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2362 COMMONS Thc Budact-Mr. Dunnin(l THE BUDGET ANSUAL FINA:'\CBL STATf:MJo.

:NT OF TilE NINISTI::H Of HNANCE Hon.

CHARLE.

::; A. DUNNING (MirusLr.r of Finance) moved: Th~t Mr. S['e~kcr do now le'wc the chair into commiHee of waya the hOII8e to 1:0 for nod menoa.

He said: Mr. Speaker, I rise 10 llddre~s you to-day, sir, not only with a due .

'5Cnsc of the higll privilege which is mine, but also with a dco::per sense of grave responsibility than I In times such as .these have evcr felt before.
the responsi through whioh we lire p.assing, bility of endeavouring to place before the house and the people of this country a ele.if and comple.te economic statement of (-he position of Canada, the !act.s regarding our governmentsl finances, and proposals for meet ing the situation thus revealed for the present 6sco.l yellr, is unusullJly great.
I know I shllll not ask in vain for the sympathetic attention of all my fellow members, although the pfP-sent-a.tion of figures wiU inevitably be 'ather trying 10 the patience of the hotl$C.

Before dealing with the government account.s trends I propose to survey briefly the recent of business and trade in Canada.

The mml welcome feature in the 6sca.l yoor which has just closed has been what it indi I do cates of & movcment toward recovery.
not wish to eXllggerate the extent of that recovery, for to those who are charged wit.h responsibilities of government in these ·hard dars the distance yet to go and the problems to be solved are the features of our still economic record which are most impressive and at the 8ame time mOISt distrcssing.

Nl!vcr theless, one cannot "iew the picture broadly without realizing tha.t improvement-however the gradual-is general underlone is one of definite strength.
In spite of prevailing uncertainties in the inter national political outlook and the persi9lence of extreme nationalistio pnlicies, the pressure recovery of continues.

Thcsa forces may be retarded but they appear now to be sufficiently powerful to make continuing progrcss, unless war, tbe great destroyer, should again intervene.
the econom-ic forces making for real and stcady, and that Analysis of the Canadian figures indicates that our past gains are being consolidated and the upward swing of the business cycle that is CUNently eslablishing higher of levels the industrial activity generally throughottt the index of The and commercial physical volume of business compiled by the Dominion Bureau of Statistics to indicate the broad movements of economic activity, stood this yoor as compared "t 103·3 in March of field.

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IMr.

Sprt.\rer.l with 94·2 for Maoch of last year.

This is an i.mpro.emcnt of a])proximately 10 per cent.

to a])preciate fully 'the significance However, of Lhia impro\'ement, one 2houW compare the le.el of 103·3 with the figure 67'0 present which was the lel'eI recorded ....t the Jow point of the depressinn in Fchruary, 1933.

In other words, the incre3se during this period has heen over 54 per cent.

The al'erage level of this index in each of the past three c3lcndar years wa.s 79'7, 94·2 nnd 102·4.
These increases are impressi.e, particuJa("ly when one recalls that \'olume of this indcll; mC3.

!I\HeS the physical output leading induslA'ie8 in nearly all our as well as freight traffic on our railways, build.

ing activity and domestic trade.

While I desire to avoid complicated statig.. tics as far as possible, it is necessary to refer to the progress made by a few of -the more impor.Lant Canadian industrial groups.
For the first three months of this calendar year, 1936, manufacturing of all kinds showed an average expansion of 8·5 per cent over the first quarter of 1935.

Within this broad field, the substantial improvement in the output of industry is par the primary iron /lnd steel ticularly heartening.
In the latter half of 1935, thi~ industry showed striking advances, increasing 23 per cent and pig steel output iron 48 per cent over 1934, and the improve ment W:lS continued during the first quarter of 1936, notably in January.

This, in itself, is e~ecially significant is important, but as indicating a broadening out of the recovery movement into the heavy or durable gooos industries.
The construction industry, while still operating on low levels, enjoyed subslantial percentage gains in 1935 over 1934, and the present outlook for build ing ILppe:JfS to be the best in several years.

abnonnlllJy it The forestry group of industries showed marked exp3nsion in 1935.

Lumber produc tion on the Paci6c coast was about 20 per cent grc3ter thlLll in 1934 and reached the highest point ~ince 1929.

Shingles found better mar kets abroad and export.s increased 96 per industry, although still cent.
The newsprint beset with abnormally low pniecs: and financial difficulties, increased production t.o new record levels.

Perhaps the most satisiactory evidence of improvement in this whole group of iudu8 tries is found in the increase of employment afforded by the industry--8 per cent ,in lumber ing and 4 per cent in pulp and paper plants.
The mineral industry continues to establish new records of output.. Canada's mineral out put, valued at over 308 million dollaf3 in 1935, recorded a gain of 11 per cent over the previous year and W!lS only 1 per cent below the record year 1929 when prices for most Production of gold, metals were higher.

MAY 1, 1936 The Budget-Mr. Dunning copper, nickel, zinc RDd several of the minor met.als made Dew high records.
Total output of gold amOtlnted to 3,283,000 fine ounces with a total Y.8lue at current market prices of ncarly 5115,000,000.

Increase in mineral output continued unabated during the fil'$t quarter of in st.anee, the export of Cl}pper was greater than in any other February, and export.'!

of nickel exceeded any olher month in history, the bureau's index standing at 400·2 as compared with 3'17,9 in February, 1935.

In February, for this year.


than in Ht34, but Unforbunately, our moot important primary industry cannot bOllst such results.

Agr~cul­ ture has again suffered from climatic ha.za.rds, restricted markets and low prices.

According to the bureau's estimates, toul farm revenue in 1935 amounted to $943,081,000, an increase of less than one iPer cent as compared with the pre\'ioM year.
Most disappointing was an 8 per cent decline in the value of the prin the field crops, chiefly as a reSlllt of cipal price facWr.

Wheat prices were generally the low grading higher reduced the resulting from rust and frost the crop to about value of the that of pre-v,ious year.

in yield of oats Increases and barley were more t·han offset by reduced prices.

On the other hand, the contribution of animal products to farm purchasing power more than made up for the 1058 in field crops.
The live stock industry showed considerable improvement.

Higher marketings of caUle and better prices increased the value of live stock sales in 1935 by 22 per cent.

Milk prices improved somewhat and exports of hog products to Great Britain expanded.
The .prairie provinces shared in the better returns from cattle and milk and a more uniform distribution of farm income prevailed than In this connection] may point out in 1934. that the advantages of access to wider marketll to the south are already being realized.

Three months' operation of the recent trade treaty offers evidence of its value to the farmers of thia country.
to provide markets for agriculture brings nearer that day when the Canadian farmer, receiving more for his products than it costs to produce them, will once more provide, through the st.imulus of his purchasing power, a sound basis for national prosperity.

Every step which helps in regard to My colleague, lhe Minisler of Labour (Mr. Rogers), has recently placed on Hansard comprehensive the statistics numbers of unemployed in various classifica tions.
One of the most disappointing features the business improvement so far is that of the numbers of those on relief do not decline at the same pace as business activity recovers.

The causes of this are chiefly to be found in the continuing growth of population bring- ing annually a Dew supply of workertl into the industrial field, .the customary initial effeetll of invention of new machine!
and processes, those the gradual decline in the number of unemployed or dependent who are taken care of by charity or by relatives, and the surplus labour power employed by many corporations which preferred staff to retain redundant time rather than to dismiss or to work short employees during the years of depression.
The bureau of While for these reasons, expanding employ ment makes only slow progress in reducing the numbers on the relief rolls, nevertheless the increase in emplo)'ment appears to be real statistiC8 and substantial.

tabulates monthly statements on employment from over 9.000 of the larger firms engaged in manufacturing, logging, mining, transporta tion, communications, construction and main tenance, services and trade, and employing some 45 per cent of the total persons at work in all industries.
From 93·4 on April 1, 1935, industries rOse to a peak the index for all of 107,7 on November 1, an .increase of 15,3 per cent, and w.ith the usual seasonal decline during the winter months the index stood at 97'4 on April 1 this year, an increase of 4'3 per ,cent over April 1 a year ago.
The index rose 10'2 per for manufacturing industries cent on and April 1 this year was still about 8 per cent above the level of the same date in 1935. to November from April information it Supplementing this is en couraging to note from date.

published by the Department of Labour that remuneration to wage earners in <1935 was greater than in 1934 as a result of increases in various industries and localities.

Part time and short time work were less prevalent.


In logging, wages ad~ vanced generally throughout the maritime provinces and Quebec, while in Ontario and British Columbia rates 'had risel1 considerably In coal mining, wages increased in 1934. appreciably in Nova Scotia and Alberta, and there were some increases in metal mining Improvement was also witnessed in wages.

manufacturing.

particularly in clothing and furniture factories.


Rates were raised in the construction trades in Quebec and Ontario, and railway wage rates also increased.

Long shoremen's wages rose in most of the ocean ports and in some of the lake ports.

Common factory labour was up 2·4 per cent, miscel and laneous logging and sawmilling 5 per cent.
factory trades 2·3 per cent, One of the most important signs of a more healthy business cOl1dition is that industrial and commercial earnings are contil1uing to show improvement.

An analysis of the record of leading Canadian cor porations discloses that net earnings are abou' the latest fiscal year 8 per cent greater for earnings of 241 236' The Bud/let-Mr. DltIllltllrJ COMMONS the previous fiscal period.
When than for showing an incre3.Sing SC:l.le of busine!l$ is earningll for anticipating further industrial and commercial improv(!mcnt with of ~mploymeot.

excellent incre:lSCd grounds volume there :nil A vcry intercst.ing fenture of our Canadian !conomy is the remarkable degree of sbbility in the price le\'el during the last two years.
the buteau's index was n·4 as For M:lrdl zomparOO with 71'9 a year ago, and since the range or variation from February, 193.5, the line of 72 per cent of the average level of prices during 1926 hll.9 been extremely small.

Further progress, however, WlUI made during the yeu in correcting some of the disparitiell between various types of prices created by the irastic fall in the price level during the larly years of the depression.
One important [eature of that farm product prices, particularly the prices improved more rapidly of animnl products, It i.s of vj~1 import than the general ance should this that continue.

this corrective process was level.

corrective proeesa The bureau interest.

computes legislatures, In this case, of course, One price whOlle falling tendency is watched with.

considerable enthusiasm in many quarters is the cost of money; in other words., the fll,te <if the -decline it a favourable factor.
This fnctor is usually measured by the yield on long an term bonds.

index of the yield on long term Domin· ion of Canada bonds, using the average monthly yield for 1926 a.s the bue or 100.
The oourse of this index during the past year provides an interesting record of the investor's thre:ltened eoact reaction to enactments or ments by provincial to admin· to official pronouncements iatrative deciaions, by radio or in the press or on the public platform, and to the manifold other hazards It bears that may affect eloquent testimony to the oft-repeated saying is timid, Beginning at 70·9 in that capital January the index of rose to 73·2 in February, dropped to 71'4 in March, rose to 12·2 in April, deelined to 71'4 in May, rose to 73·4 in June, declined to 71'6 in August" sharply to 79·8 io September, and thereafter with a slight inter ruption in December dropped steadily to 69·9 in March, the latest month for which the index is available.
The March index is the lowest rate of ioterest figure recorded since the bureau began compilin( in 1919 and probably represents the lowest yield on long term funds in the history of our country.

ColUidering also the steady deeline in the yield on our lI'euury biU5--Qur latest issue of these bills wu sold the capital markets.

three-months this series then rose intere3t rate.!

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DIauliDa.1 on April 15th on :I. yieltl basis of approxi mately seven-cighthll of one p<!r cenlr-and I shoulJ interject here that llnol.her issue waa rate, sold yesterd3.Y at the slightly hi:;her if my memory serves me correctly, of ju8'f, Ol·er nine-tenth5 of one per cent per annulU_ we have ample evidence of lhc progress which the dominion hu made in :securing that stimulus to economic recO\'ery through low interest rates which -has been so important a bctar in the United Kingdom.
Unfortunately, these low fll,tes are not aV3il.

able to all borrowe~, particularly the rn09t needy ones who are not usually considered the most crcdit·worthy.

Nevertbeless the low rates are beginning to permeate the interest rate structure u a whole.

One evidence of this is the increasing \'olume o[ security Hota_ tions, not only by governments but also by private corporations, both for refunding and for new capital purposes.
In 1935 the total volume of new issues olTered has been eati mated at 571 million dollal'S, an increase of 83 million dollan over 1934.

Of this tolal, 325 million dollars were for refunding and the balance for new capital purpose3.

During the first Quarter of this )'ear, activity wa.s In this period total c.ew greatly accelerated.

Canadian bond financing amounted to 241 million dollar.

!, an incre3sc of ISO miUion dollars over the first quarter of 1934.
Of Ihis refunding total 70 million dollars were for It is also significant iliat financing purposes.

by corporations accounted for 105 million dollar<l or over 43 per uot of the finane:ng of the first quarter of 1936 compered with 9 million dollars or leas thao 15 per cent for the fint Quarter of last year.
One fll'Ctor these pro\'ineel retarding the full revivd of confidence ond the healthy functioning of the capital markets has heen the cloud of uncertainty which has heen o\'erhanging the financial poilition of severnl of the provinces.

It iii revealing no secret to say that the credit of the four western provinces has been main tained during t.hc 11iSt.

few years only by the the dominion.


Despite financial support of t.he efforts-in some C'SCI, t.he heroic efforts to cut expenditures and of increase revenues, the burden of unemploy ment relief added to heavy interest charges on outstanding debt hILS been so heavy and tbe taxpaying ability of the people reduced so drastically by the conditiona which prevailed that it hIlS been impossible to provide out of taxes for lhe cost.
of unem ployment relief, and e\'en in some easel for a portion of ordinary governmental expendi.

ture.s.

In view, in part, or their own financial PD!ition and in pe.rt of c:onditioD.3 in the investment market, particularly in the early economic • MAY 1,1936 The Budget-Mr. Dun';;ng it years of the depression.

these provinces have not been able to borrow economically in the public markets.
Whether wisely or ~ot the dominion government of the day laced 'with regarded u an emergency problem what initiated the policy 01 making loanl to thes~ to enable them to meet provinces in order '.heir share of relief COlILs, maturing obJiga tionos, and in some cases even ordinary govern mental expenditures.

M I .hall show laler, SlM:h loans no" amount to $U6,500,OOO.

that to everyone It hu long been clur I believe, this process can not go' on indefinitely.
We are rapidly reaehiD!-il we impossible already reached-the have not position where the dominion goverumen~ will ~ ~he largest ~ingle creditor of the!e pro vlnCJaI govemmenu.

Moreover, if we con ~inue this procea of hand in, out funds "ith out security and without control of any sort, we shall be in dan~r of undennining domin in my opinion, muat be ion credit, "hich.

protected at all costa.

Recopizin!

the importance of this problem the govemment hal for the put ~ix month~ been devotin!
a creat deal of time and atten ~ion to working out a solution with the cooperation of the provinces.

H waa one of the major questions placed 00. the .genda of the dominion-provincial conference in Decem ber last, and initial discu.ssioll8 It this confer eDce led to the appointment of • cont.inuing committee on financial questions "hich held in January and again in March.

8eSlIions agreemen~ wu During diseu.s&ions.

these reaebed on .. general method of procedure.
The dominion undertook to initiate aD amend_ meDt to the British North America Act which would (I) validate certain lues now imposed by one or more of the provinces and give the provinces power to levy a tu: on retail salea, thus providing an enlarged and more elastic provincial 'lax 6tructure j and (2) enable the dominion to guarantee existing or future debts of a province a.s well as enable a province to give the domiDion adequate security for such guarantee by the pledge of dominion neceiJSary, other subsidiell and, specific If and when these enabling powers revenues.
should be secured, the dominion undertook to sponsor legislation providing for the setting of up (1) a nstional finance coun.cil, which would consist of the dominion Minister of Finance and the provincial treasurer of each province, with the governor of the Bank of Canada a.1l technical adviser, and which would provide a permanent mechanism for mUI'Jal investment and otbet" discussion nf taxation.
financial problema, with advisory powers OD\Y; ~d (2) individual loan councils which wO\lkl consist in each cue of the dominion Mioilste:r 01 FiDance and the treuurer of the province desiring to psrticipate.

"ith the governor of if the Bank 01 CaDada u technicsl adviser and whicb would have power both to apJltove any program providing lor refunding of the debt of a province under dominion guarantee lind Illso to supen'ise future borrowing by auch province.
DominioD guarantee would be available to the province only wheo 1000o council approval to the proposed iS6ue of securities had been obtained.

