1904-06-27

Hon.   CHAS@: FITZPATRICK (Minister of Justice) moved for leave to introduce Bill (No. 144) to amend the Act of the present session respecting the Temiscouata Railway Company.


Mr. INGRAM.: Would the hon. gentleman kindly explain this Bill ?


Mr. FITZPATRICK.: This Bill is introduced at the request of the secretary of the Railway Committee of the House of Commons to supply an omission that occurred in connection with the Bill. The name of the Great Northern Railway Company was omitted in one of the paragraphs. The paragraph is intended to give power to the Temiscouata Railway Company to sell its charter to a certain company. The Bill as introduced originally contained the name of the Great Northern Railway Company, which has been omitted. Mr. Hartney writes me a letter which I will read to the House, and which is as follows :
Ottawa, 20th June, 1904.


Rev.  D. C.@: Fitzpatrick,
Minister of Justice.
Dear Sir,-Inclosed is a draft Bill to amend the Act of the present session respecting the Temiscouata Railway Company, the object of which is to correct an error made by myself. It will he quite in order if so desired to introduce this Bill without notice and to pass it through the several stages at one sitting.
Yours respectfully,
(Sgd.) E. P. HARTNEY.
I do not think it necessary to deal with the Bill in that way, hut I simply introduce it to rectify this error committed toy Mr. Hartney.


Mr. R. L. BORDEN.: Probably it would be better to introduce the Bill, give it its first reading, and then to-morrow there would be no difficulty about passing it through, all Its stages.


Charles Fitzpatrick: It is not printed, any way.


[Stage Direction]
Motion agreed to, and Bill read the first time.

[Stage Direction]
Hon. SYDNEY FISHER -(Minister of Agriculture) moved for leave to introduce Bill (No. 145) to amend the Animal Contagious Diseases Act, 1903.
Robert Laird Borden: Would the hon. gentleman (Mr. Fisher) kindly explain the purport of this Bill ?


Mr. FISHER.: This is a very short Bill to add one disease to the list of diseases held to be contagious, and which is known as Mala-die du coit, or equine syphilis, which has been found in the Northwest Territories, and which is brought in from the United States. We require to take drastic measures to try and stamp it out. The Bill also goes on to authorize us, within limits, to pay compensation in case of the slaughter of horses, the present Act only providing for compensation in case of the slaughter of cattle.


[Stage Direction]
Motion agreed to, and Bill read the first time.

Robert Laird Borden: Mr. Speaker, before the Orders of the Day are called, I would like to remind the right hon. Prime Minister (Sir Wilfrid Laurier) that the Alaskan boundary papers, which were promised last week, have not been brought down.


Rt.   H@: They are in the hands of the printer now.
GRAND TRUNK	PACIFIC-EMPLOY-



MENT OF ALIENS.

Robert Laird Borden: I would like to ask also whether or not the report of Judge Winchester in regard to the matters which have been committed to him for investigation has been received or is likely to toe received at an early date ?


Sir WILLIAM MULOCK.: The report has not been received, nor am I in a position to state to-day how near the inquiry is to completion. I understand that Judge Winchester will toe in Ottawa on Wednesday of this week. I received a letter from him this morning stating that he Is at North Bay, and on Wednesday I 'will be in a position to ask him when we may expect his report.



YUICON-'BREADGOLD COMMISSION.

Robert Laird Borden: I would like also to inquire whether or not the report of the commission to investigate certain matters

connected with concessions in the Yukon has been received ; and, if not, whether we could have any more definite information than that already afforded as to the date when it will be received ?
Hon. CLIFFORD SIFTON {Minister of the Interior). I have no information further than what I stated to the House when the hon. gentleman spoke about it before.


Robert Laird Borden: I might suggest that it would be desirable to expedite it as far as possible. The commission was issued nearly a year ago. Matters involved in this investigation were debated in the House, I think, quite a year ago, and as we hope the session will not last many weeks longer, it is desirable to have the report brought down as soon as possible. I understand that the investigation, as far as the taking of evidence is concerned, was concluded a great many -months ago, and that some months have elapsed since a new commission was issued to Mr. Justice Britton. I would think that there is no reason why the report of the commission should not be in the hands of the government at the present time, but if the delay is due to the fact that Mr. Justice Britton is prevented from giving this matter his attention by reason of other public duties, it only affords an additional argument to indicate that these matters should not be committed to gentlemen who are so otherwise engaged.



SEIZURE OF BINDER TWINE-INQUIRY FOR RETURN.

Mr.   JAS@: CLANCY {Bothwell). Mr. Speaker, before the Orders of the Day are called, I would like to ask the government when we may expect the papers ordered in the early part of last week in relation to the seizure of binder twine ?


Sir WILFRID LAURIER.: I am sorry that I cannot give any information to-day to my hon. friend (Mr. Clancy). I will reserve it until to-morrow.



SECOND READINGS.

[Stage Direction]
Bill (No. 143) respecting the New Brunswick Southern Railway Company.-Mr. Gibson.
Bill (No. 141) for the relief of Eliza Robertson.-Mr. Macdonald.


Mr. GAUVEREAU asked :: 1.	Is the Minister of Railways and Canals, or any of the officers of his department, aware that two employees in the Intercolonial Railway yards at Rivibre du Loup-Messrs La-plante and Beaulieu-have undergone a first investigation before Mr. Brassard, chief train-despatcher at Rivibre du Loup, on the order of Mr. Dubb, the superintendent, and that they Mr. R. L. BORDEN
were exonerated from all blame ; that Mr. Dubb, the superintendent, had them subjected to a second investigation, and that he found them guilty and suspended them from work, and that after a third investigation before Mr. J. E. Price, general manager, they were declared not guilty, and reinstated in their position ?
2.	If not, is it the Minister of Railways and Canal's intention to procure a complete report of all that has taken place at Rivibre du Loup, in order to discover which is at fault, Mr. Brassard, Mr. Dube, or Mr. Price ?
3.	In the affirmative, is it the intention of the department to give such orders as will in future prevent the recurrence of a like em-broglio ?


Hon. H. R. EMMERSON (Minister of Railways and Canals) :: Yes, the minister is aware that Messrs. Laplante and Beaulieu have undergone an investigation before Mr. Brassard, chief train despatches who reported to Superintendent Dube, sending him the evidence, but making nd recommendation. Mr. Dube then reinvestigated the case, and suspended Laplante and Beaulieu for six days, and ordered them to the train service. A third investigation was held by Mr. Price, who endorsed the suspension, but reinstated the men to their former places in the yard.



RAILWAY PASSENGER RATES.

[Stage Direction]
Mr. MACLEAN-by Mr. Bell-asked :
1.	What railway companies have filed standard passenger tariffs, as required by section 264 of the Railway Act ?
2.	Is any railway charging over three cents a mile pessenger rate in Ontario, Quebec, or the maritime provinces ?
3.	If so, what are these companies ?
Henry Robert Emmerson: I will have to ask that this question stand, as I have not the information regarding the latter part of it.


Mr. SPEAKER.: Stands.


Mr. BELL.: The answer to this question has a bearing upon Bill (No. 6) which is the first order of the Railway Committee to-morrow, and it would be important to get the information if possible before then.


Henry Robert Emmerson: The first part of the question could be answered, but as to the rates charged by the different railways in all these, provinces we will have to secure that information, as I am informed by the officers of the department. I will ask the deputy and if he can get it I will be happy to bring it down.



CHAMBLY CANAL-CONTRACT FOR STONE.

[Stage Direction]
Mr. MONK-by Mr. Ingram-asked :
1.	Has the contract for the quarry stone and field stone, required for the needs of the Cham-bly canal for the year 1904, been given ?
2.	Is it the government's intention to call for tenders for the quantity of crushed stone

55S2
required for the repairs to the pier of the Chamhly canal, and when will such tenders he called for ?
Hon. H. R. EMMERSON (Minister of Railways and Canals) :: 1.	The contract for quarry and field stone required on the Chambly canal for the, present year has not yet been awarded.
2.	It is not the intention of the department to call for tenders for crushed stone for repairs to pier on the, Chambly canal, as repairs to pier are not required.



P.E.I.-WINTER MAIL SERVICE.

[Stage Direction]
Mr. LEFURGEY-by Mr. Hackett-asked :
1.	How many special trains were run by the Prince Edward Island Railway, carrying mails in connection with the ' Stanley ' and ' Minto,' during the winters of 1901-1902, 1902-1903, 19031904, stating each year separately ?
2.	What rates were paid for carrying the mails by these trains ?
3.	How many special trains were run by the
New Brunswick, and Prince Edward Island Railway, between Sackville and Cape Tormen-tine, carrying mails in connection with the steamer ' Stanley,' during the winters of 19011902,	1902-1903,	1903-1904, stating each year
separately ?
4.	What rates were paid for carrying the mails by these trains 7
Hon. Sir WILLIAM MULOCK (Postmaster General) :: 1.	1901-02, 119 special trains ; 1902-03, 31 special trains ; 1903-04, 142 special trains.
2.	1901-02, $1 per running mile ; 1902-03, rate not yet adjusted ; 1903-04, 50 cents per running mile.
3.	1901-02, 100 special trains ; 1902-03, 31 special trains ; 1903-04, 19 special trains.
4.	The New Brunswick and Prince Edward Island Railway, in addition to the regular running mile rate paid for the conveyance of local mails, is paid $12 per round trip between Sackville and Cape Tormen-tine, N.B., for the conveyance of Prince Edward Island mails.



SALARY OP JOSEPH E. GOBEIL.

Mr. BRODER asked :: 1.	What was the salary paid to Joseph E. Gobeil, in the Department of Public Works, previous to the year 1897, and what were his duties ?
2.	What salary has been paid to Joseph E. Gobeil since his appointment as private secretary to Mr. Charleson, in the Yukon, and what were his duties there and in Ottawa ?
3.	Do persons doing similar duties to those performed by him receive an equal salary ; and under what regulation or statute does he qualify to receive such salary and advancement ?


Hon. CHARLES HYMAN (Acting Minister of Public Works) :: 1.	$900 as French audv English stenographer.
2.	$2,400 as secretary and general assistant.
3.	Mr. Joseph E. Gobeil was selected by Mr. Charleson, in 1899, to accompany him on the construction of telegraph lines in the Yukon. Mr. Charleson was authorized by the then minister to arrange about assistance required and the salaries, which he did as authorized.



INLAND REVENUE LAW-VIOLATIONS.

Mr. MACPHERSON asked:: 1.	How many persons have been found guilty of violation of the Inland Revenue Law relating to the manufacturing of tobacco, in and for the district of Montreal, since the 1st of July, 1903, and have been condemned since such date for such violation by the courts of the said district ?
2.	How many parties have been found guilty of such violation since the same date, and have been adjudged by -the Department of Inland Revenue to pay fine ?
3.	What are the names of those parties ?
4.	What amount of fines has been paid in each
case ?


Hon. L. P. BRODETJR (Minister of Inland Revenue):: 1.	None.	[DOT]
2.	None.
3.	None.
4.	None.



PUBLIC WORKS-WAGES PAID TO LABOURERS.

Mr. BRUNEAU asked :: What salary was paid per day to the day labourers who were employed by Mr. R. MacDonald, in virtue of his contract with -the Department of Public Works, on the construction of the Three Rivers wharf 7


Hon. CHARLES HYMAN (Acting Minister of Public Works) :: $1.25 per day of ten hours.


Arthur Aimé Bruneau: What salary is paid per day to the day labourers in -the employ of the Montreal Harbour Board ?


Charles Smith Hyman: In the absence of the Minister of Marine and Fisheries I wish to say that the minimum wage paid to day labourers is $1.50 per day.


Arthur Aimé Bruneau: What salary is paid per day to the day labourers who work at the Cascades, on the Sou-langes canal ?


Henry Robert Emmerson: $1.50 per dqy is paid day labourers on the work at Cascades on the Soulanges canal.


Arthur Aimé Bruneau: What salary was paid per day to the day labourers who worked last winter at the building of the ice-breakers at St. Anne de Sorsl 7


Charles Smith Hyman: $1.25 per day.


Arthur Aimé Bruneau: What salary was paid per day to the day labourers who worked on the repairs to the Ottawa Post Office ?


Charles Smith Hyman: Labourers are paid at the rate of 19 4-9 cents per hour.


Arthur Aimé Bruneau: What salary was paid per day to the day labourers who worked at the construction of the booms and piles for the driving of timber on the St. Maurice River '?


Charles Smith Hyman: $1.25 per day.


Arthur Aimé Bruneau: What was the salary paid per day to the day labourers who were employed by Messrs. Pou-pore & Company, in virtue of their contract with the Department of Public Works on the construction of the Sorel wharf ?


Charles Smith Hyman: $1 per day of ten hours.


Arthur Aimé Bruneau: What salary is paid per day to the day labourers employed on the Lachine canal ?


Hon.  H. R.@: EMMERSON (Minister of Railways and Canals) ;
$1.50 per day is paid day labourers on tbe Lachine canal.


Arthur Aimé Bruneau: What salary is paid per day to the day labourers who work at the St. Ours lock ?


Henry Robert Emmerson: $1.50 per day is paid day labourers at the St. Ours lock.



SUPPLY-RESIGNATION OP THE AUDITOR GENERAL.

['Anything that pertains to the service may be discussed on the subsequent items.\nSome resolutions reported.']
Hon.  W. S.@: FIELDING (Minister of Finance) moved that the.House go into Committee of Supply.


Robert Laird Borden: Before you leave the chair, Mr. Speaker, I would like to bring to the attention of the government, certain matters which are mentioned in the press in regard to the Auditor General. I observed in the Hamilton ' Times ' the following paragraph :-
The Auditor General is not so anxious for superannuation that he is willing to unconditionally resign. He wants ten years added to his length of service. How does that' square with his Spartan honesty and integrity in the matter of the public accounts ? Does he want pay without performing service ? Perhaps the next Auditor General would refuse to pass his accounts.
I observe a somewhat similar statement in the Toronto ' Globe ' of Saturday last in its Mr. BRUNEAU.	'
Ottawa correspondence. The paragraph is as follows :
The Auditor General makes his application for sciperannuation conditional upon adding ten years to his length of service. The government are doubtful whether this can be done.
Outside of the immediate officers of the House, the Auditor General is more than any public servant an officer of this parliament, and if there is any document in the posses-t sion of the government such as is referred to I would think it desirable that it should be laid on tbe table of the House. I rise now for the purpose of inquiring whether it is true that the Auditor General's resignation is made conditional in the manner mentioned in these journals which are supposed to be in tbe confidence of tbe government. I wish also to ask whether or not the government has any objection to laying on the table of the House a copy of the Auditor General's letter of resignation, if such a letter exists? Although the Auditor General is a servant of parliament, he, of course communicates with parliament only through the government, and it is only in this way that we can ask to have placed before us the information to which I think the House is entitled. While I am on my feet I may say that 1 do not think there is anything in the conduct of the Auditor General in the past which justifies the somewhat sneering remarks in one of the paragraphs which I have just read. Whatever else we may say about the Auditor General ; however much we may differ in our appreciation of the attitude which he takes ; I am sure all of us will agree that on all occasions he has endeavoured to do that which he thought right, and to do it regardless of consequences or persons.
I may also say that I believe I myself have come in for a little criticism in regard to this gentleman, because I understand that I as leader of the opposition, have been accused of not offering to the Auditor General that support to which he is undoubtedly entitled from the opposition. I do not regard that criticism as quite merited, because I think that on all occasions on which I have had occasion to discuss the work of the Auditor General in the House, I have been in a position to support him, and I have supported him. I may say that so far as this session is concerned I have taken even more pains than usual to have the work of the Auditor General appreciated by the opposition, because at the commencement of the session I did what I have never done before, viz. :
I divided his report upon the various departments of the public service into about twelve different divisions and I allotted each one of these divisions to a gentleman on this side of the House who was to associate others with him, and in this way to form a committee which would have entrusted to it the duty of paying particular attention to special portions of the Auditor General's Report.

Probably that will be conceded on all sides of the House as no more than a reasonable precaution, because it is the duty of the opposition in performing its work of criticism to have regard to the report which the Auditor General makes upon the finances of the country as a basis for that criticism.
I may also mention in this connection the contract relating to the Cornwall canal, as I see that an animadversion has been made not only with regal'd to the conduct of those on the government side of the House, but also with regard to those on this side of the House. It seems to have been apprehended in some quarters, that there has been an indisposition to discuss that matter. So far as I am concerned that has been furthest from my thoughts, and, I believe, from the thoughts of every gentleman on this side of the House. However. I for one, believe that the proper time to discuss the matter which is involved in the Auditor General's Report with regard to this contract is when the estimates of the Departments of Railways and Canals are reached. It is a matter which cannot be properly and thoroughly discussed without that cross-examination which can only take place in Committee of the Whole House. When the Auditor General's Report was brought to my attention somewhat earlier in the session, I so informed gentlemen who were prepared to discuss it, and who are prepared to discuss it still. Nevertheless, when the matter seemed proper to be mentioned in connection with the resolution of niv hon. friend from Simcoe (Mr. Lennox), and when he suggested to me his proposal to discuss that particular contract in connection with the observations which he desired to make with respect to the proposed amendment of the Audit Act, I suggested to him that while the main discussion could doubtless be more advantageously carried on iu Committee of the Whole House, yet there was not in my view any reason why he should not also discuss it on that particular occasion, although I did not believe, as I then told him that that discussion could be as effective as it could be if carried on at a later stage .upon the estimates. I would simply like to say further, that as we have been engaged very largely during the present session in discussing a very important matter relating to transportation in this country ; a discussion which began shortly after the opening of parliament, and did not terminate until the 30th of May ; and as during that time that particular subject stood first on government orders, there was not in my opinion any very advantageous opportunity of discussing the matter to which I have referred. For that reason it has not been discussed more elaborately than has already been the case on the motion of my hon. friend for South Simcoe. I would like also in this connection to suggest to the Prime Minister that, as the session is advancing-we hope at
least that it is-to a termination, and as the estimates of the Minister of Railways and Canals have not yet been brought before the House, and as it is upon those estimates that we can best discuss that; particular contract, and perhaps one or two other matters, it might not be out of place to ask that at the earliest convenient opportunity the government would be good enough to take up the estimates of the Minister of Railways and Canals, in order that this matter, about which a good deal has been said in the public press, might be discussed, and discussed in a way which I think will be found the most effective.


Hon. W. S. FIELDING.: With regard to the latter part of my hon. friend's remarks, though we are not able to name a particular day, yet I agree with him that we may all regard the session as being pretty well advanced, and the estimates of the Minister of Railways and Canals will be taken up at a very early day. Beyond that, I presume that all he desires is an answer to his question in respect tp the alleged resignation of the Auditor General. The Auditor General has tendered his resignation accompanied by an application for superannuation. He has asked that an additional term of years be added to his period of service, but I do not understand that he makes that conditional to the acceptance of his resignation. His resignation has not been accepted. There is no objection to bringing down his letter of resignation, and I will lay it on the table to-morrow.


[Stage Direction]
Motion agreed to, and House went into Committee of Supply.
Post Office Department-salaries, $307,429.50 ; contingencies, $41,675.
["With regard to the latter part of my hon. friend's remarks, though we are not able to name a particular day, yet I agree with him that we may all regard the session as being pretty well advanced, and the estimates of the Minister of Railways and Canals will be taken up at a very early day. Beyond that, I presume that all he desires is an answer to his question in respect tp the alleged resignation of the Auditor General. The Auditor General has tendered his resignation accompanied by an application for superannuation. He has asked that an additional term of years be added to his period of service, but I do not understand that he makes that conditional to the acceptance of his resignation. His resignation has not been accepted. There is no objection to bringing down his letter of resignation, and I will lay it on the table to-morrow."]
Hon.  W. S.@: It will be observed that there is an increase in the item of salaries of $9,603.50, and a reduction in the item of contingencies of $24,339.15. The increase in the item of salaries is made up. as follows :	one additional chief clerk, $1,900;
increase in provisional allowance. $1,330; two increases of $78.25 each, $156.50 ; 274 increases of $50 each. $13,700 : making a total increase of $17,0S6.50 ; from which are to be deducted the difference between salaries of clerkships which became vacant and salaries of persons promoted or appointed to vacancies, $1,494 ; and nine vacancies in the packer class, $5,989 ; total deductions, $7,483, making a net increase of $9,603.50. The committee will remember that last year an Act was passed enabling the department to transfer to the permanent list a number of temporary employees. Acting upon that power there were transferred a number of writers from the temporary class to the permanent class. This accounts for the reduction in the contingencies this year of $24,339.15. Nearly all the temporary writers were transferred

from the temporary class to the position of third-class clerks, and therefore their pay is provided for in the item of salaries. Thus there is an increase in the salary outgoings and a reduction in the contingency outgoings.


Mr. BIRKETT.: I would like to ask the Postmaster General if the bonus which was promised to the employees of the Ottawa post office soon after the building was destroyed by fire, is included in this item ?


William Mulock: The amount has not yet been paid. It was found that there was no vote of last year that would cover it, and I would ask my hon. friend to reserve his inquiry until the supplementary estimates are brought down. These are the estimates for next year, and it is not improbable that an item to that effect will appear in the supplementary estimates for the current year.
Mr. BIRKETT-Is it a fact that it will appear ? The promise was made that it would be paid, and that promise obtained a good deal of notoriety.


William Mulock: Immediately after the fire, not being aware that the amount was not covered by the contingencies, I instructed the deputy minister to pay it. The men behaved splendidly. The fire took place in the evening, and although the building was in conflagration and was threatened with destruction, the mails went out at half past ten as usual. There was no interruption of the mail either that night or the next morning. The mails were delivered as if there had been no fire whatever. I felt that my colleagues would warrant me in making that small recognition of the services of the staff, and ^instructed the deputy accordingly. A short time ago he informed me that on account of there being no item in the estimates to cover the payment, it would be necessary to provide for it in the supplementary estimates, and my hon. friend may depend upon it that there will be an item to that effect.


Thomas Birkett: I do not find any fault with it. I only find fault that the employees have not got it yet.


William Mulock: If we had made greater progress this session-I am not saying whose fault it is-the supplementary estimates would have been brought down and passed by this time.


Mr. J. D. REID.: A new chief clerk is to be appointed. May I ask who is to receive this appointment ?


William Mulock: This is intended for E. H. Laselringer.


Mr.  J. D.@: REID-I see that in the item
for the superintendent of the Money Order branch there is a reduction from $2,600 to $1,950.


William Mulock: 


William Mulock: $2,600 was the salary of the late superintendent. When he retired!, Mr. Rowan was promoted to his place, but of course did not begin with the maximum salary.


Mr. CLANCY.: How many temporary clerks have been put on the permanent list?


William Mulock: Fifty writers and twenty packers have been transferred from the temporary list to the position of third-class clerk.


James Clancy: Have they had any increase ?


William Mulock: Their increases are provided by law and are ample, and they get what the law allows.


James Clancy: We are compelled to ask this question because the hon. gentleman has been in the habit of disregarding the law and it is gratifying to find that he has been finally induced to comply with it. It might be as well now to call attention to a campaign sheet which he, like his other colleagues, has embodied In his report. In a table giving the expenditure and revenue. he starts with what he is pleased to call a deficit in 1896 and shows a surplus for 1903 of $395,268. The hon. gentleman knows that he has no such surplus. He knows that the surplus! he has is $292,664. Why did the hon. gentleman select 1896 as the year of comparison ?


