1914-08-20

Sir ROBERT BORDEN (Prime Minister):: Mr. Speaker, I desire to make the following announcement to the House:
In view of the urgent conditions confronting Canada, in common with the rest of the Empire, by reason of the outbreak of war, the Government consider it highly important that His Royal Highness Field Marshall the Duke of Connaught should *continue to give to Canada the benefit of his services as Governor General. His knowledge of conditions in Canada and bis wide experience in public and military affairs render his services especially valuable at this juncture. It has accordingly been arranged, at the request of the Canadian Government, with the full approval of His Majesty the King and the Imperial Government, that His Royal Highness's term of office shall be indefinitely extended during the continuance of the war. His Royal

Highness had made all arrangements to leave Canada at the conclusion of his extended term of office on the 22nd October, but, with the high sense of duty which has always actuated him, he has placed himself at the disposal of His Majesty for this purpose.


Mr. GRAHAM:: The people of Canada will hear this announcement with great gratification and satisfaction. The ripe military experience coupled with the dual knowledge of His Royal Highness the Governor General of conditions in the old land and in our own will make ihis presence in this part of His Majesty's dominions during the trying period through which we are now passing most gratifying and reassuring to the people.



APPOINTMENT TO I,AW BRANCH.

Robert Laird Borden: That the recommendation of His Honour the Speaker of the House as to the appointment of Mr. John T. Dunn to fill a vacancy in subdivision B of the second division in the Law Branch of the House of Commons, and the appointment as made by the Governor in Council during the recess of Parliament, he ratified and confirmed.
He said: The appointment is made under the Civil Service Act, all the requirements of the Act having been complied with. Motion agreed to.



CANADIANS IN EUROPE.

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On the Orders of the Day being called:
George Perry Graham: What steps have the Government taken for the relief of Canadians who are stranded in Great Britain or on the continent of Europe through being unable to get passage home at the present time?


Robert Laird Borden: 

WAR CONTRIBUTIONS OF PROVINCES.

Mr. LEMIEUX:: May I ask the right hon. the Prime Minister if he can inform the House of the various contributions which have been made by the different provincial governments, and the nature of those contributions, to the Imperial authorities?


Robert Laird Borden: I think there is one which is about being made, or perhaps will be made in the early future, as to which I have not exact information. I heard something of it to-day, but I am not prepared to make a definite statement. If my hon. friend will permit the matter to remain until to-morrow, I shall endeavour then to give all the information in the possession of the Government.



THE EUROPEAN WAR.


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Hon. W. T. WHITE (Minister of Finance) moved that the House go into Committee of Ways and Means. He said:
I shall preface the introduction of the fiscal measures which I have to propose to the House by a brief statement of the financial position of the Dominion, and of the new situation, as it presente itself to me, with which we are confronted as a result of the outbreak of war.
Owing to widespread financial and economic conditions, to which I referred at length in my Budget speech of April, our revenues since September last have shown a marked decline. During the first four months of the present fiscal year, April, May, June and July, we have experienced a reduction, as compared with the same four months of the previous fiscal year, of over ten million dollars.
In consequence of a general increase in commercial activity, due to easier money conditions, a marked improvement became perceptible about the end of July. The extent of this improvement is reflected in the returns of the first ten days of August,
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the loss of revenue being $500,000, or at the rate of say $1,500,000 for the month, as compared with an average decline of $2,700,000 for each of the four preceding months.
As the decline in revenue for the last . fiscal year had begun in October, we had calculated that during the remainder of the calendar year we would gradually overtake the revenues of the corresponding months of the previous year and could look forward to gains in January, February and March, which would have recouped in some measure our earlier losses.
This outlook has been wholly changed by the war. Its startlingly sudden outbreak between Austria-Hungary and Servia and the appalling rapidity of its extension to Russia, Germany, France, Belgium and Great Britain threw the civilized world into a panic such as was never known before. The shock to international finance was immense. In the general loss of confidence there arose an instantaneous and universal demand for gold. Huge volumes of securities were thrown upon the market and sold for what they would realize. Liquidation proceeded upon a colossal scale until the prodigious losses of individuals and the vast drainage of gold from all great financial centres compelled the closing of the bourses and exchanges of the world. The demand for gold still continuing in the finaneialrwor.Id, and general hoarding having begun on the part of the general public, a widespread suspension of specie payment inevitably resulted. In consequence of such suspension, accompanied in Great Britain and elsewhere in Europe by moratory proclamations whereby the payment of maturing obligations was postponed, and by reason of the fact that gold could no longer be shipped across the Atlantic owing to the menace of hostile cruisers, the exchange system of the world at once experienced collapse. In the meantime international trade was prostrated by the blow which severed at once all intercourse between belligerents and caused immediate cessation of commerce between Europe and America.
All these cataclysmic events have been compressed within the period of two jr three weeks; and yet such is the flexibility of the financial organization of the world that already order is emerging out of what seemed hopeless chaos, and the vast and complicated machinery of commerce and finance is with hourly-increasing efficiency resuming its normal functions.
For the purposes of this presentation it remains for me to estimate so far as possible our expenditures for the year, indicate 
my view as to reyenue and submit the measures proposed by the Government to meet the altered conditions with which we are confronted. I should not be frank if I did not at once say that I put forth my view as to both revenue and expenditure with the utmost diffidence, because it is not possible for any one to forecast with any measurable degree of certainty what lies ahead of us under either of these headings.
Before the outbreak of war we had calculated upon a revenue of $145,000,000 and an expenditure of about $175,000,000 of which $135,000,000 would have been upon Consolidated Fund Account and $40,000,000 upon Capital, Special, and Investment Accounts.
In June last we floated a loan of £5,000,000, the proceeds of which' with our expected revenues would have carried us into next fall, when a -further loan of any £3,000,000 would have sufficed for our requirements until the end of the fiscal year, including the retirement of £1,700,000 Treasury Bills maturing in November next.
Our present cash position is normal, our bank balances both in Canada and in London having been well maintained.
I proceed now to deal with the situation as changed by the war. As to revenues for the remainder of the year, it is with much hesitation that I venture upon an estimate. For some time past I have had the tariff experts of my department and of the Customs Department considering the question. That we shall experience a sharp decline in customs revenue due to decreased importations seems certain. The war itself shuts off automatically our trade with the enemy. The increased risk of ocean traffic must have a most serious effect upon our seaborne commerce. Above all, the temporary cessation of the stream of our borrowings in Great Britain will diminish our capital and other expenditures, -and express itself in a marked diminution in our imports. On the other hand, we shall probably increase our imports from the United States, through whose ports goods from Europe will no doubt find their way. The enhanced prices of our grain, food and other products will give us greater buying power than we should have otherwise possessed from this source. After careful consideration of all these aspects of the question, we are of the view that our -revenues from present sources for the year should reach from $130,000,000 to $135,000,000.
With regard to expenditures, it will be