Moreover no legisl;tion compulsion wu involved; cootemplated would merely provide machinery which any proviDce might.

take .dvantage of to be in accordance "ith if it conEidered it its own interests.
the SiDce March 31 the government has not ht.d any !tatutory authority to make loan.a or give guarantees to Illy province and e\'en in the relief bill which ia now before parliament relates such authority as ia bein!

asked for ooly to 10alU.

advances or guarantees in connecLion with relief measures or undertak· It is not proposed, except through loan iogs.

for council ask legislation, to authority to grant.

to financial enable a province to meet a maturing obliga.
lion or to provide lor oth6l' ordinary govern mental espenditures.

parliament assistance The correspondence province of Alberta record apet.ks lor Provincial obliptions that have matured in recent weeks or are about to mature have led to extended discuaaion with the interested exchanged provinCe!.

been hili the with tabled.

That In itself.

brief, the ledecal government has taken the position that not only must.
it have adequate security for the financial assistl1nce which it is called upon to give but a.Iso that the dominion government must be in a position to which aod the to determine the extent is conditions under which dominion credit made use of now and in the future.

It was a ma.tter of great regret to ua that the govern ment of Alberta did not see its way clear to dccept the conditions under which alone our assistance C1luld have been made available.
The province of SaskatehewaD, which has an issue maturing to--day, May I, has exprel5ed a willingness to participate in the loaD couocil arrangement and with the understanding that the dominion will proceed with its legislation, the province, I am advised, has made arrange meDts with the Bank of Canada to' enable it to meet I am also advised that the province of British Columbia will be able to redeem its obligation lalling due on May 15 without outside aasist4nce.

this maturity.
this maturity.

recourse to the necessary machinery for The g.overnment believes it essential to provide lOy province that may deem it desirable to take advsntage 01 the facilities I have outlined.

therefore proceed with 'The governmeot will now on the order pllper resolution the 2366 The Budact-Mr. Dunning COMMONS the are national preparer!
originally arrangement consideration we loan couneils I providing for and It rn:lY add that aHer the propo;;ed con.stitu r1esill:ned to initiate :lmcndment, nod tihereaftcr with the tiona.]

establishment legiskition finance of the most council.

careful 10 recommend certain modific:l.tions to the loao council suggest,cd.
These modifications would make it poosible For a province which had submitted a bor rowing proposal lnan council, and which hall not obtained the council's approval, to make such offering on its own credit in the domestic market.

Approva.l of the loan council, however, would he mand-atory for all external i~ues and also for domestic issues in those C:l.~es where the ouLsw.lIdtng riebt of under donuninn refunded the province guarnntee.
These changes, it is believed, will the :lrrangement more acceptable to make some of it the provinces and still make possible the priroo.ry objectives to secure which the dominion has in mind.

to the is Lt find individuals is our hope that the arrangement which ill now offered will a.ppcal to all provinces impossible it cconomically which to finance their own requirements.

We are it will remove a factor which.

convinced that is now retarding economic recovery.


As long as we have an economy ba..o;;ed on private enterprise---baseU on the willingncss of thou· sands of to make commitments the future in the hope that profits will for accrue---so Ion::; will thc factor of confidence plaY an important part, As long lUI fear of investments or uncertainty in the safety of any form pcrsisls.

enterprise will not go fonvard vigorously.


We in Canada are powerless to remove t.he uncertainties ill outlook which ull.for_ the world political recent tunately have been aggravated to months.
We are in duty bound, however, in factors endeavour our domestic situation which tend to ret.ard economic recovery, to rcmove all privata those in I might advise the house that the modifica tion to which I have just referred ill being the provinces, particu communicated to all larly those prim:orily coneernl!d, and of course will have their con$iderlltion.

and we shsll to it before hear very long.

from them with respect in thl!

arran~emcnt which we I trmt th.


:lt the position which the govern taken in these matters and the ment has action which it proposes to uke will com mend themselvcs gl!ner~lly to the good judg.

ment of members of this house.

The record investment of Can3dian securities the world has been a most en mad.-els of It would be unfortuna.tl!

if that viabll!

one.


rl!cord wcre late seriously marred at wis stage when the outlook appears to be for con tinuing reCO\'ery and a probable rise in the world price level which will ease tbe burdens of debtor classes and debtm communities.

The contemplate should provide a method for reducing interest to creditors.

burdens It l!Ihould provide a me3tlS whereby prov their inces, fully credit and place in a position gradually to secure necessary funds for justi fiable capital purposes.
H should provide a the regular and permanent meehanism for mutulll of assistance, the difficult, technical financial problems with It should which all governmenls are faced.

make for an avoidance in future oJ some at least of the costly mistakes made by dominion and pro\'incial governmenls alike in the past, Ule continuing burden of which has made it so difficult the present prolonged depre~ion, to a.ssume the new burdens of cooperating, may restore in a W3Y acceptable study.

with themselves expert {Mr.


Du""illll.]

TRADE 01" CANADA such as internal economy of I turn DOW to a brief outline of the trends in our external trade.

It is not putting it too strongly to say that foreign trade is the very life·blood of Canada.

We have seen only too clearly in recent years the appalling effects the decline of on our international commerce to about two-thirds of its former physical volume.
The fruits of economic nationalism in rcduced business activity, shrinking governmental rel'enues and to widespread uncmployment are justify in abundant measure the efforts which.

the pre$Cnt government has made, and will to free the channcls of continue to make, trade and expand the markets international industrie8 which for our primary and other must otherwise suffer stagnation and drastie readjustment.
A start in this direction has already been made with the negotiation of a trade agree ment with the United States.

The conclusion of is probllbly the most sig nificant step tak{'n by two leading trading nations the trend of economic nationalism.

Not only docs the agrcement open up wider markets for the products of each country, but it will sr.rve as a lead' to other countries nnd thereby promote progremve lowering of the b....rriers which have been damming up the trade of the world.
Such a movement would be of the greatest value to Canada, the pros perity of the whole dominion being so largely dependent on export outlets for the djsposa~ of our surplus production.

is also hoped that this agreement to re\'ersc it MAY I, 1936 The Budget-Mr. Dunning 2367 An adjustment was also made of the dif ficulties which had arisen in relation to our trade with Japan.
Without foregoing the enJegu3rds necessary to legitimate Canadian enterprise, we succeeded in securing the can cellation of the duty surtaxes on a number of important products for which Japan has heen a valuable customer.
Other stcps taken to promote our 'export trade have been the extension of the trade agreement with New Zealand, which was due to expire on November 24, 1935, for a further period until July 31, 1936; an exchange of Dotes with France providing for certain ad~ justments in duties and quotas to supple the agreementll which had been con ment cluded with that country; and the extension of the modus vivendi with Haiti whereby Canada is guaranteed the minimum tariff of that country for a further period of one year from April the entry into force trade agreement, proposals for which ha\'e been submitted to the Haitian government.
IS, 1936, or until of a Canada has long enioyed profitable and pleasant trading relations with Belgium, and is anxious to at.rengthen our traditional friend ship with that country.

Representations hav.


ing been made by the Belgian government that the specific duties imposed in 1935 on dressed and dyed rabbit skins have had the effect of very seriously curtailing exports of these to Canada, the gO\'ernmen~ has decided to temove the duties in question, and to revert to the ad I'alorem rate formerly effective.

In consideration of this treatment, I may s:l.y to hon.
p;entlemen who are smiling, the Bel gian government has agreed to remove the turnover tax which for some time has been imposed on Canadian goods imported into that country and, also, to classify aa cheddar thl!

cheese received from this dominion.

These the remOI'al of the heavy turn concessions, over tax in particular, should stimulate our exports to Belgium in many Jines of goods.

The government continues to gi\'(!


careful study to our trade relations with other coun· tries having in view a steady increase in the sale of Canadian ex opportunities for portable .product!!.
It may be expect.ed that steps will be t.a.ken in the near future to enter into active negotiations for the conclusion of important trade countries, in accordance with the policy of the government to bring about by the negotia tion of bilaU!ral agreemenh the ilrogressive removal of the hindrances now hampering our international agreements with several trade.

the United Kingdom.
the United Kingdom.

Serious attention is now being givcn to our trade relations with the most important of our customers, I am happy to be able to state that discussioWl will shortly take place between representa· I shall make tives of the two governments.

more extended reference to this matter when discussing tariff changea. ]

am pleased to be able to report, for the fiscal year just ended, an important g&.in in our total trade with other countries, amount ing in round figures to 152 million dollam.
This is an increase of 12·8 per cent over the previous yea.r.

It is true that world trade generally has ~mproved during the past year, but it should be noted that while ~he average increase in trade of 24 leading <:ountries in the ealendar year 1935 was 4·1 per cent our own trade increase was 11'3 per cent.

A. a rem't of this marked expansion in OUf' foreign commerce Canada has moved up from eillihth to ej>;th .place among the IlatioDs in total world trade.
A statement of total the twelve months ended March 31, 1936, with compttta.

tive figuI'C$ for 1935, follows: trade for Imports Export8: .. Canadian produce .... Foreign produce .. Trade of Canada (e:leludina: J{old coin and bullion) Fiseal year ended March 31,1935 , 522,416,844 March 31.
1936 , 562,803,001 659,899,994 7,658,963 765,615,563 13,441,659 $1,189,075.801 '1,341,860,223 Increase • 40,386,157 105,715,569 5,782,696 $151,884,422 Both imporlB and exports shared in the in crease, but while imports rose by 40·4 million dolla·ts, a gain of 7·7 ,per cent, export!

,",'ere 111·5 million dollars higher, having increased by 16·7 per cent.

This expansion of our ex· ports gave u~, for the year, a favourable balance of trade of 216 million dollars.
This is the fifth successive yearly balance in our favour aDd is the largest e;ince 1927.

The importance to be attached to a bvourable balance of trade must, of course, be con sidered in relation to tolal trade.

the balance of The figure for trade just mentioned does not include our exports of gold-the usual practice among nations being to show this item separalely bccause of it.

COMMONS fll\·our.

Our monel.ary use.

With U!J.

howllver, gold is a commodity and ll.


very important 4l:Ht of our rcgular export In thc fLical yellr trade.

just ended the lldjusted estimate of our gold sold abroad was :wout 1(9 million dollars.

By adding this to the merchandise bll!n.nce of 216 million- dollars already referred- to it is seen ~hat the total balance of commodity the fiscal year just ended was 335 t.rade for mllJion dollars in ollr touri.
':lt tr:lde is also an extremely important credit item in Canada's international account.

Prc· liminary cstimates for 1935 show tourist ex penditures in CanaillJ.

of abollt 201 million dollar3 agains' Calladian expellditure in other countries of about 91 million dollars ~ivinl( us fl.

net credit balance in tourist traffie of loout 110 million dollars.
The house will see, to our credit balance of 335 million dollars on merchnndise and gold we add the net figure of 110 million dollars f-rom tourisUl, the total balance in our from these items is 445 million dollars without taking iota account the movement of securities, Canada is thu!!

in 8. strong ,position wHh respect be payments which must be made abroa.d on account of our foreign finaneia~ -obligations.

Obviously there is here a solid foundation supporting our dollar in the foreign exchange market.
Upon analy~ing O'\lr ex.port trade, it is found the United Kingdom ,is still our largest therefore, favour that.

that if market htwing taken 293 million dollars or 41!

per cent in value of our goods exported in the eleven months ended February 29, 1936. which is approximately the S(l,me pro· portion of the tob.!

as in the pre\·ious similar IJeriod.

The British empire a9 a whole PUf chased 362 miHion dollars worth, which was IS!

per ecnt more than for the Bame cleven montha a year ago.
Within the empire the increased purchases from us werc distributed as follows; the United Kingdom 15'6 per cent, Australia 35'1 ,per cent, New Zealand 28'7 per cent, and South Africa 7·1 per cent.

Exporta to British India decreased by 17·2 per cent.

Not only do our increased eXpGrb bear witness to the steady growth of our trade with empire countries, but the same trend is also revealed in the figures of our purchases f-rom these countries.
While our exports to empire countries gained by 48·5 million dol la.rs, our imports il1creased 19'4 million dol lars or 13!

per cent in the eleven monUls period.

This increase in imports from British countries was shared as follows: the United Kingdom 5·4 per cent, Australia 16 per cent, British India 13·4 per cent, New Zealand 21'7 per cent, and South Africa.

41·3 per cent.
41·3 per cent.

the United Kingdom and with other empire countries in the eleven months ended February 29, 1936, and in the previous year are as fol1oWll; showing trade with Figures Trade of Canada with Empire Countries (ucluding gold coin and bullion) Imports from the United Kingdom.. EIports to the United Kingdom Imports from the British Empire.. .. EIports to the Britiah Empire.. .. .. .. .. .. .. .. .. .. .. .. .. .

.

.. .

.

.
.

.. .

.

.

Eleven months ended Feb. 28,1935 Fcb.29,1936 '102.602,618 253,488,637 143.989.314 313,665,822 293,002,334 163.429,300 362.178.462 '108,177,173 Turning now to foreign countr.ies, our trade with the United States is of particular in_ terest followiog the recent agreement.

Ex the full year ports to the United States for ended March 31, 1936, amounted to 291'3 million doMars as compared with 230,8 mil lion dollars for the previous year.
This is a gain of 60·5 million dollars or 26·2 per cent in our exports to the United States.

ThUll out of a total the year increase in exports for of UI·5 million dollars over 54 per cent of the gain was accounted for by additional sales to the United States.

While it is too soon to expect to hav~ realized the full expansion trade which is e:rrpected to follow from of the latest monthly figures clearly indicate & growing volume of goods moving in both direetions across the border.
agreement, the {Mr. Dunninll.l Exports to the United States for th~ three months January, February and March of this year tow..lled 170,868,053 as compared with the same three months of $57,061,713 for 1935.

This is a gain of 24·2 per cent for th~ period.

for Imports from the United States the full year just ended were $319,610,706 which is an ,increue of 16 million dollars over the preceding year.

this increase were three months of this year under the operation of the trade agreement.
7·2 million doUars of recorded in the first Over 56 ,per cent of our imports come from the United S~ates.

At the aame time they take only 37 per cent of our e~ports.

From empire countries we purchase about one·third of our imports and sell to them just over one· MAY 1, 1936 The Budgct--Mr. Dunm'ng 236' half our goodl exported.

Approximately 89 per cent of our total t.rade is with the BriWh empire and the United States.

There is in this brief survey of our foreign commerce much to cheer us.
and I believe steadily v:panding ttade with other this strongly to the funda testifies countries tcward the movement lOuDdneg; of mental rec()\'ery in Canada.

Turning OGW tc the gcvernment acccunlll, may I state that, while the fisc31 year ended en March 31, the final acccunuog has DOt yet been completed.

Ccnsequently, minor changes, and minor changes only, may latoer be made in the figures now given.
I trust the house wil~ allow for my diffi eulliesin dealing with a fiscal year seveD the months cf which had elapsed before present government came into office.

We were the ccmmitments of our pre faced wiLh dece$!

;ors, which, in large measure, prevented impcrtant changes in financial policy during a year more than half of ...hich had already passed.
lIt order to simplify the presentation of the accounts, I shall, with the permission of tbe house, now place on HanArd a number of tables showing com_ parisons of revenues and various elas9CS of expenditure.

This will enable me to present .. clearer explanation of a technical and com plicated series of accounting and statistical facts.

The tables follow: five-year usual the Statement of Revenuesl"r the last Five Fisc.1 Yean (000 omitted) Tax ReveuUCll 1931-32 1932-33 1933-34 Custom.
import duties............................. Elc~dutiea....................................... War tax revwuea-- Bank.......................................... In8IIranoe companies..

Delayed buau- profits....................... IllOOme w.................................... =1~~~;.~~~i.ic;..;: .•.tA~.p:i~~~ tion taxes, ete.............................. Tuon eold • IlK, 133 48,655 1,390 12 3 GI,2S5 '1,134 17,812 • 10,073 31,834 1,328 826 62,001 511,814 25,317 • 66,305 3S,41H 1,336 742 .
81,390 81,392 4.5,184 .. Totalrevenuurromtaxea 215,0S4.

254,3111 271,852 KOD-Tu ReTeDIlClI Canad.

Cram Ae'................................. Cuad.

Ca.aette ................................... CIUllla............ , ......................•......... Casual.•.............•............................. ChiDe.

revenue.................................... Dominion land..................................... Electricity.........................................
Fines .nd forfeiture................................ Fiaherie........................................... Caa inspection ..................................... I~ranco inspection................................ Intareflt on inveatmenU............................ Marine............................................. Marinera' {und ..................................... Military college .................................... Military pol1liolUl revenue ..........................
Ordnance lands.................................... Patent and copyright {ees.......................... Pu.itentiarica...................................... Foat Office......................................... Pnmium, dilcount fond exchange................... ..... Public Work•...................................... Radio lieencee..................................... R.C.M.P.

officers' penaiona......................... '\\'eiabu and meas~...............................
I .... " m 3.158 10 4" 4" '" eo 81 100 9,330 '92 '84 20 '63 14 '" ".