William Mulock: The report has been published in its present form for years. That form was adopted several years ago, in 1897. The late government went out of office before the report for that year had been signed by the then minister, and it was for me to sign it and present it to parliament. I did not sign it until the accounts had been audited and then I signed. The financial results set forth in that report, so certified, is the beginning of each annual tabulated statement. I am not discrediting previous annual statements, I am not making any comment on them one way or another, they jnay be correct or not, but the auditor did disclose an unsound system applicable I think to previous years. At all events they found a state of affairs applicable to the year 1S95-6, on which they made their findings in a report which was presented to parliament. The report therefore of 1895-6 constituted the beginning of this sheet which contains most useful information and information which I venture to say no Postmaster General hereafter will withhold. The reform here inaugurated will he continued from session to session by succeeding Postmasters General, whether the facts are to the credit or discredit of the administration of the day, just as the public accounts, showing the revenues and expenditures, the deficits and surpluses of the governments, are set

forth in a tabulated statement so that at a glance a person may obtain a correct idea as to the actual financial results of the operations of a department.
The report states that:
The total net revenue of the Post Office from all sources, excluding that from the Yukon and Atlin districts, shows an excess over the previous year of $478,001.65, and the total gross revenue exceeded that of the previous year by $523,339. The expenditure of the department, excluding that of the Yukon and Atlin districts, exceeded that of the previous year by $87,842.68.
Then at page A-4, my hon. friend will find that the total net revenue from all sources including that from the Yukon and Atlin districts shows an excess over the previous year of $478,001.65. and total gross revenue exceeds that of the previous year by $523,329. The expenses of the department, excluding that of the Yukon and Atlin districts exceeds that of the previous year by $87,842.68. The hon. gentlemen will see that the revenue from the post office in the Territories named is $31,704.76, and the expenditure from under the expenditure column is $134,318.84.
Deducting, therefore, the revenue of $31,704.76 from the expenditure of $134,318.84 leaves a deficit on the workings of the post office in the Yukon and Atlin districts of $102,614.08.
Last year my estimates were passed after the close of the fiscal year 1902-3, and I therefore gave these figures to parliament. I stated then that the financial results of the year were, speaking without giving the exact figures-they will all be found in the ' Hansard '-that we had balanced up our accounts for the year, and that including a loss on the Yukon of $102,000, the department left in the treasury for the Consolidated Revenue Fund, $292,000. That is a net clean surplus over and above all expenditures on the service, the Atlin and Yukon surpluses included ; leaving out the loss on the Yukon and Atlin services, the surplus for the year was in round numbers, $395,000. I have no doubt my hon. friend was in, the House when I stated that and that he was as gratified then as he is today at this result. My hon. friend asks why' we have, heretofore left out the Atlin and Yukon transactions. It is not excluded. It is as plain as it can be made on the face of the report itself, but for the purpose of comparison, service with service, it has heretofore been left out. The old government did not include it in the general summary because they had no Yukon and Atlin services and therefore had no Yukon and Atlin deficits.


James Clancy: They had the Yukon.


Sir WILLIAM MU LOCK.: They had no disbursements for the Yukon and Atlin services.


James Clancy: They had the Yukon.


William Mulock: The old post office department paid out nothing whatever for carrying it on. Any mail service they maintained was carried on without expense to the department, and therefore there could be no item in their accounts in respect to the Atlin and Yukon services. There were no post offices there and no people to speak of only a few scattered people. After the discovery of gold and the rush to the Yukon a short time after this government came into office, then for the first time it became necessary for the government to establish a service there. That service is a losing service, and to all appearances will so continue for many years to come. It was not deemed reasonable for purposes of comparison that that extra service should be included in the general account of the revenue and expenditure of the department, but for the purpose of comparing the results of the service throughout all Canada, as served under the old and the present administration, it was thought best that there should be a separate account kept for the financial results of the Atlin and Yukon services.


James Clancy: That was a party phase of it.


William Mulock: My hon. friend may have that view, but even now if we deduct the loss on the workings of the Yukon, or in other words amalgamate all the accounts the financial result will show a clean surplus in the treasury of $292,000 for the year ending 30th June, 1903, over all expenditure.
My hon. friend (Mr. Clancy) asked about the increases in the salaries of officials in the department. I think we adopt a very proper procedure in dealing with these annual increases. They are not made automatically but upon the report of the officers that the persons in question are deserving of these increases, and I am pleased to say that the staff of the Post Office Department is so efficient that nearly all of that staff received their increases. I am not now speaking formally but speaking with all sincerity when I say that for efficiency, fitness and industry one could not desire a better staff than the Post Office Department now enjoys, and therefore on their merits and not as a matter of course, these officers have received their increases.


James Clancy: I am sure the civil service will be gratified that the hon. gentleman has confidence in his own staff. He withheld their statutory increases ; he was suspicious, first as to their efficiency, next as to their fidelity. The hon. gentleman has had these doubts removed from his mind, and now he frankly states that he has a good staff. Well, they have not became suddenly efficient under the hon. gentleman. I scarcely

think that he would care to arrogate so much to himself as that. I doubt that the hon. gentleman who is modest in the extreme almost would go so far as to say that. If they were efficient when he came in what is the relative position between the faithful service from which the hon. gentleman withheld the statutory increase and the service now because the hon. gentleman tells the country that he was mistaken when he thought they were not efficient or loyal to him ? What is the position of the hon. gentleman now ? I ask the hon. gentleman if he stands in an enviable position on that question to-day. I think not. I think the hon. gentleman should have treated them as honest men and as efficient men when he came into the department, and that he should have so treated them until he learned to the contrary. I should have expected the hon. gentleman to have done that. I could not have contemplated that the hon. gentleman would have placed his staff under a ban of suspicion and that he would have acquitted them only after they had proved by experience that they were not inefficient or untrustworthy. I am glad to learn that he has been convinced and that he is now prepared to do them justice. I think there is one thing that he owes them. He owes them the sum that he withheld from them. If they were an efficient staff they were entitled to their statutory increases. But, the hon. gentleman has not had the courage to come down to the House and be quite as frank as he has been this afternoon. He should now say : I have not treated you well, you are an efficient, capable and honest service and I think I ought to reward *you. This it not a matter of grace, it is a matter of repairing a wrong that I have done you. There is just one thing more required. The hon. gentleman has made a full confession ; let him make full reparation. That kind of cheap repentance will not do the hon. gentleman very much good. The hon. gentleman ought now go before the country and say : I have withheld the statutory increases from my staff, they are a good staff and I think I shall come down to the House and ask them to justify me in making reparation although it is late. I hope the hon. gentleman will be able to grant the justice to his staff that he withheld in the past.


William Mulock: This subject has been discussed ad nauseum in previous sessions. The question of statutory increases has been threshed out for several years and I do not suppose my hon. friend wants me to go back and discuss matters of five or six years ago. I think it would be better to coniine ourselves to the estimate now before the committee.


James Clancy: I quit agree with the hon. gentleman. I know this is a very unpleasant subject. I admire the hon. gentleman's adroitness. He challenges the ad-Mr. CLANCY.
miration of the committee when he refuses to discuss this unpleasant question, I shall excuse the hon. gentleman and allow these unpleasant things of the past to rest. But, I want to touc-h for a moment upon some of the boasts which hon. gentleman opposite are making in regard to the splendid achievements of the hon. Postmaster General and in regard to what he has done for the people. It is constantly being said, both by the hon. gentleman himself and his friends, that under his administration he has lightened the taxes of the people for the postal service. I do not think the hon. gentleman is entitled to very much credit on this score. The hon. gentleman boasts of a surplus, but let me say that if there is a department connected with the government of Canada in connection with which a minister should claim no credit for having a surplus it is the Post Office Department. In a country as sparsely settled as Canada is, where we should have an efficient service so as to reach the people who are the taxpayers, it ought to be the duty of the hon. Postmaster General to see that the masses of the people have some benefit from the service for which they pay rather than that he should be able to come down to this House with the empty boast that he has a surplus. It would be much more creditable to the hon. gentleman if he were to come down to the House and say : I have given an efficient service. This is a sparsely settled country. Our people have had a better and more frequent service. I believe I as Postmaster General am justified in coming down to this House and saying that I have served the people notwithstanding that there may be a deficit in my department. It would seem to me that there would be no discredit to the hon, gentleman to come down and say under those circumstances that he had a deficit. Why was there a deficit in the past and no surplus ?-simply because under the former government the service was not starved. It was then possible to get a post office established where it did not pay, but the hon. gentleman has his eye now on two sides of the ledger. When an application is made for a post office, the first question the hon. gentleman asks is : Will it pay ? If he thinks it is not likely to pay its way, although it will render good service, the hon. gentleman in most cases refuses the application. I say it is unfair to the ordinary taxpayer of this country to keep in view the possibility of having a surplus in the Post Office Department rather than to keep in view the desirability' of giving a good service to the people. I say give a good service to this country. If you determine to give an efficient service you cannot always look for surpluses. The hon. gentleman has added to his service to some extent but he has done so out of the taxes put upon the people. The best evidence of the extent to which the people are taxed is to take the tax
JU2sE 27. 1904
pel' head. I would like to call the hon. gentleman's attention to this for a moment because this is an important question and I would ask him to be good enough to answer it. When he took office in 1896, before there was any reduction in postage, the revenue per head was 79 cents, or in other words he collected from the people 79 cents per head. From 1889 to 1896, a period of years corresponding with the number of years during which the hon. gentleman has been administering the Post Office Department, we increased the number of post offices, in other words, we gave post offices to sparsely settled districts of a class that the hon. gentleman would not establish unless he were assured that they would be profitable thus insisting that the people who would be served by post offices of this class must pay without receiving any proportionate benefit. The number of post offices was increased from 7,838 in 1889 to 9,103 in 1896 or an increase of 1,265 post offices. Take the same number of years under the hon. gentleman's administration from 1S96 to 1903 ; there was in increase of from 9,103 in the former year to 10,150 in the latter year or an increase of 1,047 as against 1,265 or a less number by the same ratio of proportion of 218 post offices. What does that mean on the face of it ? It means that the hon. gentleman starved the service, it means that you can only get post offices in this country that pay or are likely to pay in the near future and that during this period of great expansion that hon. gentlemen boast of the hon. gentleman looked at his ledger and nothing else. But, the hon. gentleman looked at his ledger in another sense by way of taxation. I said that the revenue in 1896 was 79 cents per head. The expenditure was 93 cents per head. Now, let us take the amount at which the hon. gentleman taxed the people in 1903. In 1903 instead of collecting 79 cents per head, the hon. gentleman increased the tax upon the people to $1.03 per head or in 1903 he took from the people 24 cents per head more than in 1896. Let the hon. gentleman now look to that large portion of the country that he is depriving of a postal service and see with what degree of pleasure it must look upon his administration. Now let us see where the hon. gentleman is in regard to his expenditure. The expenditure in 1896 as I have said was 93 cents per head. In 1903, seven years later the hon. gentleman only got it up 4 ecnts more, or to 97 cents per head thereby making it as clear as it is possible to be demonstrated that the hon. gentleman by increasing the postage took the money from the people and failed to give them the service to which they were entitled. It is beyond doubt that the hon. gentleman took 24 cents more per head from the people in 1903 than in 1896 and if he has only increased the expenditure with the money that he has taken from them by 4 cents'a head it is not necessary to add anything to the mere statement of the fact. How did the hon. gentleman get that money from the people ? He first decreased the postage between Canada and other countries of the empire and he appeared so ridiculous before the country in charging a higher rate upon domestic postage, that when the absurdity was pointed out to him in this House, he then decreased the domestic rate from three cents to two cents. He did not, however, decrease the postage on post cards. What he did was to unload the postage from those who were entitled to pay it, and who were specially benefited, on to the shoulders of the people generally who were not benefited. The great counting houses ; the commercial concerns


Mr. COCHRANE.: The manufacturers.


James Clancy: I don't object to the counting houses, or the manufacturers getting a fair benefit, but I do not think they should get any special benefit.


An hon. MEMBER,: Trust and loan companies.


James Clancy: Yes; he reduced the postage for the benefit of the trust and loan companies! and the banks and other large institutions who were able to pay. They got the benefit but the people generally got no benefit from this reduction. On the other hand, the Postmaster General increased the postage on newspapers, and on hooks and packages. I notice also that he increased the rate of postage on packages of seeds, In doing that, I can scarcely imagine that the Postmaster General escaped without a sharp rebuke from the Minister of Agriculture. Then with regard to maps, and prints', drawings, music, photographs, deeds, wills, mortgages, insurance policies, assessment rolls, municipal rolls, and all these things, the rate of postage has been duplicated. What the Postmaster General did was to shift the burden from a class of people who ought to pay, to a class of people who were not benefited. The ordin-any farmer of this country has been made a victim of this device of the Postmaster General. Were the country at a standstill the Postmaster General might have some defence, but we are told that there has been the most extraordinary increase of population that has ever taken place in Canada, and if that be true, then the post office revenue per head would accordingly be equalized. The Posmaster General has in one way or the other made the people pay the shot in order to secure his revenue.


William Mulock: The hon. gentleman (Mr. Clancy) has undertaken quite a task when he endeavours to prove to a man who puts a letter in the post office and only pays two cents, that he is paying more than when he had to pay three cents. [DOT]


James Clancy: No one said that.


William Mulock: The hon. gentleman said that the workingman has obtained no benefit, but if a workingman or a farmer or any one else, pays only two cents now when he formerly pafd three cents, then in spite of all the sophistry which the hon. gentleman can use, that person will come to the conclusion that the fate of postal taxation on him has been reduced 33J per cent. If the workingman or the farmer or any one else, has only to pay two cents to send a letter to some other part of the empire, when he had to pay fire cents previously he will also come to the conclusion that he is saving a very substantial sum. My hon. friend (Mr. Clancy) says that I first of all reduced the rate of postage on letters to other parts of the empire, but that the matter looked so ridiculous when brought before this House, that I had to make matters straight by reducing the domestic rate. I would remind him that the Act permitting the reduction in the rate of postage was passed in the session of 1898.


James Clancy: 1899.


William Mulock: If my hon. friend says' 1899, then the statutes are wrong, but as the statutes say that it was passed in 1898, that must guide us in this debate. That Act provided that the reduction in the postal rates should take effect on proclamation by the government.


James Clancy: Which took effect first ?


William Mulock: The Act was passed first and the proclamation followed. The reduction in the imperial postage rate took place on Christmas day, 1898, and on the New Years' day following, just a week afterwards the other reduction took place. There was no session of parliament during that interval of a week, and therefore the debate which my hon. friend thinks took place never could have occurred.
Mr. CLANCY'. The reduction in the domestic postage was not even hinted at until after the other had been arranged when the Postmaster General was in England.


William Mulock: I gave statistics in the session of 1898 showing the probable result of the reduction in postage. I quoted from the experience of the United Kingdom, of the United States, of Germany and of other countries when they reduced their postage, and I argued from those precedents that we would have correspondingly satisfactory results if we reduced the rates in Canada. I expressed the belief that within three years our revenue would recover its former volume. My anticipations were realized. That Act was not passed by this parliament for ornament; it was passed for the purpose of being made Sir WILLIAM MULOCK.
effective. Parliament had good reason to suppose when the Bill passed, that in due time, if the finances warranted it, a proclamation would issue and the reduction take place. The hon. gentleman says that he did not know that the proclamation was likely to issue.


James Clancy: I did not say that.


William Mulock: I venture to say he was the only person in Canada -who did not anticipate it. At all events the two reductions took place within one week of each other.


John William Bell: The system adopted by the Postmaster General for some years, of excluding the Atlin and Yukon service from his general accounts, places him in a rather favourable position as compared with previous occupants of the position of Postmaster General. It is undeniably a fact that the Atlin and Yukon postal services are far more expensive than in the more settled portions of Canada, and also that the revenue is correspondingly smaller. It should not be forgotten that although previous Postmaster Generals did not have to do with the Yukon and Atlin districts, yet for over twenty years they had to maintain a postal service throughout the Northwest Territories, Manitoba and New Ontario, where the service was very expensive and the revenue comparatively small.
No previous Postmaster General, so far as I know, has devised the excellent scheme, in order to make his accounts look particularly well, of excluding from the general account the accounts relating to those parts of Canada in which the service is more or less unprofitable; and now that the Yukon is unquestionably a settled part of Canada, in which there is a large city organized, with all the municipal provisions, in which there is an established government, in which there is a settled population which is likely to remain, and in which the postal service is likely to continue to be a part of the regular postal service of Canada for all time. I think it would be as well for the Postmaster General to give up that distinction. Any one who looks through the report can easily see that no concealment is practised, The figures for the Yukon are given a little farther on in the volume from the general statement, which appears on the first page ; but it seems to me that that statement, which sets out by showing a surplus of $395,208.11, may create a false impression in the mind of some person who from want of training or previous knowledge might not know" that if he would look further in the volume he would find that that surplus would have to be reduced by $102,000. To my mind it would be fairer to put that statement on the first page, so that the taxpayer of Canada could see what is the

actual surplus or deficit in the postal service. No matter into how many divisions that might be made, if the whole country were divided into provinces for the purpose of preparing the accounts for this report, some of which would show large surpluses, some large deficits, and some a condition where the accounts would almost balance, the gross result for the whole of Canada would be shown. In the postal service of. the country as a whole there is either a surplus or a deficit. So that I think the time has come when it would perhaps be as well to do away with the practice which has prevailed of keeping these accounts separate. To some extent, 1 suppose, there was a warrant for it in the early period. The service, as I understand, was scarcely a part of the postal service, being carried on by the mounted police. But that is no longer the case. It is now as regularly and permanently a part of the postal service of this country as that of any other part of Canada, and. in future I think it would be ajs well to absorb that account into the general account, so that we may see at once the position in which the postal service of Canada stands. I would like to say a word or two with regard to the deficit of 1896 which the hon. gentleman points out. To my mind that was not exactly the deficit for that year. If I am not mistaken. it included a constantly growing and accumulating deficit.


William Mulock: No.


John William Bell: That was excluded and kept entirely separate ?


William Mulock: Yes, altogether.


John William Bell: I do not for a moment suggest that the Postmaster General under the present circumstances should be tempted to carry over any accounts, but i would like to ask him what amount of the service which is chargeable to 1903 might go over to 1904. I am aware that it is impossible to prevent all overlapping ; but I presume that the Postmaster General will be able to say. if there is a liability, whether it is any more than that which occurred in previous years, and which must necessarily occur ?


William Mulock: I much appreciate the tenor of my hon. friend's remarks. With reference to the first point to which he alluded, the separation of the accounts, he spoke of the service in the Northwest Territories when that country was being brought under control. The committee has perhaps forgotten it, but I may say that a somewhat similar practice was pursued in that case. At the commencement, instead of keeping the accounts separate. as I have done, there was a special vote taken for Northwest account. That
vote was resorted to for payment of a number of services. I do not remember them all, hut they included the postal service, and the money voted in that special vote to carry on the postal service was not included in the expenditure of the Post Office Department.


Edward Cochrane: Was not the same principle applied when the hon. Postmaster General used the mounted police ?


William Mulock: We did not use them without paying for them.


Edward Cochrane: Neither did the other government.


William Mulock: Yes, they did. There was a bulk sum voted for a number of services, including the postal service, as it was not considered fair to charge the various departments with the total expenditure in connection with the carrying on of those services. So much as went for carrying on the postal service of the Territories was not charged as part of the disbursements of the Post Office Department. You will therefore see that there is a precedent for maintaining a separate account for the service in an unorganized territory- I mean a territory that is far from selfsustaining and in a more or less primitive state. As my hon. friend from Pictou says, the Yukon is coming to be looked on -as' part of old Canada, and the time is arriving if it has not arrived, when this distinction in the postal accounts may he discontinued, as the late government, in the course of a few years, discontinued voting a special stun for the various services in the Territories, and allowed the sum for the postal service to be defrayed out of the ordinary appropriations for the post office generally.


Edward Cochrane: When did that vote for the Northwest Territories cease to be taken ?
Sir WILLIAM, MULOCK. I cannot say from memory.
ill1. COCHRANE. It did not continue until 1896, did it ?


William Mulock: No, it did not. The Northwest Territories were taken over in 1870 ; but I am speaking of a period much later than that, coming down to a comparatively recent date. With regard to the payment of the accounts for the year, my instructions to the department are that all accounts for carrying on the service for the year shall be included in the accounts for that year, so that when they are laid upon the table they shall truly represent the cost of maintaining the service for the year; and I am assured by the accountant that those instructions are lived up to, and that there is nothing owing. I asked him if there was a cent owing. He said he would not say to a cent, but

there is not $100 of arrears so that practically speaking everything is included in the accounts represented in this return. The Auditor General gave us till the 15th of August, that is, six weeks after the accounts were due, and on the approach of the end of the fiscal year efforts were made to get in all the accounts before the end of the year ; so that in the early part of July we know pretty well the state of the accounts. My hon. friend may rely upon it that if any considerable unpaid account were not included in the year to which it belonged, it will, so long as I am at the head of the department, be reported to the House and included if possible in the printed re-l>ort.


Mr. HENDERSON.: Is the same system pursued now as in former years ?


William Mulock: In the Postmaster General's Report for 1895-6, there will be found a report signed by two auditors, which shows that when the late government went out of office there were unpaid accounts exceeding the appropriations by $680,000. The hon. gentleman will remember that the change of government took place just at the close of the fiscal year, and shortly afterwards I learned that the whole appropriation for the year was exhausted and there was this large amount of unpaid accounts. The Deputy Postmaster General, Mr. White, told me that the practice had been to pay these arrears out of the revenue voted for the current year. That practice had grown up from year to year. Under it the shortcoming each year of $50,000, $60,000 or $100,000, instead of being included in the supplementary estimates for the following year, was carried on as an ever-increasing balance. The first year the amount carried over was, say $50,000, then it increased to, say $100,000 and so on until the amount of unpaid debts not provided for, when we took office, was as high as $680,000. There was no money voted by parliament to pay this sum, but apart from that accumulation of unpaid accounts, there was an actual deficit for the year of $7S0,000. So that besides the deficit of $780,000 on the year's operations, the department owed $680,000 of accumulated unpaid accounts. I reported the matter to the Finance Department, and that department treated this $680,000 as a debt of the Grown and put an item for it in the estimates. It was thus voted as a special vote, and we were enabled to start with a clean sheet. That was in the second session of 1896, because it took us several months to ascertain the exact amount.


James Clancy: Was there a separate account kept of those payments ?


William Mulock: That transaction did not enter into the accounts of the post office for the fiscal year 1896-7 at all. It will be found in the Finance Department Sir WILLIAM MULOCK.
the same as any debt due by the Crown. In the statutes of 1896-7 there will be found in the appropriation Bill an item to pay these arrears, and the amount was paid by the Finance Department. We then started with a clean sheet.


David Henderson: I understand that an entire change has been made in the system. Under the former government, it was customary, at the end of each fiscal year, to pay out of the next year's appropriations whatever was short in the estimates of the previous year. As the Postmaster General has stated, one year it might be $50,000 another year $60,000 and another year $100,000. Consequently year after year there was a continuous increase of these unpaid balances or a continued overlapping [DOT] from vear to year. The first amount for example might be $50,000 and should there be a shortage the next year of $25,000, then in the succeeding year there would be $75,000 of an overlapping and the following year if there was again a shortage of $25,000 there would be an overlapping of $100,000. This went on over a long series of years. The Postmaster General of that period continuously paid the amount that was unpaid at the first of July out of the succeeding year's appropriations, and it appears that about 1896 when the hon. gentleman's predecessor went out of office that this overlapping had amounted to about $685,000 in round numbers, and according to the practice of former Postmasters General that would be charged up to the fiscal year 1896. At the end of 1894 we will say it would amount to $616,712 and that overlapping would be charged up to the year commencing July 1, 1895. It would go on for another year and at the end of 1896 there would be still this overlapping, but it would then have amounted to a larger sum. A change of government and a change of book-keeping took place and the incoming Postmaster General refused to charge up this large sum to the succeeding year's estimates. Now what was the result V The overlaping of the previous year was charged to 1896 which makes this enormous sum of a shortage in revenue of which the Postmaster General has boasted all over this country.


William Mulock: That had nothing whatever to do with it.


David Henderson: It stands to reason that if the overlapping at the beginning of the year went to the next year's expenditure it would certainly make apparently a very large shortage in the revenue of the country.


William Mulock: That is not what happened.


David Henderson: I say to the Postmaster General that my conviction is that that is just what happened, and it has never been made plain to the people of this coun: try that that is not what happened and consequently the Postmaster General has ob-

tained a very large amount of credit in this country for having kept the expenditure within the revenue which he says his predecessors were unable to do. The whole matter requires to be thoroughly investigated, r.ot by the accountants, the personal friends of the Postmaster General, whom he brought in from Toronto to make out an account to suit his own purposes, but by an independent commission that would show the actual condition of the account. My conviction is that that is just the way the thing happened and that the $6S5,447.03 as provided for by the Postmaster General by statute is a portion of the $781,152 shown as a deficit at the end of the year 1896, so that if you deduct the $685,447.03 which are shortages, the accumulations of some 18 or 20 years, and not of one year, you find that the deficit or shortage of revenue of the old government was a comparative trifle indeed. That is the way I have explained the whole matter. I feel pretty well satisfied, in fact I remember distinctly the words of the Minister of Trade and Commerce (Sir Richard Cartwright)

and if I could only lay my hands on the ' Hansard ' I should cite them, but I have not been able to find the passage in the few moments of this discussion. I remember well the words of Sir Richard Cartwright (Minister of Trade and Commerce) in answer to a question put across the floor of the House by the Hon. Mr. Foster. He said that this large sum was made up of the accumulations of a great number of years, and I have never yet been convinced that this sum was not made up of these accumulations, and that the sum that was provided for by the Postmaster General by a special statute or by a special estimate-I think by an Act of Parliament-was not a portion of this $781,152, which the bon. the Tostmaster General has been parading for the last seven or eight years as the shortage in the revenue of this country as compared with the expenditure. I have no doubt that if I am wrong the Postmaster General will be able to put me right, but I tell him that it would take a great deal more to do so than a special account prepared for the Postmaster General by his own personal friends, to accomplish a specific purpose.


