture of wood or metal.

railway rolling stock; aircralt clasps, In cotton good.s, the reductions will affect printed, dyed or coloured labric.
"l; shadow~ cloth, gabardinea and certain cut-pile labriea; cotton handkerchiefs; book-binders' cloth, and certain fioe cotton labriea.

Practically al1 the major items in the wool schedule figure in the Hat ol propOlled reduc tions.
The following wool products are among those which will enter frnm tbe United King dom at lower dutie.s than heretolore; woollen and worsted yarns, whether for manulacturing purposes or for counteHale; pressed felt and wool filter cloth; hlanketa of all kinds; wool len and worsted fabrics "in the grey," im ported for finishing in Canada; practically all lines and weights of woollen and worsted and overeoatings; cloths, lciow, and many un woollen clothing ol all eDumersted articles manufactured from or contsining wool.
including suitings In 8ilk and artificial silk good.

'l there are including !.boae many imrortant r~r.

Dunnin&.1 reductiOD.

!, on woven fabriCII of 1111 kinds, embroideries, laces, braids ancl cords; nnd clothing :tnd wear_ in part of artificial ing: apparel wholly or silk.

The duties are reduced on kDilted garment.t, knitted underwear and knitted goods of all kinds; as well IS on hoaiery, glovC8 lind mitla.

rugs and c:trpeta, and linoleum.


Leather and leather products show reduc tions on belting; on glo\·et and clothing leather; and on all finisbed thlln lanned, n.o.p.

Similarly, duties are re duced on boots and ahoe.l; on trunka, bap and valises; on fancy cases and boxes, and on clothing made lrom India rubber or lrom wllter-proofed ColtoD labrics.
leather lurther and all Miscellaneous articles upon wbich reduced jewellery, nites are proposed includes braces, brushes of all kinds, pens and pencils, tobacco pipes smokers' accessories, photo graphic dry plates, abruives, medicinal and soaps, preparatioll3, pharmaceutical mucilage and adhe5ive pastes, aUl'lical dl'e»-' inWl' and bandages, manufactured goods ol liver oil.
blackinp and celluloid, drl$5iogs leather or mttal, articles of sterling or other silverwart, clock movementa and pa.rts thereof, children's carriages and aledl, picture and photograph frames, and woven dre3S lineDll.

halibut lor toilet An interesting feature is the provision lor the free colry, from the United Kingdom, of goods, otber than spirit.!

or wines, more tban 100 years old.

The undertaking to maintain certain fixed margins of preference applies ooly to the itClIl!
enumernted in achedule V, which seta forth in each irutll.nce the measure or amount the margin.

This scbedule conlaina 91 of the items as agaiWlt 215 in schedule E of agreemeot of 1932jmoreovcr, in 21 of ~he 91 item.s comprising the schedule the amount ol the margin to he maintained i.s materially lessened.
Among the 125 items upon whicb Canada is no longer (83 compared witb 1932) bound lo maintain fixed maTiins ol preference, are .many wohich will be of great value in trade negotiations likely to be entered into with other countries.

There is this lurtber important difference between Canada'.
com mitments IS to fixed margins in 1932 and the commitmenta being entered into tlHlay: tbat, except as regards certain primary iron and sleet commodities, by lar tbe greater part ol tbe scheduled items enumerate commodities not produced or manufactured commereially at aU in Cllnada, and, hence, entail no ele ment of protection lor domestie intercsta:.
The value of importa from the United Kingdom, FEBRUARY 25, 1937 The Budyel-Mr. DUlilling 1247 in the fi$eal )'ear 1936, under the 91 iteltUl on which bed margiu have been granted, Wll!

approximately 37 million dollal'll.

silk yarns covered with metallic strip, certain motion-picture equipment, corset rivets, and industry.
cotton laces used in the g:lrment thill agreement, In the tariff reaolutioWl wflicb I shall table on concluding, it i.s provided that the varioUll rates set upon United Kingdom product.s, .hall become Brit.iab under preferential rata in the CUlltomi tariff.