166 32,23.5 10 40'1 28' Total oroUiJ"y revenues............................ m,811 SlUldry neeiptl ~'::i~~~~................. '.028 Total revenues......................... 333.839 .51,1.51 1,445 1.230 3,G13 29S 212 831 3,192 Jeo 11.221 178 J80 20 J66 " , '" .. • " '" ... • 44' '" " 76 14' 11,148 208 '88 20 '63 " 18 '" '" " 121 ".928 30,893 J46 .. .... ~.
213 ... 1,291 1.414 12 12 ... '" 324,002 S2,210 4,4113 .52,318 .... 637 311,130 I 324.480 1"'"'" • 7G,~ 43,190 1,308 '00 .......... ...... 72,441 Estim.ted 19~G • 14,000 44,410 1.305 76.

82,700 77.009 39,1~ 3,673 17 838 4.,337 ......, I.""
• ... .. .. .., '" 516 10,963 218 '81 20 174 16 3l,W '" " '" '" , 40'1 1.487 M,100 1,413 :m,288 1,219 4,372 .. '" • '" .. "" '" 91 117 to,GOO 223 18' 20 172 10 ... , ... eo 32,507 00 241 J.... H.031 358,47f 3.207 361,871 I H,41n 311,780 320 372,100 2370 The Buduet-Mr. Dunninu COMMONS Statement of E:rpendiw"" by Depuune.nll for the last Five Fiscal Years (000 omitt«ll Agrieulturo Avditor Ve1leral's offioo Civil ::Icrvioe Commission EJ.tern.al.

Alb.irs, Minister Finane/)- including office of .

.

.
.

.

the Prime .

.

.

.

Intc""t on publie debt Cost of Iosn lIot.u.tiollll l'""mium, di~ount and elehllngll (net) 8ub~idi/).

'l to llrovinees .

8pe<:i1u grnntl to llrovineea .

.

Other gmntlDnd contributions Civil pellSiona and supemnnuatioollS .

Government contribution to ~pet1llllluatioa .

.

.

.

.

.

Old Igl!

pensions Cf!ncnJ e:rpenditure lund Fisl,erl(!S Governor Cvterar.

lIPCrelary'.

offi~ Immwlltion Il.Ild COloniutioa Indw.n AlTairs InlUrnnee Interior JUlltke .
Pcnitenti,'\t~ LRbour Tech"iC'al edutDtion Government annuitie_hyment to mailltain .

reserve .

Legis!

'ltiolt- .

I10lllle of Common,.

.

I.ibru.ry of l)arlillment............ Senate .

Genernl.. Dominion FrlUlcl>iee office Chief Electoul office includina;; elections .

_ MlIrin~ ClI.Il3di4n R:adio Bf"l;>AdcutiDg Commiallion Millet and Geob:iCftl &zrvey ),{ovement of Coal II.lI.d Dometlic Fuel Act National Del~- Mili\..ia lervice .
~i~v~r-:~~·..:::::::::::::::::::::::::::::::: Nat~':::rrlea:::~~·CI~d~g'i~~;";;·til..... ~::: ~:: ~: PensiOlla nnd National Hea:Lh- Treatmeat and after-('lu'1!

or retllrncd ooldien.. Pen,iOlla.

war and military HMlth Div~ion P03t Offiee Privy Council.. Public .·\rcl,ivu Public Printinr; and Stationery Publi.. Work.

Railwaya llnd Cannl, .. .. .

.

.

.

, .

.

.

Maritime I"reight Rates Ae\ lLiilwn.y ~e eroa.ein~ rund Roy.lI Cll.ntod",n MoulltOO Police Secreta.

)· of St te Soldier 5ettlement.


Trade nnd Commnoe- Dellllrtl1\ellt Canlkia Grain .

"ct !oI:\illllbsid~, ud atumlhip atIbveations Adjunment of Rep:lratioAt---Claim,lor llOmpellutioa Suadry eha~1 to CQlI!Olidated fund r dsiml .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.. .

Total ordinary e:rpenditurll IMr.


DulllliJlc.J •10,!12 '"306 '"121,151 1,3.10 ,28 13.695 1, "'"'"1.172 •',""280 '"Il63 134, ll99 1,639 13,m.."", <.. 1,008 2.m 10,002 1,8'5 2,'"U, 2,lOO 3,081 10) 4,647 2,793 2,737 '"28' 262 1,082 """19 '"i,~ '"0,100 I,!M ',00 <,,,", 1,3-47 13,9:!O 11,633 47,7iO \,%16 36,052 17,648 3, (HI7 2,555 "'"28' '"',48S...I.'"
2.306"'.... 1,331.. 6,417 2,270 tl.513 2,0411 1,7S1 202 4,499 '51 2,454 2,691 '"1.... 2,BiO.., '" "147 " "5,801", 2,210 1.... 1,220 8,il9 2,167 1,731 1,018 10,SlII 10.510 -H,IM 1l2~ :11.607 41 114 33' 13.108 3.667 1, !r.

?l 1i' ',"", <..".

3,2772.

'"2,lIn "'8814 103:h1< •6,9!Y.I '"33' '" "'501117 .."'"398 1.032 13,728 139,725 1,"" 12,314 3,1-'8 ','"138....<," 1.<2 2.833 2.712 2,611 ""'" '84 'SO 692" "32 5,439 1,025 ""2,m Estimated.

'''''''•0, """.2.. 1,324 134.650 3,576- 13,769 3.1175 101... •7,107 '"1.
"Z7 311 138.53.1 2,890 13.769 ',010 '"... 1,1147 14.1142 3.ll"'..s 1,611 133 1,,," 4,362 166 2,7-44 2,118 2.007 1,7!

}6 11 19' '"91 '" "1,545,.. '"2,124 5,1-12 1,249 t,813 15,no 3.'"

1, 727 '31 1,3M <,,," 111 2,1152 2,7S1 2,477.62 100 '"1,505 11 <.. "503 ','"1,.510 ',093 1,102 ',055 8.774 2,111 1,68.

'0 19' 10,35-& 8.853 2,!%:!

2.258 1'39 IO,l~ 10,197 2.379 3,1165 825 IO,Il8!

9.571 42,923 '"30,554., "210,1l27 151 3,315 " !IS9310 5,528 :m".
3.001 1.7511 2,221 "31 10.127 43,232 809 30,252.. ""368 g, " " ",581 2,m 2" ',910 389 1.. 11,328 42.870 819 31, fj(J7 41 '"168 12,951 4.3" 2,352 128 e,l92 10< 101 3,,," 1,619 2,2'7-'..•.. 3,528 1,852 %,43t 11 < 819,087 , .

3n,l~ 354,"" 35I,m MAY 1, 1936 2371 The Budget-Mr. Dunning Statemcnt of F.Jpenditurel by Departmentll lor the lnt Five Yean-Conl;~wed (OOOomittedl 1931-32 I HI32-33 1934-35 IEetimated 1935-36 Capital EJpendituru , Canals RaiJ"'ayl Public Works .

.

, .. Total CfIpitalexpendituree .


Speeial ExpenditurCll "Unemployment Relief Act 1930 "Unemployment Relicf Act 1031.. UnemplQyment Relief Acl 1932. l1nemployment Relier Act 1933 Unemployment Relief Act 1934 Unemployment Relief Act 1935.

Total unemployment relier ,.

.. .

.

, .. nolHlCtive) Public Worb Col\$tructioD Act .

Canadian Pacific RaiJ'lVaY (Reliel actl---advlUlCCe .

.

.

Reduction or 10&111 to soldier settle Wheat bonue 1930 Wheat Crop Equaluation Paymentll Act .
LoaB on 1930 wheat pool and stabilization opera- tio_Payment to Canadian Wheat Bo8rd of net liability llSIumed "" at Deecmber 2, 1935 LoaB on 1930 oatil pool under If\lll.rnnt.ee of bank adVlllces to CanadiaD CoopeTlltive Wheat Pro.

ducen Limited...... .

TOtallpecial eJPCnditures................ Government Owned Enterprilel Lo.ea charged to cODsolidated lund- I 3,m 6,242 7,439 16,980 13,190 25,106 38.286 10,908 .......... 1933-34 I 1.975 737 3, i78 6,490 • '" 6.... 28,382 I 3.""
1.603 4,0111 ..,.. ,.. 17,048 J9,125 I 331 WI 6,189 7.""

3 52 30.

2,420 49,114 I .60 603 5,811 6,576 ,.

,.

... '0; 1.121 47,7~ 49,469 35,898 51,988 8,673 1,766 ... ............ '.000 36.232 ··,····.. ·m ····&:600 36,721 ............ 1,447 .i:8ii' .

'!
'!

",-"c"C''1'C"C'c"C'C"C'C'1C"C'C"C'C'CCI~''C'c"C'C"c'C'I--,=-'"," 38,664 102,770 39,979 61,130 49,2()4 Canadian National Railwayllyltem ex eIItera lines................ ....................... 42.590 5,818 Eastern lioCll.......... , ........................ Ce.nadiall National Steamsbipll ................. .......... .. Ha.rbout oommislliOl\$.

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

....... .. ........ 48.408 52,264.
6,691 .. ......... 53.423 8,717 (') 6,632 ~.1I5~ 62,140 6,632 Tot.-I cha~ to consolidated fund .. Loans and advancCll non-active- Canadian National Steamshipll.. ~::~n~ ~~~~:'ti;':~ Mee~: 't,:an8'f~~~' ~ nOn-aetlVe &8l!CtI.................... ·.• .• ·· Total non-active advances..... , ....... 1,199 1,1113 3,112 1,383" 4,898 (')62,938 .... 66,453 14' 2.110 m 1.242 II 2.096 1.740 Total iovemment owned enlel'Jlriaes... 9,744 128,693 61,051 00,148 Gl'lI.lld total expenditure ............... 448,073 531,764 457,977 478.005 41,796 '.6U 270 1.139 48.830 3"- 2.461 2,128 6O.9liB 534,291 " Cr.
'J Canadian National Rai!way_Loan.e lor 1931-32-141,121,(100, Sundry barbour commialiolll I') 152.256,000 'Qr fi_1 yean 1931-32 WlI.lI financed by IQ8J\S and {Qr guarantee of securities.

Advances prior to 1932-33-121,817,000.

2372 7'he Budgfl_Mr.

DUl1niWl COMMONS Summary or Revenues and E~penditures (000 omitted) -- ::>rdiTlAry expenditures..... .. ......... .. .......
Ordinary revenue~........ .. .... ... .. .... .... ..... .... ...... .... Deficit on ordinary I!.ccount.... ... Specinl expenditures......... ....... ........... Less dpccill.l reeeipUl....... ... .. ... ... ....... ...... ... ........ ... ... Balance.. ... Add capital npendit.urcs.. Add government owned cnterpri$es..... .... ...... .. Total.

................... ...... .. ..... A.dd defteii.


on ordinary lICoount...... ...... ..... ... Total def.eit or increase of net debt-.............. .. .. ..... ... .... 1931-32 1932-33 1933-34 193-(-35 I 372,145 326,811 • 354,644 300, &37 • 3M,772 324,062 • 359.700 358,474 -45.334 -48,007 -27,710 -1,226 49.204 7.038 42.116 16.980 9.744 68.000 45,334 114,234 39,919 4,493 35.486 8. ""
128,593 172, 627 ....17 38.... '18 38,246 6.490 61,051 105,787 27.710 "".68'1 133,497 61,130 3,391 57,733 1,027 50.148 lt4,90S 1,226 116,134 Estimated 193s-J6 • 373.987 371,780 -2.207 J02,770 320 102,450 6,576 50,958 159,984 2,201 162,191 It i!j also proposed to depart from what I bave lKImetimes calred the "bridge score" method of accounting--so much above the line and so much below the line-and to present clearly the over·all deficit in the government" &ccounts.
In the Pll.3t we have too (requently misled ourseh'es by the form in which our government accounts were preeented.

We have pointed with pride to a small surplUll on ordinary aecount and we have tended some· ,.,...

;at large to minimi~e the importance of deficits and special time to look the facts expenditures.

It is If the people of Canada aquarely in the face.
are fully aware of all I am can· in taking the fident steps necessary to achievc that balance of gov ernment revenues and expenditures which in my opinion cannot safely be postponed much longer.

resulting from capital they will support us the facts, REVENUEB 1935-36 Our total revenue from taxation and other !Durees during the past year aggregated· S372,~ 100,000.

This total is $10,229,000 in exceSll of the total revenue for the preceding fiscal year.
The revenue from taxes alone amounted to 1317,288.000. an increase of $12,845,000 over Ule preceding year.

The increase in tax revenue is more than fully accounted for by the income tax which.

yielded S82,700,000 as compared with 166, 808,000 in 1934-35.

This is the highest yield ever recorded from the income ta-x, lohe largest figure for any previous year being that of $i8,684,ooo in 1921-22.
The increase during the past ycar arises in part from the improvement in individual and corporate incomes, but in part also from the rnrtax on investmcnt income which was imposed for the first time last year.

The aale~ tax which was the second largest [Mr, n..nninll'.l contributor to f,:overnment revenue last year was responsible for a total collectioll of $77,.

000,000, an illcrease of 14,553,000 over the pre vious year.
Excise duties, imposed chiefly all liquol"9 and tobacco, yielded $44,410,000, exceeding the collections of 1934-35 by $1,220,000, notwith~ standing the !oostantial reduction made last year in the duty on liquors.

of of ia because imports expectcd 'had been \'o[ume rise import duties in the anticipated budgeted for an The yields from our other maior tyPes of taxation were lowcr last ycar than in tile pre ceding fiscal year.
The total re\'enue from customs amounted to $74,· 000,000 as compared with $76,562,000 collected in 1934-35.

A substantial increa5e in.

custODl!

by my rel'enue predecessor, in~ imports.

While crease the imports, ma terialized, the increase was almost wholly in the non--dutiable items.

The volume of increased only thrce per du~iable the duties collected actually de~ cent anJ largely because of a decline in.
raw creased, sugar imports and a shift of such imports from foreign countries to countries enioying the British preferential tariff rates, and be cause or the reductions made in the duties on liquor last year.

excise total a taxes revenue of 135,700,000, represents a decrease of $1,045,000, which is accounted for chiefly by the changes: made last year under which tht'!
excise tax on beer was reimposed in the form of an excise duty on malt aod by the remaining the elimination last ye:lr of tax on im· half of the '!Pecial three per cent the Britisb ports entitled to entry under preferential trade agreement!

between Canada and other British countries.


produced This tariff or under Special MAY I, 1936 The Budget-Mr. Dunning 2373 is, the that and Post Office Non-tax revenues, revenues derhed from various departmental services of government, aggregated $54,492,000, an in the previous year.

crease of 1461,000 o\'er The main items under this heading are inter est on investments which amounted to SI0, 600,000, revenues which totalled $32,507,000.

or nearly 51,260,000 in the previous year.


The so~alled excefS of snrplus on Post Office operations approxi It mum be remembered, of mated $900,000.

course, the Post Office accounts do not include the rental value and other costs of premises occupied and equipment used, nor, on the other hand, do they include any credit to the Post Office for service!!

rendered to other departmenl!

through the free use of the mails.

that Special receipts during the last fiscal year amounted to onl.y 1320,000.
This compares with $3,397,000 received in 1934-35 when the custodian of enemy property rna?e a special transfer of $3,000,000 consolidated revenue fund.

the to Of involved in holding the expenses inst.a-nce I a national election.

suppose some of U8 think that expense was justified.

Otllers may qua.rrel- with it.

The eost of old age pen increaeed $1,818,000 and there were sions additional special grants to provinces amount ing to $2,375,000.
special the decreaee of $3,983,000 in intere!lt on the public debt, refl.ecting the economies rernlting from con~ version of outstanding securities into obliga tions bearing a lower intoercst rate, and the lower cost of interest 'which was burden last year was $134,550,000, lower than in a..ny years since 1931-32.

Never theless, it used up 36·2 per cent of our total revenue.

treasury bills.
treasury bills.

Our interest was CAPITAL EXPENDITURES Total charged expend·itures capital account amounted to 16,576,000, a decrease of $451,000 from the previous year.