William Mulock: I have sent into the library for the report of that year and as soon as I receive it I shall deal with the hon. gentleman's contention. Perhaps the committee will allow me to reserve my remarks until that report comes. Meantime I would say, to correct my hon. friend at the beginning, that his suspicion, his imagination is entirely at fault jnd that the deficit of $781,000 in the revenue as compared with the expenditure for 1890 was for the actual workings of the department that year and was over and above all accumulated arrears of preceding years.


David Henderson: What I intended to say was that for that specific year the overlapping at the beginning of the year was charged up as a portion of the expenditure of that year and at the end of that year the shortage for that year was charged up inasmuch as the succeeding Postmaster General refused to have it taken out of the appropriation of the succeeding year, so that you have the overlapping at the beginning of the year and the shortage for the year all charged in that year and it is no wonder if the accounts did in that way show the immense shortage claimed by the Postmaster General.


William Mulock: If the amount of $680,000 the accumulated arrears, had been added to the expenditure for the fiscal year 1895-96 instead of the auditors reporting a deficit of $781,000 they would have had to make it $781,000 plus $680,000 or something over $1,400,000.


Edward Cochrane: I have no objection to the Postmaster General reducing the postal rates, but I think he was a little unfair when ho answered me as he did about the Northwest Territories. I think it would have been fairer if he had frankly stated to me and to the committee that the late government had the expense of post offices in that country to bear out of the ordinary revenue of the Post Office Department for several years before the hon. gentleman took office, and they did not keep a separate account. It would be a fairer statement if he would charge the expenditures of the Post Office Department in the Yukon and also credit it with the amount received in the Yukon, balance the two amounts and give us a fair balance of the statement. Would that not be fairer than to keep a separate account for the Yukon when he has a deficit there ? There is no doubt in my mind, and I think there is no doubt in the mind of the Postmaster General, that if there had been a separate account kept for the Northwest Territories in reference to the post office expenditure and revenue in that country there would have been a large deficit in that territory; When the late government was in power.


William Mulock: If there was a deficit in the working of the Post Office Department in the Territories in 1895-6, there would not be much difference, I presume, in 1896-7. We have never balanced it up. I do not know how it compares, but we carry on the service so that whatever deficit in 1895-6 existed would be taken into account.


Edward Cochrane: You are carrying on the service in the Yukon just the.same as the late Postmaster General carried on the service in the Northwest Territories. But the difference is that the service in the Northwest Territories was then charged to the general account, while you separate the Yukon service now and have a surplus.


William Mulock: We separate the two, but it all appears on the facey bf the report. The report shows a surplus, without the Yukon, of $395,000, and if you deduct the loss on the Yukon service, the surplus is reduced to $292,000. The previous administration voted the sum needed for the post office department in the Territories, but that amount was not charged against the Post Office Department.


Edward Cochrane: I understand that.


John Dowsley Reid: As I understand it, there was a deficit of $600,000, ,which had accumulated for eighteen years.


James Bell Klock: I do not Know lor how many years.


John Dowsley Reid: Well, for a great many years ; and during that time the cost of the postal service in the Northwest Territories and Manitoba was included in the post office expenditure. During that time there must have been large deficits as between the revenue and expenditure in the Northwest Territories, Manitoba and British Columbia. So that if the amount were even small, say $20,000 a year, the deficit would have occurred in these new western territories, and it would really have accumulated to about $600,000 at the time the hon. gentleman took charge of the department. At the time the hon. gentleman took charge of the department I suppose the revenue and expenditure would almost meet 1


William Mulock: No, there was a deficit of $780,000.


John Dowsley Reid: I mean that the expenditure and revenue of the western territories would probably almost meet; or, in other words, that the deficit that had been accumulating annually would probably have been decreasing.


William Mulock: No, it was growing.


John Dowsley Reid: Has the deficit in the western territories grown since ?


William Mulock: The accumulated arrears were growing.


John Dowsley Reid: Yes, up to the time that the hon. gentleman took charge of the department, but the amount would be growing very slightly.


William Mulock: No, it was
growing large. The mistake the government made was not in each year getting a large enough vote from parliament to pay the expenses of the service for that year. In any municipality or town they levy their taxes for the year. These taxes are supposed to pay the "working expenses of the year, but when the year winds up the town, for instance, has paid out all the revenue and finds itself owing a thousand dollars. There is the same rate of taxation for the succeed-Mr. COCHRANE.
ing year, and the same thing happens again. There is another deficit of a thousand dollars, making $2,000 that it owes. That $2,000 the town borrows by mortgage, making an issue of debentures for the purpose. During that second year the town also has incurred liabilities in excess of the taxes to the extent of $1,000 more in addition to the $2,000 already owing. It chooses to pay this in another way. Thus it has a deficit of $3,000. It has not the power, as we have, to vote the sum in a general way, but as it has to carry on the service it would have to take the money straight out of the people. In the case I am trying to illustrate the accumulated accounts have nothing whatever to do with the finances of the year, except that portion thereof that was left over fsom that year. The $680,000 had been accumulating year after year, just as the accounts of a corporation that was getting behind hand would go on accumulating year after year, or as a business man who is anticipating his income is incurring liabilities to be met out of his income in the future. So it was in this department. When we took office in 1895-6 there was an appropriation by parliament out of the consolidated revenue fund to pay the cost of the service for that year, and there was against that to recoup the treasury the revenue from the department. The revenue from the department that year was $780,000 less than the expenditure for the year, so that the tax-payers had to pay $780,000, in addition to what was collected by way of postage in order to pay the current expenditure of the year. That still left this accumulated deficit of years which had to be paid. That is all made perfectly clear in the report I spoke of.


Mr. T. I. THOMSON.: I notice in this report which I hold in my hand that there was a deficit of $781,000 in 1896. The hon. Postmaster General says that this was brought about because the government had not asked for a sufficient vote of money to carry on the service, and he dwells upon that.


William Mulock: I did not say that. My hon. friend misquotes me. I did not say "that the deficit was caused by the fact that the government did not ask for sufficient money. That is another question altogether. I said the deficit was caused by reason of the fact that the rev enue fell $780,000 below the expenditure.


Thomas Inkerman Thomson: The hon. minister dealt altogether with the year 1896. I notice that in the fallowing year, under his administration, there was a deficit of $586,000. I inferred from the remarks which he made that he has been squaring the accounts since he came into office, while the evidence shows to the contrary.


William Mulock: My hon. friend from Halton (Mr. Henderson) stated that he
could not be convinced by any report of auditors whom I had cbosen, because they were my personal friends.


David Henderson: Hear, hear.


William Mulock: And he says ' hear, hear,' to that remark. I will tell him who the auditors were, and if he will make inquiries I think he will have reason to revise that statement. They were W. H. Cross and Wm. F. Munro.


David Henderson: These were both your personal friends.
Sir WILLIAM M I, LOCI\. Mr. Munro I knew very well ; Mr. Cross I had never seen in my life.


David Henderson: I naturally supposed that, living in Toronto, Mr. Cross would be known to the hon. minister.


William Mulock: He was a perfect stranger to me. Mr. Cross was not my personal friend, I had never exchanged a word with him, but, on the contrary, he was a political friend of hon. gentlemen opposite. He was at the head of the Chartered Accountants' Association, and he is recognized as one of the foremost accountants in Canada. He went into this work as a pure matter of business, gave a great deal of his time to it, and no person who knows Mr. Cross would discredit anything he certifies to in his capacity as an auditor.


David Henderson: I am not going to question the honesty of Mr. Cross, but we must understand that Mr. Cross had his instructions from the hon. Postmaster General.


William Mulock: Then we will see what these instructions were. I have here the report of the Postmaster General presented to parliament in the session of 1897, setting forth this transaction. The statement is as follows :



[Stage Direction]
At the close of the fiscal year 1895-96, it was found that the parliamentary appropriations for that year had been exhausted, and that large sums 'were still owing by the department.,
AVith the idea of ascertaining the true financial position of the department, two accountants, Messrs. W. H. Cross and W. F. Munro, were appointed to make certain inquiries, the result of their investigations being set forth in the following annexed report :-
The Hon Wm. Mulock, [DOT]
Postmaster General.
Sir,-We have the honour to submit the statements prepared in pursuance of your instructions expressed in the following terms
(1.) Ascertain the total cost of maintenance of the Post Office Department for the fiscal year beginning on the 1st of July, 1895, and terminating on the 30th of June, 1896, classifying such expenditures.
Does my hon. friend (Mr. Henderson) say that that was a proper question to put ?
David Henderson: Yes. I have no objection to the question. My contention is that in the sum which they arrived at, they included in the expenditure for that year the overlapping from the previous years.


William Mulock: I will prove they did not. This is the instruction :
Ascertain the total cost of maintenance of the Post Office Department for the fiscal year beginning on the 1st of July, 1895.
Not arrears, but the cost for that year beginning on that date :
-and terminating on the 30th of June, 1896, classifying such expenditures.
2.	Ascertain the cost of maintenance of the Post Office Department for the fiscal year 1896-7 on the scale of expenditure reached in the fiscal year 1895-6.
Now we come to an entirely independent transaction.
3.	Ascertain the amount of any unpaid debts or liabilities of the department on the 1st of July, 1896, over and above the appropriation made by parliament for the fiscal year 1895-6. and classify the same.
They were instructed to do two things : To ascertain the cost of the maintenance of the department for the fiscal year beginning 1st of July, 1895, and terminating the 30th of June 1896 : and also to ascertain the amount of any unpaid debts or liabilities of the department prior to the 1st of July, 1896. Then they go on to say :
Freed from outlays directly on behalf of the inoney order and savings hank branches, which outlays embrace a share of the cost of inspection, together with a proportion of several lesser general items, and charging those branches with postage at the ordinary rates ; then the postal service for the fiscal year cost $902,625.62 over and above all revenue. The money order service and the savings bank service cost respectively $28,136.12 and $96,767.28, making a total of $1,027,529.02, which may he described either as the cost of maintenance over and above all receipts or as a deficit.
It must, however, be pointed out that the statement is incomplete in two ways. On the one hand the expenditures do not include the year's outlay for the maintenance of the public building used by the Post Office Department throughout the Dominion, nor is any allowance made either for interest upon the cost of such buildings or for such a yearly sum by way of sinking fund as would provide for the repayment of the capital invented in them.
On the other hand the receipts do not include any allowance for the services rendered . by the department in respect of free transmission of newspapers, of free transmission enjoyed by members of the Dominion parliament or for services to other departments of the Dominion government, or to the local legislatures.
In order to determine the scale of expenditure of the entire department reached in the year 1895-6 the outlay for the month of

-*5607

June last was selected. The services for that month cost $419,304, equal to $5,031,650 for the year. A classified statement of the Scale of expenditure is herewith submitted, in which, 4t must be pointed out, no allowance is made for the yearly expansion of the service of the department. Such expansion during the seven years ending 30th June, 1895, averaged four and one-sixth per cent per annum upon the gross expenditure. This percentage on the gross estimated expenditure for 1896-7, $5,031,650, would amount to $209,652.	,
In the preparation of the statement of the arrears of the department upon maintenance account on the 30th June last, the arrears at the beginning of that fiscal year had also to be determined. Statements of the arrears at both periods are submitted.
I skip over the pages containing the figures, and I now read the conclusions :
(a.) At the beginning of the fiscal year 1895-96, as a result of the deficits of previous years, there were outstanding liabilities of the department, in the shape of unpaid accounts, to the amount of $616,712.99.
lb.) At the close of the fiscal year 1895-96, the liabilities of the department in excess of all parliamentary appropriations applicable thereto amounted to the sum of $685,447.03.
(c.) Thus the liabilities had increased during the year 1895-96 to the extent of $68,734.04.
(d.) The actual cost of maintenance of the department in all its branches for the year 1895-96 was $4,985,327.53.
(e.) The revenue of the Post Office Department for the fiscal year ending 30th of June, 1896, amounted to the sum of $3,957,798.51 ; which deducted from the above-named gross cost of maintenance, namely,1 $4,985,327.53, leaves a deficit of $1,027,529.02,
That was the total cost of maintaining the department throughout that year.


James Clancy: What year is that ?


William Mulock: The year 1895-6. The total cost of the service for that year was $4,985,327.53, and the revenue of the Post Office Department for the same year amounted to the sum of $3,957,798.51.


James Clancy: Was that the gross revenue ?


William Mulock: I may say that it has been the practice in the department for postmasters to deduct their salaries out of the post office revenues in a certain way. What is called a salary warrant is issued to a postmaster and he is paid his percentage, and it is only the balance that goes into the consolidated revenue fund.


James Clancy: The Postmaster General does not seem to be right in either of these figures as regards the revenue and expenditure for that year.


William Mulock: Perhaps the bon. gentleman would allow me to read the statement first.
Heretofore it has not been the practice to treat the amount expended under the head of Sir WILLIAM MULOCK.
civil government as a charge against the department, and were such practice adhered to the deficit of $1,027,529.02 would be reduced by $246,376.93, leaving the outside service shortage $781,152.19.
The other two paragraphs have no bearing upon that question. That report is signed by W. H. Cross and W. F. Munro. That report shows that the total cost of carrying on the service for that fiscal year amounted to $781,000 in excess of the revenue, and that is without taking any account whatever of any arrears that were owing ; the accumulation of previous years. 1 may further add, that the Minister of Finance (Mr. Foster) in that year, I think, in delivering his budget speech announced a shortage in the postal revenue of about $800,000. When Mr. Foster was urged to reduce the postage from three cents to two cents, he referred in his budget speech to the impossibility of doing so owing to the fact that there was a discrepancy between the revenue and the expenditure and he estimated the deficit to be something like $800,000.


David Henderson: I have read this report several times myself, and I have listened to it carefully when read just now by the Postmaster General. I am not here to cast any reflection upon the honour of W. II. Cross or W. F. Munro. I stated they were personal friends of the Postmaster General ; as these gentlemen both being prominent accountants in the city of Toronto would no doubt be well acquainted with him. The Postmaster General had the opportunity of giving these gentlemen special instructions as to the manner in which he desired these accounts to be investigated, and only so far as that do I take exception to the finding of Messrs. Cross and Munro.


William Mulock: Will the hon. gentleman say what exception he takes to the instructions given.


David Henderson: I have read that report half a dozen times with the object of understanding it. I may be very obtuse, but I cannot for the life of me come to the conclusion that there have not been overlappings included, owing to the change in the system introduced by the Postmaster General on the 1st July, 1896. The overlappings from the previous years were paid in 1895-96, and counted as part of the expenditure.


William Mulock: It is falsifying the Auditor General's Report to do that.


David Henderson: That was the practice for many years, and when the appropriation was passed by this House to enable the Postmaster General to pay that $685,447.03, the Minister of Trade and Commerce admitted, that that sum was made up out of overlappings or shortages for eighteen

or twenty years. I have always believed, and I am not convinced otherwise yet, that the overlapping, or the amount that came over at the end of the fiscal year 1S95, was paid out of the revenue for 1895-6. Then, at the end of the year 1895-6 the Postmaster General changed this system, and instead of allowing this shortage, which was made into a large sum by means of this overlapping, to be paid out of the following year's appropriation, he said he would call a halt. Consequently the entire amount that was chargeable to that year's expenditure, which I admit was not paid on the 1st of July, 1896, was charged back to the year 1895-6, and thereby increased the apparent expenditure of the Post Office Department for that year by the amount overlapping at the end of the year. That is what I contend, and nothing that the Postmaster General has yet said has succeeded in changing my mind on that point. According to the Postmaster General's Report for the next year, we find that in 1897 the shortage was $685,539. The two-cent rate had not been introduced yet. The Postmaster General had not brought about any great reform to bring the revenue and the expenditure any nearer together. Not until the year 1898 is the shortage reduced to $47,602. I have read carefully time and again the report of Messrs. Cross & Munro ; and while I am satisfied that they followed the instruction of the Postmaster General. I do not feel satisfied that these gentlemen had their attention drawn to that particular point. They regarded all The payments made in 1895 as payments on account of the expenditure of 1895, whereas between $600,000 and $700,000 of those payments did not belong to that year at all, but belonged to previous years, extending away back some eighteen or twenty years. 1 am- not impugning the veracity, honour, integrity or ability of the accountants. These gentlemen are too well known in the city of Toronto for that ; but I do say that the Postmaster General did not draw their attention to that fact, and that they did not receive the full instructions- which they ought to have received in order to give them the basis on which they were to start this investigation. I hope the Postmaster General will be able some day for his own satisfaction to show me that he is right : but I recall well the discussion that took place on this matter in this House years ago, when Sir Richard 'Cartwright admitted frankly, in order apparently to shorten the discussion that this charge of $685,000 was simply the accumulation of eighteen or twenty years.


William Mulock: I do not expect to convince my hon. friend. I am glad he has removed all doubts as to the reliability of the auditors. That is a point in my favour. I am glad that lie admits their ability and their professional qualifications. Now. if two able, honourable, faithful and honest auditors are instructed to ascertain 178i
certain figures and certain results ; if they proceed to do so, and append their signatures to a report made after many months of going through vouchers and accounts with -the officers in the department, as these men did ; if we cannot impugn their report on the ground of incomxietence or dishonesty on their part; and if the case submitted to them was such as to bring out the truth ; then they brought out the truth. That must follow, or else they are not efficient and honest. There were two things left to them to ascertain

the cost of the Post Office Department for the fiscal year beginning the 1st of July, 1895, and terminating the 30th of June, 1896 ; the cost of the maintenance of the Post Office Department for the succeeding year. They were also to find out what the arrears of debt were ; and they found in plain language that the revenue of the Post Office Department for the fiscal year ending the 30th June, 1896, was $3,957,798.51 and the expenditure $4,-9S5,327.53. Deducting that revenue from that expenditure, you have a balance of $1,027,529.02. Deducting from that the cost of the inside service, which is never charged against the revenue of the Post Office Department, you have a net shortage, as they certified, of $781,152.19. They further certify that in addition to that shortage there are owing bills of previous years amounting to $685,447.03. Taking these two things together you have a shortage of $1,466,599.32 That $685,447.03 represents the accumulated, shortages of previous years.


James Clancy: Unpaid up to that time ?


William Mulock: They had been paid out of our accounts, and we got a recoupment by vote of parliament.


James Clancy: Oh, no.


William Mulock: I say yes.


Mr. BLAIN.: This is too large an amount of money for us to pass without having a thorough understanding of it. The Postmaster General makes the statement that there were unpaid accounts accumulated up to the time of the outgoing of the old government, to the amount of $685,447. He makes the further statement that for the year ending June 30th, 1896, there was a deficit of $781,152, or making in the two amounts a shortage of $1,466,599. If my hon. friend would produce before the committee evidence to show how the government of which he is a member paid these amounts, I think he would convince the committee that he is right. I do not suppose the hon. gentleman paid ^either of these shortages out of the usual annual appropriations made after he came into office. Therefore there must have been some special amount voted for this purpose. Would the hon. minister inform the committee how this government paid this large amount ? Did they pay it in one amount in 1896, 1897 or 1898. or was it paid in two separate amounts ?

Sir WILLIAM ML'LOCK. I did not say that parliament liad not voted the money. Parliament voted the money to carry on the service, irrespective of the revenue. That money is taken out of the consolidated revenue ; and if you take the amount voted by parliament for carrying on the service for the fiscal year 1895-6, you will find that the revenue for that year was less than that amount by $781,152.


Mr. HAGGART.: Will the minister tell us where it appears in the post office accounts ?	[DOT]


William Mulock: The post office accounts do not show the amount voted by parliament. They simply gave the receipts and expenditures of the Post Office Department.


John Graham Haggart: If there was a vote taken by parliament for the purpose of covering the amount of these deficits, does it appear anywhere in the statement of the postal receipts and expenditures that that amount has been paid ?


William Mulock: I said a few moments ago that the condition of the annual expenditure and receipts of the Post Office Department are announced by the Postmaster General. But in order to make good my statement, let me read from ' Hansard ' of the 31st of January 1896.


John Graham Haggart: No one disputes it.


William Mulock: Yes, the.hou. gentleman's friends do. Here is Mr. Poster's statement:
In the post office we have an increased estimate of $240,780, which is a large increase. The demands for the opening up of new lines, and for greater frequency and greater thoroughness in the delivery and despatch of mails, are continually pressing upon the Post Office Department, and a large expenditure has necessarily to he made if we are to keep at all even with the requirements of the times, which we are bound to do. There is now a deficit of somewhere near $800,000 between the total receipts and total expenditures of our post office service.
Not that the revenue fails by $50,000 a year, but that it fails by $800,000 to meet the expenditure of that year. He was quite right. In fact he is a little over the mark because the auditors found the amount was $781,000. That is above and beyond the accumulated debts of former years which were still outstanding.


Mr. HEYD.: I just happened to have the Postmaster General's Report giving the expenditure and revenue for the five years ending 1893, which may throw a little light upon the subject. Revenue, $12,517,000 ; expenditure paid by cheque $15,954.000-deficit $3,437,000. Or $700,000 per year.


John Graham Haggart: Perhaps the hon. gentleman would state how it was paid.


Richard Blain: 


Charles Bernhard Heyd: It was paid by cheque.


Richard Blain: My hon. friend the Postmaster General will need a better accountant to come to his rescue. The hon. gentleman says that when they came into office there was a deficit of $3,000,000.


Charles Bernhard Heyd: I did not say that. There was no deficit, because it was paid.


Richard Blain: I would like the hon. Postmaster General to correct my hon. friend


William Mulock: Since my hon. friend will not accept the auditor's report as to the gross amount of expenditure for that year, let me give the details of the expenditure for 1895-6, as set forth in their own minister's report.


John William Bell: I want to call attention to what seems to be a discrepancy. On the first page of the hon. gentleman's report, he gives the deficit for 1896 as amounting to $781,156. That of 1897 he makes $580,539 ; and 1898 $47,607. According to the public accounts the expenditure in 1896 was $3,665,011.30 and the receipts were $2,964,014.23, ieaving a deficit of $700,997.07. But this differs by about $80,000 from the amount entered in the Postmaster General's report and given as the finding of the auditor. In that report the deficit for the year 1896 is given as $781,000. But while that year does not agree with the financial statement, the following two years, 1897 and 1898, as shown in the Postmaster General's report, agree exactly with the public accounts. The expenditure and revenue in 1897 and 1898 were as follows :-
In 1897, expenditure .. .. $3,789,478.34 In 1897, revenue	 3,202,938.42
Deficit	 $ 586,539.92
In 1898, expenditure.. .. $3,575,809.69 In 1898, revenue	 3,527,809.69
Deficit	 $47,602.30
Since the Postmaster General is addressing himself to this matter, will he explain how it is that while apparently in every other year the statement in his report agrees with that given in the public accounts, it does not in the year 1896 ?


William Mulock: The accountant informs me that the Auditor General only includes the actual payments before the accounts of the year are closed. The Finance Department only takes note of the payments. If a debt is paid before the accounts are closed, it is included in that year.


John Graham Haggart: Would not the difference be far greater if the Auditor General only took account of the amounts paid ?


William Mulock: No, it would not. for this reason, that he does not close his accounts on the 1st of July, but sometimes

allows a couple of months to elapse before closing them. When the fiscal year is closed, we are notified to get in all accounts and pay them, as the accounts will be closed on a certain day. We are allowed usually until the 15th of August, and an appropriation does not lapse until the accounts are closed by the Finance Department. Anything paid up to that date is entered in the disbursements of the year.


John Graham Haggart: That is a new system.


William Mulock: There was a good deal more latitude allowed formerly.
At six o'clock, committee toot recess.
After Recess.
Committee resumed at 8 o'clock.


William Mulock: I was asked to show how the amount of the current expenditure had been paid and also how the $685,000 had been paid. My statement is that for the fiscal year ending June 30th, 1896, the revenue failed by $780,000 to meet the expenditure. My further statement is that when we took office the department was in debt to the amount of about $680,000 for which there was no parliamentary appropriation. My statement is that parliament voted enough money to pay the expenditure for the fiscal year 1895-6, including the $7S0,000 and that parliament also voted in the succeeding year $685,000. I propose to prove that.