the policy of the Government so far as possible to maintain the existing programme of public works under construction. New works will not, however, he undertaken until the financial situation clears; and' in this connection we must ask the forbearance and co-operation of members of both sides of the House. On the one hand, we do not desire to shut down construction now under way, with the consequent resulting unemployment, and, on the other, we must have in mind existing financial conditions, and embark upon new expediture only when we have in view the source of funds with which it may be defrayed. Under this policy I estimate that our revenue will just about suffice to meet our ordinary running expenditure; at least, I am hopeful that it will do so.
This leaves to be otherwise provided for capital, special and investment expenditure a sum totalling probably $30,000,000, together with such special expenditure as we may make for the common defence of Canada and the Empire. We are asking Parliament for a vote of $50,000,000. What portion of this may be expended during the remainder of the fiscal year is problematical, but we must assume at least the greater part. With the world at war and our national existence at stake, it is not the part of patriotism to spare either blood or treasure, and the Government may be depended upon to continue to uphold to the utmost of its power the arm of Britain in the fateful contest in which she is now engaged for the preservation of the Empire and the freedom of the world.
Assuming a capital and special war expenditure of, say, $60,000,000, we must further provide $8,500,000 for the retirement of Treasury Bills maturing in November, making a total of $68,500,000, which must be met by the proceeds of borrowing or special taxation. We have already borrowed $25,000,000 by the issue of June. This leaves a balance of $43,500,000 which we must now devise ways and means to meet.
To partially meet the special war expenditure I have to propose certain increases in customs and excise duties upon articles and commodities to the taxation of which resort is usually had in the emergency of war.
The special war taxation which I have to propose to the House will affect the rates of duties of customs and of excise upon coffee, sugar, spirits and tobacco. On green coffee, which was free when imported direct from the country of growth and production
or purchased in bond in the United Kingdom, it is proposed to place a duty of 24 cents per lb. under the British preferential tariff and 3 cents per lb. under the general tariff. The increased revenue on coffee for the year will be about $500,000. As to sugar, we propose that upon the raw commercial article testing 75 degrees by the polariscope, the rate of duty .shall be increased from 25 cents under the British preferential tariff to 88 cents per 100 lbs., and from 314 cents under the general tariff to $1,114 per 100 libs. No- change is proposed in the rates respecting each additional degree over 75 degrees. In other words, an increase is proposed of 63 cents per 100 lbs. under the British preferential tariff and 80 cents per 100 lbs. under the general tariff. On raw sugaT which tests 96 degrees an increase is made in the British preferential tariff from 401 cents per 100 lbs. to $1.03f per 100 lbs. and an increase in the general tariff from 574 cents per 100 lbs. to $1,374 per 100 lbs. On refined sugar testing 88 degrees by the polariscope the British preferential tariff rate will he increased from 72 cents to $1.52 per 100 lbs., and under the general tariff from 93 cents to $1.93 per 100 lbs. No change is made in the rates respecting each additional degree over 88 degrees. In other words an increase is proposed of 80 cents per 100 lbs. under the British preferential tariff and $1.00 per 100 lbs. under the general tariff.
On refined sugar which tests 99 degrees we propose to increase the British preferential tariff from 83 cents per 100 lbs. to $1.63 per 100 lbs., and the general tariff from $ 1.07| to $2.07§ per 100 libs. In other words, we propose to increase Tefined sugar four-fiths of a cent per lb. under the British. preferential tariff rate and one cent per lb. under the general tariff rate. The revenue we shall derive from this special taxation on sugar will probably exceed $5,000,000 per annum upon the basis of last year's importations of sugar.
On whisky, brandy, gin and other distilled spirits of like character, it is proposed to increase the duty from $2.40 to $3 per proof gallon. The increased revenue on spirits so imported will exceed $2,500,000 per annum upon the basis of last year's consumption.
Certain other minor changes will be proposed, which it is unnecessary to advert to here, on account of the increase in coffee, sugar and spirits duties. In other words, there are certain changes, known as consequential changes, which it is necessary to
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make in the duties on certain commodities by reason of the increased duties imposed on
articles which are raiw materials in their production.
On cigars and cigarettes we propose to increase the specific rate from $3 per lb. to $3.50 per lb., and on manufactured tobacco we propose an increase of 10 cents per lb. The increased revenue from this source will be over $200,000 per annum.
I may explain that on account of schedule 0 of the French treaty no increase can be made in. the rates of customs duties on wines and champagnes. The reason is that the customs rates under the French treaty are fixed and specific and not susceptible to increase during the continuation of the treaty.
So much for our proposal as regards customs. I now turn to the measures which we
propose with reference to duties of excise. Our proposals in this respect are as follows: Upon spirits, from $1.90 to $2.40 per gallon; on malt liquor, from 10 cents to 15 cents per gallon; on malt, from li cents to 3 cents per lb.; on cigars, from $2 to $3 per thousand; on cigarettes, from $2.40 to $3 per thousand; on manufactured tobacco, from 5 cents to 10 cents per lb. We anticipate an increased revenue from excise calculated upon the consumption of last year of about $6,600,000 per annum.
In connection with the increases which I have proposed in customs and excise rates upon liquors and tobaccos, it has come to our knowledge that certain brewers, distillers and dealers, in expectation that a special war tax would be necessary upon these commodities, have during the past two weeks taken exceedingly large amounts out of bond. I have particulars of the abnormal increases in customs and excise revenue under my hand which I shall later lay before the committee. If we failed to deal with the situation thus- created, our fiscal measure, so far as it relates to the commodities in question, would be defeated and we should be deprived in large part of the revenue which for the remainder of the year we have calculated upon from these sources.
I have to propose, therefore, that part of the legislation relating to duties of customs and excise be deemed to come into effect on August 7, 1914.
These special war taxes, representing only a small fraction of our increase in military and naval expenditure, due to the critical situation which has arisen, will fall upon the entire community. In paying them each citizen will feel that the amount he pays is a direct contribution to the defence of Canada and the Empire.