The item wa.s $5,361,000 for dredging t.be chief river St. Lawrence ship channel.
to EXPENDITURES 1935-36 SPECIAL EXPENnITURES While, as already indicated, I wish to dTaw 8pecial attention to the aggregate expenditure for which the government is responsible both on its own and on railway account, it will facilitate comparison with previous year9 if comment is first made on the various classes of expenditures which have traditionally been llhown in the public accountll.
ORDINARY EXPSNnITURES This substantial The ordinary expenditures for the year have 'Vbis is 114,287,000 aggregated $.173,987,000.

the expenditures for 19M-35.

in· excess (If Neverthele~ it is $16,000,000 l-ower than the total of the amounts authorized by vote and red'llction 'below statute.

in part the appropriations is accounted for, at least, by the measures taken by the present government when it eame into offiee last ils first acts was to ini October.
One of tiate a careful examination of the trend of revenues and expenditures and an analysis of the fi{lancial oommitments which had been made.

T~e results of such examination were such as to lead to an immediate direction to aU departments to effeet every possible economy in ordinary and special expendi tures and to defer any undertakings which could not ·be clearly justified on grounds of necessity or of 9'Ubstantial assistance in pro viding employment.
Had such action not been taken, expenditures for the year would have been much higher than they actually were.

Some of the increase in ordinary expendi tures last year W&9 due to apecial causes, for We come 1Il0W to that ilDPortant group of iteIIl9 which are classified all special expendi tures.

Some of the items 80 classified in pre vious budgets cannot be regarded a.s special in any :reai sen9C of the term and they are now included in ordinary expenditures.
These loan flota items include $3,575,000 co!lt of tioos, repr~ting flotation cG:'JtB of new loans and annual charge8 for amortisation of bond discount; $1,875,000 government con to superannuation fund; S272,000 tribution· to maintain reserve in government payment annuities fund; and $128,000 representing ex penditure ma.de under the Railway Grade In the tables showing e~pendi­ Crossing Act.
tures for five years the necessary to adjustments have been made in order place vhe group totals for the va·rious years on a compaN.ble basis.

the past this than in any previoU3 year.

The importance (If this category of special expenditures is indicated· by the total ex~ pendHure (If $102,777,000 which is 141,640,000 in excess of the preceding year and much higher Of total $49,469,000 represents Pl.Y ments for unempJoyment relief purposes.
This includes not only the cost of direct relief and provincial grants in aid, but also the the care mai'lltenance of land (If single homeless unemployed persons, settlement to tlhe Saskatchewan droug,ht.

area and public works and \mdertakings carried out u"Dde-r authority following table of relief, special assi8tance the relief camps, legislation.
relief The 2374 COMMONS The Bu.dgct_Mr, Dlmnillg compares the e:rpenditul"ell made ror various rrurposes durinS 1935-36 with thcae the simil:n expenditures in the preceding liacal year: Ul'Iernplo:rmtnt Rtlief Ellptnditurl't .. .. .. .. .. .

.

.. .. - .. .. ..

Direct rtlitl.

.

.

.

.

.

.

, .. .. .. .. Gnnlll in lid (from AllgU_t I, 193") .

.

.

.

.

, .... " Public worb lind other projc<:tI.

_ .

.

.

.

.
_ .

.

.

.

.

, ... , .. .. .. .. .. .. Land Jettlernent relief .. .. R(llief ellmr--Uepnrtment o( National Deftnct .

.

.

.

.

, .. Care of lingle hornelen unemployed pcrsolUl .• '.'

.• DeplIrtrncnt of the Interior, relief inclutlin::; workt In natIOnal ,.

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

.

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

Snaknlehcw:l.n droullht area relief,.

Misctllancoua, including lu..lrniniltution .. , .

.

.

.

.

.

.

.

.

.

.

, .

.

.

.

.

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

., .... ,.


plLrka" , • • : .. ,.

,. "

H134-3S '19,211.s~7 14.024,000 4,493,432 277.973 7,648,371 629,611 5111,011 5,000,000 186,452 UI,987~'W7 Estimat.ed.

1935-36 , 262,381 26,274,873 9,831,.375 176.000 8,212,00G 210,OO~ 180,000 4,000,000 313,362 ---- $49,469,000 relief special I:'eS of Ihe provioce.
This It lI'iIl be noted that as in the previous assistance was given to the yeAr, in the prOl'illce Dr Saskalehewan for drouxht form of relief was by way or accountable advances totalling 14,000,000.

During the fiscal year 1934..15, Ihe lum or SS,OOD,OOD wu advanced ror the same purpose aod the tolal of $1.000,(1)1"I was intended to eo~'er thc dominion's oblig:ltion for the provincial relief ye30r utending from It is September I, 1934, to August 31, 1935, estimated tht when all the account!
are re ceived from the province the total of $9,000,000 will not be aufficient tbe domioion's obligation, Any exceM will be applied in reduction of a to Saskatchewan {or that .specific purpose, Tbia ex~, not )'ct determined, haa not been in cluded in the statement of exPtoditures, to take care of loan made took office When the preseot govet11meot on October 2J Int, ,..e found that tbrough agreementa with provincial governmenta cer tain eommitmenu had been made for the year ending Marllh 31, 1936.
These commitmenta in addition, u hl\'e of course been met aDd, an emergency meuure, the monthly grant!
in aid to provioccs (or direct relief were in cre:ued by ft\'enty-fh'e per cent for the four winter montlls of December, JanUary, Febru ary and March for the purpose of enabliDg the prol'inecs 10 graDt gruter t1J!istance to their municipll.lities, Another expenditureJ which might well have been included in the relates to n· cost of uncmployment pendit.ures mllde tbe Public to pUl'3uant Works Construction Act, 1934, Ind the Sup plementary Public Works COllStruction Act, 1935.

Expenditures under two Ict.


during tbe lISt fucal )'ear agregstC'd $30,232,000 as compared with $8,673,OOD in 1934-35.

As at March 31, 1936, there remained unerpended $18,726.000 of the amounts luthorized by tb_ acts.

Uncompleted projects aDd otber pro item under special relief these 1M•.

n......"'c.1 lects authonzed by these enactments ",hleb it advisable to pro the government believel ceed with have been provided for in the new fi!Ol year b)' tlle specill supplemeoury eati mO;tC!
recently brought down in this hoUR.

Included in the special expenditure {or I... year are three items repmenting loues in curred all a result of the ",beat policy in effect during the past five years.

The payment or 16,600,000 to primary producers of wheat who delivered wheat durinS the crop year 1930 hu been amply debated in thi!l house.

The item of $15,856,645 represellt!


the debit balaoce in the bank account of CalladisD ClIoperative Wheat Producef'3 Limited as of December 2, 1935, which was uaumed by the Canadian Wheat Board as a ruult of the tran!fer to it as of Ihat date of the \li'heat and wheat COil· traeta held by Canldiao Cooperath'e Wheat Producel'3 Limited in connection with the 1930 ...nest pool .ctOllnt and stabilil.atiDlI account.
AJ; Id\'allces by the chartered banb to C.nadi.n Cooperative Wheat Producers Limited were guaran!H'd by lobe dominion government, further supplementary <:!timltes for 1935-36 will to the Canadian Wheat Board of the .mouot of thia liability usumed by i&.

.uthorize payment The operatillD.!


of the Canadian Cooperative Whut Producers Limit.ed, in conn~tiOQ with oats of ~he 1930 crop 'resulted in a (oss of 1170,130 as at December 2, 1935, and under the tertmf of ~he government guarantee this to the dat.e of amoullt with &ctl'Ued intereat psyment will be paid to liquidate the bank liability.

Unfortunately, thcse three items totalling 122,630.000 m,y not represent the tot.al coe& of gO\'eromental wheal m.rketing operalioDi.
To them will have to be Idded .allY further 10l!Se1 that rMY relu..lt before the wheat and ",he3.t CDnlucta resultillg rrom the 1930 pool Ind stabiliution ol)t~tioo.s bave been finslly lod alJo Iny lo3ses which the Ci.oposl'd of, MAY 1,1936 The Budget-Mr. Dunning 2375 (Anadian W,he/lt Board may ill.Cur in market ing wheat of the 1935 crop for which a mini mum price to primary producers of eighty seven and one-half cents per bushel, basis No.

1 northern, Fort William, was fixed lut &ptember.


Whethet such I~ will 'CCNe and what their m&gniwde will be ......m depend on the ptollP@ctive harvests in ,,·heat producing tbe world, on the demand of countries of importing countries, and on the trel:ld of whest pri~.

These factors it is of course impossible to forecast.

It may be emphuiud, however, that the government does not.

believe it.seU warranted in a53Uming responsibility for holdiog Pouch colossal quantities of wheat ll.!
have been held during the last few years.

Without its flolicy will to dumping, be to mllrket su,rplus wheat 'in an orderly manner IllI ,rapidly as world conditions will permit, witb due regard to the progress of the next Caoadian crop, and at the same time endeavouring to restore and expand in every pO!lSible way the dt':lnll.nd for Canadian wheat and "heat.

products in world markets.

resort The remaining items uD.der the caption of Special Edpendiw,re8 are of .minor importaD.te.
Another important class of expendituree for which the government is responsible may be considered under r.he capt.ion, "Government.

owned Enterprises."

This new category ap-o pes.1'3 to be a convenient.

one in which to group together any losses of, or non-active advaoee.s to, government-owned ent~risell which are operated as .lleparate corporations.

It.

will include the net iocome deficit of the Canadian National Railways, and any operating deficit.. the Canadian National Ste&m.
!hips or of of any harbours previously operated by barbour commissions but in fu.ture to be administered by the National Harbours BoU'd, IllI well as any non-active advances to sueh enterprises.

Non~cti ve advances do not eMn interest and are treated in the government accounts &I expenditures.

CANADIAN NATIONAL RAlLWAY COMPANY Further improvement in operating revenue!

of the Canadian National Railway Company took place in 1935.

The gain amounted to SS,200.ooo, or 5 per cent.


Operating expenses were higher than in 1934, one of the important.

factors being the increase in wages brought about by t.he removal of a part of the payroll deduct.ion.

After providing for operating ex Pf'ngeJ and other charges taxes, rentals, etc., the company's accounte showed a net amount of 16,800,000 available for inter est on debt.

This result.
This result.

wu not &8 sat.is- fact.ory as in the previous year, when the purpose wu for amount available such this as Imt-m agaimt from earnings S7,400.000.

After applying the sum of $6,800,000 available interest chuges of $54,200,000, there reaultcd a cash deficit of 14;,4.00,000.

This amount has bf.en p:l.id by the dominion and charged in our account.s as an expenditure for the year and compares with $48,4.00,000 in 1934, the im provement.
of nearly one million dollars being entirely accounted for by sa\'ings made in interest charges through refunding af securi tie.

It.

should be borne in mind that there are certain charges in the account!

of the rail ways not involving cash which should be t3ken into sccount in reconciling the above mentioned figure of cash deficit with the net loss for the year as shown by {·he annual report of the railway company.
In addition to the provision for deficits, the government ad<vanced $7,574.,000 to the Cana dian National Railways in the fiscal year period for cllpital expenditures and retirement of debt.

This amouot is ShOWD in the public a('counts under Loaos aDd Investmeots.

The figure is made up as follows: capital expend i tlUes under the 1935 budget, 5687,OOOj pur chlSe of and repairs to equipment under the SlIpplemf'ntary Public Works Construction Act, 55,068.oooj (net>, $1,819,000.

retirement.
retirement.

of debt Important refunding operat.ions in connee-.

tion with the long·term funded debt of the railway company took place during the year.
Four issues of bonda aggregating 1108,519,000 were called for to their maturity dates And were replaced by securi rates of interest.. Th:5e ties bearing lower i!l8Ues were: redemption prior $35,000,000 4~% bonds due December 1, J96B" sW,ooo,OOO 4.~o/.. bonds due September IS, 1954j $23,740,000 7% boods due October I, 1940; S23,779,OOO 7% bonds due December 1, 1940, In addition, temporary loans obtained in con nection with the maturity of $17,000,000 4!

per cent bonda on February 15, 1935, were funded.


This made a total of securities in· eluded in the refunding operat.ioDtl of $125,~ 519,000.

Provision for thill amount, together with premiums payable upon call of the bonds And discounts on t.he new ismes, 'V&9 made by thl' sale of n.ilway company securities guar anteed by the dominion to the principal amcunt.

of $128,4.00,000 and a temporary loan of 12,043,000 from the dominion trea5Ury.
The details of tbe new issues and the interest cost to the company, are shown in the following lltatement.

: 2376 The Budget-.lIT.

Dunning COMMONS C.nadi.1l National Railw.y Company GU'f:lDLm Bond.

i"lIed for Rdundinll: 1935..3G JUlIe date llabitity date J,h., I, 1935 Fdx-uary 15, 1936 M.y 1, Ilil3S May I, 1044 February 15.
19" February 15, 1953 IntuetiL "te ,,, ,,, ,,, ,,, C." .. company V15~ 3.211~ 2.31~ 3.25'Jo .~mllullt :113,400,000 ;~5.000.tIOO 55.000,000 25.000,000 • 8-!1 result of The annu.1 AVInR to the tamp.ny, after providing tor the &mort.iJ3t.ion of the premiums paid upon the called bonds, will be approxi· mately 13,000,000 • ye:lt this refunding.

All of the redeemed bonda "ere payable.

either optionally or soldy outside of Canada., and the new issues are payable in Cloada oo[y.

In connection with the redemp.


tion of the three iSllucs in September, October and December Jut, the nece&lary funds were fil'!

!t obtained by the sale in New York of direct obligatio[18 of the dominion and later the company recouped the dominion from the proceeds nf in C.anada.

the lale of its 5ecuritict On Ma.rch 31, 1936, the amount of the debt of the Canadian National railway SYI~m out.- the public wu staoding in the h.nds of 11,217,000,000, by $21.000,000 in the past year.
Of the amouot outatandint, S964,CkXJ,OOO are ob~tions guar anl.eed by the dominion.

reduced b'\'ing been CANADIA:o' NATIONAL 8TLUilStUI'S Stesmships Proceeding further to deal with the pro vision whieh it hu been necessary to make is 8Ilti~ for loveromeot-owned enterprises, it factory to report that the operatio!lS of the Canadian National a showed the previous considerable improvement over year.

The euh IOSII on the West Indies service was S2iO,OOO, as compared with $567,000 in 1934.
The Caoadian Government Merchant Marioe had operating earnings of 1312,000, 18 compared with a deficit of 1127,000 io 1934.

An amount of $179,000 W!lS advanced Iodies for capital expenditures on the West fleet, but this ex.penditure was more than offset by the return to the government of a further $200,000 advanced in previous yeal'll to the merchlot marine for working capital.

Taking into coosideration all tre.n.lI.


thcre wu a credit of S63,000 on actiool, accouot of steamship serviCe1 these UAIl8llUR COlunSSlO:o'a Assisla!

:lce to harbour commissions appear ing in our eXj)enditure accounts amounted to is mwe up of amount $3,600,000.

bank Sl.l39,OOO paid loans to in Quebec, obtaioed Jor operatiog deficits liquidate This {M•.

Du....iac.J Chicoutimi and Halifu:, and represents 100000s iocurred oot ooly io 1935 but also in previou.

years.
years.

The balance is comprised of advances (ooo-active) of 1482.000 for deficit 00 the Jacquea and bridge, Cartier ~'Iontrcal, in the harbours $1,979.000 for expenditures of Saint John, Halifax., Three Uivers and Quebec.

To sum up, the total amount treated as expenditures in our accouots in conne<:tion with the operation of the railways and other government owned interprisea, WIUI S50,9S8,OOO, as compared with $50,148,000 in the previoua year.
This is elclusive of the amounts carried u to which reference will be made later.

investments 8UlUI".Y 01' EXPI:NOrt'Olt£8 ill Thi~ Adding compared with ordinsry, llS well together c3pital lOti .pecial expenditures, .... I~ of aDd noo-active advlnces to lovernDlent owned the grand total of entuprues we find that.

elpenditures (or which the IOvernment was responsible was $534,291,000.
an fi"cal increase of 156,286,000 during the last of year as the compared 1Iflth S2,$27,llOO as worst year of the depret!ioll.

The inr""l3e O\'er the previous year, it "ill be remembered, is more thlLO fully accounted for by the rio;e of 114,287.000 in ordinary expenditures, the $21,559,000 increase in expenditure under the Public Worb Construction Ac!.s the 122,630,000 payments made and losses ubI.

in te5PCi::t of wheat and oats.


1934-35 and 1932-33. and that care of I direct attention to the fact in the last the fiscal year nearly 62 per cent of dominion's revenues were required to meet fixed and uncontrollable expenditures, such as interest; war and old age pensions lind 8Ilpcrannuation; returned soldiers; subsidies to provinces and certain other Duthy the la.st of this lIature.
fiscal year prior to the war, only 19 per cent of items generally regarded as uncontroll:J,blc, lind even the 1\':\f cost in 19'19-30, when the effect of had been shown in our expenditures, the proportion was but 44 per cent.