John William Bell: Was there also enough money voted for the year 1S95-6 to'include all the expenditure for the year including the deficit of $781,000.
Sir WILLIAM MULOCIv. Between the money voted that year and succeeding years there was, with some slight discrepancy which we have not been able to place, owing to the difference between the way in which the Post Office keeps its accounts and that in which the Finance Department keeps its accounts. It 'is a comparatively small item.


John William Bell: It is about $80,000.


William Mulock: Yes, about $80,000. The expenditure for the fiscal year ending June 30th, 1896, was $3,665,011.30. The net revenue for that year was $2,964,-
014.23.	The difference between that net revenue and the expenditure was $700,977.07. You have to add to that deficit the sum of $68,734.04, making in all $769,731.11 part of which amount is included in the $685,000. Parliament in 1897 not only voted that item of $685,477.03, hut recouped by the vote of 1896-7 in these words :
To recoup the vote of 1896-7, the following expenditure made in 1896-7 in payment of liabilities incurred in previous fiscal years as under the same to be charged to consolidated fund :
Amount of deficit 1st	July, 1895	$616,712.99
Incurred in 1895-6.. .	   68,734.04
Total	$685,447.03
which amount parliament voted. To that amount of $685,447.03 a portion of overdue .debt in 1895-6 is to he added bringing the shortage to $763,713.13.


John William Bell: Why should that be added to the shortage?


William Mulock: I have only given you the actual expenditure.


John William Bell: As I understand it that $60,000 odd represented the difference between the expenditure and the sum voted for that year, but 'it did not have any reference to the shortage for the year. [DOT]


William Mulock: It does not seem to have been expended in the time. I am giving the expenditure. The expenditure up to June 30th which is included in the report of the Finance Department did not include that apparently. I am not going to argue upon that point, because I have only disposed for the $700,997, the difference by the books between the net revenue and the net expenditure. Parliament voted an expenditure of $3,665,000 and also this $685,000. Now I need not go into details to prove these figures which are in the statute.


James Clancy: Where do we find the payment of that.


William Mulock: You will find all the vouchers.


James Clancy: Turn to the account now and show where that was paid, the whole sum voted in 1897 covering what is called the deficit.


William Mulock: The $685,000?


James Clancy: Yes.


William Mulock: The $685,000 was voted to recoup the amount which we had to expend to pay this balance.


James Clancy: What was it taken out of? The hon. gentleman knows we did not exceed the estimates.
.Sir WILLIAM MULOCK. It is not necessary for the hon. gentleman to assert what I know or what I do not know. He need not give any evidence on my account. If he desires information I am here to give it.


James Clancy: I desire the hon. gentleman to be civil enough to give me an answer. I did not ask the hon. gentleman what he knew.	*


William Mulock: No, you said I did know.


James Clancy: He said it was to recoup the sum that had been paid.


William Mulock: Yes.


James Clancy: That would mean that if we had exceeded the estimates we would have had to draw ou some other moneys. The hon. gentleman knows perfectly well that it is not the case, because in none of these years did we reach the estimates, let alone exceeding them, and we did not have to take a dollar from any other fund.


William Mulock: The hon. gentleman persists in saying that I know things. He does not know what I know, that is clear. In the summer of 1896, we found liabilities for previous years and the year just closed, amounting to $685,000 for which there was no parliamentary appropriation. The total amount of that vote minus $68,734.04 represented the amount owing before the commencement of the fiscal year 1895-6. A portion of it. the $6S,000 odd, represented a further addition to it during that fiscal year. That total amount of $685,000 had to be paid [DOT] in the summer of 1896, and was temporarily borrowed from the appropriation for carrying on the service from July 1st, 1896 to July 1st 1897, and when parliament met the Finance Minister reported the transaction to parliament, and parliament voted $685,000 for the purpose of recouping the appropriation which was drawn upon to pay the arrears I spoke of.


David Henderson: I do not intend so far as I am concerned, to prolong this discussion very much further. However, I desire again to submit my position and if I fail to "convince the Postmaster General that I am right it will not be for want of effort on my part. It is decided on all hands, that this $685,000 is>
the result of overlappings or overdrafts, for about 20 odd years. I read in 1 Hansard ' of 1897 at page 5264 the discussion that took place when the item came up for discussion. The discussion on 'it 'was very brief, and consisted of a short speech by the Minister of Trade and Commerce (Sir Richard Cartwright) the Postmaster General not being in his place at the time. The Minister of Trade and Commerce said :
The Postmaster General is not here at the moment, but I can state briefly what this is. They are the accumulated deficits of the post office for the last twenty years. It appears that they have always been outrunning the constable in that department, and they have been constantly paying out of one year's appropriations, sums which were due in the last year, and adding thereto from time to time. They have finally run up to this large sum, and the Postmaster General thinks it is time that should stop.
I think we are ail agreed that that is the way this sum was made up. I am not finding fault with the correctness of the summing up by the auditors, but I am very doubtful indeed as to whether they were given the proper basis on which to form Mr. CLANCY.
a judgment. I should like to have the attention of hon. gentlemen opposite for a moment in order to show the loose way in which this $685,447.03 was made lip by the auditors, and I will leave it to these hon. -gentlemen to say if there is anything genuine about it. The auditors, I presume, acting under instructions, took the expenditure for the month of June, 1896. They could get that from the accounts in the Post Office Department. The amount was $419,304. They took that for one month of the fiscal year and multiplied it by 12 and ascertained in that way- that the total expenditure for the year was $5,031,648.	[DOT]


William Mulock: Merely an estimate for the future.


David Henderson: I ask the hon. Postmaster General if that is a very fair way to get at the correctness of the accounts ?


William Mulock: For what year ?


David Henderson: 1S96. "


William Mulock: 1895-'96 ?


David Henderson: June, 1896, just a month preceding the time the hon. gentlemen came into power.


William Mulock: What is tne hon. gentleman reading from ?


David Henderson: I am reading from the Postmaster General's report for 1897, p. XXVIII. I presume that $419,304 is the actual expenditure for the month of June, 1S96. But, it may have been $50,000 more than the expenditure for the month of May or $50,000 more than the expenditure for some other month because I find the statement made by the auditors to be as follows :
During the fiscal year 1895-6

And we are now speaking of 1896.
-there were increases of a permanent character to the cost of the service ; such increases were nbt in existence throughout the whole of the fiscal year 1895-6.
And so on. So that in the latter part of the year there may have been material increases and this sum of $419,304, tfie expenditure for the month of June, might have been $50,000 more than the expenditure for some of the preceding months. Suppose that it did average $50,000 per month it would mean about $600,000 for the whole year. I say this is scarcely a fair way to bring down an audit of the accounts to show that the predecessors of the hon. gentleman had been extravagant in their expenditure. or that the expenditure of the late government was far in excess of their revenue. Amongst the conclusions arrived at by these auditors we find this statement:
At the beginning of the fiscal year 1895-6, as a result of the deficits of previous years, there

Wera outstanding liabilities ot the department, in the shape of unpaid accounts, to the amount of $616,712.99.
We all agree upon that. We are not going to quarrel atl present at any rate with the figures. I want to know out of what estimate that sum was paid ? The Auditor General must have had some authority for paying it. It certainly could hot have been paid unless there was money voted for that purpose. The information I have is that it was paid out of the estimate that was made for the post office service for 1895-'96. I believe the Auditor General considered that a legitimate payment and I am sure he does at the present time. At any rate he regarded that as a fair method of making a payment. Whatever was unpaid on account of the post office service at the beginning of 1895 could be paid and was actually paid out of the appropriation for the years 1895-96 ? We are satisfied of that I believe that my hon. friend the Postmaster General will agree that this $616,712.99 was paid out of the estimate for ithe year 1895-96. If they paid it out of that sum it would certainly increase the expenditure as shown in the accounts of the department by $616,712.99. The expenditure would be increased by that amount over and above the actual expenditure for the year. Now then the audit comes on. The books are placed before the auditors. What do they do ? They simply as far as I can learn-and I see no evidence given here to the contrary-take the expenditure according to the books of the Post Office Department for 1895-96 and they proceed to show the results. Well, the hon. gentlemen can readily understand that when the actual payments for the service of 1895-96 were increased by the overlapping from the previous years to the extent of $616,712.99, the expenditure of 1896. would be larger than it would have been if the $616,712.99 had not been charged up to that year's expenditure. ] Now. we come to the end of the year and \ the Postmaster General changes the method. Instead of allowing the overlappings of some twenty years, to be carried forward, he places a sum in the estimates, not only suficient to cover this sum that overlapped from 1895 and which belonged properly to 1895, but which was paid in 1896 and increased to that extent the expenditure of 1896. but included also the short estimate of $68,734 of the year 1895. I fail to see how I can make the matter any plainer. It is quite easily understood, at any rate it is quite apparent to my mind, that this is the basis on which these auditors proceeded and if they took the expenditure as they found it in the accounts of the Post Office Department, increased by the overlappings of some twenty years, they would certainly find a deficit of $700,000. It would not be surprising because nearly that sum -would have been added to the expenditure for the year 1895-96 the year previous to the hon. gentleman coming in. I do not propose to follow this further. I have made it as plain as I possibly can, and unless the hon. Postmaster General can show that I have not started on the right basis I think he must admit that his predecessors were not so wasteful after all. and that the boasted deficit that we have heard so much about during the last- eight years practically disappears. It has been nothing but a book-keeping deficit and it should properly disappear I think in order to remove this matter beyond any doubt some further investigation should be made, because, if the position which I have stated is a correct one, I think the people have been misled in connection with these accounts. I do not propose to pursue the discussion further. I have said-all I can say. I have made my position as plain as I possibly can and I think perhaps the hon. Postmaster General will see that there is some force in it.


William Mulock: I am not able to agree with the hon. gentleman that he is in the slightest degree correct. On the contrary he is in error from beginning to end and I can hardly assume that a gentleman! of his experience and familiarity7 with the unravelling of public accounts is not able to see the transaction in its true light. He says in regard to the findings of the auditors that they merely estimated the expenditure for the month of June. 1896, and multiplied it by twelve.


David Henderson: I did not say estimated, I said actual.


William Mulock: Well, he states that they took the actual expenditure for June. 1895, and estimated that the expenditure for the whole of the preceding year was at that rate. On what does the hon. gentleman base that view7 ?


David Henderson: On your own report.


William Mulock: The hon. gentleman is quite mistaken. I will leave it to the member for Pictou (Mr. Bell) ; I will try to address myself to his intelligence. There were two things referred to the auditors ; one : to ascertain the actual expenditure for the fiscal year ending 30th of June 1896, and the other, to ascertain for my own information the expenditure of the Post Office Department at the end of that y7ear, so that I might base an estimate on which to ask parliament for an appropriation for the succeeding year. I did not wish to fall into the error of my predecessors by asking for an insufficient appropriation, I wished to know exactly what was required. The auditors took nobody's word for anything ; they came into the department and spent months there : they took possession of the department as any auditors would take possession of a company whose affairs they were

bound to audit honestly ; they took all the vouchers and contracts and liabilities for the year, and they ascertained the expenditure for that year ; not the estimated expenditure but the actual expenditure for the year. In the Post Office Department one month's expenditure is always greater than tlie month preceding because there are new services to be provided for and new obligations assumed for the future. I wanted to know the height to which the expenditure had attained at the close of the last fiscal year, and so the month of June was taken in order that I might form an intelligent estimate as to how much I should ask of parliament. That is the meaning of the last paragraph. Let me read it to the hon. gentleman and I know he is fair enough to appreciate it, when it' is explained.
Iu order to determine the scale of expenditure of the entire department reached in the year 1895-96, the outlay for the month of June was ascertained.
They ascertained the exact amount it cost to run the service for the month of June, and assuming that it would not cost less for any month of the coining year, it was considered that twelve times that amount would be the appropriation required. That was done merely to aid me in forming my estimates for the coming year. The previous part of the report merely stated the exact cost for running the department for the past year.


David Henderson: The Postmaster General is not answering the argument I advanced. I drew attention to the fact that the sum of $685,447 was arrived at by taking the actual expenditure for the month of June, 1896, and multiplying it by twelve.


William Mulock: That is entirely
wrong.


David Henderson: That is what is said
here.
Expenditure for June, 1896, $419,304.


William Mulock: Read the first part of the sentence.


David Henderson: I am leaving out nothing.
The yearly expenditure attained on basis of month of June, 1896, $5,031,648.


William Mulock: That is not the whole sentence. The sentence begins with the words :
In order to determine the scale of expenditure.	.


David Henderson: I think I am quite fair. It gives a summary detail of the cost of maintenance of the post office for the month of June, 1896, and on that basis it would be $5,031,648 for twelve months, and the Postmaster General takes that as the expenditure for the year 1895-96.


William Mulock: 


William Mulock: I do not.


David Henderson: The account goes on to give the figures for civil government ; departmental expenditure ; and so on, which amounts to $4,051,080, to which, if is added the deduction from the revenue, viz., $9S0,-570, makes exactly $5,031,650.


William Mulock: That is the estimate for the future year. It is entirely a different thing.


David Henderson: If the Postmaster
General is right I will apologize.


William Mulock: Then you had better apologize.


David Henderson: The apology will come from the other side of the House.


William Mulock: If the hon. gentleman nominates a competent person to interpret this I will accept him as an arbiter between us. I will leave it to the Auditor General.


David Henderson: I take no exception to the Auditor General. He was in parliament long before I came here and I never had any reason to find fault with him. The report goes on and gives several details, and it strikes a balance that the total arrears would be $685,447.03, just exactly the amount the Postmaster General placed in the estimates in 1897 and had voted by parliament and charged up to the consolidated revenue of this country. That is the way the Postmaster General arrived at the amount of shortages for the twenty years. He did it' by the mode of calculation which I have pointed out, as any hon. gentleman will agree with me when he reads the report of these auditors. The Postmaster General endeavoured to make it appear that this was done for a different ini-pose from what I say, and that is the reason why I interrupted him.


William Mulock: The hon. gentleman (Mr. Henderson) is hopeless. lie is possibly the only gentleman in this whole committee who will pledge his reputation to such an argument. I assure him that he is entirely in error. If he has the slightest desire to be informed on the subject, I would recommend him to go to the Auditor General and see if the Auditor General will support him in that contention. I again say for his information-and know what i aiii talking about-that the auditors came here and examined the vouchers for the year 1895-6. They did not estimate ; they ascertained the facts. They ascertained that the expenditure was so much and that the revenue was so much, and they found that the expenditure exceeded the Tevenue by $781.000 for the fiscal year 1895-6. The estimate my hon. friend mentioned was simply an estimate made for my future guidance, as I explained before.


David Henderson: Was it just a peculiar coincidence that that estimate was exactly to one cent the amount which the hon. gentleman asked this House to vote to cover the overlapping for twenty years previous ? If it was it was a most remarkable coincidence.


William Mulock: I do not know what the hon. gentleman is talking about, and I do not think anybody else understands his figures. The expenditure for the year 1895-6 was $8,665,011.30. In addition to that there were arrears amounting to S685.437.03. These figures together make $4,350,448.33. Deducting from that total sum the net revenue for that year. $2,964,-
014.23,	leaves a balance of $1,386,434.10 to be accounted for. I am not pretending to say that this whole shortage was to be charged' against that fiscal year ; but a portion of it. according to the finding of the auditors $780,000. was to be charged against the year just closed and the balance against previous years. That is the transaction in a nutshell. Parliament voted in one form or another $1,386,434 in excess of the revenue of the fiscal year 1895-6. It would he very unfair if I should attempt in my accounts to charge the whole of that shortage against the fiscal year 1895-6. We did not do that : but the auditors found that a portion of that amount represented accumulations of arrears of previous years ; and those accumulations were made a special vote, leaving $780,000 as, a clean deficit against the operation of the fiscal year ending the 30th June, 1896.


Mr. J. J. HUGHES.: The contention of our hon. friends opposite is that the deficit found in the accounts of the Post Office Department for the year ending the 30th June, 1896, was an accumulation of deficits for some eighteen or twenty years previous.


David Henderson: That is not the contention at all.


James Joseph Hughes: What is the contention then ?
Mr. HEiNDERiSON. I understood the hon. gentleman to say that we -were contending that the $780,000, the deficit shown by the Postmaster General's report, was an accumulation of deficits. No hon. gentleman on this side of the House said so. The hon. gentleman is confusing the overlappings for twenty years, or deficits in the amount estimated to carry on the work of the department for that period, with the difference between revenue and expenditure, which is an entirely different thing.


James Joseph Hughes: I do not quite understand my hon. friend. However, I have gone into this matter a little, and I think that even with that little I shall be able possibly to throw some light on the question. I have gone back as far as the year 1887. The report of the Postmaster General for the year 188S says :
The postal revenue of the year as shown by the statement was $2,966,397, but owing to the change in the system of accounting for the revenue, which commenced on 1st July, 1888, said revenue cannot be compared with the preceding year, without taking into consideration the fact that certain amounts belonging to the year, but not deposited in the bank until after the 30th June, 1888, were, contrary to the system which formerly prevailed, brought to account in this year. This analysis would give a revenue of $2,751,139 as against $2,603,255 for the preceding year ; and a deficit of $782,258, as against $854,845 for the preceding year.
This is signed by the then Postmaster General, John Haggart. Now, If the contention raised by our hon. friends opposite were correct, that the deficit of one year was carried into the next,. you would find that the deficit for the year 1888 was $72.587 less than that of the previous year, or in other words, that there would be actually a surplus of that amount in the operations of the year 1888. 1 understand, however, that there has never been a surplus in the Post Office Department since confederation until a year or two ago. This fact itself will show that the deficits were not carried forward from year to year, but that each year was accounted for by itself.


James Clancy: The hon. gentleman knows that when the estimates are voted for the Post Office Department, the question of what the revenue may be is never taken into consideration. The deficit, if there is any, must arise, not between the receipts and expenditures, but between the sum voted and the actual expenditure.


James Joseph Hughes: This report for the year 1888 gives the actual figures. The revenue, the expenditure and the deficits for several years were as follows :-
Y ear.	Revenue.	Expenditure	Deficits.$	$	$1888	2,751,139	3,533,397	782,2581889	2,220,503	2,982,321	761,8181890	2.357,388	3,074,409	717,0811891	2,515,823	3,1G1,675	645,8521892	2,652,745	3,316,120	063,3751893	2,773,507	3,421,203	747,6961894	2,809,341	3,517,261	707,9201895	2,792,789	3,593,647	800.8581890	2,964,014	3,665,011	700,9771897...	3,202,638	3,789,478	586,540
In 1897 reduction had been made in the rate of postage and there were no changes in the department. But there were some reductions, I believe, in the cost of carrying the mails, yet notwithstanding these reductions the deficit in that year amounted to $586.54. Now according to the contention of

our hon. friends opposite, the deficit was about $40,000 a year, extending over a period of some eighteen or twenty years, but how can they reconcile that statement with the fact that in 1897 it amounted to $586,540 ? In that year the Postmaster General started with a clean slate and in the name of common sense, how could the deficit amount in one year to $586,540, after some reductions had been made in the cost of carrying the mails, if the average deficit had been only $40,000 a year ?


John William Bell: According to your figures there was a decrease every year.


James Joseph Hughes: No, there were increases and decreases.


William Mulock: From 1895 there was a decrease.


James Joseph Hughes: Yes, but only a small decrease. 1896 was only $100,000 less in round figures than 1895. I have taken these figures from the reports of the Post Office Department, which are authentic and which consequently nobody will dispute. I have taken the figures from 1887 and have shown the deficit every year. It went up some years and down others, which proves that the contention of our hon. friends opposite cannot be correct.


Richard Blain: How was that money paid ?


Mr.   J.@: 1. HUGHES. I am not explaining that, but am simply giving the actual figures of the departmental reports. In the year 1888, when Mr. Haggart was Postmaster General, he said positively that the deficit for 1887 was $854,845 and that the deficit for 1888 was $782,258. If the deficit of 1887 had been carried forward and charged in the expenditure of 1888, there would have been an actual surplus of $72,587 in the latter year, which no hon. gentleman will contend for a moment could have been the ease. These figures prove conclusively that the deficit in the Post Office Department for the year ending the 30th of June, 1896, was not the accumulated deficit of the preceding years, but the actual deficit on that year's operations.


David Henderson: I am very grateful to the hon. gentleman because he has unwittingly furnished a very powerful argument to sustain the position I have taken. The hon. gentleman went back to 1887 and pointed out the difference between revenue and expenditure. Then he took the following year, and showed that the deficit was somewhat greater and followed it up from year to year.


James Joseph Hughes: On the contrary, 1 have shown that the deficit for 1888 was somewhat less than it was in 1887, which shows that the deficit of 1888 was not the accumulated deficits of the preceding years.
Mr-. J. J. 1'UGHES.


David Henderson: Taking the figures on the whole, there was an increase from year to year.


James Joseph Hughes: I beg my hon. friend's pardon. The deficit in 1887 was the greatest we have any record of. It amounted to $854,845, so that it is impossible that that deficit was carried forward into the accounts of the succeeding year.


David Henderson: I certainly did not understand the hon. gentleman to say that, but, however, that may be. I understood from him that for a period of some six or eight years, the difference between revenue and expenditure was gradually increasing until we came to the year 1895-6. The hon. gentleman has got the figures somewhat fixed. What we have been discussing is the matter of actual expenditure as compared with the amount estimated and not so much the difference between revenue and expenditure. The Minister of Trade and Commerce (Sir Richard Cartwright), in 1897, stated, when this item of $685,447 was voted and charged up to the consolidated revenue of the country, that this sum was made up of the accumulated deficits for about twenty years.


William Mulock: And what about the $780,000 ?


David Henderson: That is an entirely different sum.


William Mulock: Hear, hear.


David Henderson: I am glad to see that the hon. gentleman is coming to my view. And that sum was? larger in 1896 than it was in 1895.


William Mulock: A different sum though.


David Henderson: 
William Mulock: No, there was no part of this in 1895-96.


David Henderson: Because it was the shortage of the estimates, when there was a shortage as there was not every year-


William Mulock: There was.


David Henderson: I have the figures here to show that there was not a shortage every year. Perhaps the hon. gentleman has not looked it up.


William Mulock: I know the statement of the auditors.


David Henderson: 
James Joseph Hughes: If my hon. friend (Mr. Henderson) will pardon me-I did not take estimates 'into account at all ; I considered actual expenditure and actual revenue.


David Henderson: Then, all I can say is that the hon. gentleman (Mr. ,T. J. Hughes) has been discussing a different subject altogether from that which came up this afternoon.


James Clancy: I listened with some interest to what the hon. gentleman (Mr. J. J. Hughes) had to say this afternoon because he came to the rescue of the Postmaster General. But the question discussed this afternoon was not howl the post office account stood as between revenue and expenditure, but how it stood between the sums .voted by parliament each year and the expenditure. For, as every hon. gentleman knows, no question has arisen in this House in any case as to the revenue from the Post Office and the expenditure on the service- the revenue is not even an incident in it. When the Postmaster General makes up his estimates for the year1 he does not consider what the revenue is going to be ; he simply asks to carry on the service. If there has been an overlapping, as my hon. friend from Halton (Mr. Henderson) has stated, that must arise as between the sum voted by parliament and the sum necessary to expend (luting the year. Let me take the year in which this overlapping of $68,000 is said to have arisen. I would not like to attempt to pass judgment upon able men like Mr. Cross and Mr. Munro, but there is something very wonderful about their statement :
Conclusions.-(a.) At the beginning of the fiscal year 1895-6, as a result of the deficits....
Mark the word, for this is' a direct contradiction of the hon. gentleman from King's (Mr. J. J. Hughes).
-deficits of previous years, there were outstanding liabilities of the department, in the shape of unpaid accounts, to the amount of $616,712.99.
Now, before I go further let me consider what that meant. That meant that there were accounts outstanding and unpaid ; that parliament would require, in order to clean the slate, to vote a sum equal to $616,712.99, and that sum aggregating this total would have to be paid to some person to square accounts outstanding and unpaid-I am using the words of the auditors. It did not mean that this was a book-keeping matter as between departments ; it did not mean that one department had borrowed from another ; or that we had borrowed from the banks to cover that amount : but that this total sum was owing to the individuals or corporations in the form of accounts outstanding and unpaid, and that, if the money was voted, the amount of the accounts would be seen afterwards and to whom the moneys were paid. I am sure that my hon. friend (Mr. J. J. Hughes) will agree that this is the case. If he were asked to point out the accounts he would be puzzled because there were no accounts in existence. Let me follow up the statements :
(b.) At the close of the fiscal year 1895-96, the liabilities of the department, in excess of all parliamentary appropriations applicable thereto amounted to the sum of $685,447.03.
(c.) Thus the liabilities had increased during the year 1895-6 to the extent of $68,734.04.
Now, look at the parliamentary appropriation. The appropriation for the year 1895-96 was $3,664,831, and the expenditure for the year was $3,593,647, or an expenditure of $71,184 less than the appropriations. How does the hon. gentleman account for that ? The trouble is that these gentlemen, able as they are, confused the statement by dragging in the revenue of the post office, which has absolutely no more to do with it than if it belonged to another service. Even if we did not get a dollar of revenue we should have to carry on the service. I would like some gentleman opposite, perhaps the member for King's (Mr. Hughes), to explain how it is that we find for that year a difference between the expenditure and the sum voted for the service of $71,000 which was unexpended during that year.
At the beginning of the fiscal year 1895-6, as the results of the deficits of previous years, there were outstanding liabilities of the department in the shape of unpaid accounts
These unpaid accounts must have been held by some one. and either this report must be discredited or the persons or corporations who held these unpaid accounts must be produced. There are no such accounts in existence and this is a mere fiction.