From these special war taxes I estimate we shall derive additional revenue of about $7,000,000 during the remainder of the fiscal year. This leaves a sum of over $36,000,000 to he provided by borrowing. We shall, as opportunity offers, issue further loans, but I must state to the House that the amount upon which we can rely from this source is conjectural and dependent upon the course of events.
In these circumstances I am taking authority, by legislation amending the Dominion Notes Act, to increase the amount of notes which may be issued against a 25 per cent margin of gold from thirty to fifty million dollars. This will give ns an additional fifteen million dollars from money borrowed from our own people upon the Dominion's credit. We shall avail ourselves of this emergency measure to the extent that it may be found necessary to supplement our borrowings otherwise. I have already given notice of the legislation in that behalf.
As to the effect of the war upon industrial and commercial conditions in Canada, I do not regard it necessary that I should upon this occasion make any special pronouncement. Injury there will no doubt be to some of our enterprises, but such injury may be most marked at the beginning and not of long duration. In the circumstances, I feel that I can confidently appeal to all employers of labour to continue to carry on their operations to such extent as. may be feasible to them in order that the distress of unemployment may be minimized as much as possible, and that the first brunt of the war may not fall too heavily upon the working community.
To many of our industries, notably to agriculture, there should be pronounced stimulation and quickening of activity. Trade between Canada and the motherland will undoubtedly receive an impetus, the importance of which to our future relations it would be difficult to overstate. If I have any general advice to offer it is that the people of Canada will, as I am sure they will, continue to maintain the calm, sane judgment for which they have always been noted. Above all, confidence is a supreme patriotic duty-confidence in one another, confidence in our country and its institutions, in the Empire, in the righteousness of our cause and, under Providence, in the certain ultimate triumph of our arms.
I beg, Mr. Speaker, to give notice that, when this House goes into Committee of Ways and Means, I shall move the following resolutions:

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[1. Resolved that it is expedient to amend Schedule A to the Customs Tariff, 1907, as amended by chapter 15 of the Acts of 1913, and by chapter 26 of the Acts of 1914, and to strike thereout tariff items: 21, 22, 23, 25, 26, 27, 28, 29, 43, 44, 45, 66, 103, 104, 105, 106, 107, 113, 134, 135, 135a, 141, 143, 144, 145, 146, 147, 150, 151, 152, 156, 159, 160, 161, 162, 168, 220, 248, the several enumerations of goods respectively, and the several rates of duties of Customs, if any, set opposite each of the said items, and to provide that the following items, enumerations and rates of duties be inserted in said schedule A:
Tariff Items.	British Preferential Tariff.	Intermediate Tariff.	General Tariff.21 Cocoa paste or ' liquor ' and chocolate paste or * liquor,' sweetened, in blocks or cakes not less than two pounds in weight	per pound.	4 cents.	44 cents.	4J cents.22 Preparations of cocoa or chocolate in powder form	22^ p.c.	271 p.c.	271 P.c.23 Preparations of cocoa or chocolate, n.o.p. and confectionery coated with or containing chocolate, the weight of the wrappings and cartons to be included in the weight for duty	per pound	1 cent.	1 cent.	1 cent.and	22J p.c.	35 p.c.	35 p.c.25 Chicory, kiln-dried, roasted or ground, per pound	2 cents.	3 cents.	3 cents.25a Coffee, extract of, n.o.p., and substitutes therefor of all kinds. .. .per pound.	5 cents.	6 cents.	6 cents.26 Coffee, roasted or ground, and all imitations thereof and substitutes therefor, including acorn nuts, n.o.p....per pound.	4 cents.	5 cents.	5 cents.27 Coffee, roasted or ground, when not imported direct from the country of growth and production	per pound.	4 cents.	5 cents.	5 cents.and	71 p.c.	10 p.c.	10 p.c.28 Coffee, green, imported direct from the country of growth and production, and green coffee purchased in bond in the United Kingdom	per pound.	2J cents ,	3 cents.	3 cents.28a Tea imported direct from the country of growth and production, and tea purchased in bond in the United Kingdom	Free.	Free.	Free.29 Coffee, green, n.o.p	per pound.	3 cents.	3 cents.	3 cents.and	10 p.c.	10 p.c.	10 p.c.29a Tea, n.o.p	
[DOT] [DOT] [DOT]	10 p'.c.	10 p.c.	10 p.c.43 Condensed milk, the weight of the package to be included in the weight for duty, per pound	21 cents.	3S cents.	3| cents.44 Condensed coffee with milk	25 p.c.	35 p.c.	35 p.c.45 Milk foods, n.o.p. ; prepared cereal foods, in packages not exceeding twenty-five pounds weight each	20 p.c.	271 p.c.	271 P.c.66 Biscuits, sweetened	20 p.c.	30 p.tf.	30 p.c.103 Fruits preserved in brandy, or preserved in other spirits, and containing not more than forty per cent of proof spirit in the liquid contents thereof	60 p.c.	60 p.c.	60 p.c.104 Fruits preserved in brandy, or preserved in other spirits, and containing more than forty per cent of proof spirit in the liquid contents thereof	per gallon	$3.00	$3.00	$3.00and	30 p.c.	30 p.c.	30 p.c.105 Fruits in air-t'ight cans or other air-tight packages, n.o.p., the weight of the cans or other packages to be included in the weight for duty	per pound	IS cents.	21 cents.	21 cents.106 Jellies, jams, preserves, and condensed mince meats	per pound	cents.	3S cents.	3S cents.107 Preserved ginger	25 p.c.	35 p.c.	35 p.c.113 Cocoanut, desiccated, sweetened or not, pel	7\ cents.	4} cents.	4 4 cents.
Tariff
Items.
134	All sugar above number sixteen Dutch
standard in colour, and all refined sugars of whatever kinds, grades or standards, testing not more than eighty-eight degrees by the polariscope, per one hundred
pounds	
And for each additional degree over eighty-eight degrees.. per one hundred pounds. Provided that fractions of five-tenths of a degree or less shall not be subject to duty, and that fractions of more than five-tenths shall be dutiable as a degree.
* Provided that refined sugar shall be entitled to entry under the British Preferential Tariff upon evidence satisfactory to the Minister of Customs that such refined sugar has been manufactured wholly from raw sugar produced in the British colonies and possessions, and not otherwise.
135	Sugar, n.o.p., not above number sixteen
Dutch standard in colour, sugar drainings or pumpings drained in transit, melado or concentrated melado, tank ' bottoms, sugar concrete, and molasses testing over fifty-six degrees and not more than seventy-five degrees by the polariscope per one hundred pounds. And for each additional degree over seventy-five degrees, per one hundred
pounds	
Provided that fractions of five-tenths of a degree or less shall not be subject to duty, and that fractions of more than five-tenths shall be dutiable as a degree. Provided that all raw sugar, including sugar specified in this item, the pro.	duce of any British colony or possession,
shall be entitled to entry under the British Preferential Tariff, when imported direct into Canada from any British country.
Provided that sugar imported under this item shall not be subject to special duty. 135a Raw sugar as described in tariff item 135, when imported to be refined in Canada by Canadian sugar refiners, to the extent of the quantity of sugar refined during the calendar years 1912 and 1913, by such refiners from sugar produced in Canada from Canadian beet-root under regulations by the Minister of Customs, per one hundred pounds, testing not more than seventy-five degrees by the polariscope.. And per one hundred pounds for each additional degree over seventy-five degrees	
Provided that sugar imported under this item shall not be subject to special duty.
This item to expire December 31, 1914.
141 Sugar candy and confectionery, n.o.p., including sweetened gums, candied peel, candied pop-corn, candied fruits, candied nuts, flavouring powders, custard powders, jelly powders, sweetmeats, sweetened breads, cakes, pies, puddings and all other confections containing sugar, the weight of the wrappings and cartons to be included in the weight for
duty	per pound I
and	