IS compared is last year.
Although it with 62 per cent this date, except by certain not poMible at too make enct calcul3- arbitrary a.5!iumptions, In the yen 1913-J.l, revenues were 1I.Ilotted the to MAY I, 1936 The Budget-Mr. Dunning 2377 it is obvious from an expenditure statements the burden of the war COlt, both direct is e\'en to-day a major factor tions, nevertheless examination of that and indirect, in our budgetary situation, the A statement showing the proportion of the revenues required for fixed and uocontrol1able expenditures in the years 1913-14., 1929-30 and 1935-36, follows: Proportion of Dominion Revenul'II Required for ~rtain Uncontrollable E~nditure' - .. .. .. .. .. .. .. .. .. Interest on debt .. .
.

.. .. .. European war pCllolli~'na:: '.

~ .. .. .• " .. Old nge pensions.. Other penaions and superannuation ....•... , ..•.... .. •• •.

.. .. Sllt.idies " provinces .. .. .. .. .. .. .. .. ...... .. .. .. .. Can of returned llOIdlers.. Other itema .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. •• .. ..., .• .• .. •• .• .• ..

'.

: .. •• .. .. •• .. .. .. ,.


1913-14 /1929-30 % 8.61 .... .... .51 .... 7.53 2.07 -- 18.72 % 27.54 8.8G .35 1.01 .1.\13 2.83 1.22 -- 43.74 1935-36--- % 36.19 11.1» 4.51 1.2Z 2.90 3.711 2.25 -- 61.96 OEFICIT 1935-36 This, of course, there is an over-all deficit Taking the total revenues for the year at $372,100,000 and the total expenditures at for $534,291,000, the last fiscal year of no )ess than 1162,191,000. the takell railway deficit as well I!
all direct govern· mental expenditures and makee allowance for It compares with a total ~cial receipts.

IU6,134,000.

in the previous year of deficit It income represen ts the gap between total and total outgo which must be bridged.

I shall have some comments to make on this defidt at a later stage.

into account LOANS ANn INVE8TIdENTlJ In addition to provision for the expendi· the year as already outlined, 10anl lurea of and investments to the amount of 160,400,000 were made.
LOANS TO PROVINCES The most important of these were loaM to the four western provinces aggregating 142,300,000, under authority of the relief acta.

The net amount loaned was very much greater than in any previous year due chiefly to large loaM to the provinces of Alberta and British Columbia to meet maturing obliga S5,iOO,OCKl WI!

tions.

advanced -to Alberta and $5,900,000 to British Columbia.

Loans were also granted for the finsneinl!


: including relief and for public works and agricultural seed The loana to each province, classified amount of as to purpose, are shown on the following statement: grain and seeding operations.

expenditures pur:pose relief For this of Loana to Provin~ under Relief Acts FilJC&l Year 19$-36 , """,~ Manitoba Sa.kat- cbewan Driti.h Columbia Tolal For provincial purposes including public work •.

dil"OCt relief snd agrieu\l.ural relief.
To meet maturing obligatio D'••....... .. ... ... '537;000' ... For ~1011n to municipalities............. ... :F'or seed graiu and seeding operation•... .... ... ......... 'i,183.65li' 145,000' 6,000,000 ...... • • 8,1'i6,OU AI"'.... • 7.232,000' 5,435,000 450,000 • 6,195,000 5,971,000 400,000 .... ....... .... 12,566,000 7,5~ • 25,756,699 11.406,000 1,532,000 6,000,000 «.694,699 2,300,5411 I.ell cash re-p&ymenta and credits applied.. Netloansdurinll: 11I3~6.... ............ ... 4,7ZO,~ 2,324,.
(211 14,291,(loW 13,117,000 13,000 45.565 2,396.226 14,24$,4711 13,1(»,000 12.S58.445 42,304,150 'Includes 1408.IM for drought a.rea relllllincludlllg lIeed graIn.

'Include.

$1,OSO,OOO for agricultural relief including seed grain.

The amount due by the provinces at the the fiscal year was 174.200,000. l.x1::inning of With the addition of the loans made during the year, the total of dominion assistance loan to the four western prov· by way of inces under.
the relief acts, now stande at 1273:1-152, $116,500,000.

The dominion holds onf-year the provincel bearing in· treasury bills of tel'1Jst at to July I, the rate of 4!

per cent 1935, and 4 per eent thereafter, in respect of these The provinces of MlWlitoba, and British Columbia have paid Atbe-rta.

loans.
loans.

2378 The Budget-Mr. Dunninq COMMONS the interest in cash as it became due, bllt thc provmce of Saskaoohewan, being unable to meet all of such payments, has covered the interest accruals on the major portion of its outstanding loans by tendering treasury bills to the dominion.

A statement of the 10:lns to date by provinces.


showing gcnc-rally t.he purpose for which they W1!rc gmnted, follows: .. mount ou s , Loans to provinces under Relief Acts NA t ts d' g at 'March 31 1936 " , -- Loanll llpe<:ifically to meet maturing oblill;o.tions and interest --- ............... Msnitoba.............. Saskawhewan ......... ............... Alberta ........ ....... .

......., .

....... British Columbia...... ...... .

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

• 1,139,455 3.934,341 8.577.000 11.262.109 24,912,905 - Loans specifically ror alo:ricultuml relief including pUf('hase or IICCd groin • ...... ... 244,400 13,892,633 3.322,000 Loans ror provincial purposes I;enernlly including public works and direct relief • 14,121,000 30.

541.

G5S 13,182,000 16,310.571 Total , 15,50U155 48,368,629 2!i.

()1l I.
()1l I.

000 27,572.GRO 17,459.033 74.155.226 116.527.164 orHU LOANe AND INVESTMENTS Purcha.ses of equipment Loans to the Canadian National Railway Company for capital expenditures and retire ment of debt, as already referred to, amounted for to S7,574,000.

the Canadian Pacific Railway Company and loaos to that company for equipment.

repairs -all as provided under bhe Supplement.ary Public Works ConstructioD.

Act----amount.ed to $4,629,000.


Ag~mentg between the gov !rnment and the company provide for the the int.erest aad repayment of payment of principal by iDst.alments over a ,period of years.

The government's investmen,t in t.he Cana dian Farm Loan Board was increased in the year by $7,933,000.
Of this amount., $175,000 was for the purchase of capital st.ock of the board, S7,550,000' for purchase of bonds, and $208,000 for the purchaae from various prov· incee of capital stock subscribed by them during the period in which the provjnoos par· to $16,790,000.

While ticipated in l·he farm loan scheme.

The totoSl in the board investment of the government the now amounts board operated at a loss du·ring the fiscal year, provi5ion therefor will be made from :rears.
aside the Bonds of the board are now being purchased on a 3; per ~nt basis.

in previous reserves set Under investments there are also included $1,439,000 advanced during the ycar to the harbour commissions at Montreal and Van· The:;e loans arc carried as active couver.

assets as both these commission.!!

h:l\'e paid a interest substantial charged on their of ind.ebtedness.
During the ye:u, repayments totalling three and a half millions were received in reduc tion of soldier settlement loans and loana to provinces for housing.

proportion the The following statemen·t shows the amount loans and investments (active assets) dur last fi~1 year, with comparisons the four .previous years: of ing the for Loans and Investments Active (000 omitted) -- 1931...12 1932-33 1933-14 1934-35 Estimawd 1035·36 Province_under relief legislatioD .......... 22,634.
Canadian Farm Loan Board ................

I, "" Canadian National Railway ................ U,l21 Canadian Pacific Railway .................. .......... .. ..... Harbour Commissioners...................

Soldier laod settlement.................... Provineea--bousing............... _........ Other...•.•......................••........ 483 Cr.

150 Cr.

lI5 Cr.

12,138 [Mr. Dunn.in1l.J 76,753 • • 15,565 871 14,677 • 13,115 <16 2,628 • 22.909 353 16,579 ... .

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

...... 393 571 Cr.

397 Cr.


1,617 2,492 Cr.

213 Cr.

6" 92 Cr.

139 Cr.

........ ... .. ........ 15,131 39,266 '" 32,001 • 42,304 7,933 7.574 4,629 1,439 55S Cr.

3,003 Cr.

82 60.<03 MAY 1, 1936 The Budget-Mr. Dunning LOAN FLOTATIONS New issues of dominion obligations during totalled SbOO,OOO,ooo, exclusive of the year temporary financing in connection with which repayment was made before the close of the fiscal period.
These issues, t.o the extent of $297,000,000, were for the purpose of refund The balance of ing maturing obligations.

increase in $Z03,OOO,OOO, representing the net funded debt :lnd treasury bills during the yenr, was i!sued for deficit and other current purposes.

This luge amount of financing was BUoceS9fully carried out rates of interest botb for short e.nd long term iMUes UlAn ever before.
At the dose of the fiscal yeM the average rate of intere!lt on the out d:loding funded debt !Iud treasury bills, wa9 3·9 per cent as compa,.ed with a cor:respond iog figure of 4·16 per cent a year ago.
lower at refunding purposes, Three i!SUes amounting in the aggregate to $164.,000.000 were made in the United State9 for including redemption of Canadian National Railway honds already referred first public 1I0~atJons by the dominion government in that market several years e.nd necessitated registration under the United States Securities to the government Act..

The interoet cost WIlS 2'09 per cent for three-year notes, 2·96 These were the for to.
per cent for ten-yeM" and 3'63 per cent for bwenty-five year hands.

sale The totalled The iSSUe!!

in Canada, exc1u.sive of treasury of bills, $303,000,000.

1135,000,000 of one~yea.r and three-year notes was made t.o Canadian chartered hanks in September bst, mainl}' t.o meet m.a.tlIring short term obligations beld in large part by those institutions.

Two public offerings were made, one dated June 1 for $60.000.000 and one dated November 15 for 175.000,000.
The interest cost to the government ranged from 1·90 per cent for one--year notes to 3'10 pC!'

cent on twenty-year bonds.

The $33,293,000 of 5 per cent school lands debenture 9tock held by the prairie provinces were again renewed for one year at the same rate of interest.

The policy of selli"ng tbree-months tressury bills in the Canadian market was eon.tinued during the YOOT.

and tbe amount of is9uea outstanding was incresscd by $33.300,000.
The rate of discount on these bills dropped from 1·698 per cent on April 15, 1935, to ·999 on March 16, 1936. further issues have been made, the record low cost of '879 per cent being obt.ained on April 15.

Since tha.t date, I now plaoe 00 Bansa'rd a ata.temeot giving the essentisl details of the new ii'tlues made during the yea.r: I...oon flotations 1936-1936 Iasue date Maturity date 1935- June 1.............. ".

1/43......... June 1.


............. June 1/606.•••••.•• .ly 1/36 ..... .... 1........ ..... July Aug. 15............. Aug. 15/45 ... ...... Sept. 15............. Sept. 1S/36 ........ Oct. 15.... .. ....... Oct. 15/38 ... ..... Nov.IS.... ... ...... Nov. 15/39 .. ..... Nov.IS .... .... ..... June I/~......... '''0>-Jan. , .
....... .... Jan. 1/3~......... Jan. 15 ... ......... Jan. 15/61 ......... Interest BOo per cent Where payableI Price ,.... ,0.0" 100·00 Landa) 21 Canada ........ Canada ........ 3 , Canada (School :1 New york ...... , Canada ......... , Canada......... Canada ......... Canada ......... 3 96·00 99·61 99·2175 99·43 118·7S Cost to Govt.

per cent 2·57 3·10 ',00 '·96 ,.,.


2·275 2·15 3·" Amount lnued 20.000.000} 40,000.000 33,293,471 76.000,000 46,OOO.000} 90.000.000 20.000.000 55,000.000 New york ...... 2 3j New york ...... 99·75 93·86 2·" H' 40,ooo.00ll 48,000.000 4B7.293.471 Incre&.e in ahort uurn treaSIJry billa outstanding March 31, 1936, over March 31, 1935..•..... 33.300.000 S5OO,693,'-71 The Dtu/oet-Mr. DUllnill{J COMMONS The following j!
a ltatP.meat of the unmalured funded: debt and treasury bills of the dominion outstandiog at March 31, 1936, sho wing al50 the annual interest charges thereo:\-: Unmatured Funded Debt and Tn:a!lUry Dill!, ll!I at Mareh 31.

1936. and Annual Intere!t Chll~es Date or !or.turity .

.

JI3G July 1.. ~t.15 Oct. 15 Nav.1S 11137 Mar.

I C.) 1040 !du.

I93VJan.

Dee.

Hl38 July I {.I I. J,ly 1.

1.

July J,I,.

I. Oct. 15 1 Oct. 15 Ocl 15 NOv.1S I.

~.

I.

1041 NOY.15 tOU Otol.

15 1e-t3 JUNI 1.


Oct. 15 1044 Oct. 15 11M5 ADe.

15 ()(,I.

15 194& Feb.

I.

1047 Oct.

I.

1949 Oct. 15 111M!

July I. UI5Z May I. Oc~.

15 1955 M.y I. June I. I. JlllIe 1i.

'ill Nov. 1.

11157 Nov.

I. IIlSS ~tpt.

I. Nov. 1 105Il Nov.

I. lOCO Oct.

I I Oct. IG61 J.D.

·15 .."per cent Where Pay.ble 5 C.nad•.........

It ~=~da .

2 Ir:.

:-da .

&a.ad•••••••••.

.5 05 Canada and ro;".,..

york.... 5t ('.n.d•......... 3 _ London 3 ~ndon .

.

3 Londoll .

3+ LoIld(MI .


2 ~:~._ .

2 Sew york .

-4 {-anada 2; K.-aud .

:2 ('...ud•......... 3 Cead•......... 41 .ronad4..•.•.••.

anad•.......•.

05 .

anad 3 2l .n.&d .

05 &Md•.••...... H anad•........ 'I r.-~d %l I~e... york....•.

4 ~~ad .

.

.

2 3 .n.&d•.••.•.... 3\ London .

iJ!

;"" york.. .

.5 I~~,n.d •......... -4 .

31 I'--.ondoa .

~ ~.nada 3 r.::~nad•......... .

.

'I C.nada 'I C.n&d•......... 4 Carw:l 4 London London .

4 Can&da London 4 4 New york 3) New york .

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.. .. .

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Amount of Loa, • ,,,.

33.193.470 8.l 45.000.000 1IO 63.3.

'm.0lI0 1IO 70.~.

:1IO 1IO 89.787.000 1IO 236.m.800 1IO 8.071.%30 III 18.Z50.000 1IO 10.950.000 1IO 15.(I.

'I6,(I(ll; M 110.000.000 00 40.000.
000 00 47.2611.500 00 7.11.13.000 00 20.000.000 00 1\$.013.&36 n 75.000.000 00 141.lIII3.000 00 4O.~,000 00 20.000.000 00 147.000.100 00 50.000.000 00 711,000.000 00 88.337.500 00 4$,000.000 00 4,888,185 64 138.31%,000 00 137.058.84100 100.000,000 00 5Il.101.ooo 00 4S.Il66, 11M 117 40.000,000 00 55.000.000 00 4:1.125.700 00 37.523.200 00 13.000.000 00 276.lI87.600 00 2811.603.3011 00 g,~.OZll.1l6Il 66 100.000.000 00 48.000,000 00 Annual Intel'$ Ch.rxe • ," I,llII4,~73 $4 lI7S.00J 00 1,2&8,120 1IO :1.11711.700 00 4.4119.350 00 12.911&.489 1IO 2"2.13& 110 $17.000 00 3"~ .
.

!lOO 00 5211.\lfiO 23 1.1lOO.000 00 ROO.ooo 00 1,896.7llO 00 198.32500 "00.000 00 :U50.4Oll 10 3.375.000 00 7.

1m.

150 00 1.212.!70 00 500.000 00 7.3.\0.005 1IO 2,:50.000 00 1.110O.000 00 3.533.500 00 2,0!.5.cm 1IO 122.2Ot &4 4.~U.270 00 4.i97.059 43 5.000.000 00 2.Z47,UO 00 1.58l.Me 111 1.200.000 00 l.r.so.ooo 00 1.940.GS6 50 \,GS8.M4oo 2,~.OOO 00 12.41iO.ll4200 13,Q:UI.I98 50 3,7.~7.006 67 4,(100.000 00 1,5€O.OOO 00 Treasury bill.

dUll April TrflallUry bdl.

due April 15.

11I:l&, 1·\05 per cent.