Thia ill in accordance with the practice followed for many yeai'll by Canada of generalizing within the empire to the greatelt possible ex tent concessions in tariff treatment granted to any one empire country.
This principle ill 10 desirable that, in Lhill instance, the govern ment ill disposed to apply it without excep in spite of the fact !bat there are in tion, volved ooe or two Hew in reepeet of which the chief beneficiary may be an empire coun try whicll afl'ordJ no preference to CAnada; in such iDltanctl!l, it liN within the power of the governor-seneral to withdraw from any lucb empire country the preferential treatmeot now volun tarily ez:tended to it.
non-reciproeating in eouncil We regard the agretmcnt at a friendly arrangement for doser economic cooperation, from wbich both countritl!l will benefit and by which no other country will suffer.

A liberal and moderate preferential policy IUch a. this embodie.

will 5IIppiement and agreement freer .trengthen the growing movement for trade within the world at a 'l'l'hole.

Other tariff propou.


!a, not diredly ~ ciated 'l'l'ith the United Kingdom agreement, while not great in number, are of importance to Canadian producing and conllUming inter ests, and of conKiderable IIignificance to coun triea wholNl trade with Canada hu been a flctor in the recovery to which I have pre viously referred.

Re\'isions in dutie.

which extend to intermediate tariff countries include reductions in the rAtes on cotton.
clothing of all kinds, as well ... 00 a wide rAoge of articles mADufactured from cotton; on various gums and rcsina u!ed in industrial proceMea; on well-using of steel for oil and· gas wells; on printing plates .nd paper used in the pro duction of periodicals; on parts for aircraft enginea; on a wide range of plastics and plalltic materials; on plate glu!, decorative marble, slipper cloth, parts of surgical inatrumente, and certain copper alloye.
Provision i. made for the entry free of duties from all countries of 8mall "perlJOnaJ girts," as well at for the free entry of strioged musical instrumenu certified to be more than 100 years old.
Various liquorice fibrtll and producu will enter at rates than heretofore, u will various lower egg~leaning fumigant, and folie, tnachillea, electric rasol'll, disinfect.anta, forged ateel allll-n TARIFF BOARn REPORTS Reports which have been received from the tariff board and which lind reflection in the tarilJ resolution.

moved, to-day include tho.


on cherries in solution, motion-picture equi~ ment, steel wool, hard rubber in sheets, and plastics, the lut named pro\'iding for a com pletely new lIChedule to cO"er thtlll!

products, DOW so widely used in iodustry.

The board has reported also AS regard.

chiffons and tilica mnd; and all reporb received I Ihall table tbi.

day.
day.

The board will have ready in the near future reports on other mattefl referred to it, and it is eJ:peeted that thtllC will be received in time for consideration by the goveMlmenl while the bouse i, still io.

committee of waY' and means.


Concluaion May I conclude, Mr. Speaker, on a note of cheer and of challenge: cheer, becaUlt the immediate outlook poiots to a continus the encouraging trends in economic lion of activity which I have already reported; chal lenJ\:e, because the prob1e'ms of depretaion we have still to solve and the new problems which will emerge with buoyanl prosperity demand the best that we are capable of in in forethought and io.

cooperative wisdom, endea,"our.


We may rejoice that we have been among the leaden in the degree of our recovery from the deptha of depressioD.

But we mve special problem.

inherited from the wa.r or arising out of our economic and politi DIll stTUcture with which we alI a people and at a parliament will be conIrooted for lOme time to come.

These probleme are by no they merely forbid com means insuperable; relaxation placency, sectional dissension or of effort.
They cl\n and will be solved u prosperity increalle.

!J, if only we take care to see that auch pro~erity is soundly bued and evenly distributcd, and if we ell put our shouklere in a common national effort.
to the wheel to diminish the I mfntion thcm here not joy which we naturally feel in the record of expandiog trade, increasiog hueineas activity, rising payrolls and impro\'ing revenues which I he.ve been able to report, but rather u a challenge to continued endea"our, to individ ual, corporate and national to a kcener sense of tTusteeahip in carryinl out our everyday bUslneM and civic responeibili If this challenge be accepted by the tiel!.

Cansdian people, that better deys indeed than we have yet known.
I am confidwt, air, lie ahead--better integrity,