British
Preferential Intermediate	General
Tariff.	' Tariff.	Tariff.$1.52 '	$1.93	$1.931 cent.	1% cents.	lVs cents.88 cents.	$1,111	$1,1112 cent.	li cents.	li cents.88 cents.	88 cents.	88 cents. [DOT]2 cent.	2 cent.	2 cent.i cent.	t cent.	J cent.22* p.c.	35 p.c.	35 p.c.
Tariff
Items.
143	Cigars and cigarettes, the weight of cigars
to include bands and ribbons, and the weight of	cigarettes	to	include the	papercovering	per	poundand	144	Cut tobacco	per	pound.145	Manufactured	tobacco,	n.o.p.,	and	snuffper pound	146	Ale, beer, porter and stout, when importedin casks or otherwise than in bottle, per gallon	147	Ale, beer, porter and stout, when importedin bottles	per gallon.
gallon.
uumauuug uut	~

 

 *
cent of proof spirits	per gallon.
cent of proof spirits. .
and.
n.o.p.
XijlIij 1 dlGUllUl, til t.nc	t	^
known as alcohol, hydrated oxide of ethyl or spirits of wine, n.o.p. ; gin of all kinds, n.o.p.; rum,, whisky and all spirituous or alcoholic liquors, n.o.p.: amyl alcohol or fusel-oil, or any substance known as potato spirit or potato oil; methyl alcohol, wood alcohol, wood naphtha, pyroxylic spirit or any substance known as wood spirit or methylated spirits, absinthe, arrack or palm spirit, brandy, including artificial brandy and imitations of brandy, n.o.p.; cordials and liqueurs of all kinds, n.o.p.; mescal, pulque, rum shrub, Schiedam and other schnapps; tafia, angostura and similar alcoholic bitters or beverages; and wines, n.o.p., containing more than forty per cent of proof spirit . . . .per gallon of the strength of proof
Provided, as to all the goods specified in this item when of less strength than the strength of proof, that no reduction or allowance shall be made in the measurement thereof for duty purposes, below the strength of fifteen per cent under proof.
Provided also, that when the goods specified in this item are of greater strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased in proportion for any greater strength than the strength of proof.
Provided further, that bottles and flasks and packages of gin, rum, whisky and brandy of all kinds, and imitations thereof, shall be held to contain the following quantities (subject to the provisions for addition or deduction in respect of the degree of strength), viz.:-
Bottles, flasks and packages, containing not more than three-fourths of a gallon per dozen, as three-fourths of a gallon per dozen:
Britsh Preferential Tariff.	Intermediate Tariff.	General Tariff.$3.50 25 p.c. 65 cents.	$3.50 25 p.c. 65 cents.	$3.50 25 p.c. 65 cents.60 cents.	60 cents.	60 cents.30 cents.	30 cents.	30 cents.42 cents.	42 cents	42 cents.75 cents.	75 cents.	75 cents.$3.00 30 p.c.	$3.00 30 p.c.	$3.00 30 p.c.17 h P.c.	22J p.c.	22J p.c.

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British		
Tariff	Preferential	Intermediate	GeneralItems.	Tariff.	Tariff.	Tariff.
Bottles, flasks and packages, containing more than three-fourths of a gallon but not more than one gallon per dozen, as one gallon per dozen ;
Bottles, flasks and packages, containing more than one gallon but not more than one and one-half gallon per dozen, as one and one-half gallon per dozen;
Bottles,	flasks	and	packages,	containing
more than one and one-half gallon but not more than two gallons per dozen, as two gallons per dozen;
Bottles,	flasks	and	packages,	containing
more than two gallons but not more than two and four-fifths gallons per dozen, as two and four-fifths gallons per dozen;
Bottles,	flasks	and	packages,	containing
more than two and four-fifths gallons but not more than three gallons per dozen, as three gallons per dozen;
Bottles,	flasks	and	packages,	containing
more than three gallons but not more than three and one-fifth gallons per dozen, as three and one-fifth gallons per dozen.
Provided further, that bottles or phials of liquors for special purposes, such as samples not for sale to the trade, may be entered for duty according to actual measurement, under regulations prescribed by the Minister of Customs.
159	Spirits and strong waters of any kind,
mixed with any ingredient or ingredients, as being or known or designated as anodyne-1, elixirs, essences, extracts, lotions, tinctures or medicines, or ethereal and spirituous fruit essences, n.o.p, per gallon
and	
160	Alcoholic perfumes and perfumed spirits,
bay rum, cologne and lavender waters, hair, tooth and skin washes, and other toilet preparations containing spirits of any kinds:-
(a)	When in bottles or flasks containing not more than four ounces each
(b)	When in bottles, flasks or other
packages, containing more than four ounces each	per gallon
and	
161	Nitrous ether, sweet spirits of nitre and
aromatic spirits of ammonia, .per gallon
and	
162	Medicinal or medicated wines, including
vermouth and ginger wine, containing not more than forty per cent of proof ' spirits	
168 Malt flour containing less than fifty per cent in weight of malt; also extract of malt, fluid or not, including grain molasses-all articles in this item upon valuation without British or foreign excise duties, undejr regulations by the
Minister of Customs	per pound
and	
220 All medicinal, chemical and pharmaceutical preparations, compounded of more than one substance, including patent and proprietary preparations, tinctures, pills, powders, troches, lozenges, syrups, cordials, bitters, anodynes, tonics, plasters, liniments, salves, ointments, pastes, drops, waters, essences and oils, n.o.p.:-