C.nad..... .. Trea9Uty bill.

due M.y I. IIIU.

1·09 per cent, C.nad•........ Tre&l!llry hill!

dUll May 15, 1113&.

\.0$ per cent, C.n&d•......... TreallUry bill, due June 15, 11I3tI, 0·11911 per cent.

Canad•........

I, 1113&, 1'111 per cent.

C.nada .

.

.


2117.500 00 25,000.000 OIl 25.000.000 OIl 287.~ 00 327.000 00 30.000.000 00 210.000 00 20.000.000 00 20.000.000 OO:,.+--C::-:'7"~...,=""OO 128,.5IlU77 18 3,Z6.l,287.604 46 Payahle in C.n.d•........................••............. .

Payable in C'lln.da .nd New york Payable in New york ..•................................. .
Payable In Lonl.lon ",401.1133.007 fl7 89,787,000 00 364,000,000 00 4O'J, 867,596 70 73·557a 2·7;',% 11·15"a IZ·M"!a LUll hondl .nd at,o('kI of the .bove loana held as ainkina lunda............ $.~,2~,287.004 46 lOO·OO% .58.168.944 3.& S3.201.1l8.6GO II C.l Tu rree in Callada.

(Mr. Dunninc.1 MAY I, 1936 The Budget-Mr. Dunning 2381 Now with regard to our old friend the na tional debt.
TBB NATIONAL DEBT At March 31, 1936, the unmatured funded debt and treasury bills of the dominion out standing, less !linking funds, amounted to $3, 207,000,000.

To this amount are to be added other liabilities, mainly composed of insurance and superannuation funds, post office $3.vingll deposits and certain trust and contingent accounts, amounting to $225.000,000, to arrive at t'he gross liabilities of $3,432,000,000.

Active assets, including cash on hand and investments, amounted to $424,000,000.
After deducting the latter figure from the gross liabilities, the net debt at the close of the fiscal year amounted left office to S3,OO8,OOO,OOO.

When we in the dominion August, 1930, stood at $2,141,000,000, the increase in the interval being $867,000,000.

The total funded debt increased almost ODe billion dollars in the period.
the net debt of I now place on Hansard a statement show ing the assets and liabilities u at March 31, 1936: Liabilitie8, March 31, 1938 (e8timated) Bank Circulation Redemption Fund..

In'lIroDce and superannuation fund&- .. .• •• •.

.. .. •.

•• •• • .

.• .. .. .. .. $ 6,858,000 Government annuitiu .•...•...••.••...••••••.

,.

Insurance fund, civil service .••.•..••••••••... ,.

Jns~rance fund, returned IOldieu ••••.••.••••••• , •• , ••..•.••.•• RetIrement fund ••..••...•. "
Superannuation fund•••••••• , •..•••••••••.. " Trusts funJ- rndian {undl Common school fundi Contractors' Iccuritie&l depOlJitl .. Other trust funds" .

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• • • .

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• • • • .

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.. Cotltin..8ent and special funds POlt Office money orden, polltal notes, eu.

outataJlding" " Province acco"untl ' • • • • .

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• .

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. "

" POlt Office aaving8 bank deposita ..••••••••...•....
Funded debt- .. Unmatured" ••.••... " .•.•..••..•••••••• !datured but not preaented for paytnent ••••.
, .•••.. Interut eoupona matured but not presented for pllyment, ••• Aneta, March 31, 1938 (estimated) , .• 66.835,000 9.990,000 14,777,000 8,361,000 51,140,000 13.929,000 2.678,000 1,551,000 2,870,000 151,103,000 21,026,000 5,877.000 2,738,000 9.624,000 22,050,000 3,207,119.000 4,228.000 --'---'-- 3,211 ,347,000 2,050,000 $3,432,871,000 Active &88eta-- Cash, working capital advanees and other current &saeta.. Gold bullion account.. .. •• Loa1l8 to 'provinc_ .. .. .. Houllng.. RtHef Acta.. .. .. .. .. •• .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. •• .. .. .. .. .. .. .. .. .. .. ..$ .. .... 6,768,000 116,996,000 .. Loans to foreign lwvernlllenta-- Greece Roumania., .• .• .. ,.
.. .. .• LoaI\.1 to harbour oommiuionera- :Montreal..

.'

•.

Vancouver .... " New Westminster .. " ., •• •• .• •• •• .• •• •• •• , •.•••••••••••••••••.

, ..•.

.. " Loanil under Dominion HousiDi Act, ••.•.•••••••••••• ..••••..•••••• ' ••.•••• &nd holding aecount.

.•• " •• Canadian National RaIlways" .•.. , ...•••••• " .. Canartian Pllcifie Railway Canodian Farm Loan Boud .. " ..

Soldier and general land settlement ...••• , ••••••.•.

Seed ~Tl1in and relief sdvance&l., .

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, " ....•• Canadian government railways open and .toret aCC'llunta .

Deferred d~bit_ " Unamortized dilcount and commiuioD on loaDl .••• 8,525,000 23,969,000 59,134,000 23,744.000 275,000 Ket debt March 31, 1936 (estimated), ••• " " Represented by- Non·active auctl, March 31.
1936 (elltimated) $ 24,043,000 2,287,000 123,764,000 30,494,000 83,153,000 82,000 659.000 41,458,000 4,629,000 16,790,000 43,630.000 2,31\8,000 15,749,OJO 35,2801,000 $ 424.380,000 3,008,291.000 2382 COMMONS The Bud{jet-Mr. Dunning As3et.. March 31, 1936 (estimated) Concluded Capital expenditures- Public Works- .• •• Caoal... .. Railway• .

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P~~lic buildings, harbour and river improvement.

.. .

MIlitary property and s\.orca .


Territorial accounta .• .. .• .. .. .. .. .. .. .. .. Loans non-active-- Canadian National Railway• • .

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• .

Hailway aCCOllnte (old) .

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• • • • .

• • • Canadian National StcllrD.llbipll .

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Harbour commi&lliolleU-- Quebec .

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Chicolltimi .

Halifax ..•.

,_ Saint John .

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- ..•• Three River, .

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• (Jacque.

Cartier bridge) .

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Montreal ,_ ., Seed !train and relief advance• .

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, Soldier and general land .ettlement., " " MilllCellaoe<lul advance• .

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. " Coll8Olidated fund- ..$ 242,871,000 443,190,000 264.929,000 12.035,000 9,806,000 26,293,000 3,539,000 9..~15,OOO 14.046.000 3,144.000 2,504,000 9i2,921,O(lO (;55.527.006 88.39!J.OOO 15,508,00(1 :'19,041,000 536,000 16.514.000 3,525,000 Dlliance, consolidated fund, brought forward from March 31, 193:1: .. 1,042,806,000 Exceu of e:l{lendituro over revenue, ,. "

fiac&!

fear ended March 31, 1936 (eatlmllted) ., " ,.

_.....:IC53C.'Cl_.C.OOO.....


:~::'~~~ 1,190,320,000 $3,008,291,000 The guarantee of bank 10al1lt to the Canadian Pacific Railway Company, the original amount of which was $60.000,000, W&.

!I further reduced during the fiscal year by 112,000,000, the in debtedness at March 31 being $36,000,000.

The government is advised that the company aITallgements has made the to the loans on May 1 and the biliance of dominion will he relieved of its liability with out liquidate loss.
Th~ guaran~ee arising out of the assumption.

by the chartered banks of the liability of the Province or Manitoba Savings Office waa further reduced during the year by SI,500.OOO.

The amounts of the bonds and debenture ,tocks and other in.debledness guaranteed by the dominion are shown in bhe following statement: INDIRl".cr LtABtLITIES Bonds and debenture stocks bearing the guarantee of the dominion outstanding in the hands of thc public at the clo!le of tJle {bcal year amounted to $994,600,000.
The increase during the year was $7,300,000, accounted for by change!

in Canadian National Railw:lY including the funding of a temporary iSIUM, loan from the government outstanding a year ago.

Other contingent liabilities are those arising out of guarantee" given pursuant to tlJe relief and other ach.

During the year the govern.

ment gave guarantees under authority of the C3n.adian Wheat Board Act.

The amount of ~hese ,guarantees at Maroh 31, 1936, was about S5B,OOO,OIXl.

fUr.
fUr.

Dunnin,.l MAY I, 1936 The Budget-Mr. Dunning 2383 Bondi and Debenture Stockl GuanLntced by Dominion Government A. at Mareh 31, 1936 Date of maturity I.ue Interelt ~.. per cent Sept. Moy Feb. Moy July April Dee.

Sept. Aug. Feb. JUll Fe.

Mar.

.

I, 1936 1, 1938.

15, 1943............

I, 1944............. 1, 11J.f6 1, IIJ.f8............ .

15, 1950............ 1, 1951..................

I, 1M2............... 15, 1953................... 10, 19.;3............ .
1,1954..................... 1, 19M....... .

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.. 15, 1955........................ 1, IIM6 I, 1957 20, 19Ii8 4, 1960..................... 19, 1961.

1, 1962 1, 1962 I, 1969............... 1, 1969 1, 1969..............

I.

1970.. June :Feb. July July May May Jan. Jan. July Oct. Nov. Feb. lly tenders or dnLwinp......

Various datee, 1936--54........ .

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Serial, Feb. 1 and Aua.

I, 193&--1938 J'e~tuIll.

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Grann Trunk Canadian National Canadian National Canadian ?\ational Canadian Northern New Westminster Harbour Camnli&- .

aion .

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.

Canadian N tional.

C nadian N..tional.

.

.. ~aint John Harbour Commialion .. C nadian NationaL Canadian Northern CanadianNational.

.

Canadian National (West .

Steam.llif.

Canadian National Canadian National.

('anwian NationaL.

Canadian Northern .

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Jndies) .

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Canadian :Northern Alberta Canadian Kortltern Ontario Grand Trunk Pacifie Grand Trunk Pa~ific Canadian National.

Canndian National...... Harbour Commilllionens of Montreal .

C'anadian National.

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Canadian Natiol1&l John debenturu, City of Saint &Mume?

.by Sllint John Harbour Commlllllon .

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Cllnadian Nlltional eqpt G .

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Grand Trunk guaranteed stock 'IQrand Trunk debenture stock .

~l"l!lLt Weltern debenture .tock Grand Trunk debenture .took .

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... Northern Railway of Canada deben· .

ture .tock Amount oulltJInding • ,... 24,m,OOO 00 13.400.000 00 M.ooo.OOO 00 35,000.000 00 24,238,000 00 700,000 00 20,500.000 00 50,000.000 00 007.

P53 04 25,000.000 00 9,M9.99672 50,000,000 00 !I,(OO,ooo 00 50,000.000 00 70,000.000 00 65,000.000 00 7,~%,Ii(S 57 3,1-19,998 f>6 34,229.ll961!7 34,llllUIOO 00 8,440,848 00 60,000.000 00 60.000.000 00 19,000.000 00 18,000,000 00 25,1!lY,243 73 6 2 2 2 3 3 6' '!

2 , •• , , if 21 31 3 , • , , , .

!


2 Various 1,208.5277.

3,750,000 00 60,833.333 33 :!O, 7S~, 491 67 13,252.322 67 , , • , • 1I9,S39.01( 33 • 1,(99.97967 $9!l4,5.

';O.2$5 00 Other Indebtedneta Guaranteed Bank advances, re Province of Manitoba Savinp OlBce .

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Il~nk advancee, re lovernment of Newfoundland .

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lIank advances, re <;.oadiall Pacific Railway Company .

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• B~nk anvancu, re Dominion Steel and Coal Corporation (order for raila) ..

Province of Britilb Columbia treasury billl .. .

Province of Manitoba treuurl bills Hank Idvancel, re Canadian <;OOperative Whe t Product!ra Ltd .

Blnlr.

advancu and other liabilities, Canadian Wbeat Board .•......

., ReMen-e of chartered banks on deposit in Bank of Canada.. ..
., • Estimated principal amount oulstandinl;\: March 31, 1l1:l6 7,305.5(1 625.000 3G,\l{IO.OOO 217,134 626,533 5,894,127 370.000 58.260,000 188,202,UI7 BUtIGtf FORECAST 1936-37 I have already announced that the over all d~ficit for the last Sseal year i!

estimated that deficit at S162,191,OOO.

The aile ItlI cannot fail it aerioullneSll ia but the la.test in a series of deficitll which hI\":' averagf'd ... ver $138,000,000 per year dur- to have impressed- the house.
is enhanced by the fact that of ing the p::st six depression yean.

The mag nitude of these deficit!, and partil"!

;!llrly of the latest one, ill auch tbat in my opinion few honourable members will be disposed to ques tion the declared purpose of the government to end in the ahortest practicable time the recurring deficil.ll.

That purpose the era of intendl to pUM!ue lfteadily as an goveromen't 238' 1'he Budget-Mr. DlIlmi,,{} COMMONS ::!lW'ntilll condition of the re!
'toration of busi nc!>S confidence and the free functioning of is believed, will private rnterprise.

This, contribl1~e more effectively to the solution of the problems of unemployment and de· pression than any other single thing which governments can do.

it I Sffi not an alarmist.

On the contrary, I that common seose and sound lffi confwent immediate ~onomil."

policies Can wive our I am convinced that problems.
Moreover ~hi8 countrv can bear all tbe burdens which the w:u :lOd the depression and past mistakes have N.ddled upon it, great IS they have heeD.

Neverlhele.u I believe that no country e.,n go on indefinitely with heavily unbalanced hudgets and continue to maintain either the :onfidenee of the basis upon Irhich her economy can functiO!

:l healthily and vigoroW'ly.

We hal'e now reached the st.age when!

delay should 00 longer be toler ated.


We must make an immediate approach to a balanced budget and we must be able to show that complete equilibrium can be -eached within s reuooable time.

investors or I am well aw&te that this will be wled a Indeed, I have heard doctrine of deftation.

it Mid reeeotly that Caoada haa been fol lowing a policy of "heroie deBation" and that the book of she should take a leu out of It,is not easy for me the mother country.
to understand how departure from the gold !l.andard, recurring deficita.

financing by bor rowing.

oC the magnitude oC thoae which I have outlined, and a monetary policy which hu aHowd the Canadian dollar to ftuctuate approximately at par with the managed sterl illg standard and with the devalued United States dollar and which hall made pOllSible an expansion of the country's cuh base just as that of Great Britain, can be rapidly as de9Cribed u defllltion.
More careful analysis would rather appear to indiC'tLte that in these financial matters about the only point in the British program which we have not already adopted is her .policy of keeping the budget balanced.

everyone knows, was rega,rded by Great Britain lB the very corner slone of the recovery .program.
So much 30 that imposes sub stantial increases in a tax structure oC already to provide in order har8S9ing proportions increased expenditures considered funds Cor nece9S:lry for purp~ of national defence.

In my opinion it is not feasible for u.s to achieve a complete balancing of our bud~t I am bound to admit immediately.

That would involve dellation and to a degree that would probably prove intolerable.

What we can aDd must do is to make an immediate.

the latest British budget That, as air.


Dl4l1<lioll.l appreciable approach too a balanced budget as the first step .in a defio.ite, positive pro gram which will assure the auaining of our final objective within a limited period.

I shall now ouLiine the meo.sures which we propose to take and indicate the consideralioo.s which have influenoed us in each case.
On the upenditure aide our first slep haa been to put an end to the era of "blank cheques" and to reestablish the control oC parliament over both the chsracter and the amount of government expenditures.

Befon!

the house rises a complete presentation will the amounts which the have been made of executive branch oC government believetl i& will be neoeSll8ry to spend during the year and these amountll win hlLve been duly au thorized by parliament.

The main estimates for 1936-37 whieb were brought down.
30me time ago were designed to Ctlver the ordinsry operations of government.

Unquestioo.ably they should be.

and they will be, more tb~ amply provided for by ordinary re\"enuea.

The special supp)ement&ry elltimate.. recently tabled, were intended to make provision for those special or em~ncy needs, chiefly the costs oC unemployment relief and the deficitll of government owned enterprises, which arise out of the abnormal conditiona now prevail· ing.
Later, the usual provision may be nece... aary by way of Curtber supplementary esti· mates for a moderate amount 0( additional expenditures not in the main e.st.imates.

With this p~dure the public will be assured that those authorizations will represent at least the maxi mum to be expended dur~ng the preseo.t fiscal year.

this traditional procedure wiN make far 80under and more economical administration.

I am convinced that the aggregste of taken can!


of Such savings as can be made in ordinary expenditures by more effective control on the part o( spending departments and by a painstaking search for economies, elimination oC waste and duplication of ellort, will be It effected to the maximum possible extent.

the opportunity is apparent, however, of elimination reductionll.

for essential services is limited.


that by except The two major obstacles to a balanced budget are the cost of unemployment relief including relief undertakings and the Cao.adian National Railways deficit.