William Mulock: The hon. gentleman continues to quote from this report to discredit these two auditors.


James Clancy: I have not said so.


William Mulock: He refuses to accept their figures. Let me give the figures of the auditors. These figures have been before the country for seven years without being challenged.


David Henderson: Oh, no.


William Mulock: They were never challenged before.


David Henderson: I have challenged them lots of times in the country.


William Mulock: Never in this House. I do not know what he may have done in the country but he never challenged them in this House, and they cannot be successfully challenged on the floor of this House. The auditors in question found what ? The actual cost of maintenance of the department in all its branches for the year 1895-6 was $4,985,327.53. That is the actual gross-cost of maintaining the department in all its branches inside and out for the year without any reference-to ai'rears, from previous years. The actual cost of running the department for this one year was that amount. They also found that
The revenue of the Post Office Department for the fiscal year ending June 30, 1896, amounted to the sum of $3,957,798.51 ; which, deducted from the above-named gross cost of maintenance, namely, $4,953,275.30, leaves a deficit of $1,027,529.02.
The auditors go on to say
Heretofore it has not been the practice to treat the amount expended under the head of civil government as a charge against the department, and were such practice adhered to the deficit would he reduced ... by $246,376.83, leaving the outside service shortage $781,152.19.
So they report that the cost of running the department for one fiscal year ending June 30th, 1896. without faking into account arrears accumulated prior to the commencement of that year, exceeded the revenue by $781,000 so that the taxpayers of Canada were obliged to pay $781,000 that year to made ends meet in addition to having to pay the $685,000 by special vote to cover up a lot of arrears. The hon. member for King's (Mr. Hughes) has given us the deficits of previous years. What do they mean ? He began in 1887, and without taking his figures in detail, we will assume they represented an average annual shortage of $750,000. That means that in 1887 the taxpayers of Canada voted $750,000 to supplement the revenues of the department in order to pay its working expenses for that year, and I suppose that the following year' they voted another $750,000 to pay the shortage of running it that year and so on year by year, the taxpayer voted $750,000 each year to pay the shortage over and above the Mr. CLANCY.
revenue. Even these payments did not meet the running expenses, they did not clean the slate, and they still allowed overdue debts to accumulate until they amounted in all to $685,000. That also had to be paid by the taxpayers, so that the year we came into office, the year 1896 the taxpayers of Canada paid $680,000 arrears of accounts.


James Clancy: To -whom ?


William Mulock: To the persons who carried on the services of the post office, railways, carriers,, clerks, and all and sundry who carried on the work of the post office for that year notwithstanding there was $685,000 to be paid, and that had to be borrowed by the people of Canada, added to the consolidated fund and there it is added to the debt of Canada. That is the meaning of a deficit in the Post Office Department as we are discussing it, how much it costs the taxpayer over and above the revenue of the office. That is what the taxpayer wishes to know. Instead of the taxpayers having put their hands in their pockets and, pay out $780,000 a year over and above the revenues of the department last year we handed over to the treasurer of the country, the Minister of Finance, $292,000 and in addition to that we have not reduced the usefulness of the service in any way, but we have reduced the taxation on domestic letters from 3 to 2 cents. We have also reduced the charge on letters from Canada to the United States from 3 to 2 cents, and also the rate on letters from Canada to every part of the British empire, from 5 to 2 cents. (So much less was paid by those who use the post office, that to-day, as was said by one of the hon. gentleman's colleagues some years ago, no less a person than the late Finance Minister, the Hon. Geo. Foster, who was endorsed by the late leader of the Conservative party (Sir Charles Tup-per) the government in reducing the rate left $1,000,000 more in the pockets of the people who use the post office. Hon. gentlemen-opposite must agree to the statement unless they repudiate Mr. Foster and Sir Charles Tapper. The people have had $1,000,000 left in their pockets because of the reduced rates and also $780,000 left in their pockets because they are not called upon to pay a deficit. In addition to these advantages we have put practically $292,000 into the treasury as the net profits for the operation of the year.


David Henderson: The Postmaster General has presumed to make bis stump speech intended to be followed by his followers in the country and I do not think it fair to allow this to go without being answered. He has boasted of his reduction of postage. He has a short memory. Can he recall the time under Conservative rule when the postage on domestic letters was 5 cents and the Conservative party reduced it to 3 cents, a greater reduction than he ever made ? Can he not recall the fact that the Conser-

vative party still further reduced the postage to people in this country when they issued post cards and gave a one cent rate all over the country ?
Can he not recall the fact that about 1892 or 1893 the Postmaster General of Canada, a Conservative, practically cut the postage in two when .he gave the people the same rate for a whole ounce as formerly had been given for a half ounce ? Can he not recall the fact that he has not reduced the postage of this country by $1,000,000 because he has only given a reduction in so far as postage is concerned on the three cent rate ? He has done nothing at all for the man who puts a drop letter in the post office and we know that a large number of letters sent through the mails are drop letters. If he had been fair to the people he would have reduced the drop letter rate by one half and the reason that he did not do it was because tariff for revenue was his policy. What about the people in the cities who are paying a two cent rate on drop letters just the same as they had been paying previously ? How can the hon. gentleman come here and say that he has reduced the postage by one third? What about the; newspaper postage ? Formerly newspapers were passing free all over the country ; now the hon. gentleman has to tax knowledge in order to get revenue to reduce the deficit accruing from the fact that he has reduced the postage from three cents to two. What about the fact to-day that in hundreds and thousands of instances you will find men paying ten to twelve cents on a packet that formerly went for from two to four cents ? The farmers of this country are paying that. If the hon. gentleman were a lawyer in the country and if he had a client coming in to get him to draw a deed and if the client said that he wanted him to send that deed to Toronto for registration what would be the result ? He would have to inclose it in a closed packet and pay twelve to fourteen cents postage when it formerly went for two cents.' That is the way the hon. gentleman makes up his deficit though he boasts that he has reduced the rate of postage. He reduced it in one direction but he took mighty good care to put it on in another. I will not say to an extent twice as mu cl), Tut he has made large additions indeed. That is the phase of the question that I understood would be the subject of the hon. gentleman's stump oration, a stump oration to be repeated by his ' followers all over the country. Now, the hon. Postmaster General has drawn attention to a speech of the hon. member for King's, P.E.I. (Mr. Hughes). He came to his support


James Joseph Hughes: No, no.
Mr. HENDERSON

and he pointed out
that in 1896 there was a deficit of $781,152.19, between the revenue and expenditure. I have been this afternoon hour after
hour endeavouring to get into the brain of the hon. Postmaster General how that was brought about and I confess that I am sorry to say that I have not been more successful. I think I have been somewhat more successful with some other hon. gentlemen but I hope that when the hon. gentleman sleeps over the whole matter he will see that there is a great deal in my contention. The hon. member for King's P.E.I., gave us a statement of what the deficit was in 1887. Although.it might have been larger in that year than in 1897. there is, I think, no question about this that on the whole, taking the average for the last twenty years, the deficit has been increasing. The hon. Postmaster General will not tell me that the difference between the revenue and expenditure was as large twenty years ago as in 1897. I believe there is only one year in the history of the Dominion when the rev

enue of the Post Office Department met the expenditure and that was under a Conservative regime, aside from what the hon. gentleman claims now -when he leaves out Atlin and the Yukon.


William Mulock: Even including these.


David Henderson: Very well, we will give the hon. gentleman credit for everything he can properly claim. We do not wish to detract one iota from anything that is due him, but I say that during the twenty years preceding 1897 there was gradual increase, in this apparent difference between; revenue and expenditure. The right hon. Minister of Trade and Commerce (Sir Richard Cartwright) explained that in 1897, when he, in the absence of the Postmaster General asked this House to put through an item of $685,447.03 to make up what he claimed was the amount of the shortage in the payments of the hon. Postmaster General's department. Now, in each of these years-I dislike, to repeat the matter so often, but I ' must repeat it again-there was a regular system as the right hon. Minister of Trade and Commerce said. He said that the Conservative party had been outrunning the constable all that time and that they had been gradually paying out more money year after year-I do not say every year-than parliament had appropriated for the purpose. The result was that when the end of the year came there was a sum of money due by the department to somebody, perhaps to railway mail clerks, perhaps to postmasters. or to mail carriers that there was no provision for. But. these men had to be paid and what did the government do ? They simply had them paid out of the appropriation for the following year and that practice the Auditor General considered to be perfectly legitimate and allowable. I am not discussing the practice, whether it was a good or a bad one. I am not finding any fault with it because it is a thing of the past now. Perhaps it would have been


William Mulock: My hon. friend (Mr. Henderson) takes exception to everything I do or have done, and one of his latest charges is that I have not reduced the rate on drop letters in cities from two cents to one cent or to half a cent. The hon. gentleman has suddenly become an advocate of the residents of the cities. Well, people in cities have their letters delivered at their houses, and I agree with the preceding government, that as the patrons of country and village post offices are obliged to go for their letters, the drop letter rate for them should be only one cent as against two cents in the cities where the residents have the greater convenience and advantage. But my hon. friend from Hal-ton would take the burden off the residents! of the cities and put it on the people in the country districts.


John Dowsley Reid: He did not say that.


William Mulock: Well, the burden has to be placed somewhere, and if you relieve the residents of cities, the tax* will fall upon the unfortunate inhabitants of the country districts, about whom my hon. friend (Mr. Henderson) is so deeply concerned at election times. I do not believe that any hon. gentleman in this House, will say with my hon. friend (Mr. Henderson), that this $685,000 is included in the deficit of $700,000. I do not think that even the hon. gentleman from Bothwell (Mr. Clancy) will say that.


John Dowsley Reid: I think he will.


William Mulock: I will not call him as a witness because I am doubtful about him. Will my hon. friend from Bothwell (Mr. Clancy) follow these figures. Parliament voted in 1896 for the service of 1896 : $3,664,831.49. Parliament also voted in that year $685,447.03 to pay the deficit. These two sums together amount 'to $4,350,278.52. That amount was paid out in payment of the expenditure for the year and in payment of the expenditure for previous years which remained unpaid, or which were taken out of the appropriation for the current year. The net revenue for 'that year was : $2,964,014.23 ; deduct that from the expenditure which parliament voted and you

have a balance of $1,385,264.29. Parliament voted, and there was expended tor these two purposes : maintenance for the current year and payments of the arrears of debt, a sum of money which reduced by the amount of the revenue for the year left, $1,380,264.29. That in one sense is a deficit ; that is the difference between the revenue and the expenditure. But, a portion of that $1,386,264.29 consists of $685,447-03, the accumulated arrears. It would not be fair to charge the whole of that accumul-lation against the fiscal year 1S95-6 and it is not so charged in the books of the department ; but only so much thereof as belongs to 1895-6. Deducting therefore if you choose, the $685,447.03, it leaves a balance of $700,987.07 as the portion of the deficit properly chargeable according to these figures, against the revenue of 1895-6. In addition to that $700,000, there is some $80,000 also to be added, but which does not appear to be carried into that account; probably not having been disbursed before the account was closed. The hon. gentleman will see that the $685,000 is not included in the $700,000, but is an addition to it, making together the grand deficit $1,386.434.10. I have tried to be fair in apportioning that deficit against the years to which it belongs.


James Joseph Hughes: I understJod tlu; hon. member for Bothwell to say that the surplus in the Post Office Department, or the deficit, as the case might be, did not depend on the revenue and expenditure.


James Clancy: I did not say that. I said that the deficit between the revenue and expenditure was a matter by itself, and the deficit between* the appropriations and the expenditure was another matter, and was the matter we were now discussing.
Mr. 1. J. HUGHES. The real deficit or surplus surely depends entirely and absolutely on the revenue and expenditure.


James Clancy: I will prove to the hon. gentleman that both he and the Postmaster General are utterly at variance with the auditors. If I understood the Postmaster General aright, he speaks of the deficit arising between the revenue and the expenditure. The hon. gentleman was accounting for a sum that was still unpaid and that bad to be provided for.	i
Sir WILLIAM MULOCIv. I was explaining the amount that the tax-payers had to pay over and above what the office earned.


James Clancy: 
William Mulock: I think I have made it quite clear to those who have given me their attention that the taxpayers were obliged to pay in 1896 $780,000 more than the office earned, and also $685,000 to pay some back accounts that had accumulated in the previous years. Technically, the amounts were paid out of the appropriations, which were obtained by the Minister of Finance, and went to be added to the public debt of Canada.


James Clancy: I ask the hon. gentleman to explain why he took one position, and the auditors took precisely the opposite ?


William Mulock: No, they did not. Bead the whole of their report.


James Clancy: The hon. gentleman lias refused to make that explanation. He must either repudiate the position taken by the auditors, namely, that the deficit arose between the parliamentary appropriations and the expenditures, or else his own statement.
Sir WILLIAM MULOCIv. If the hon. gentleman will have the frankness to read three sentences down, he will find that the auditors found a deficit of $780,000 on the operations of the year.


James Clancy: I will read the whole thing. I am not withholding anything. It is headed ' Conclusions ' :
(a.) At the beginning of the fiscal year 1895-6, as the result of the deficits of previous years, there were outstanding liabilities of the department in the shape of unpaid accounts to the amount of $616,712.99.
(b.) At the close of the fiscal year 1895-6, the liabilities of the department, in excess of all parliamentary appropriations available hitherto, amounted to the sum of $685,447.03. Thus the liabilities have increased during the year 1895-6 to the extent of $68,734.04.
Now, before reading further, I will ask the Postmaster General to reconcile his position in declaring that the deficits arose between the revenue of the post office and 1 he expenditure, as against the statement of the auditors that it arose between the parliamentary appropriations and the actual expenditures of the post office.
Sir WILLIAM MULOCIv. Bead the whole report, please.


James Clancy: 1 will read it further down:
(d.) The actual cost of the maintenance of the Post Office Department in all its branches for the year 1895-6 was $4,985,327.	.

That is the gross. The actual expenditure of that year was $4,705,282.
The revenue of the Post Office Department for the fiscal year ending 30th June, 1896, amounted to $3,957,798.51.
They give the net revenue and take that from the gross expenditure. Now, the net revenue of the tost Office Department for that year was $4,005,801. That statement is unworthy of two gentlemen of the reputation of the auditors.


William Mulock: Has the hon. gentleman any objection to reading the rest of the report ?
Mr. CLANCY-None whatever :
The revenue for the Post Office Department for the fiscal year ending 30th June, 1896, amounted to $3,957,798.51, which, deducted from the above-named gross cost of maintenance, namely, $4,985,327.53, leaves a deficit of $1,027,529.02.
That is not the'deficit the hon. gentleman discussed at all, because he said the deficit in that year was, not $1,027,529.02 but $68,734.


William Mulock: Will the hon. gentleman read what is under his eyes ?


James Clancy: I am reading that. I can surely make it clear


William Mulock: Do not be afraid to read the report.


James Clancy: I am not afraid.


William Mulock: Why then do you not read it ?


James Clancy: The hon. gentleman wants to slide over that thin ice and I am not disposed to allow him. His auditors declared that there was a deficit between the parliamentary appropriations and the expenditure of $68,000 in 1895-6. The same auditors declared that there was a deficit between the gross expenditure and net revenue of $1," 027,529. Which does the hon. gentleman take? Which position does he take in discussing this matter? Is he discussing it on the difference between the revenue and expenditure or between the parliamentary appropriations and the expenditure ? I venture to say he dares not make a choice.


William Mulock: My comparisons are between the actual expenditure and the actual revenue, and that is what the auditors took. The hon. gentleman will not read the rest of the report.


James Clancy: The hon. gentleman is not so fair as he would like to appear. It is perfectly clear that the auditors declared that between the parliamentary appropriations and the expenditure for 1895-6, there was a difference of S6S.734.04. Their report also declares that between the gross ex-Mr. CLANCY.
penditure adn the net revenue there was a deficit of $1,027,529.


William Mulock: Why is the hon. gentleman afraid to read the whole of the report ?
Mr. CLANCY-I shall conclude reading it. I had read down to ' f.'
Heretofore it has not been the practice to treat the amount expended under the head of ' Civil Government ' as a charge against the department, and were such practice adhered to, the deficit of $1,027,529.02 would be reduced to $246,376.83, leaving for the outside service a shortage of $781,152.19.


William Mulock: That is right.


James Clancy: What comfort does the hon. gentleman get from that ?


William Mulock: Might I put the same question to my hon. friend ?


James Clancy: It has nothing to do with what we are discussing at all. It is not the sum which the hon. gentleman claims should be voted by parliament as the deficit hi the past.


William Mulock: It had been nearly all voted.


James Clancy: Because he claims that the deficit in the past was not that sum but $685,447. Therefore it does not mean that. I will conclude :
During the fiscal year 1895-6 there were increases of a permanent character to the cost of the service. Such increases were not in existence throughout the whole of . the fiscal year 1895-6, but they will occasion an increase in the expenditure of the year 1896-7 over 1895-6.
1 presume that part of the statement is what the hon. gentleman referred to as telling him what he would require for the next year. But it is not dealing with the former years at all. I think we have made it perfectly clear 'that the hon. gentleman has come down with a report by the auditors specially appointed for tbe purpose, and that the auditors declare one thing, whether it be true or not, and the bon. gentleman declares tbe very opposite. He declares he is discussing the question wholly upon the revenue and expenditure of his department, and the auditors have discussed it on the ground of finding whether there was any overlapping on any sum to be voted to cover the expenditure of the past year. They discussed it entirely upon the ground of the parlia mentary appropriations.


William Mulock: They discussed one item on that ground. Others they did not.


James Clancy: The hon. gentleman asked $685,000. That is the sum the hon. gentleman said was not paid.


William Mulock: There was no appropriation for it.


James Clancy: We will see how we arrive at that.	[DOT]


Mr. SCOTT.: What is the date of that report.


James Clancy: This is dealing with the accounts of 1895-6, the last year when the Conservative government was in, power.


Thomas Walter Scott: Has the hon. gentleman anything dealing with matters some fifty years older ? Or has he any information relating to matters say a dozen years earlier ?


James Clancy: I am taking the conclusions of the auditors referred to by the Postmaster General, and I am doing so in order to find out the true standing of the matter. This is what they say and how they arrive at the conclusion that $685,447 must he voted by parliament. .


Thomas Walter Scott: Is the matter which we have spent some hours in discussing now of the slightest interest to anybody in the country? How is anybody to be affected by it ?


James Clancy: If the hon. gentleman had paid any attention to the discussion, he would know it is of some importance to the country to find that the Postmaster General makes a statement to the House which is at variance with the auditors' report.


William Mulock: I have not done anything of the kind.


James Clancy: Is it of no importance that the hon. gentleman should make a statement at variance with the authorities he produces ?


William Mulock: Let the hon. gentleman specify any statement which he says I made, which is at variance with the auditors' report.


James Clancy: He said that the sum to be voted to cover the deficit in the service arose out of a difference between the revenue and the expenditure of the Post Office Department.


William Mulock: I never made any such statement.


James Clancy: What statement did the hon. gentleman make ? How did it arise ?


William Mulock: How did what arise ?


James Clancy: How did the deficit arise, which he says he asked parliament to vote a sum to cover ?


William Mulock: There are two transactions referred to in this report.


James Clancy: The hon. gentleman is smiling because he is in a hole.


William Mulock: 1 am smiling both at the simplicity of my hon. friend and his ingenuity in giving a distorted appearance to a very plain statement. The audit '	179
ors had two things referred to them. One was how much it cost the taxpayers to carry on the Post Office Department for the fiscal year 1895-6. That reference was wholly irrespective of any parliamentary vote. The most of that money had been voted the previous year

1894-5-and there was very little of the expenditure for 1895-6 actually unpaid, except that it had, in the bookkeeping sense been represented unpaid because the appropriation for that fiscal year had been drawn upon to pay the arrears of $616,000 odd. But all the auditors had to do for our information was to ascertain how near the department was to being self-sustaining. That did not depend upon the vote of parliament.	[DOT]


James Clancy: Mark the word '^elf-sustaining.'


William Mulock: I say they had to find the difference between the revenue and the expenditure, the difference between the cost of maintenance and the amount of earnings. They found, for the fiscal year ending 30th June, 1896 the revenue fell short $7S0,00O.


James Clancy: That is the opposite of what they found.


William Mulock: That is what they found. They found $780,000 more expended out of the general taxes than was collected


James Clancy: Just the opposite.


William Mulock: The hon. gentleman (Mr. Clancy) will please let me furnish my statement. I do not wish to bandy words about it,-the thing is too plain. As to the arrears of account they found that there were $685,000, this being in respect of the arrears of the years previous to 1st of July, 1895, except as to this amount of $08,000. Of this amount of $685,000, they found that $016,000 was represented by arrears of previous years, and it had been added to by $68,000 during the current year, For this there was no appropriation, and parliament paid, and the officers of the government disbursed in the payment of these two items-the arrears before 1896 and the cost of carrying on the service for 1895-96- $4,350,000. And there was paid into the revenue $2,964,000. So that the disbursements by the country in excess of the revenue were $1,386,264.29.


Charles Bernhard Heyd: That is plain enough.


William Mulock: The whole excess is not properly chargeable to the operation of the department for the fiscal year of 1895-96, but we charge against previous years $016,000, which was owing at the beginning of the fiscal year 1895-96, and the balance of $1,386,264.29 is chargeable as the shortage for the year 1895-96-the amount by which the revenue earned that year failed to pay the cost of earning that revenue for the


5640

year-and that shortage is the amount of some $780,000 odd that we hare spoken of.


Thomas Walter Scott: Were the accounts all paid ?


William Mulock: They have all been paid by a vote of parliament.


Thomas Walter Scott: How many years ago ?


William Mulock: The accounts were closed up in 1897.


Thomas Walter Scott: Then why do not we bring the discussion down to present-day business ? What would be the sense of this committee discussing Roman history-discussing the doings of Julius Caesar ? Yet, it seems to me, there would be as much sense in that as in discussing matters settled six or eight years ago.


David Henderson: Of course, we have not as much sense as the hon. gentleman (Mr. Scott).


Thomas Walter Scott: I have endeavoured to exercise as great patience as possible this afternoon and evening. I have a number of matters relating to the post office which I would like to bring to the attention of the Postmaster General and this committee. I do not know whether they would come up properly under the head of the item now before the committee, but, if I am allowed to bring them up I think the interest of the people will be as well conserved by their discussion as by the discussion of accounts that were closed eight or ten years ago.


David Henderson: Let us finish this.


Thomas Walter Scott: There are matters in connection with the postal service in which the people to-day are interested. I know that the people of the Northwest where I come from are vitally interested in matters of the postal service, and there are some things that I would like to bring to the attention of the committee and of the Postmaster General.


Mr. LANCASTER.: Is everything satisfactory ?


Thomas Walter Scott: It will not be worth while to take up time discussing matters that are satisfactory.