$3.00	$3.00	$3.0030 p.c.	30 p.c.	30 p.c.60 p.c.	60 p.c.	60 p.c.$3.00	$3.00	$3.0040 p.c.	40 p.c.	40 p.c.$3.00	$3.00	$3.0030 p.c.	30 p.c.	30 p.c.60 p.c.	60 p.c.	60 p.c.3 cents.	3 cents.	3 cents.35 p.c	35 p.c.	35 p.c.Tariff Items.	Preferential Tariff.	Intermediate Tariff.	General Tariff.(a) When dry	20 p.c.	25 p.c.	25 p.c.(b) All others	60 p.c.	60 p.c.	60 p.c.Provided that drugs, pill-mass and preparations, not including pills or medicinal plasters, recognized by the British or the United States pharmacopoeia, or the French Codex as officinal, shall not be held to be covered by this item; Provided, also, that any article in this item containing more than forty per cent of proof spirit shall be rated for duty at . . per gallon	$3.00	$3.00	$3.00and	30 p.c.	30 p.c.	30 p.c.248 Paints and colours, ground in spirits, and all spirit varnishes and lacquers. . per gallon.	$1.25	$1.25	$1.25
2. Resolved, that any enactment founded on the preceding- resolution shall be deemed to have come into force on the twenty-first day of Aug-ust, nineteen hundred and fourteen, and to have applied to all goods mentioned in the preceding resolution, except as hereinafter otherwise provided, imported or taken out of warehouse for consumption on and after that day, and to have also applied to goods previously imported for which no entry for consumption was made before that day:
Provided, however, that the foregoing provisions respecting goods specified in tariff items 146, 147 and 156 shall be deemed to have come into force on the seventh day of August, nineteen hundred and fourteen, and to have applied to the goods mentioned in said tariff items 146, 147 and 156 imported or taken out of warehouse for consumption on and after that day, and to have also applied to goods previously imported for which no entry for consumption was made before that day.

[Stage Direction]
1. Resolved, that it is expedient to amend the Inland Revenue Act, as amended by chapter 34 of the Acts of 1908, by repealing sections 154, 201, 222 and 279 thereof, and substituting therefor the following:-
154. There shall be imposed, levied and collected on all spirits distilled, the following duties of excise, which shall be paid to the collector, as herein provided, that is to say:
(a)	When the material used in the manufacture thereof consists of not less than ninety per centum, by weight, of raw or unmalted grain, or when manufactured from sugar, syrup, molasses or other saccharine matter not otherwise provided for, on every gallon of the strength of proof by Sykes' hydrometer, two dollars and forty cents, and so in proportion for any greater or less strength than the strength of proof, and for any less quantity than a gallon ;
(b)	When manufactured exclusively from malted barley, taken to the distillery in bond and on which no duty of customs or excise has been paid, or when manufactured from raw or unmalted grain, used in combination, in such proportions as the department prescribes, with malted barley taken to the distillery in bond and on which no duty of customs or of excise has been paid, on every gallon of the strength
of proof by Sykes' hydrometer, two dollars and forty-two cents, and so in proportion for any greater or less strength, and for any less quantity than a gallon;
(c)	When manufactured exclusively from molasses, syrup, sugar or other saccharine matter, taken to th«* distillery in bond and on which no duty of customs has been paid, on every gallon of the strength of proof by Sykes' hydrometer, two dollars and forty-three cents, and so in proportion for any greater or less strength, and for any less quantity than a gallon.
201. There shall be imposed, levied and collected on every gallon of any fermented beverage made in imitation of beer or malt liquor, and brewed in whole or in part from any other substance than malt, a duty of excise of fifteen cents, which shall be paid to the collector as herein required:	Provided, that
any brewer using sugar, syrup or other saccharine matter in the manufacture of beer, and having previously given ten days' notice in writing, to the collector of his intention to use such sugar, syrup or other saccharine matter, and paying the duty hereinbefore mentioned on the beer made therewith, may receive a drawback equal to the duty of excise paid by him on the malt used with such sugar, syrup or other saccharine matter in making such beer, under such restrictions and regulations as the department prescribes.
222. There shall be imposed, levied and collected the following duties of excise on all malt, which shall be paid to the collector, as by this Act provided, that is to say:
(a) On every pound of malt manufactured in Canada, subject to excise regulations. with respect to coomings and absorption of moisture in warehouse as provided by the Order in Council of the seventh day of February, one thousand eight hundred and ninety-one, three cents:	Provided that malt may be removed
from a malt-house to a distillery in bond, and the duty on such malt may be remitted upon proof satisfactory to the department that such malt has been used solely for the production of spirits, in which production no other material than malt is used; and provided further that malt used, in any licensed bonded manufactory, in the manufacture of malt extract or other similar medicinal preparation approved by the department may have duty thereon remitted
[Stage Direction]
under such regulations as the department establishes ;
(b) On every pound of malt Imported into Canada and warehoused, when taken out of bond for consumption, an excise duty of three cents:	Provided that malt imported into Canada, crushed or ground, shall be subject to a duty of five cents per pound.
279. There shall be imposed, levied and collected on tobacco and cigars manufactured in Canada the following duties of excise, which shall be paid to the collector as by this Act provided, that is to say:
(a)	On all chewing and smoking tobacco, fine-cut, cavendish, plug or twist, cut or granulated, of every description, on tobacco twisted by hand or reduced into a condition to be consumed or, in any manner other than the ordinary mode of drying and curing, prepared for sale or consumption, even if prepared without the use of any machine or instrument and without being pressed or sweetened, and on all fine-cut shorts and refuse scraps, cuttings and sweepings of tobacco made from raw leaf tobacco or the product in any form, other than in this Act otherwise provided, of raw leaf tobacco, ten cents per pound, actual weight;
(b)	On common Canada twist, when made solely from tobacco grown in Canada, and on the farm or premises where trrown, by the cultivator duly licensed therefor, or in a licensed tobacco manufactory, ten cents per pound, actual weight;
(c)	On all snuff made from raw leaf tobacco, or the product in any form of raw leaf tobacco or any substitute for tobacco, ground, dry, scented or otherwise, of all description, when prepared for use, ten cents per pound, actual weight;
(d)	Snuff flour, when sold or removed for use or consumption, shall pay the same duty as snuff, and shall be put up in packages and stamped in the same manner as herein prescribed for snuff completely manufactured, except that snuff flour not prepared for use, but which needs to be subjected to further processes, by sifting, pickling, scenting or otherwise, before it is in a condition fit for use or consumption, may be sold by one tobacco manufacturer directly to another tobacco manufacturer, and without the payment of the duty, under such regulations as are provided in that behalf by the department;
(e)	On cigars of all descriptions, made from raw leaf tobacco, or any substitute therefor, three dollars per thousand;
(f)	On all cigars, when put up in packages containing less than ten cigars each, four dollars per thousand;
(g)	On cigarettes made from raw leaf tobacco or any substitute therefor, weighing not more than three pounds per thousand, three
' dollars per thousand ;
(h)	On cigarettes made from raw leaf tobacco or any substitute therefor, weighing more than three pounds per thousand, eight dollars per thousand;
(i)	On all foreign raw leaf tobacco, unstemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, twenty-eight cents per pound, computed according to the standard of leaf tobacco as hereinbefore established;
(j)	On all foreign raw leaf tobacco, stemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, forty-two