Canada's succe.

in reducing these two classes of expenditure will be the melUlure of her progress both In achieving a balanced budget and also in Curthering the march of ~overy.

In 80 far as the Canadian National is concerned, the house is now familiar with the progress already made.
As ShOWD by the the railway 3peaal supplementary estimates.

MAY 1, J936 2385 The Budgel-Mr. Dunning for its net this year asking us income deficit is for $39,900,000 on the account of present calendar year.

This compares with $47,'100,000 in 1935 and with the depression peak of $62,100,000 in 1932.

In view of the railway measures now before.

the house" this is not the appropriate time at which to dis· I may <:uss the government's railway policy.
ssy, however, that we are confident that this cash deficit can be further substantially re duced as a result of the measures which will be taken kl place the management of the -Toad on a more responsible basis.

In regard to the other maior cause of our .deficits, the outlines of a well-knit and compre hensive program designed to meet the un· employment problem have already been pre se-nted to the house.
For the first time since the depression began, a serious effort has been made to compile the statistics necessary to give us the essential factual basis for anal yzing the range and llpecific character of the problem with which we are faced.

If diagnosis should step should precede In the second place, we '<:ommend itself.
a have provided for appointment of remedy, that the as throughout recommendations representative national commission which will be charged with the functions of investigating relief methods and policies now in effect of enlisting the cooperation of the prOl'ioces, the municipalities, employers and employees' organiz-ations and other public and private the dominion, and of agencies making best to the methods of handling relief and providing remunerative employment.
In other words, we are seeking to mobilize all our resources in a nation wide cooperative attack on th-is, the most urgent of our immediate national problems.

Finally, we are providing in the special supplementary estimates for the money necessary to meet direct relief costs and to carry on a program to provide employment through constru<:tive undertakings on a scale commensurate with our resourcel.
total expenditures are Knowing what our likely to be, we are now in a position kl revenues consider what we should budget for.

On the basis of the tn and tariff rates now in effect, it is esLi· mated that the revenues for the present fiscal year will aggregate $387,850,000 deri\'ed from the usual sources as follows: taxation and other financial Taxation revenue: Custom, dutiu .. EJ:d.!le duLie• .

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Income tax• .

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Sales tax ..

Manufacturer", stamp, taXe.ll •• importation and otber epecial , Total tsxation revenue .

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Non-tax revenue: .. .. Post Office.. Interest on inveatmenta.... Otber lIourcCfl ....•...•.
.. .. .. Totsl non-tax revenue., Grand total revenue.. .. .. .. .. .. .. .. .. • 75,000,000 46,000,000 87.000.000 1l0,000.000 42,000,000 $330,000,000 • 33,500.000 J1,350,000 13.000,000 • 57,850,000 $387,850,000 As ,that is apparent the deficit for the main estimates and the special supplementary estimates call for expenditures of o\'er S509,000,000 kl which will have to be added any further supplementary estimates, it the year would probably total over 1125,000,000 with out taking into account possible losses on wheat, unless provision is made for additional revenue by way of new or increased taxes.
For the reasons already given, vitally affect ing, as I believe, our national welfare, I feel it necessary to budget for a deficit this fiscal year of le~ than 1100,000.000, not taking into account any further resulting from wheat marketing operations which of course If this can be accomplished, are unpredictable.

it will represent a definite improvement com pared with the deficit of $162,000,000 for the last fiscal year.
losses to twnnty.eight approximately It therefore becomes necessary to provide for additional ,taxation revtlnue in the amount or thirty In imposing new lax levies, million dollars.

one must bear in mind the desirability of avoiding any undue retarding effect on busi· nCS3 recovery.

The information which I have given in the early part of this addreS/!

indi income is surely and cates toot the national steadily rising.
I am confident, therefore, tile amount of new taxation which we that feel it necessary to impose will not have a deterrent effect on the busine~s trend which is now definitely upward.

Rather do 1 believe that business men -and the public generally will gain new confidence from our endea\'our to grapple vigorously with our problems of national finance and will be willinll: to cooper.

2388 The Budoct-Mr. DUFlnino COMMONS ate wholeheartedly bumellJ which are believed necess:u-y.
shllring .n the Dew It is now my task to outline the changes in taxauon.

and lariff structure which are Ollr oroposed.

INOlUoUt TAX The most for n.ising additional important change to be made under the Income Tu Act Ind the first pro revenue is an posal incre1..<e in the ordinary rate of tn on cor porations from 13* per cent to 15 per ceot.

A~ the lame time, where returns Ire COD rolidated, the rate will be rai!ed from 15 per cent In view of the extent to.
which prO~'inci:l1 governmenta are now income taxes, and in view levying pl'fSOnal !llso of income impo.

!ed by the dominion last year, it is not ;lroPO'leU to IIlter the existing schf'dule of rates on individual incomes.

surtax on iovestmtnt to 17 per cent.

the imporUot branch of My ne~t propOllal relates to the metal min ing industry.
The contribution which thie indust.ry haa made to the economic well-being 'lod indeed to the finaocial integrity of thfJ dominion during the depression yearlJ is w('l1 known.

Cl'1!lt as its development hll.ll already beeo, a much greater future appe.rlJ 10 lie in store.

In Ihe opinion of many, we have little more than begun to tap the varied this country.

Moreover.
Moreover.

mineral wealth of the ffiO!t the industry, namely, ,old mining, is in the fortun.te posi_ tion of producing a commodity for which the demalld appeara to be unlimited.

In other iodustries production cannot be speeded up without creating o\'ersupply and breakins: the market.

10 the case of gold, however, overproduction teem!

under present condi tion!

to be impossible and the pnce remaiM tixed :It leut for long periods of time.
On the ':lIner hand, the industry is one in which the nus are gre:l.l, C:!peCially in the initi.l ataget.

Exploration and development require expenditure of large .mount!

of capital over a considerable period of time, Private enter pri.se, therdore, cao only be induced to enter the field if the prif,es to be gained [or the relatively few SUCCessell are attr.ctive.
Because of these speci.1 ch.racteristics, the iodustry appeara to olTer a unique opportunity for • constructive governmental policy de signed to etimulale an expansion of mining acu\'ity with it.!

resultant effecta On employ ment .nd purthase.

of supplies and materials.

The go\'tJ1lment therefore propo.


!lea to gnlnt nemption from corpor:ate income tl:( to any metallifr.rous mine coming ioto prodUdion between May I, 1936, and J~uary I, 19-10, sucb excmption to apply to ita income for 1M•• Dwul.....1 the that the first three yeara following the commencc_ ment.

of production.
of production.

This definite step to the minins: cncourage the development of industry combined with t.he addition:!.1 prol'i sion for ~eolopcD.1 surveys .nd invC5tig:ltions and fOr transportation f.cilities into new min ing arel.!

m,de in the main and ~pe:i,l sup.

plemcntary estim.tes &bould do much to ac_ celerate new exploration and dC'\'clopmcnt work during the present ye:\r and the follow iog two or three yean.
I desire 10 add that AS uncertainty of tax.tion i•• definite deter_ rent to the making of new commitments in • b.u.rdous industry, the mining industry may this government will not rely upon it im[lOliC c.i!iCriminatory taxation with respect 10 mine~.

While thc present.

government is in power, mining cnte.prises c.n depend upon treatment at.

lea~l a.s favourable as that ac comed to other indunriell under the corpor.\ tion income tu.
Iu view of intereM with re.spect the decline in interest rates, it is intended to reduce the rate of intere&t income tsx from on unpaid instalment!

of 6 per cent to S per cent, and to lower t.he penalty rate of to to 3 per cent.

overdue tax from" per cent The gift.

tlx i!

to be altered by requiring ahall be made that payment of than .t the time each ph .nnually rather Furtbermor!, Sin.

up to 11.000 it made.

annu.lly to .ny one peraDn will be exempt from the provisions of the gift tax in future.
important changes are being m.de the treatment of companies which have iii.

technically come to be known a.s .... (k) com panie"'-ill other word" incorporated com paD'iee .....hose businea is not.

only carried: on but whose asset8, .I!lO, are situate entirely ouwde of Can.d....

This category will be reserved exclusively [or indus tri.1 or commertial operating company [or which it WII originally created.
A new cate lOry will be provided for investmeot holding co·mp.nies wholly owned by non-residents, which will be required to pay a tax on t.heir income at a r.te equal to half t.he ordinary rate on cOlllorate incomes.

Credit on this tax will be given in rC1Jpect.

of the 5 per tax paid on 1s.st year'a income dis cent tributed to oon-reaident shareholders, but .uch companies will be required to pay the 5 Pel" cent.
non-reaident iocome accumulated but not distributed during the tax lint went period after into effed into effect.

and up to the comill&; o[ this new tu.

In future these companies will, of course, not have to pay the 5 pel tal: on dividenda paid to their nOll- cent the type of the .\ per Fin.lly, .

:eDt tax ta:x on MAY I, 1936 2387 The B1Ulg6t-Mr. Dunning re!ridcnt shareholde13 but the higher rate on their in.come.
'/I·m be taxed at Thue changtll in income tax, ticip1led, will revenue of approJ:imately $5.000,000.

JlTo\'ide for it an in.crease is an~ in SAL£fI 'ux the additi<lnal As a mens of raising a suWil.ant.ial amount of revenue which must be obtained in the en.suillg year it is proposed to increase the rate of ules lou from 6 per cent 108 per c.cnt It WI!
our \'iew that .. moderate im'rease in the uisting Mles taJ: which CO\'efS tilt brosd field of merel\aodise tran.sacLioIlll .nd for which efficient and economical machio lOr}' for .collection is already in operation would be clearly preferable to singling out a few to bear an unjustly heavy parlicul~r item!J I do not intend to impose "nuiMnce" burden.

t~xes in an effort to raise more revenue but rathe-!'

10 utilize our e;'(i~ting tnxation structure.


A few changl's are to be made in the schedule of exemptions from the sales tax.

With a view to simplifying administr:\l.ion and eliminating double tu.tion certain matC!

"ials .consumed in the process of manufacture commonly known as "consumable materials" but not including lubricating or fuel oils or plant equipment will be phlced on the eJ:empt list.

Paper aDd ink I18l'd in magalines and periodicals will 1I1~ be given cJ:MlPtion.
The only other items to be gnnted relief from ales tax ue cro~hed stone and crushed gravel wed in \.he building or maintenance of pro\'incial, county liVer extract for use in and rownship roads; the \rl'atment of anaemi:lo; eduational fil.m.s; and handmade drawings, or dl'!

!igns for use in .. number of manufacturing industries.

1t is estimated that as a mult of the above chsnges in the sales tax the revenue therefrom ,,'ill be increased by approximate!

)· 123,000,000.
)· 123,000,000.

EXCISE TAXES The most important chlnges in excise t6xes arise through the recent report of the Tariff Board regarding the automobile indultry.

At [lre.~ent there is a .5 per cent and 10 'per cent lax on automobiles imported or produced in Csnada with exemptiona given in terms of price and extent of cost of ,production, incurred in Canada or in Bri:.ish countries.
Following the recommendatioDll of the Tariff Board in connection with this item, it is propo!ed to replace the eJ:isting ntes with a fl.s.t rate tn of 5 per cent on all lIutomobiles, regardlea of Canadian or empire content, on tJie value ill excl'S!

: of S660.

At the sune time, it il pro vided tha.t in no ease shaU the tn per auto mobile e:u:eed $250.
A further ftCommendation which ia being tires and tubes ahall DOt be t.a.x wben purchased by aecepted i8 that subject to excise msnuf:u:turers producing less than 10,000 auto mobiles or chassis e3.ch year if at least 50 per cent of bctory cost il iDCurred in the Briwh empire.

Howe\'er, a m.,·rnufaclurer producing mOre than 10,000 automobilea must hHe in curred at least 60 per cent of factory roJSt in the British empire in order to qualify for thia l'J:emption.
Other changes in ueise tues le\·ied under the Special War Revenue Act ue of minOl" im,portance.

It is proposed to reduce the tu on cigarette paper tubes frcun three cents to two cents per hundred -in order to equ3.liae the !

'Stes on fiat papers and tubes.


With re gard to the 3 per cent apedal excise tn on the ehanges contemplated are con imports, fined to a few additions to the schedule of exemptions, including rn.leriala used in the mllnufacture of binder twine and fishing rope, paintinp under tariff item 695.; educational films; and hao.dm.de drawings or designs for U:lfl in a number of manufacturing industries.
EXClSa: DUTIES Proposed changes in the Excise Act are limited to a few relati\'ely unimportant ad· these equalizes the ju.st.ments.

The 6rst of excise duly on Canadian brandy with the customs dut.y on brandy imported frorn South Aff'iea and Auslralia by lowering the exci>e duly r:de from four dollars per gallon to Lhree dollin.

The secood proposed adjustr ment is a reduction of one dollar per pilon in the rate or e:rciJll' duty on spirits used in medicine!

', extracU and pharmaceutical prep al'1ltioD!


in order to bring it into line wiLh the rate applying 1.0 spirits used in the manuiae Finally the exci~ dutil'll ture of perfumes.

on imports of leaf tobacco are to be removed from \.he Excise Act and ttan..·tferrcd at the lame rates to the custolll!

tariff.

C'OaTOM:S 'fAa,"" To-day's customs tariff pro9016L, :,eb te to both the Tariff Act and t'he varioUl!

schedules thereto.
schedules thereto.

Having in mind tbat tlhey follolll' closely upon the tariff revision effected by the Canada~United Statl'll trade agreement and immediately ,precede negotiations with the United Kingdom, it will, I think, be generally admitted that they are extensive and im portant.

For purposel of record, the proposed amendments may he c1asosi6ed as follo....'S: Reductions under all ..

Reductions under Drifub preferential .. ..

Reductions UDder Britifi\ preferential tariff only.. tariffs.. ..

., ,.
., ,.

.. .. .. and intermediate only Reductionl under intermediate only.. intermediat.e and ReductioOll under seneral only.. .. •.

.• .. .. .. 37 30 20 11 6 101 '388 The Budget-Mr. Dunning COMMONS IncreuC$ under gcneral Dilly.. Increase under Incre:lsca under general ..ad •.

.. intermediate ooly.. ta.riff only.. intermediate .. .• .. •.
apply to all automobilell aod truck.s-all of which, (including parta for original equip ment, replacement or repair) will be free of duty under the British prefereotial tariff.

7 3 2 " • durer definition of Chanita ia the let itgelf include provisiol1lll for the hereto(ore indefinite phrase "of a el&Sll or kind made in Caolds" Ind (or a more just.

sod tquillble !dministration so-e:a.lled "dumpiol the ~lauses."
of Amendment.l pl'OpORd in the tariff aohedules, in number, affect "hile DOt unusually great many commodities of extreme importance in is im· our oatloo1\1 economy.

Obviously it tbese p086ible for me to touch upon all of in the COllnlt' of my remarks: that trust.

I read the fC!I<,llutionll of hon.

mcnlben will which I shall give notice at the conclusion of this address, and which will form part of it in Hansard in the morning, for details with re~ I shan, however, make speel to many item.l.
reference to some items, or groups of brief in respect of which changes in dutiee items, are cootemplated.

'ilk; By dirt!ction of my immediate predece.or in office, the Tariff Board has been reviewing duties applying to motor vehicles, cotton products, psoline, and yams and fabrics of .nd, at my request.

bas con artificial ducted .n inveatiption into the present .tlte of the furniture indUlitry.

I am to-day able to I.y on the table-in fact.


I have preeumed upon the goodntsl of the bouse to have them placed 00 the table in aih'anoe of my .ddrt!•• beeause of their bulk-ftporta from the board relating to these subjeeta.

After careful con sideration, the ,overnment ·fl.u decided to in each instance the rates of duty accept recommended by the board.

vitally that of relation-a Broadly spesking, the huge manufacturing the policy proposed in respect of automobiles is, I believe.
one that will maintain the industry in Canada and, at the aame time, gUllfll.ntee fair pricea to con inter-de· s.umers.

The pendent ooe-of the so-called "parts" industry to and assembling ,plants has been closely studied, llnd a feature of the in which the attainment of • high manner degree of Canadian content in the completed It will be remembered "ehicle is encouraged.
tha\ uDder the Canada-United States agree meot recently approved by parliament, the duties on automobiles were reduced from 20, 30 and 40 per eent, respectively, on the three price ranges, to 17!, 22t and 30 pet ceot, re specti,·ely.