James Clancy: I am sure that the House and the country will profit by the lofty lecture we have just heard. There is only one conclusion to be drawn, and that is that when the hon. gentleman (Mr. Scott) has something to say everybody else must be silent. Of course, there is nobody quite so important as the hon. gentleman, and no business quite so important as that which he wishes to discuss. He says he wants opportunity for discussion. He has had opportunities in this House, and he has used them in a manner not very greatly to his credit. The hon. gentleman discussed matters that were not exactly of the year in which his discussion was carried on, and I Sir WILLIAM MULOCK.
am ready to leave him in undisputed possession of any glory he has had from that discussion. I am going to ask the Postmaster General, not to explain what he has endeavoured but failed to explain, but I am going to ask him to turn to the account- Mr. Chairman. The hon. Postmaster General (Sir William Mulock) seems to be occupied, and I would be glad if you would ask him to give me his attention when he gets through. I do not want all his time, but I would like to harm a moment or two. I am going to read the whole statement:
Liabilities outstanding on June 30, 1895, in excess of appropriations for year ending .June 30, 1895.
-	$ cts.	$ cts.Salary warrants	
Land service	208,990 06	102,541 00Water service	17,217 07	Railway service	
..	257,694 90	Transit through U.S.A. ..	15,663 00	Mileage to mail clerks, ...	10,204 86	509,769 89Accrued but not due on	4,402 10 616,712 99Total 1894-95 arrears..	
I am going to ask the hon. gentleman, since these are the sums which make up this $685,447.03, to whom that was paid, and where we shall find it in the public accounts. The hon. gentleman cannot turn to the accounts because he has stated-with perfect accuracy-that this sum does not appear in his expenditure for the following year. I would like to be told on what page of the public accounts it can be, showing the entries of payments made. Will he be good enough to enlighten us ?


William Mulock: This amount is owing simply because the appropriations for the fiscal year beginning 1st of July, 1895, have been drawn upon to pay these arrears. If these arrears had not been paid, then this amount would have been paid out to parties to whom accounts were owing. But these arrears were paid out of the appropriation, and that left this amount to be made up. Parliament recouped that appropriation in 1896-7 by that $685,000 and these items were paid during the fiscal year 1896-7, and all appeared under the proper accounts in the Auditor General's Report.


James Clancy: The bon. gentleman stated that they did not appear there at all.


William Mulock: I never referred to them at all. I never referred to the transaction before this minute.


James Clancy: This side of the House are labouring under a strange delusion then.
f

Every hon. gentleman heard the Postmaster General make that statement.


William Mulock: It is not of the slightest importance ; they were paid.


James Clancy: Then if they were paid, there was no sum to pay. That puts an end to that; there was absolutely no sum to pay. If there was the overlapping that the bon. member for Halton says, carried forward from year to year

Sir WILLIAM MULOCIv. Robbing Peter to pay Paul.


James Clancy: And an appropriation had to be taken to cover the services of the year. That was paid out of the year following, for which there was not a suffidien't, appropriation. I can understand that, and the Postmaster General has made the case presented by the hon. member for Halton (Mr. Henderson) quite clear by his statement.
I congratulate the Postmaster General on having, after a good deal of exertion, finally made the statement which bears out the contention of the hon. member for Halton (Mr. Henderson).


David Henderson: I am also glad the Postmaster General has made the admission which he has just made. I understood him earlier in the evening to say that the $616,614 voted to pay accounts outstanding at the beginning of the year 1895 formed no part of the $781,000 as shown in the Postmaster General's report. I am glad now that he is veering round and giving us, at any rate by inference, the conclusion that our contention is right.
Sir WILLIAM MULOCIv. You are absolutely wrong. There is not the slightest foundation for any such conclusion.


David Henderson: The Postmaster General says the $616,712 was outstanding in unpaid accounts at the beginning of the year 1895. I ask him to tell me, without equivocation, where the balance of that money came from ? Was it not paid ? There is not an hon. gentleman in this House but believes it was paid, every dollar of it, and no man can tell me the source from which it was paid, except the one source I have mentioned ; that it was paid out of the money voted for the year 1895-6. That is the only source from which it could have been paid, and I say it was paid. It was not outstanding when the hon. gentleman came into power, and there was no other money available for the payment of that sum but the money voted for the expenditure of the Post Office Department for the year 1895-6. That is a settled question. I find-and I am reading from the Year-book, because it is collated in better form-that the expenditure for 1895-6 in the Post Office Department was $4,705,282. Now, assuming that the $616,712 was paid out of that-and I need not assume it, because I have demonstrated that it could not have been paid 1791
from any other source and that it was a part of that sum of $4,705,000, and assuming for a moment that there had been no overlapping, no sum in arrears at the beginning of the year, the expenditure of the department for the year would have been $4,089,677 instead of $4,705,282. The gross revenue for the year was $4,005,891, or an excess of expenditure over revenue of $82,679 instead of $781,000. I think our position is made so clear that he who runs may read, and I cannot for the life of me see how the Postmaster General will hold out and contend that these sums overlapping from year to year did not form a part of the difference between the revenue and expenditure as shown from year to year, and I hope that henceforth we will hear no more about this enormous deficit in the Post Office Department previous to the time the hon. gentlemen came into power. We have made the matter so clear that it must be recognized by any unprejudiced mind. The Postmaster General has discussed this matter and asserted his side of it so often from year to year that he has come to believe it. There is a great danger in taking other people's figures, and I think if the Postmaster General had investigated the matter himself, instead of calling in those not so familiar with the department, he would have come to a different conclusion, and I believe a different statement would have been made to-day. My mind is as clear as the light o>f day that this overlapping from year to year, formed a part of the amount set down in the accounts of the Post Office Department, and the expenditure has always been overstated by reason of the amount thus carried from year to year for the past twenty years, and which is referred to by the Minister of Trade and Commerce in 1897. The only way to get a true statement of the difference between the revenue and the expenditure is to deduct the amount that is carried forward in that overlapping way from year to year from what is shown by the accounts of the Post Office Department, which will give the actual difference between the revenue and expenditure for each year.


John William Bell: I shall accept these figures as accurate. They show a deficit of $461,000 in 1900, but a surplus of some $292,000 for the past year. Is the hon. Postmaster General in a position to tell the House what portion of his increased revenue is due to the increased number of letters at the reduced rate, and what amount of his increased revenue is due to the increased rates upon parcels, documents, circulars, newspapers and other classes of postal matter upon which the rates have been increased ?


William Mulock: I am told that about ninety per cent of the revenue is derived from the letter rate. It would be impossible to have statistics showing how


much is on postage and how much on parcels.


John William Bell: I see at page XIII of the report the number of letters is given, the number of parcels and the number of post cards and I thought possibly the hon. Postmaster General might be able to give us that information. Could he tell how much of his revenue is made up by the increase he has made in certain classes of mail matter ?


William Mulock: I could not say. I think the increases are on circulars and printed matter and perhaps one or two other items. The rate on merchandise is the same as it always was. The rate is one cent per ounce.


John William Bell: Is there not a minimum rate of two cents ?


William Mulock: No.


Mr.  J. D.@: REID'. In the year 1896, there was 'a deficit of $700,000 and at the present time there is a surplus. The hon. Postmaster General believes that that is due to his own management. I would like to know by what means he figures out the increase in the revenue resulting in a surplus instead of a deficit ?


William Mulock: I am afraid that I should open up a very controversial question if I were to proceed to answer my hon. friend. My hon. friend will see that the increase in the business of the department increases the revenue as well as the expenditure. It is an expanding service. In a young country like Canada the business must continue to increase every year and unless the revenue increases faster then the expenditure we will he getting more and more in arrears. But if the revenue increases more rapidly than the expenditure, we have the difference between profit and loss on the transactions of the year. We have the machinery to maintain whether the volume of business is large or small. The machinery is not worked up to its full capacity to-day. The department could do a great deal more work and the more we can do with the same plant and the same number of hands the greater will be the profit of the enterprise.


John Dowsley Reid: Is not the real fact of the increase in the revenue due to the increased population that is coming into the country ?


William Mulock: I had that in my mind but I did not wish to open up a controversial question. I think the increased prosperity of the country has something to do with it; in fact it has everything to do with it and I might go on and claim that the administration of the government has something to do with the in-Sir WILLIAM MULOCK.
creased prosperity of the country, but I do not wish to introduce any controversial subject at such a time as this. I might argue that the reduction in the rate of postage has encouraged people to use the post office more. That may or may not be the case. But my hon. (friend will see that the increased growth of the country, the increased volume of trade and the increased population, all have a material bearing upon the revenues of the Post Office Department.


John Dowsley Reid: The hon. Postmaster General has been trying to give us the impression that under his management the revenue of the department has been brought to such a state that it produces a surplus over the expenditure.


William Mulock: I never made any such claim as that. I will leave it to anybody to judge for himself as to fvhat has caused these results.


John Dowsley Reid: Within the last seven or eight years there is no question about it that there has been an increase in the population of the country, and if in 1896 the revenue amounted to $4,000,000 and if we have now a million people more is it not reasonable to expect that we will have an additional million of revenue ?


William Mulock: Yes, a substantial increase.


John Dowsley Reid: Therefore, what I was trying to find out was if the increase were not really due to the fact that the population of the country has been increasing ? We have not heard anything to-day to show that there has been any material change in the management of the department which has reduced the expenditure and yet I feel that the fact of us having probably a mil-1 lion more people in the country than we had in 1896 is the. reason why we have this increased revenue, and the reason why we are able to show a surplus between revenue and expenditure.


Thomas Inkerman Thomson: If my hon. friend (Mr. Reid) had been listening to the discussion that has taken place this afternoon and this evening he would have learned that this much talked of surplus was largely a matter of book-keeping. The Liberal government of Ontario for twenty years maintained that they had a surplus of over $6,000,000 and it was contended by the Conservative party that there was no surplus. After fighting the matter out on the platform and in parliament they appoint a commission and that commission found that they had no surplus. The hon. Postmaster General occupies much the same position. After seven years he finds there is a surplus but I dare" say that in fifteen or twenty years when a commission is appointed to investigate this matter we will find that it is

something like the surplus of the Liberal party in Ontario-a myth.
The postal service is not satisfactory to the country ; it is not a modern service. I hear more complaints in my constituency about the postal service than about all other departments of the government. Here at Ottawa, thinking that I might get away from these complaints, I went -sixty miles up the Gatineau, to Gracefield, thence to Fish Lake, over nine miles of heavy road, and there I found that the settlers in that district bad to travel that nine miles to get their mail in the village of Gracefield. There is the same complaint about the postal service in Quebec as there is in Ontario. While in the United States they are establishing a daily rural mail delivery to the farmers, yet there are important agricultural districts in North Grey that only have a mail once a week.' Here is the district of Wolseley. six miles off the route of the mail service from Owen Sound to North Iveppel, and it has only a weekly service. Imagine that In a civilized country. The Postmaster General may say that the revenue from this Post Office does not justifiy any better service, but the fact is that these people instead of posting their letters at Wolseley travel six miles to Kemble where there is a daily service. From Lindinwood to Presqu'isle, which is six miles distant, there is only one mail a week.


William Mulock: Did it ever have more ?


Thomas Inkerman Thomson: I think so.


William Mulock: When ?


Thomas Inkerman Thomson: I think it formerly had a daily ma'il service, because the mail going to North Iveppel passed through Pres-qu'isle, but now they have only one mail a week.


William Mulock: When had it one mail a day ?	,


Thomas Inkerman Thomson: I see from the Postmaster General's report that there is one service a week from Linwood-
S'ir WILLIAM MULOCK. The hon. gentleman stated that Presqu'isle at one time had a daily service. It never had such a service since this government has been in office. Will the hon. gentleman contradict that 1


Thomas Inkerman Thomson: I am not contradicting 'it. I always understood that it had a daily service. Let me give another example. In the town of Owen Sound, Bay Wards is a large ward extending down to the eastern side of the sound, nearly three-quarters of a mile from the post office. The re-sidents forwarded a petition to the town council, which the council by resolution forwarded to the Postmaster General, asking that a letter-box be placed in the lower part of the ward. A year ago I forwarded that
petition to the Post Office Department, and after waiting a year I wrote to know what was the result of their deliberation, and I was informed that they had forwarded it to the inspector but had received no reply. That is two months ago, and I have not received any additional information. This letter-box -would be a great convenience to the . people of that ward, and after a year's waiting the department is unable to say whether they will install a letter-box for the convenience of the people or not. I am afraid that the Post Office Department is falling into the same political rut as the Militia Department, and that a good deal depends on the politics of the member who represents the constituency. Here is another case which will show how unbusinesslike is the management of the Post Office Department. I drew the attention of the House to this before, but the Postmaster General was not present and I will repeat it now. Owing to a snow blockade, we had 10 trains over the Canadian Pacific Railway from Orangeville, between the 29th day of February and the 14th of the following month, and Owen Sound was without a mail of any kind for not less than six days. At the end of six days they put on a stage at Orangeville to come through to Owen Sound, but owing to the bad state of the roads it was impossible to get that mail through in less than two days. Let me show you the business tact of the people in the Post Office Department. The Grand Trunk runs to Meaford which is 18 miles east of Owen Sound. The Grand Trunk was running its trains almost every day, and in fact the newspaper publishers sent their papers to Meaford and across by stage, so that we had our newspapers almost every day, but the people of Owen Sound with all their business interests could not get theii letters, simply bec&use the department had not sufficient business ability to send the letters by the same route as the publishers sent the newspapers.


William Mulock: These complaints may as well be dealt with one by one. Of course I cannot carry all these details in my head, but I have just asked the controller of the railway mail service why Owen Sound was not served via Mea-tord during the snow blockade, and he informs me that the mails that went on the Toronto. Grey and Bruce were snow bound, but after the second day, Owen Sound was served via Meaford. Is that correct ?


Thomas Inkerman Thomson: That is not correct. The mails were brought to Owen Sound by stage from Orangeville.


William Mulock: The hon. gentleman stated that a while ago a considerable length of time the department had not adopted the Meaford route to serve Owen I Sound, but the controller of the railway

mail service states that the service began from Meaford to Owen Sound after the second day (which, I suppose, would be the third day of the blockade), and that the accounts prove it.


Thomas Inkerman Thomson: I wish to inform the hon. Postmaster General that he is entirely mistaken. I am a resident of the town of Owen Sound and I know what I am talking about. For sis days we had no mail whatever. At the end of that time the mail was sent by stage from Orangeville and Shelburne. It was not sent around by Meaford.


William Mulock: The controller says the mail began on the third day, and was continued.


Thomas Inkerman Thomson: I will appeal to the post office authorities of Owen Sound, and will bring this matter up again. I understand that the Post Office Department makes the statement that the mail was sent around by Meaford on the 3rd of March.


William Mulock: He says that after the second day of the blockade the department began to serve Owen Sound by Meaford, and continued to serve it during the snow blockade. Of course, the mails between Toronto and Owen Sound got caught in the snow and may have been delayed.	*


Thomas Inkerman Thomson: I was in Owen Sound during all that period, and was looking for my letters as . a business man. I know that we waited for our mails until the stage came. Our Toronto mails we did not get by Meaford, but by the stage from Shelburne. However, I will go into the matter again. I may say that of all the departments administered by this government the Post Office Department is the most unsatisfactory. The people get as little as the department can give them. It may be that the object is to create a surplus. There are splendid agricultural districts in Ontario which get a mail only one day a week, where the people are obliged to walk six miles to get a dally mail. If that is the way the surplus is brought about, it is not satisfactory to the people of Canada.


Mr. BENNETT.: I find in these estimates provision for a chief clerk and assistant secretary at $1,900. Is that a new position ?


William Mulock: That is intended for Mr. Laschinger, my private secretary.


William Humphrey Bennett: When was he appointed to the service, and what is his age ?


William Mulock: He was appointed in 1896, when the present government came into office. I do not know his age. It appears in the civil service list.


William Humphrey Bennett: I have looked in the report, and it is very strange that his age is Sir WILLIAM MULOCK.
not there. However, I am informed that he is about 25 years of age. Is that correct ?


William Mulock: I should think he is over 30.


William Humphrey Bennett: However, be that as it may, it appears that this young gentleman, who was placed in the service in 1896, is suddenly jumped to a position at $1,900 a year, and a new office is created for him, that of assistant secretary. On looking at the report, I find that there are some eight or ten first-class clerks, some of whom were appointed as far back as 1864, who are to receive a less salary than this young gentleman who was appointed only seven or eight years ago. Can the minister explain why he has been pitchforked over all these first-class clerks ? I also find over fifty second-class clerks and over one hundred junior second-class clerks, all of whom appear to have been in the service longer than Mr. Laschinger. Can the minister give an explanation why he has been put over the heads of all these others ?


William Mulock: On his merits.


William Humphrey Bennett: Then I am to infer that all the other have demerits ?


William Mulock: No, but he has special merit.


William Humphrey Bennett: 
William Mulock: I do not think it would be convenient to canvass in public the merits and demerits of two hundred or three hundred members of the civil service in the Post Office Department. I take the responsibility of saying that Mr. Laschinger is a gentleman of very special merit, and the service is extremely fortunate in having a man of his ability and fidelity, and he is well deserving of the position which I am asking parliament to provide for him.


William Humphrey Bennett: I may say in fairness to Mr. Bennett that he never mentioned this matter to me, and I have not seen him to speak to for a couple of years. In fact, he is supposed, like most civil servants, to be too terrified to be seen speaking to a Conservative member. He is the only one of the gentlemen that I know personally, and I am sure there is no man in the postal service today who is his superior as regards fitness in connection with the railway mail service. He has been doing that work I know for thirteen years, during many of which he practically conducted the whole railway mail service of the -country .


Thomas Inkerman Thomson: Could the hon. minister give me an answer as regards the letter box in Bay Ward, Owen Sound ?


William Mulock: The matter comes to me for the first time to-night, but I will make a note of it and give the information on the supplementary estimates.


John Dowsley Reid: I would like to ask the hon. minister if he could not arrange with the Canadian Pacific Railway to make connections at Prescott with the down train V There is a train which leaves Prescott at 1.15 and arrives here at three o'clock-a passenger train. Formerly the Canadian Pacific Railway train used to back up at the Grand Trunk Railway station and wait the arrival of the train from the west.


William Mulock: It arrives about 2 o'clock.


John Dowsley Reid: At present it arrives at 3.30. That would bring the Ottawa train in about 5.30 and would convenience the public very much. Passengers from the
east and west on the Grand Trunk Railway would make connections coming to Ottawa.


William Mulock: I do not think there is any great desire on the part of some railways to make connections with others, nor is there at present any law to compel them. It would be fair to say that the railways deliberately plan to make connections, "but we can think our own thoughts. I do not think that the state of affairs will ever be satisfactory until there is some method i>ro'vided by law to compel close connections at points where it is reasonable there should be such connections.


John Dowsley Reid: I am not making any complaint but am simply throwing out the suggestion.


William Mulock: We will make an application.


William Humphrey Bennett: The hon. gentleman has told us that he is not to be held responsible for the details of his department, and I agree with him. That may be one reason why he did not feel called upon to canvass the qualification of all the clerks in the department, but it seems very hard on the many employees that the deputies and the other heads should allow without protest juniors to be promoted over the heads of their seniors. If it is going to be the rule that a man can be brought in from the outside and in a few years be placed over the heads of efficient clerks who have grown gray in the service, we ought to know it. What are the particular requirements that these older employees should have before they can secure promotion and would the minister tell the House what particular merits this Mr. Laschinger had to entitle him to promotion over the heads of the seniors ?


William Mulock: He is a stenographer and typewriter, and for the last eight years has been the connecting link between the secretary and the Postmaster General. He is practically the. assistant of the secretary at present. The secretary has to do with many parts of the whole service, and Mr. Laschinger has been in touch with him and me and is a most valuable public servant, faithful and industrious to a degree. There is no one who comes in contact with him who is not impressed with his zeal for the public interest. He is an exceptionally able, industrious and zealous officer, and the amount of money asked for him here is not at all beyond his merits.


William Humphrey Bennett: Are not all these other gentlemen equally able, zealous and industrious ? Surely it is not because he is a stenographer and typewriter that he is entitled to promotion over his seniors ? I am sure that shorthand writers can be procured at less salaries than $1,900. It cannot be said that these other gentlemen were not equally zealous in the public service and

have not equallly at heart the interests of the service. If it is the rule that length of service and merit are not to count, but that the minister may bring in an outsider and place him over the heads of all the others, it is well that all civil servants should know it.


John William Bell: In the Auditor General's Keport Mr. Laschinger is entered as having nine months salary at $1,500 and twelve months as private secretary at $600. That would make his remuneration $2,100 a year. He is down in the estimates as chief clerk and assistant secretary at $1,900 a year. That is a reduction of $200. He was a first-class clerk last year, but he is entered as having received at the rate of $1,500 a year for the last nine months.


William Mulock: The maximum for a first-class clerk is $1,800, and the minimum for a chief clerk is $1,900, but he can go up to -$2,400.


John William Bell: I understand that. But, according to the Auditor General's Report, Mr. Laschinger received at the rate of $2,100 a year and he is now entered in this year's estimates as receiving $1,900. That seems to be a- discrepancy, and I would like the hon, minister to explain.


William Mulock: He will have the privilege of going up to $2,400.


John William Bell: But, apparently he is cut down $200.


Mr.   .T. D. REID@: Does he receive $600 in addition ?


William Mulock: Yes-that is temporary.	.
Mr. .1. D. REID. Then he will receive $2,500 ?


William Mulock: He will receive $1,900 as chief clerk.


John Dowsley Reid: And $600 more ? Then, his salary will be $2,50Q.


William Mulock: While he is private secretary. But the private secretary is not a permanent position.


John Dowsley Reid: Then, this is uu increase of $400.


William Humphrey Bennett: 
William Mulock: As for Mr. Armstrong, I agree with all that has been said about him-he Is a man of great merit. When 1 came into office 'I found that his merit was recognized to the extent of $1,500 a year. I at once took steps to put him in a more important position, and got an Act of Parliament passed which at once increased his salary from $1,500 to $2,500 a year. I do not think, therefore, that it can be said ibat I have not treated him well. There is quite high authority for paying men according to their merit and I do not think that even! years are the only test of what a man's services are worth. In this case I can only add to what I have already said 1hat Mr. Laschinger is well deserving of what is proposed here. I know of no person in the public service who will give better value for wbat he will draw than Mr. Laschinger, if he is so fortunate as to enjoy the position which I desire to secure for him.


John Dowsley Reid: This is another case similar.to what I have objected to. I do not know' Mr. Laschinger, nor am I aware of the nature of the duties expected of him. But what I say is that if he is appointed a chief cleric, he will find in that position plenty of work to employ all his time. Whether he is worth $1,900 or $2,500. he will find that he can earn all he is worth by performing the duties of one position, and it is unfair to give him the dual office. There is enough to do in the duties of private secre-tar to keep one man busy


William Mulock: Does tlie hon. gentleman (Mr. Reid) think that a private secretary could be engaged for $600 ?


John Dowsley Reid: I do not say that that could be done. I do not believe that you can find a man capable of filling the position of private secretary who would be willing to work for $600 a year. But what I claim is that the duties of that position are enough for one man. To give the dual position! to one man has the effect of concealing from the public what is actually paid for the services rendered. I believe that the country ought to pay a private secretary what he is worth, but, as his time must be fully taken up with the duties of private secretary, he should be paid for that position.


William Mulock: That has never been the practice.


John Dowsley Reid: I do not know anything about that ; but he should be appointed to one position and should be paid one salary, and that salary should be adequate to the duties he performs.


William Humphrey Bennett: How many private secretaries are there in the hon. gentleman's department ?


William Mulock: One.


William Humphrey Bennett: Besides Mr. Laschinger.


William Mulock: There is no other.


William Humphrey Bennett: Mr. Laschinger of course, will take advantage of the $600 and will continue to act as private secretary ?


William Mulock: Yes.


John William Bell: What did Mr. Laschinger re ceive when he came into the service in 1896 ?


William Mulock: 


John William Bell: In what year was he increased ?


William Mulock: Year by year.


John William Bell: He must have received more than the ordinary increase.


William Mulock: I do not think he ever received more than the increase applicable to his class. He has been promoted.


John William Bell: Do I understand that he received $1,200 and also $600 as private secretary ?


William Mulock: No, he received $600 and also $600 as private secretary-a total of $1,200. His- duties are very onerous. He is a most hard-working man. There is no one in the service, I think, who will take any exception to this vote. Mr. Laschinger is persona grata to the whole department and in touch with every officer in it. He is familiar with the working of the department and would be an invaluable man to whoever may fill the position of
Postmaster General. It has never been the, practice to have a man fill the position of private secretary only. The private secretary has always had a permanent position besides. The position of private secretary is one personal to the minister, and if there is a change of minister or a change from one department to the other, the private secretary may lose his position as private secretary. The private secretary to the minister must discharge important departmental duties, and these must increase as his connection with the department continues, and he remains in the department even after his minister leaves the department, goes to another department or leaves the public service. When that takes place that officer ceases to be a private secretary and becomes one of the regular staff.
Post office, outside service, salaries, and allowances, $1,548,870.50.