cents per pound, computed according to the standard of leaf tobacco as hereinbefore established ;
2.	In all tobacco manufactories where less than fifty per cent of Canadian raw leaf tobacco is used, and where ten per cent, or more, of other materials is used, such materials shall be subject to a duty of sixteen cents per pound actual weight.
3.	Resolved, that any enactment founded on the preceding resolution shall be deemed to have come into force on the seventh day of August, nineteen hundred and fourteen.
Mr. McCOIG:: May I ask what tariff
changes are made on raw tobacco coming into this country?


Mr. WHITE:: I shall give my hon. friend full information later on.


Archibald Blake McCoig: Are any changes being
made?


William Thomas White: We are increasing the
excise duty on manufactured tobacco from 5 to 10 cents per lb. As regards customs duties, the specific rate on cigars and cigarettes will be increased from $3 to $3.50 per pound, while on other manufactured tobacco an increase of 10 cents per pound is proposed. Raw leaf tobacco is not touched so far as customs duties are concerned.


Mr. A. K. MACLEAN (Halifax):: The occasion hardly demands any extended remarks from hon. gentlemen on this side of the House in connection with the Budget statement just delivered by the Minister of Finance. It is of course an unusual thing for us in this country to have a second Budget statement delivered in the one fiscal year, and I am sure we all regret the circumstances which necessitate the deliverance of this second financial statement by the minister. It was not unexpected, however, that, Barliament being assembled, we should have a statement from the Government announcing a sharp decline in our revenues, and that efforts were being made to supplement the revenues of the country in order to meet any probable deficits. The Minister of Finance has very well described the conditions now prevailing in this country. Previous to the announcement of war some two weeks ago, we had experienced for some months considerable declines in our imports, and consequently in our revenues. This condition was accentuated extremely by the tragic and regrettable conditions now prevailing throughout Europe. As the minister has stated, we found the credit system not only of Canada but of the entire world almost in a state of collapse for a week at least. We found the imports into