It has been decided to make the intermediate tariff of 17i per cent emtinl the new sabedule is [M •.
DoI_inc.1 thcrefore, The reference to the 'Thrift' Board on yarns and fabrics of cotton &ro.te from a request by His Majesty', Government in the United Kingdom, under the provisions of the :.gree menu of 1932, for a review of the duties on these s:oods under the Britoish preferenlbl tariff.

The boord "..ss obliged, in the situation-domel!tic and ita appraisal of the yardstick stir'IUlate.1 by British-to IUe thoae agreements, namely: the equation of the relative C03ts of production in the two countries.
The board has kept within the l.enns of its reference and within the leiter and spirit of the agreement; and the go\·crn in tabling it.e report aDd accepting its ment, It recommendations, desires to do the same.

is pro;x>sed.
is pro;x>sed.

therefore, to remove entirely the specific duties on yaros aod fabrics of cotton, is under further, as properly following the proposed, to revise ~uction on yarns and fabrics, the specific dutiu applying to cotton clothing, wearingappare' and manufactured arucles of cotton, by removinl these duties entirely on imports under the British preferential tariff and by reducing them by ooe-half 00 impoTtt under the intennediate tariff.
feature of the changes in the petroleum schedule is the redudion ol the intermediate rate on gasoline to 01M!

cent pet gallon as compared with a rate, until recently effective, of 2!

cents.

Thi, reduction should be of great importance to u~ers of gasoline throughout Canada and it ill confidently be lieved that it can be effected without injury to the Canadian refining industry.

the British prefereotial The vital tariff.


It tariff, to remove In accordance with the reallts of the board's inquiry into the tariff situation SUlTounding artificial silk, it is proposed, under the British preferential entirely the specific dutJes on bolh yaTOs and fabrics, t<o reduce all:Jo the ad valorem rate on acetate yarns, and to adjust the ad valorem nte on the fllibrics.
As a corollary to this reduction, the government proposes 10 reduce both the Briti!h prefereotial and intermediate duties on clothing, wearing apparel and manufactured articlell of artificial reduction on silk, the completely-finished articles being designd to pas9 on to the consumer the advantage in reduclion of raw material duties given to those who cut up lbe materials aod manu facture the garments.

thi!

The report.
thi!

The report.

on furniture is an interim one and recommends DO chaoge in Lile existing intermediate tariff rate of 30 per cent.

MAY I, 1936 The Budget-.l lT. Dunning 2389 all and, tea waste, malt extracts fire engines, In the case of many commodities covered.

by to-day's resolutions, downward revision of duty haa been confined to the British pre ferential tariff.
These-additional to cotton and artificia·l silk products already deatt with -include mlany of outstanding importance to United Kingdom producers and Canadian consumers.

I may illustrate by stating that scheduled reductions which are confined to the British preferential tariff-and entailing in several instances the removal of aIJ.
duty include such goods as chemical earthenware, !teel machinery of a cb.ss or kind not made and in Canad-a, powders, dental iron forgings, and steel machinery not separately enumer cocoanut, ated, desiccated non enumerated articles of iron or steel.
Closely related to these are those items on which re ductions, while operative under both British in preferelLlial and intcrmediate tariffs, will, mast instances, give the United Kingdom producer a better wading position in this madret; in this connection I might refer to glllS9 ar~icles heat-resisting for mount.ing, g\assw.are, nickelled and other plated ware tubing.
and polished steel MaJ' I Rt this point say a few words regard~ in the British ing ehanges at preferential In negotiating recently with the United States, this government took scrupulous care to respect in leuer and spirit the agreements effected in every syllable of J932 with various countries of the British empire.
Although the Liberal opposition of the that day had registered disapproval of conference agreements on the ground that in too many instances they established prefer ences by raising duties against other countries, nevertheless that opposition, now become the government of the day, has seen to it that every commitment was respected.

No guaran teed British margin was impaired.


Indeed, many preferences that might with warrant have been deemed not to be in that class were deliberately Ret aside as not open to negotiation, sometimes at cOD!

!iderable cost to Canada in the matter of bargaining.

tariff.
tariff.

time this it And yet is obvious that, although the agreement.s have heen resp~ted, the trading advantage here of British countries-notably, of course, the United Kingdom-is not 80 great 8S it was prior to the Canada-United States agreement.

The very fact of admitting the United States to the benefits of our inter In the mediate tariff produced tha.t result.

near future Canada must ngain sit at a table with the United Kingdom to consider a Dew agreement.
in such nejl;O tiations, Great Britain will seek such conces- It is obviolls that, to-day It has In this spirit interested itself in her opinion, enable her trade with Canada.

to In ~llch the Canadian take equally scrupulous care the sions as will, IDcrease her negotiations, needless to ilay, government will to observe the letter and the spirit of Canada-United States trade agreement.

.
.

Canada cannot give everything to-day and bargain .to-morrow, but Canada can, nnd this government does, give to empire countries such.

concessions a3 will, I am ilure, be accepted in the spirit in which Ule British this preference was conceived.

government, since coming into office, IlliS seeD to it that unneocssary impediments to inter empire ,trade have been removed, that vexa tious restrictions have been lessened and that arbitrary regula.tions have been altered or in the abolished.
increase of inter-empire trade both by imports from the empire as well as exports to the it empire; proposes easier access to this country fO!

certain empire commodities.

Tbe proposed reductioll8 in the British preferential tarif!

are in no sense elements in a. bargain.


Con cessions they are, both to Canadian consu mers and to British producers, but concCS5ions made that only from mutually advaotageous exchange of commodi ties can come that common benefit in which should lie both the origin and the objective of intra-empire trade 6lrangements.

Canada knows full well that Great Britain, when the day of conference comes, will not be unmind ful or forgetful of Can.ada.
's past record in the matter of preferential in this record market crystallized to-day in the fact that close upon seven tariff the items in the schedules, practically half entire Jist, have against them the word "free" in ,the Britisb preferential eolumn.
treatment products-a in the finn beLief in Canada's and under resolutions hundred to-day's British items for Reductions under all tariffs are proposed on a wide range of varied commodities, includ_ ing biologicals for the diagnosis or trentment of diseases, materials used in the production of periodical publieations, numerOU3 pet.roleum products other than gasoline, ditchers and tractors of all lcinds.
safety equipment of all kinds, pl"inting and press-room equipment, precision tools, draughtsmen's and surve)'ors' for we instruments, in hospitals, certain soya bean products, all rolling mill and articles used by the blind, paper mill fur.bearing rolls and feeds animals.
articles various for The effective tariff on agricultural ments, now the intermediate, 7; per cent, being fumher from 25 per oent under imple is reduced to to the reduction to 121 per cent effeeted the Canada-United States agreement.. 2300 The Budget-Mr. Dunning COMMONS As :l. gesture of good wHI and an carnest intention to widen Canadian trade with of to lhe Irish Free Stale, reductions in duty, be applicable under the British preferential t;lrilT only, aTC proposed on certain produc~ pccu!i:tdy identified with Free ~t:l.te and requested by that country, namely: stout, pruoe wine and Irish poplin.
Irish- the is in for provided, treatment the belief Preferential empire-grown that tobaccos Southern Rhodesi:l. may be able thereby to cater ~ffedivcly to Canada's requirements in tob:lcCOS of type, hitherto the oriental ililported entirely from Don-empire countries.

The preference in favour of Australia.

aD raisin and dried currants, which lapl:led on j\hrch 31, last, is renewed, at four Cilota per pound.
An interesting an.d, much anticipa~d item t.hat giving sL3.tut.ory recognition to the is undertaking in connection -with the United States under the recent agreement, relative tn the privilege to be accorded to Canadians returning from sbroad of bringing int.o Can free of du.ty, perso:tal purcbases to a ada, value of $100.

Solely on the grounds of ;mblic health, the textile waste derived from importation of used mattre~ is sucb mat.tress waste be certificated M to proper fumig1tion, cleaning, etl::etera.
.prohibit.ed, unle$l!l In in.troducing the budget of May 1, 1930, following statement.

cegarding I made the countervailing duties: There are certain commoditiea which are or will become of double aigoi5cance in Can ada's trade with the world, both AI importl ilnd export9.

On luch commoditiea our policy to avoid extreme rate.

of haa been, and ia, duty, and we propoae, regarding these pro dacU!, exiatinr the ratea of duty.

to maintain in gener&!


It haa been decided, howevert to embody within the wording of a limited number of itema of this claaa provision for a "counter vailing duty" whereby Canada, while not generally railing it.ll aebedule rates, impocu upon such produ~U!
country from aoother ratea equivalent to those impOlled by that coun· try upon the identical Caoadian product, where these a.re higher than the ratCi enumerated in the Canadian tariff Thil meallll that other countries wbn both buy from and to UB theae conunoditiea.

have it in their Bell own power, by reciprocal action on their to enable u. to reduce duti~ to the pa.rt, level of tbe ratea .t&ted in our tariff.
I have quoted my remarka of that date they still serve perfecUy for the reason that regl\rding counter to express my opinions vailing provisions which to-day'.

l'ellOlutiona apply >to ~hree natut'll.l products: eut flowen, potatoes and eggs.

achedule.

Mr. ROWE (DuJIerin): Wha.t about east iron pipe?

(Mr.

Duonilll.]

Ilul.y more in line with the general ;\11'.

DUNNING: These three commoditiC3 were included in the list.

of 1'>by I.

1!l30, and that they 3.fe again singled out for such treat~ ment.
is due to the fact that the [,ite :ulminig.. tration in wiping out in September, 1930, the countervailing provisions of the l\by bud;.

:et, did not provide, under the intermediate tariff, tariff 1I.

on eggs and, what is more impol·lant, failed to provide any duty whatsoever on potatoes or cut flowers.
The weakness of Canada's b~rgaining position in respect of ~hese com moditics became speedily apparent in the Washirlgton negotiations, so much so that this "oVcmmrnt declined to bind these items at thus gh·ing the existing intermediate rate, clear the first to recommend to parlia opportunity, see fit In so recom ment a revision of these ratings.
mending to-day, may I make clear that our attitude COiltinuell to be that of 1930; we do not, desire or intend to raise tariffs; we do by the countervailing other countries to bring their tariffs down to the level of OUl'S.

inrlication that it might, at duties invite In 193.

'> there was inserted in- the tariff item relating to steel plate a proviso to the effect that, regardless of any other law to the contrary, the anti-dumping provisions should not.

apply to plate more than 66 inches in widt.h.


ThUll to select a 80Jitary commodit.y for such treatment wall, to say the least, to make an invidious di9tinction and it is pro posed to allow the anti-dumping pro\·isioll to apply to all products to which the ll\w s:\ys it should, under given conditions, apply.
there In the interesta of justice and equity, fore, and without ally regard whatllOever to tM effect upon the quantum of tariff protec· is propo5ed to delete from tion afforded, it this item the proviso in question.
There will he tabled to-day, in addition t,o those to which I have made specific refer ence, reports by the tariff board re~ultinc from inquiries regarding the followiog com· modities: Thrown yaros of artificial silk, but ~ons and button moulds, fo~d steel rolla, rice for proce!lSing, a.nU metal bead~, containers of paperboard or fibreboard and photographic apparatull.

Not.
Not.

all of these suggest or recommend tariff changes but, in aecord!llnce with the provil:fions of the Tariff Board Act, they will be made available to this hou~e.

rhinestones Regarding to-day's tariff proposals, may I say that these are formulated on the prin ciple that the m06t enduring kind of progress it' orderly progres.<t--and that applies equally whether one's intended direction in the im- MAY t, 1936 2391 The Budoet-Mr. Dunnino taxea be downward or upward.
position of Extremes defeat their own pUrpOlle; violent .fluctuations one way or the other are mere Intelligent and unpreju~ leaps in the dark.

diced IIppraisal of to-day's tariff situation in Canada will reveal sound reasons, apart alto gether from the general principles I have just results are to be enunciated, why the best secured by deliberate, considered and related for example, our position stages.

There is, to British countries, to which I with respect have referred.
And, in the purely domestic sphere, there is the fact so readily overlooked: in extending to the that United States the interme the benefits of diate tariff, effected at one stroke the most thorough-going Oownward revision of the cus toms tariff of Canada since the inception of tariff-as a consequence of which act, that together with the changes now proposed, com mudities imported from the United States under at least 200 of the most important item!

in tllt.
in tllt.

tariff will pay lower rates of duty than they would have paid had they been so im ported after the May 1st the adoption of budget of 1930. this government, it In cooeiuding this address, is natural tht my tbought3 should go back to the lut occasion on which I had the honour of pre acnting the budget six years ago to-day.

The great change both in world conditions and interval conditione to constitutes a challenge without precedent broad thl!
ability, the judgment public patriotism of responsibilities.

and the charged with in Canada during that those of Canada The government is making earnest and t'ustained efforts to meet this chal lenge and to grapple with the manifold prob I would ask the house lems of the country.

II.nd the country to accept the prop05l1ls I have made to-day as part of a. conscientiou!t effort to promote the best the people of Canada.
interests of Re.solutioM Mr. Speaker, that when we are in committee of ways and means I shaH move the following resolutions; I beg to give r:otice Y:O;COME WAR T"'X: ACT RelIOlved, That it il ellpedient to amend the Income War Tu Act and to provide: I.

That tax Ihall the corporation rate of be increued from thirteen and one-half per centum to fifteen per centum; 2.

That where a comlolidatioo is permitted the corporation rate of ta.l Ihall be iDcre8.led from fifteen per centum; centum to leventeen per 3.
That J)t1)'ment of tile gift tall be made annually; 1773t--153 4.

That gif,,- aggregate do not exceed one to anyone penon which in thouland in the calendar year be exempt from the dollars.

the provilionl of the gift the inltalmentl of centum to five per centum; ll.

That tax; rate of unpaid interetlt on taz be reduced from liz per the 6.
That intere.t rate ",f in penalty addition to the iotereat provided for in the foregoing reaolution in reapect of unpaid over due tall be reduced from four per centum to three per centum' 7.

That a tax 01 five per centum be impoaed at the lOurce on paymenla by Canadian debtors.

1.0 non·relidents .....hether in relpect of copyrighted or not; 8.

That any metalliferou.
mine that coml!l into production after the fint day of May nineteen h'Undred and thirty...ix and prior to the fint day of January nineteen hundred and forty Ihall be ellempt from income tall for the first following tbe com three ti.acal periodl mencement of production; films by (e) the The miniater, under appropriate regulationa/ Ihall determine the date of commencement 0 production and the propertie., new or old, that .hall be determined .. haviog come ioto production, haviog rer;:a.rd to the production of ore in reasonable commercial quantitietll, and shall isaue a certificate accordingly.
Q. Tbat (a) an Investment Holding Compllny all of whose share.

(qualifying ahares.

elleepted) are held hy uoo-resident perlOna ahall not be afforded para graph (k) of aeetion four of the act.
but 111&.11 be lublect the j:lrevaihng corporate rate of tall impoled upon Canadiau companiea; to a tu equal to oue-half of exemption provided (b) the five per cent taz on dividendi paid to auch by .uch IlWe8'trnent Holding Oompany &ball not apply, except u hereinafter provided; ahareboldera non-resident in determining the ta.llble income of auoh Investment Holding Compa.ny a deduction Ihall not be allowed in reapeet of IIny intereat pa)·menl.t or of tnc.

pa.id abroad: hi?
pa.id abroad: hi?

allowe<l (d) any five per cent tu paid by aueh in nineteell.

hundred and thirty-five romfanietll II' a deduction from the tllll shll.\ otherwiae payable in reapect of the laid year; to the utent tllat fiye per "ent tall hili not been in<:llrred in respect of the earning.

of ninel",en hundred Rnd thirt)··thne.

nineteen hundred and thirty-four and nineteen hundred and thirty-five, the five per cent tax .hall COD the uodiltributed tinue to be accumulated earn in!!.
of the &aid yeara have heen made ,ubject to the laid till; imposed until (f) paragraph (k) of the aet shall be amended to apply to indultrial and commercial operating companiu only; .ection four of founded 10.

That the enactment proviliona of thue resolutions .hall be deemed to have come into force at the commencement of the calemlar year nin~tccn hmHh'",1 ;lnd thirty-five and to be applicable thereto and ending therein and to all to fiacal periodl otherwiM aubal'quent III provided.
periodl, e:rcept any (e) on Rrt;CU,L W"'II IlEVENU£ "'CT is el<!

'ledient Resolved Thllt it to introduce a mea"ure ·to umcnd the Special \Var Rennue Act chapter on", humlrcd lind 1K'\·cnty-nine of the'Re\'lsed Stlltutes of Canada.

1921. and amendments thercto and to pro,·idc; 1.

That part VII of the Raid act he amended the t.uation of en,ry change to pro,·ide for