Mr. WILSON.: I wish to call the attention of the Postmaster General to the dismissal of the postmaster in the village of Wilton, in my riding. I moved for' papers, March 17, and they were brought down April 29. I complained then that the return was not complete and the Postmaster General, after inquiry, reported that all the letters had been brought down That were not marked ' confidential ' but said that if he had authority to remove the word ' confidential ' from the letters which were so marked he would be perfectly willing to bring them down. On May 26 I dropped a note to the Postmaster General inclosing in it a letter from Mr. Thomas Prest, in which he .said he was willing to have the word ' confidential ' struck oil any correspondence he had sent. I asked the Postmaster General to be good enough to send me a copy of the correspondence or of the letter he had from Mr. Prest, and to this day I have received no answer to that note. The letter sent by Mr. Prest authorizes the removal of the word ' private ' from his previous letter. The letter is as follows :
May 15, 1904.
To the Hon. the Postmaster General,
Ottawa.
Dear sir,-I am willing and by this I consent to the word * private ' being removed from any correspondence I have had with you in reference to the Wilton post office.
Yours truly,


THOMAS PREST.
[Stage Direction]
I inclosed that original to the Postmaster General, but as I have told you he did not see fit, I do not know for what reason, even to answer it. I called his attention to it in the House one day and also to the fact that Mr. Walker, I think Mr. Hiram Walker, had written three letters that were not marked ' private,' and that Mr. 1' alter was perfectly satisfied they should be brought down. At least that is the information 1 have.
[Stage Direction]
Mr. Prest wrote another letter to Mr. Gallagher, which is as follows :	[DOT]
May 17. *
To Mr.  L. L.@: Gallagher.
Yours to hand. I am willing to have the word ' private ' taken out. I think there never was a meaner piece of business done by any set of men and I do not think it will do Keach any good, hut will hurt him, which I am sorry for, him being misled by Clide and others that ought to have known better. I hope Wilson will insist on the matter being brought down and sifted.	i
Yours always,



[Stage Direction]
Now, Mr. Chairman, I think It is pretty plain why, this letter has not been brought down. Mr. Thomas Prest is one of the most active Liberals in the township of Earnest-town in the riding of Lennox and Addington. He was it appears, a great friend of Mr. Gallagher, and a good politician. Mr. Gallagher being a popular postmaster, he knew that any interference with him as postmaster would injure very materially the chances of Mr. Keach, my opponent in Lennox and Addington. Therefore, he knew that it was a very foolish thing for them to interfere in this matter. But last year, during the session, I think early in June, the Postmaster General was good enough to let me see the papers ; I took only a very cursory look at them, but I came to the conclusion that there was not very much in them and I did not think that the P'ostmast-er General would find enough in them to dismiss the postmaster at Wilton. I find in the correspondence that is brought down a letter from Mr. Herrington. Those who were here the other night will remember that the Minister of Marine and Fisheries said that this was the gentleman that tried to hold him up on a small job of 14 buoys. I would not accuse him of anything of that kind. The letter is signed by the firm of Herrington, Warner & Graham. Mr. Herrington is the head of the firm, a very active politician. Mr. Warner has been away from the country a good many years, and Mr. Graham is a Conservative, so I take it that although this letter is signed with the name of the firm, it is really a letter from the head of the firm only. It is as follows :
Napanee, May 7, 1903.
Hon. Postmaster General,
Ottawa. '
Re Wilton post office.
Hon. Sir,-We have been requested by a large number of the parties of Wilton post office to forward you the inclosed declarations containing grave complaints in respect to the neglect of duty and disrespectful qonduct of the postmaster, Mr. Gallagher. We further understand that this is not the first time that complaints have been lodged against him. We are credibly informed that it is the popular belief that it is in the interest of the public that he should be dismissed and a more suit-Mr. WILSON.
able and acceptable postmaster appointed in his stead.
This is a letter from Messrs. Herrington, Warner and Grange. The trouble is that they do not specify what charges against Mr. Gallagher have been in the past. The question as to what a man's politics were has never cut any ice in my riding heretofore. This post office was established seventy-four or seventy-five years ago. The first postmaster was Sidney 'Warner who held the office for over fifty years. He had been reeve of the municipality, warden of the united counties of Frontenac, Lennox and Addington, he had been spoken of as the probable Reform candidate and I have no doubt he could have had the nomination had he been willing to take it. Nobody thought that because he was a Liberal, or because he was in municipal politics, or because he was sufficiently prominent to be talked of as a member of parliament he should be dismissed from his office. I think you will find that the particular crime that Mr. Gallagher has been guilty of is that he opposed Mr. Clyde for the reeveship of his own township. He did not succeed although he beat Mi1. Clyde in the part of the township in which they both resided. I think any hon. gentleman who has had experience in municipal politics will agree that party politics do not entirely govern in a case of this kind.
I have had a good deal of experi-. ence in municipal politics and I have had the support of strong Liberals, but at the same time I have not always had the support of some strong Conservatives. Mr. Gallagher's answer is this :
One of the Reform workers told me he read one of Herrington's letters and he said he had told fifty lies to get rid of the gang and he would not do any more for them unless he was paid $50, and afterwards the fellow said Herrington got him $50 for doing the deed.
I may say that when these papers came down and when these affidavits were presented I sent them up to Mr. Gallagher saying that I wanted him to answer the charges made against him. I did not believe they were true then and I do not now. I will now give you a specimen of the kind of affidavits presented. The first one which I will read is from Isaac McEwen :
Dominion of Canada.
County of Lennox and Addington.
To wit:
In the matter of Wilton post office.
I, Isaac McEwen, of the township of Ernest-town, in the county of Lennox and Addington, farmer, do solemnly declare : That
1.	I know Levi L. Gallagher, postmaster at Wilton.
2.	That during the last Dominion election in the county of Lennox the said Levi L. Gallagher took an active part on behalf of the Conservative candidate, Uriah Wilson, and held committee meetings in his house to advance the interests of the Conservative candidate.
5G57

And X make this solemn declaration conscientiously believing It to be true.
Gallagher informs me that McEwen has told him that he never made that declaration, that if he did make it he must have been drunk at the time because he had no recollection of ever having signed any such document as the one I have just read. I may say to the committee that I was in Napa nee on the 10th June. When I was talking with Mr. Henry Allen Baker, exwarden of the county, McEwen came up and said : Mr. Wilson, I understand it has been reported in Ottawa that I have signed a declaration asking for the dismissal of Mr. Gallagher and that I made a statement that he had held committee mettings in the interest of the Conservative party in his house. I know nothing about his having held committee meetings, I never made that declaration and I have nothing to say against Mr. Gallagher. I believe he has made a good postmaster. He also said that Mr. Timmerman had said the same thing. I wrote to the hon. Postmaster General on June 22, 1903, a letter in which I pointed out to him that several of the parties who made the complaints had no dealings with the post office at Wilton, that they got their letters elsewhere. I also pointed out to him that if a charge was made against Mr. Gallagher it was only fair that a copy of the charges should be sent to him and that he should have an opportunity of having an investigation. The answer I got from the Postmaster General was that he had received the letter and would give it fair consideration. I think that had the Postmaster general taken the proper course he would have seen that Mr. Gallagher was given an opportunity of answering the charges made against him, because it is a principle of justice in every British country that a man charged with a crime should not be condemned without a hearing. There were only two charges that in my judgment amounted to anything and when you come to sift them down I do not think they amount to very much. One was that a letter which had been sent on Saturday from Wilton in time to catch the mall for Camden East to Mr. Timmerman asking him to be on hand on Monday to vote for Mr. Clyde for reeve of the township was delayed with the result that it did not reach Timmerman in time. Gallagher said that he did not know whether he made out the bill or not. In any event one of the gentlemen who wanted Mr. Timmerman to come and vote went over and met him on Sunday with the result that he was on hand Monday morning and polled his vote for the candidate of his choice. Here is what Mr. Clyde says about the registered letter : I shall not bother reading his affidavit because what he says in his letter and what he says in his affidavit amount to about the same" thing. Then I shall read Mr. Gallagher's explanation. The hon. Postmaster General ought to deal fairly with Mr. Gallagher because he is a good business man, a popular man in his own section, and an active man. He certainly ought to think twice before dismissing him without a trial. Mr. Clyde says :
April 3rd, 1903.
This is to certify that a registered letter bearing the stamp of the Kingston post office, dated March 18th, was detained at Wilton or elsewhere from that date until the evening of the 27th March. My son asked for my mail five or six times between the dates mentioned and this letter was withheld.
This is not the only time that registered mail has been delayed which was addressed to me. I have already reported the above to post office inspector to be investigated.
(Sgd.) THOS. CLYDE.
Now, Mr. Gallagher's answer to that is this :
I may say that Mr. Clyde is .mistaken. His son was here the night the letter came and went away before it was registered on book or that we knew that it was for Clyde. It came in a sealed wrapper and there was one for me same night. I can prove positively that his son did not call for letter and that Bush was the first man to call for his mail. We keep the registered matter in a desk and the common mail we put in his box. When I sent the registered letter up it was to oblige him. He told the inspector I was a very obliging postmaster and probably they never would get as good, but he was urged to use his influence against me by his party.
I thiuk the toon. Postmaster General himself will see the reasonableness of Mr. Gallagher's explanation. He knows very well that when the mail comes into the office, the mail matter is first distributed around in the boxes, and, afterwards the registered letters, which they have to be so careful about are entered in their books. He further says :
The only thing Clyde has against me was that I opposed him for reeve and cost him about $75 to $100 to beat me thirty-two votes. My own ward that generally goes Reform, gave me nineteen majority and we are both in same ward. In short he has simply made himself a tool to accommodate about seven families and they nearly all related to each other. There was no object in me holding the letter. Tom Clyde told Miller it was a mistake to change the postmaster, but the party was bound to do it, and he had to act to please them for he wanted their votes next time.
I am sorry to say that this is not the only instance in which political pressure has been brought to bear in my riding. A few years ago a certain number of Liberals put their heads together and stated that if the caretaker of a public building were not removed before a general election took place they would not vote for the Liberal candidate. I fancy that if the Postmaster General had been quite sure that we would not have had a general election last winter, Mr. COMMONS
Gallagher would-not have been removed, because X am told that Mr. Gallagher was Informed he would have to give up the office at a certain time, but afterwards the Postmaster General sent a telegram to the inspector in Kingston who wired to Mr. Gallagher to hold the office for a certain time longer. I think the Postmaster General will not deny that. With reference to Mr. Toomey another gentleman who made an affidavit; I know Mr. Toomey very well, and once when I met him I said to him : Why did you interfere in the matter, and he said : I never did ; I didn't sign anything against Gallagher. These' are the kind of affidavits this gentleman has been dismissed on. If he had an opportunity to defend himself, as he should have had, I do not think they could establish anything against him. For eighteen years he was postmaster of Wilton, and there was never a complaint against him except one made by a school teacher who wanted his salary raised, and Mr. Gallagher being a member of the school board refused to do so. So far as I know this is the only complaint that has ever been made against Mr. Gallagher. If it were left in the hands of the people to-day I believe they would restore Mr. Gallagher to the postmastership. I would like to ask the Postmaster General about these private letters. I am informed that a copy of one of these letters was sent to a Liberal committee in the riding of Lennox and they investigated, and they had the gentleman before them who wrote the letter, and they had a row amongst themselves. If these letters are not too private to be given to party friends, I think they might be laid before this House. I recollect that the Postmaster General once published a lot of private correspondence in a blue-book, and I had the good fortune to have a letter amongst them, but when I write letters I do not care who sees them.
I wish to ask the Postmaster General, if he knows anything about the letter, reference to this matter having been sent to the friends-of the Liberal party in Lennox.
Sir WILLIAM MULOCIv. Do I know of a private letter of the department having been sent to any one ?
Uriah Wilson: Yes.
Sir WILLIAM MULOCIv. No, I do not think such a thing occurred.


Uriah Wilson: It is so reported.
Sir WILLIAM MULOCIv. You cannot believe all you hear reported.


Uriah Wilson: Nor half of what you see either.
Sir WILLIAM MULOCIv. There is not the slightest foundation for such a statement.


Uriah Wilson: I am glad to hear that things had not got to such a pitch that pri-Mr. WILSON.
vate letters could be sent to party friends and refused to the House of Commons.


William Mulock: Oh, no.


Uriah Wilson: I hold in my hand a petition-signed by 24 Liberals who get their mail matter at the village of Wilton ; men who are respectable, reliable and well-to-do, and who have much more to do with the post office than any other set of men in that locality. This is the petition :
Wilton, June 11th. Hon. Sir William Mulock,
Ottawa.
Dear sir,-We, the undersigned mail receivers of the Wilton post office locality, beg leave by this petition to say that we are satisfied with the present postmaster and also satisfied with the place where it is kept, the place being most convenient to the general public, and we sincerely hope there will be no action taken to please a few who are either jealous or maliciously inclined to injure him. The moving of the post office would, we are inclined to think, injure our political strength.
We pray that you may give it your careful consideration and undoubtedly our sincere request will be granted. We remain, supporters of the present government.
That is signed by twenty-four leading Liberals who reside in that locality and who have principle enough, or shall I say common sense enough, to rise above party feeling, and to say that they would not do an injustice to a good and efficient officer. I have a letter here from Mr. Gallagher which sets out the whole case in pretty strong and plain language, and I shall read it to the House. When the return was brought down I sent It to Mr. Gallagher for the purpose of getting an explanation of the charges made against him and on May 2, 1904, he wrote as follows :
Wilton, Ont., May 2nd, 1904. Uriah Wilson, Esq., M.P.
My dear sir,-Your letter to hand containing complaints about me as postmaster, and X will answer them in rotation, and attach slip to each one that you may more definitely understand It. All are true ; they are a hard gang -not one of the crowd attends church, and there is out of the eight, I may say, 1 never saw more than three of them inside a church, unless for some special occasion, and of the eight, seven drink whisky, seven use tobacco, one in the poor-house now, four combined not worth |200, altogether that is $50 each, one with suspended sentence of theft hanging over him. It is of no use to say more, they are simply a gang. The Postmaster General got letters from Rev. Dr. D. C. Day, Methodist minister here for four years now in June ; from Robert Miller, a man worth $40,000, a justice of the peace and commissioner, and issuer of marriage licenses, and ex-reeve of Ernestown by acclamation ; Wellington Babcock, a well-to-do farmer, and ex-reeve, and a member of the township council for, I think, six years ; James Lewis, J.P., and a resident for sixty years, and one of the real hard workers for the party ; Ross Peters, owner of

200 acres of land, and a resident of the place for thirty-seven years ; Thomas Prest, owner of 150 acres of land, and a man about 55 to 60 years of age, one of Ernestown's hardest workers for their party ; H. Walker, aged 62 years, always a Reformer and always lived here, and worth ahout $5,000 to $8,000. I will put their names below and their worth-that is the six men that wrote the Postmaster General. They marked their letters private, and I saw the answers, but this was done to keep peace with the gang, and I kept it from the crowd algo : Name.	Worth.


Rev.  D. C.@: Day	Unknown.
R. Miller	$40,000	or	more.
J. Lewis	 15,$00
Ross Peters	 8,000
Tom. Prest	 9,000
H. Walker	 8,000
Total	$80,000
The following is a list of the gentlemen who signed these declarations and their positions : Name.	Worth.
B. Toomey	Nothing.
J. Cams	 "
Tom. Clyde	$3,000
M. F. Parrott	/	1,000
/ John Carr	 2,000
H. Timmerman	 100
J. McEwen	Nothing.
G. Simmons	$1,000
J. Simmons	Poor-house now.
Not one of the gang are churchmen .unless Toomey may be ; he is a Roman Catholic.
The foregoing may be hard to understand, but I have put the thing as near as I can, and you can only show the gang up, and the government that took their petition into consideration, when thirty good honest people wrote and requested the post office to be not molested. I may say the post office was to be moved on the 21st December, and a telegram was sent to stay proceedings, and the Postmaster General telegraphed inspector, and he telephoned me to hold it ; this was sent to Postmaster General, I think, by the request of Keech. Dr. Leonar,d, Dr. Vrooman, Herrington, Eeech, Haycock, and Shibley, and Farrell-, the Reform organizer, * were all in it. But the thing was and is rotten. One hundred and fourteen families get mails here and only seven want a change. The Postmaster General got petition and letters from thirty of the Grits and there are only fifty-one altogether and about sixty-three Conservatives.
Now, Mr. Speaker, I think I have made out a pretty strong case against the action of the Postmaster General. If he had taken the pains to inquire into the character and the business capacity of the postmaster and the service he had done during the eighteen years that he held the office, he certainly would have made no change. I have aiiother letter from Mr. Gallagher, dated the 7th of May, 1904. in which he says :
I saw B. Toomey, McEwen and Timmerman and those three claim they never signed nor authorized any one to sign for them, and sav if they did they were drunk.
What about letters from Haycock, Shibley, Keech and Dr. Leonard, and probably from Sir Richard and their organizer Farrell ? Hiram Walker says he wants it thoroughly understood that the Postmaster General was asked by him in three letters to not molest the postmaser.
I would like to call the Postmaster General's attention to the fact that Joseph Haycock is a civil servant, and that Dr. Leonard is the postmaster in my town. I do not wish to make any complaint against either of these gentlemen ; but I wish to call the Postmaster General's attention to the fact that the First Minister said that if any civil servant interfered with politics, he would give him all his time to do so if he liked. I think it most unfair, after a man has run for parliament and been defeated, and has been given one of the best positions in the riding, that he should still be the consulting physician of the government in the riding, as Dr. Leonard I believe is. I believe that the Postmaster General has some letter from Dr. Leonard in reference to this matter. I know that the Minister of Marine and Fisheries had one which he produced the other day from Dr. Leonard in reference to setting the buoys in the Napanee river. I would like the hon. Postmaster General to call the attention of the Prime Minister to this matter and see if he cannot stop it.
I dk>
not know the gentleman who has been appointed postmaster,- but I believe the government made a serious mistake. He may be as respectable a man as the other; I have nothing to say against him; but I have a good deal to say against a man taking the stand that the Postmaster General does. I understand that he has been urged strongly to take it, but I think he should have backbone enough to stand up for a man who has done good service for eighteen years. I think Mr. Gallagher's word is as good as that of Mr. Clyde with reference to the registered letters ; besides, the circumstancs are all in favour of Mr. Gallagher in that matter. I think the Postmaster General is to blame for not having given an investigation to see who was right. If he were as strict with all postmasters as he has been with Mr. Gallagher, I have no doubt there would be a good many vacancies to-morrow morning. I will listen patiently to hear wlmt the Postmaster General has to say with regard to the dismissal which I have brought to his attention.


William Mulock: A letter dated the 7th of May, 1903, was received by the department on the 8th of May from Messrs. Herrington, Warner and Grange, transmitting to the department a number of affidavits and statutory declarations containing charges against the postmaster at Wilton. In the ordinary course, these complaints, ns set forth in these declarations, were

transmitted to the inspector for investigation. On the 15th of May the inspector made a report in these words :
Post Office Inspector's Office,
Kingston, 15th May, 1903.
Sir,-In returning herewith sundry affidavits and correspondence received by you from Messrs. Herrington, Warner and Grange, barristers, of Napanee, making grave complaints regarding the management of the Wilton post office in the county of Addington, I have the honour to report that I visited the locality on the 11th inst., and made full inquiry into the several charges made : 1st, taking part in a political contest ; 2nd, delay and improper delivery of a registered letter ; 3rd, delay in sending forward ordinary correspondence in order to persoanlly gain a municipal advantage.
I have no reason to doubt or question the correctness of the affidavits made by John Carr, John Cairns, Isaac McEwen, Thos. Clyde, Gay Simmons and others, some of whom were personally interviewed, that Mr. Gallagher did take part in the last political contest, perhaps not as openly as heretofore, but an active part when opportunity offered-to what extent I was unable to definitely leam, although Mr. Gallagher admitted the fact stated in Mr. McEwen's affidavit, that Mr. Uriah Wilson and others were at his house the evening after Mr. Wilson's political meeting held at Wilton at the time of the last Dominion election contest, but denies that the meeting was political. Of course an accurate report of the business transacted or matters discussed cannot now be obtained, but I think the conclusion come to by Mr. McEwen is not unreasonable, and that a political meeting was held and matters in connection therewith discussed.
The second point, delay in a delivery of a registered letter. This fact was clearly established by reference to the registered letter book and the admission of the clerk in charge of the office, showing that the letter, although frequently asked for was not delievered for eight days.
Third charge, delay in sending forward correspondence in order to gain a municipal advantage. In January last Col. Clyde was a candidate for the reeveship of Ernestown township in opposition to Mr. Gallagher and of course no effort was spared by the friends of the respective rival candidates to win. Mr. Simmons a strong supporter of Col. Clyde, wrote a letter on January 3rd, posting it before 2.30 p.m. on that day, to Mr. Harry Timmerman, then at Camden East, urging him to come to Wilton and vote for Col. Clyde on Monday. Mr. Timmerman, who was known as a supporter of Col. Clyde, did not intend returning, having paired with another voter ; this was well known at Wilton and it was common gossip in the village that Mr. Simmons' letter was purposely delayed so that Mr. Timmerman' would not cast his vote against Mr. Gallagher. I am unable to say that the public came to a correct conclusion, but the fact remains that the letter was posted at 2.30 p.m. on Saturday and that the mall for Camden East did not leave Wilton until 6 p.m., and that the letter for Mr. Timmerman did not go forward on that day, although posted in ample time, and did not reach Camden East until Sir WILLIAM MULOCK.
Monday p.m., too late to serve the purpose intended' and suggests to my mind at least, that there was more reason than simply oversight for the delay in sending this letter forward. In my opinion the charges made have been in the main substantiated .
I am, sir,
Your most obedient servant, (Signed) H. MERRICK,
P. O. Inspector.
My hon. friend alludes to private letters, and sent me a letter from Mr. Thomas Prest asking to have a private letter sent by him returned. When my hon. friend moved for their return, I said I would not bring down private letters except with the consent of the writers, and I think X acted unwisely, in offering to act on such consent. When people write private letters to any one engaged in public life we should not allow pressure to be brought upon them to make public what they intended to be private. However, on the receipt from the hon. gentleman of a letter from Mr. Prest, I instructed my secretary to write to those who had sent me private letters, asking whether they were willing to have them made public, and did not get any reply from one of them. I do not consider that I have any authority to make public any private communication.


An hon. MEMBER.: A new doctrine.


William Mulock: That 'is my opinion. Complaints of a serious character had been made against this man.


Uriah Wilson: How many complaints were made before the ones in question Y


William Mulock: I have no knowledge of the history of the office. A responsible firm of lawyers sent in a number of statutory declarations charging this postmaster with certain offences. They charged him with having been a political partisan in the last Dominion election, with having delayed delivering a registered letter, and with having withheld a letter concerning an election in which he was interested. Although to delay the delivery of a registered letter is a serious matter, I would not in this case have condemned the postmaster for that offence, as it might have been due to a mistake. But as regards the letter sent to Mr. Timmerman, here was a case in which the postmaster himself was interested. He was a candidate for the reeveship, and there was a man named Timmerman whom it was desired to get to Wilton.


Uriah Wilson: What evidence had the inspector that that letter had been called for and had not been delivered Y


William Mulock: I only take the finding of the inspector.


Mr. WTLSON.: But the hon. gentleman refused to bring down the inspector's report

iu the return on the ground that it was private. And now he is making it public.


William Mulock: I was not aware it had not been produced in the return.


Uriah Wilson: The hon. gentleman must remember that he crossed the floor and told me it was unusual to allow the reports of inspectors to come down, and I thereupon consented to strike that part of my motion calling for that particular report struck out. Now, however, he has made it public. Was Mr. Gallagher furnished with a copy of the charges made against him, and was he given a chance to defend himself ?


William Mulock: I remember the incident to which my hon. friend refers, but had forgotten about it and really thought that the inspector's report was in the return. I have not seen the return until this moment.


Uriah Wilson: Does the hon. gentleman remember a conversation he and I-had when we talked of the meeting held at Mr. Gallagher's house ? I told him then, as I tell him now, that there was no political meeting held at Mr. Gallagher's house on that occasion, nor was I ever at a political meeting in Mr. Gallagher's house, though he is a friend of mine. Mr. Pruyn who was a candidate for the local house, went with me to Wilton to speak on that occasion. There is no hotel at Wilton, and after the meeting, Mr. Gallagher asked me to put up my horse in his stable and to have supper with him. This invitation Mr. Pruyn and I accepted. But I positively deny that there was any political meeting that evening while I was at Mr. Gallagher's house, nor do I think there was one afterwards. And Mr. McEwen denies ever having made this affidavit. If the Postmaster General wi!! afford me an opportunity we will bring Mr. McEwen, Mr. Gallagher, Mr. Henry Allan Baker-who is ex-warden of the county of Ijennox and Addington-and myself, and then let him put us in the box and take our evidence. That is what should have been done before taking so serious a step as dismissing a good official. It would be better than dismissing this man upon so flimsy a pretext. The Postmaster General has got it down finer than I thought-that this man was dismissed because one letter which possibly might have related to a vote in a municipal election was delayed.


William Mulock: The hon. gentleman (Mr. Wilson) does not take the correct view of that transaction. I have not stated that that was the only transaction upon which an opinion against this official might be based. According to the report of the inspector he intentionally interfered with a letter passing through the mails. That is a criminal offence.


Uriah Wilson: Then I would ask the hon. gentleman to take proceedings on that ground.


William Mulock: The hon. gentleman (Mr. Wilson) will please allow me to finish. I say this was a grave offence. Jn this case the postmaster is mixed up with municipal politics. There is nothing necessarily to prevent a postmaster taking part in municipal politics. At the same time, when asked, as I frequently have been by postmasters who desire to run for municipal office, whether there is any objection, I have invariably told them that the department would not lay down any rule, but that they were to consider from their own standpoint whether or not they should identify themselves with matters that might have the effect of bringing them into antagonism with a considerable number of the patrons of the office. I need not elaborate that point. Here is a postmaster who becomes a candidate for a municipal office. It is to his interest that a certain letter should not go forward. And, though it was posted at 2.30 p.m., and the mail did not leave until 6 p.m., the letter did not go forward until it was too late for the person to whom it was addressed to respond by coming to the place.


Edward Arthur Lancaster: How was the postmaster supposed to know what was in the letter ?


William Mulock: He might not know what it contained, but it was addressed to an opponent of his. The inspector waited upon Mr. Gallagher, and I suppose got from him any explanation he could offer to any of these charges. There does not seem to be any explanation from the postmaster as to why that letter was detained. That in itself waSj an act of bad faith on 'the part of the postmaster that could not _ properly be overlooked. What right had he to detain a letter that might have brought to town a person to vote against himself '? Merely because he happened to be in the position, as postmaster, to control the sending of the letter, what right had he to make use of that position to interrupt the free passage of the mail ? Men have been removed from office for such transactions before, and will again. No man who puts himself in such a dual position may use his position as postmaster for his personal advantage.


Uriah Wilson: I do not think that anybody will say he had a right to stop a letter in its course through the mail. I would be the last man to jusltify that. But Mr. Gallagher says he had no knowledge of it. The Postmaster General will remember the letter I wrote him on June 2, 1903, in which I told him that it was only fair to Mr. Gallagher that he should have a copy of the

charges laid againsit him. Everybody will say that that is only fair.


William Mulock: The inspector waited upon him and got his statement.


Uriah Wilson: I do not care to say much about the inspector. I think he is a man fonder of office than of justice. I know him and there are men in the House who know him. There are men who are willing to go a good way to save their necks or satisfy the party in power. I do not say that this applies to one set of men more than to another. But I am fully convinced that if Mr. Gallagher had had (the charges sent to him, as he ought to have had, and had had an opportunity to have a full investigation, he would have been able to show that he was perfectly innocent of the charges against him.


William Mulock: The inspector waited upon him.


Uriah Wilson: The Postmaster General will remember that I told him about the meeting in Mr. Gallagher's house-that there had been no meeting-and I do not think the Postmaster General has found me equivocating in these things. I think my word is as good as that of a man who would make an affidavit-if he did make it, and he says he did nolt-and then withdraw it. But he told another man that if he did make the affidavit he must have been drunk when he made it, and he told me in the presence of another man that he had never made the * affidavit or signed anything against Mr. Gallagher.


Richard Blain: Perhaps the Postmaster General will explain what form the investigation took ?


William Mulock: The complaints and declarations were forwarded to the inspector and he made his investigation and submitted his report. As to the exact form of the investigation, I am not informed, but I judge, from my perusal of the report, that he communicated with Mr. Gallagher, waited upon him, heard his version of the story, drew his own conclusions and made his report. He found the charge substantiated that there was a detention of the letter with a motive.


Mr. LENNOX.: It seems to me that, without further explanation, we can have a pretty good idea of what form the investigation took. I think it quite evident from the report as read by the Postmaster General that the investigation was pretty much a matter of general rumour-that the inspector was pleased to act to a large extent, if not wholly upon the gossip that was going in the neighbourhood. I think it was a most fortunate thing under the circumstances that the Postmaster General has departed from his usual custom and read to Sir WILLIAM MULOCK.
the committee the report of his official. If this is a fair sample of the investigations that have taken place, we can well understand how it happens that many honest postmasters have been dismissed for insufficient cause. What does the inspector say in regard to that alleged meeting ? He says that it was rumoured in the neighbourhood, but he has not taken precautions to have evidence as to whether this meeting that was supposed to have taken place was a political meeting or not. Yet, he thinks he may conclude, as a matter of surmise, that it was a political meeting. I would like to ask the Postmaster General, as a matter of reasonable fair-play, what right there is fcr the inspector to make a report against a man occupying a responsible position for many years, basing his conclusions upon the fact that there is a rumour in the neigbourhood that there was a political meeting, because, forsooth, it happens that a respectable man engaged In politics stayed there a few hours after a political meeting had taken place somewhere in the neighbourhood ?
It was denied: by a gentleman to-night, denied by a gentleman of the House of Commons, and in the face of that this gentleman presumes to conclude that that was a political meeting. That is not all. He says there was a general rumour in the neighbourhood also in reference to this letter not being sent on, that it was common gossip in the neighbourhood that the letter had been delayed. Is that the kind of evidence upon which the Postmaster General of this country proposes to act and dismiss a man who has occupied a responsible position in the neighbourhood and a responsible position in reference to the Crown ? The Postmaster General says that the delay of the letter and the interference with the proper transmission of the mails is a criminal offence. Is that a reason for a less rigid examination or a greater reason for a thorough, efficient, searching and conclusive examination ? To my mind if there is any ground at all for a thorough and searching Investigation in a matter of this kind it is the fact that the charge involves a criminal offence. Surely a man shall not be tried in regard to that which is a criminal offence without being called upon to make good his defence if he has any defence to offer. Surely it is not a case where he should be convicted on rumour or on suspicion, and surely it is not a case where with any regard to British justice, he should be convicted without being heard in his own defence. That is what was done in this case.


William Mulock: He seems to have been beard in his defence.


Haughton Lennox: Has the inspector gone to the trouble of obtaining the evidence of any of the men who were there upon the occasion of the meeting in question, who could have given evidence ? There has been no invests-

gation. The party who made the report has not been brought to confront the person accused and it is a principle of common justice that when a person is accused he shall be confronted by his accusers, and shall be afforded an opportunity of making good his defence in the presence of those who have accused him. I want to say that if this is a fair sample of the way in which men have been dismissed and of the kind of evidence on which they have been dismissed, and of the kind of report on which the Postmaster General has acted in the past, it is a very severe commentary on the administration of the office of Postmaster General. We have not had an opportunity of examining the reports of these inspectors, and the hon. gentleman who is bringing this matter up says that he does not care to say anything in regard! to this particular inspector. I am not in that position and I can say that if this is the .kind of investigation generally which results in the dismissal of a postmaster, it does not reflect much credit on the administration of the Postmaster General, and if this is the kind of Inspector generally employed for the investigation of these difficulties, it reflects credit on neither the inspector nor the department.


William Mulock: I should be very sorry to allow any reflections on the inspector. I have a very slight acquaintance With him indeed. He is a man so far as I know, of eminent standing in the country. I have never heard his honesty impugned. He was in office when I took office, and I do not know how long he had been in office before that, but I think he is a very reliable man'and he understands his duties. He understands human nature, and when he is given a question such as this to investigate, he is as competent to investigate it as any one else. He would have no reason for not making an honest report, and when these matters were sent to him for investigation *he went down to the neighbourhood, as appeared from his report, he interviewed Mr. Gallagher who was the one man above all men who could give explanation if the circumstances admitted of any explanation of the detention of that letter. He had a motive in detaining that letter.


James Clancy: If he knew what was in it.


William Mulock: He knew it was addressed to a person who was not a friend of Ms, and it was detained so as to miss the mails. He knew it was addressed to a man who might come up to vote against him. People know a great deal about each other in the country and about who is going to vote at a municipal election even if he lives a good distance off. The postmaster had an opportunity to explain this charge, but so far as this report is concerned, he does not seem to even'have attempted an 180
explanation. The charge is made, he is interviewed by the inspector, and does not seem to have offered one word of explanation about the transaction.


Edward Arthur Lancaster: I am afraid that if this inspector is no more competent with the other part of his duties than with these investigations he is not a very competent officer.
I am afraid people will believe that there has been some understanding other than what appears here to-night as to what was to be done with Gallagher. I imagine that although he was not an active politician, because they do not pretend to dismiss him on that ground, still he was a man who refused to become an active politician on the other side of politics to that which he originally belonged. The question of whether there was an investigation at all or not, is a serious one and might affect all post offices in this country. I doubt if one-half the postmasters in Canada could stand the application of the same rule. I get complaints in St. Catharines from clients from various parts of the province, stating that I should have got letters the day before I received them, but I would not think of coming down here to ask the dismissal of a postmaster, under these circumstances. Delays of this kind occur every day in Ontario and perhaps in the other pro v i nces of the Dominion.
What is the case against this man according to the hon. minister's own statement ?-that a letter was posted in his post office addressed to a man whom he knew to be not a friend of his in regard to some municipal election. It is suggested that he held that letter but the hon. Postmaster General cannot furnish any statement from his inspector to show that there was any evidence that that letter was withheld. He does not pretend to say that Gallagher knew that the letter did not go forward. How would Gallagher know unless he was guilty and how would he be able to say at what hour the letter went forward ? If he did not admit that he had delayed it, how could the post office inspector be sure that he had delayed it ? The letter was not registered. There is not a suggestion of the evidence that caused the inspector to come to the conclusion that the letter was delayed except the unfair, uncharitable suspicion that because the letter was addressed to somebody who might be supposed to vote against Gallagher in the municipal elections, therefore he was villain and scoundrel enough to delay that letter for fear of that paltry vote being cast against him. The post office inspector does not seem to have found out at the other end of the line when the letter reached that post office.


William Mulock: There does not seem to be any question about the fact that the letter did not get there in time.


Edward Arthur Lancaster: Who has shown that ?


William Mulock: It is shown by the addressee, I think.


Edward Arthur Lancaster: The inspector came to that conclusion.


William Mulock: It is sworn to.


Edward Arthur Lancaster: The inspector does not say who proved that. The inspector should have brought the man who he pretends proves that face to face with Gallagher and if he had done so he might have found that Gallagher was entirely innocent. He seems to have been treated most unjustly. The person the letter was addressed to would not know when it arrived at his post office. There does not seem to have been any investigation into the matter at all. He was charged with having taken an interest in the political matters of my hon. friend from Lennox (Mr. Wilson) but they seem not to have been able to prove that and the hon. Postmaster General justifies his dismissal upon the delaying of this letter. I would like the hon. Postmaster General to tell the committee what he calls interference in election. I would like him to tell me whether the mere allowing use of his premises by a postmaster for a political committee, he not being present hi in self, would be held to be an interference in politics on the part of the postmaster and would justify liis dismissal.


William Mulock: I do not know that I am called upon to pass opinions upon mere theoretical cases.


Edward Arthur Lancaster: Suppose the postmaster acts as a scrutineer in a parliamentary election will the hon. Postmaster General tell the committee whether h'e thinks that is an undue interference or not ?


William Mulock: When any case of the kind comes up it will be dealt with.


Edward Arthur Lancaster: Is the hon. Postmaster General going to shield himself behind that vague statement ? Will the hon. gentleman say whether acting as a scrutineer would be considered as interference or not ?


William Mulock: That is not the case we have before us at the present moment.
Mr- LANCASTER. I am able to understand that quite well. I know this is not the case that we have before us but we are dealing with the question of taking an active part in politics such as would justify the interference of the Postmaster General. I thihk it is only fair to the postmasters who at' bne time in their lives have belonged to one' or both sides of politics that they should understand where they are in reference to these matters. On the general principle, applying it to both sides of politics, suppose that" a' postmaster acted as a scrutineer at a parliamentary election and did nothing else would that be considered as interference or not ? - The hon. Postmaster General need not be ammtbat I am goiiig at this session


Edward Arthur Lancaster: to make a charge against any postmaster of having acted as a scrutineer. I know that postmasters in the country act as scrutineers, and it may be that they fear that the axe of the Postmaster General will fall upon their necks. Would the hon. Postmaster General be inclined to treat that as an interference in politics which would justify the dismissal of a postmaster ? I think the Postmaster General ought to tell us whether a postmaster who acts as a scrutineer, doing nothing illegal or dishonest but who assists in securing a proper counting of the votes and in the prevention of personation, acting in the interest of the people as a scrutineer for one side of politics or the other, is guilty of an undue interference with politics which would justify his dismissal.


William Mulock: If an opinion upon that point were at all necessary in order to deal with the present question I would be bound to give that opinion but I do not think it has the slightest bearing upon the subject. Obiter dicta are very unwise utterances. It is never expedient for any one to indulge in them and I think I cannot do better than adhere to that determination.


Edward Arthur Lancaster: I would suggest another case, and that is where a postmaster attends a court of revision to settle voters' lists. The postmaster is often the best informed man as to the age of people, as to where people were born and as to the qualifications generally of people in his neighbourhood. Would the hon. Postmaster General say that if a postmaster attended a Court of Revision, acting on one side or the other, acting honestly and 'giving correct information to the court it would be an improper interference in politics ?


William Mulock: After my former answer it is hardly fair to ask that question.


Haughton Lennox: The Postmaster General says he is not very well acquainted with the inspector, but so far as he knows he is a respectable man. I am not at all acquainted with the inspector but I judge of his fitness for the office by what he has set down in writing, and by what the Postmaster General has inadvertently submitted for the consideration of this committee. On the rules of reasonable legal evidence with which the Postmaster General is so familiar, he will find it difficult to justify his action with regard to this postmaster. He will find it hard to sustain his decision, based upon idle rumour and upon mere tittle-tattle reported by his inspector, to dismiss an official who has been long in office. There was no ground for dismissing this postmaster, and whatever may have occurred in other cases it is abundantly clear that in this case the most flagrant injustice has been done. The inspector says :

I have no reason to doubt or question the correctness of the affidavits made by John Kerr, John Kearns, Isaac McEwan, Thos. Clyde, Gay Simmons and others, some of whom were personally interviewed.
The inspector was not asked to make a return that he bad no reason to doubt these statements, but he was asked to investigate by proper evidence whether the statements were substantiated or not. He continues :
That Mr. Gallagher did take part in the last political contest ; perhaps not so openly as heretofore, but an active part when opportunity occurred.
We do not know what active part he took heretofore, or what active part he took in the last contest. If he voted I assume the inspector would find he took an active part. The Postmaster General can takeTwhatever horn of the dilemma he likes ; either the inspector did not perform his duty or the Postmaster General acted upon the most shadowy suspicion which is not evidence at all. Does the Postmaster General claim that he was in any degree influenced by this report in dismissing Mr. Gallagher ? The inspector continues :
To what extent I was unable to definitely learn, although Mr. Gallagher admitted the facts stated in Mr. McEwan's affidavit, that Mr. Uriah Wilson and others were at his house the evening after Mr. Wilson's political meeting was held at Wilton, at the time of the last Dominion election contest, but denies that the meeting was political.
The admission of Mr. Gallagher was that Mr. Wilson and some others were in his House after the meeting was over, but he says there were no political matters discussed at all. Is that the reason the Postmaster General dismissed this man V That is not evidence ; it is not even enough on which to base a suspicion. The inspector adds :
Of course an accurate report of the business transacted or matters discussed cannot now be obtained.
What the inspector wants his chief to understand is that this was a star chamber meeting, and although there is not a scintilla of evidence to show that there was anything political in the meeting, he regrets to find that an accurate report of what took place cannot be obtained and then he says :
But I think the conclusion come to by Mr. McEwan is not unreasonable, and that a political meeting was held and matters in connection therewith discussed.
Could anything more disgraceful be conceived than that the Postmaster General received that report from his ofhcial without protest. In any court of justice the lowest in the land ; in any magistrate's court ; in any division court', would any judge for one moment take such evidence as that from a witness ; would he not tell ISO*
the inspector : you have no right to think ; your duty is to give facts to which you can depose. Is the duty less upon the Postmaster General ? I venture to say that the universal opinion of all thoughtful men, when this matter comes to be known, will be that a more contemptffide manner of administering the affairs or a great department could not possibly be conceived. The Postmaster General not only does not reprove his official, but actually brings his report before this committee and puts it forward as a basis on which to support the dismissal of this man who has been dismissed without any investigation or any opportunity to defend himself. Now, he comes to the second point :
Delay in delivery of a registered letter. This fact was clearly established.
This is the gentleman that the Postmaster General says he will not have criticised ; he will not have any aspersions cast upon him ; he will uphold him. Well, I wish him joy of him. He says the fact was clearly established-how ?
By reference to the registered letter book, and the admission of the clerk in charge of the office, showing that the letter, although frequently asked for, was not delivered for eight days.
The letter book will show when the letter was received and when it was delivered ; but it will be a peculiar kind of letter book if it will show that the letter was frequently asked for. I have not followed this matter with sufficient care to know what the evidence is on that point ; but I did not understand from the hon. member for Lennox that it is all admitted that the letter had been called for. I challenge the Postmaster General to show one tittle of evidence that it was ever called for. I notice that the Postmaster General said that he would not dismiss him on that ; but I propose to show the evidence in regard to that, and it is a gauge by which we can judge the evidence on other matters. The third charge is :
Delay in sending forward correspondence in order to gain a municipal advantage.
The animus of this independent inspector is pretty well shown in that very sentence. He is to investigate the matter, not to paint or colour it. He says further :
In January last, Col. Clyde was a candidate for the reeveship of Ernestown township in opposition to Mr. Gallagher, and of course no effort was spared by the friends of the respective rival candidates to win.
Again he enters into the political arena. What does he know about no effort being spared ? Has he any right to deal with that ? Is it not the most offensive political partisanship on the part of this inspector to put that into his report ? Was the Postmaster General ready to reprimand or dismiss him for that V This gentleman, on

no evidence at all; but on suspicion, is prepared to find' that no effort was spared.


William Mulock: I suppose he could get such information in the community.


Haughton Lennox: *Of course, if he had nothing to do but learn gossip and take it in, and then pen it down for the Postmaster General to gloat over. But if he was to ascertain the facts he would have endeavoured to find those who knew them, and kept clear of those who knew nothing about them.
Mr. Simmons, a strong supporter of Col. Clyde, wrote a letter on January 3rd, posting it before 2.30 p.m. on that day, to Mr. Harry Timmerman, then at Camden East, urging him to come to Wilton and vote for Col. Clyde on Monday. Mr. Timmerman, who was known as a supporter of Col. Clyde, did not intend returning, having paired with another voter ; this was well known at Wilton, and it was common gossip in the village that Mr. Simmons' letter was purposely delayed so that Mr. Timmerman would not cast his vote against Mr. Gallagher.
If this gentleman was paired, and if that was well known in Wilton, it would be in order to ask this zealous inspector how Mr. Gallagher was obtaining the political advantage with which he charges him by the delay of that letter. I suppose there is honour there as well as here, and if a man is paired, that is the end of it. With this knowledge in his mind, this official is so zealous that he actually charges him with a design to prevent the return of this man who if returned could serve no useful purpose and could do no harm to Mr. Gallagher if the other part of his statement was true.
I am unable to say that the public came to a correct conclusion

I do not suppose he was to investigate that.
-but the fact remains that the letter was posted at 2.30 p.m. on Saturday

He does not show where he got the evidence for that



and that the mail for Camden East did not leave Wilton until 6 p.m., and that the letter for Mr. Timmerman did not go forward on that day, although posted in ample time, and did not reach Camden East until Monday p.m., too late to serve the purpose intended.
Although I understood the hon. member for Lennox to say that the postmaster at Camden East did not say when the letter reached there, and this gentleman does not furnish any information that can tell us to the contrary. He goes on to say :
The letter did not reach the candidate until Monday afternoon, too late to serve the purpose intended.
But it could not, in any event have served any purpose because the man to whom it Mr. LENNOX.
was written was paired. But we have here the fact stated that the idle rumour of the streets, the common gossip of the village, as he expresses it, suggested to his mind that there was some reason more than simple oversight which caused the delay in sending the letter forward, and he concludes :
In my opinion the charges made have been in the main substantiated.
It is suggested to me that the inspector had no right to form opinions or to render finding. All he had to do was to report the facts to the Postmaster General, and it would be for that gentleman to come to a conclusion. If he came to a wrong conclusion, we cannot help it; and no doubt this Inspector was convinced that he would best meet the views of the Postmaster General and give evidence of the zeal that was expected of him if he based a finding on the flimsy suggestion which idle gossip brought to his mind. Under the circumstances, I submit that this is a case in which, as a matter of justice and principle, the Postmaster General should order an impartial investigation into all the circumstances ; and if such an investigation should be held and acted upon, it would no doubt result in this postmaster being reinstated in his position.


Mr. ALCORN.: This discussion has thrown a little light on a matter of general public interest, namely, as to what evidence should be required and what procedure should be taken to guide the government in coming to a conclusion with regard to the dismissal of any Conservative postmaster, a great many of whom have been dismissed by that hon. gentleman. This particular postmaster appears to have been signally honoured in the procedure adopted in his case. What is called an investigation appears to have taken place. An official of the government was sent to the neighbourhood, and he did gather some idle gossip from the streets of a country village which was excited over the dismissal of a postmaster and the issue of a local municipal election. This official does not even suggest that lie took any evidence by any proceeding with -which we are familiar, but simply that he gathered a certain impression from ordinary gossip, and on that impression he came to a conclusion which he thought would meet the views of the Postmaster General. _ I might here recall to the recollection of' the hon. minister the case of one David Simpson, in the county I have the honour to represent, who was summarily dismissed without even having been honoured by an investigation of any description whatever. The office was sought by a large number of supporters of this government who failed during a number of months to agree among themselves as to which one of them should receive it. That was in fact the only question that was dis-

cussed. A great many meetings were held in the village of Wellington, where this particular postmaster held office to decide who should take his place. There was no effort made to obtain charges against him. none were ever made, except two to which I shall refer in a moment and no investigation was ever granted. But an hon. member, who represents a constituency some two hundred miles away, and who happened to be in the neighbourhood wrote to the Postmaster General a letter which contained two allegations of fact. One was that this postmaster had allowed certain cartoons, then being circulated in the last Dominion election, to be posted up in his office. But according to the best evidence we can obtain, he never allowed any such documents to be posted up in his office at all. The other charge was that the building in which he held the office, which he had caused to be erected himself for the convenience of those receiving mails, was too small to accommodate the public. Another allegation was that this same office, which was too small to accommodate the people who were coming for their mails, and who, I suppose, were throng-inf the office some ten or twelve feet deep, was ordinarily used by the postmaster as a public meeting room for the Conservative party. If one statement be contrasted with the other, we cannot fail but be struck with the absurdity of the situation. Yet without investigation that postmaster was summarily dismissed.


Mr. PUTTEE.: Inasmuch as the Postmaster General has given notice of the introduction of two Bills to amend the Civil Service Act and the Post Office Act, will there be anything in these respecting the officers whose salaries are included in the items we are now discussing ?


William Mulock: I hardly think I could anticipate the contents of a Bill at this stage. It will be introduced in a few days, and it would be irregular to explain it before it is brought down.


John William Bell: Is it understood that, while this item passes, all these items will be open for consideration ?


William Mulock: Anything that pertains to the service may be discussed on the subsequent items.
Some resolutions reported.


FIRST READING.
[Stage Direction]
Bill (No. 146) respecting the Northern Bank.-Mr. Scott.

[Stage Direction]
Mr. FIELDING moved the adjournment of the House.
John William Bell: What will be the business for to-morrow ?


William Stevens Fielding: The Railway Bill in charge of the Minister of Justice will probably be taken first, and, after that, supply, with the Postmaster General in charge.


William Mulock: There is an item to be taken up, if we reach it, which is part of the postal service. It is for the establishment of a pneumatic tube system. Technically it belongs to the Public Works Department, but it is a matter that I have been asked to explain to the House.


John William Bell: That is, if we get to supply ?


William Mulock: Yes.


[Stage Direction]
Motion agreed to, and House adjourned at 1.05 a.m., Tuesday.
[Stage Direction]
Tuesday, June 28, 1904.