our own country declining very considerably, and the purchasing power of our people also decreasing. We observed the purchasing power of most nations of the world also falling, and that meant a diminution in our exports to those countries which in the past were purchasers of Canadian products. We found high rates of exchange, insurance and freight, a cessation partially of the shipping business of the world, a tendency towards the protection of gold reserves on the part of nearly every country in the world, a cessation of borrowings by Canada, and all these tended to a derangement of the financial and trade conditions of this country. It was inevitable, therefore, that there should come a diminution in our trade and revenue, and it was not unexpected that efforts should be made by the Government of Canada to secure further revenues for anticipated declines. It is needless for me to make any reference to or to discuss the necessity of securing additional revenues for the treasury of this country. Whether this might have been avoided in the past by a different disposition of Government policy is not a matter for debate upon this occasion. The condition confronts us and must be met, and I think it will be the judgment of this House that it was imperative that some ways and means should be provided to meet to some extent at least the diminution in revenue.
I do not propose to discuss the tariff amendments which have been proposed by the Minister of Finance this afternoon. To some degree, at least, I am sure the changes he has proposed will meet with the commendation of the people of this country. However, the changes proposed are very considerable and .substantial, and I am sure hon. members opposite will admit that it is but a fair request that we be allowed to reserve our comments on the tariff resolutions until they are placed before the Committee of the House.
I have just a word or two to say in regard to one or two other matters. The .Minister of Finance announced the intention 'of the Government to abstain from further unnecessary public expenditures, but he gave no indication of the extent to which work on public works, the money for which has already been voted, will be carried on. I admit there is room for difference of opinion as to the extent to which, the government should proceed in respect to public expenditures. It must be conceded, I think, that public undertakings of a national character already commenced or 3
in contemplation, and which may reasonably be expected to be productive to the nation should, if possible, be continued. I do submit, however, and predicate that in the future in this country both in respect to public and private expenditures there must come a decided change of policy. I think I may in fairness say that a large proportion of the public expenditures made iu this country in the past-and I am not referring to, the expenditures made by one government or another-was very doubtful indeed, and I believe the public will demand that in the future a vast amount of public expenditures of the character made in the past must necessarily he abandoned or abated. If one were carefully to examine the Estimates passed at the last session of that Parliament he might readily conclude that they contained supply for public expenditures, aggregating many millions of dollars, which should never have been suggested at all, and which now should be suspended at least and probably never recommenced in the future, but be entirely abandoned. I trust that the Government will exercise a wise discretion in public expenditures during the next few years, and especially during the present fiscal year, and that none will he commenced which aTe not of a national character and which will not he productive to the nation.	_
There is another matter to which I wish to refer very briefly indeed, and it is one which affects the welfare of the country. I am assuming to speak largely for myself and not on behalf of any other hon. gentleman in this House. In this matter I am not attempting to dictate what should be the permanent fiscal policy of the Government; it is rather in the way of a suggestion of temporary relief to the 'people. I refer to the food supplies of this country. It is quite apparent that European energies for many months to come-I trust not many-will be devoted to war 'and not to the production of the necessaries of life. The sword and not the ploughshare is in action in Europe today. Fighting is taking place probably at this very moment in the very garden of Europe and in the greatest wheatfields of the world. This necessarily means a very pronounced curtailment in the production of the food supplies of the world and a drain upon the food supplies of this country, the United States, and some others of the few non-belligerent countries. I am not speaking after any investigation or study of the estimated crop productions of this country during the present year. Distressing



news comes- from some sections of the western provinces with respect to our wheat productions and it is said that other agricultural crops in some- others of the provinces are very considerately short of the normal. The financial conditions likely to prevail during the coming winter I think inevitably will bring distress upon many of the people of the country and consequently the quantity and cost of the food supplies of this country is a matter of extreme importance.
With the best possible motives and in all sincerity I do suggest to the Government the desirability of considering the question of placing upon the free list many of the food supplies of the country. It may be that our own production will meet our own consumption and the extraordinary demand which *will be made upon our food supply, but nevertheless I can see no reason why the question of even the temporary elimination of -duties upon the foodstuffs of this country should not toe seriously taken into consideration by the Government. I am not suggesting this to-day as a matter of permanent policy for the Government if their economic views be different, and if it would not be in harmony with their views as to wh-at would be the true fiscal policy of the Government. I am now suggesting it merely -as a wise temporary policy and one calculated to meet the unfortunate conditions now prevailing and which may prevail in -a more pronounced way during the coming months of this year.
There is another thing to be said in connection with the tariff upon foodstuffs and it is that if in the judgment of the Government it would be deemed unwise to -place a -considerable quantity of them upon the free list there might very well be a very considerable diminution in the rate of duty. It might -afford some relief to the people of the country and still give the treasury an additional revenue because I think I iam quite correct in stating that it would be possible to secure a greater revenue under a very -moderate tariff upon foodstuffs than with the tariff rates now existing upon such commodities. There is this further to 'be said in connection with the suggestion, that if our own foodstuffs are sufficient, the absence of tariff duties upon imports of foodstuffs might enable some exporters in this country to engage in the export trade by reason of the fact that the elimination of duties would bring into Canada a quantity of foodstuffs in excess of our own consumption for export.
{Mr. A. K. Maclean.]
Under the present war conditions prevailing in Europe it is quite obvious that there will be a cessation of manufacturing in countries which hitherto were large exporters to nearly every country in the world. It is worthy of consideration whether or not something might be done to enable Canadian manufacturers to participate in the export of manufactures to countries hitherto largely supplied by the belligerent countries of to-day. This is a matter which might very well be taken into consideration by the Government and particularly by the Minister of Trade and Commerce. This ]S a question which will receive very keen and careful attention from the Government of the United States. I assume that they anticipate that a great opportunity is open to them for obtaining markets which hitherto -they were unable to enter, and I do submit that it is quite possible that Canadian manufacturers and exporters might have to-day an opportunity to obtain markets not hitherto open to them. What the Government might do to assist in the extension of our foreign trade in manufacturers I am not able to suggest at the moment. It may be that a moderate expenditure in the way of encouraging steamship lines between Canada and foreign countries, with strict governmental control over rates, would be as good a method as any other to assist the Canadian manufacturer and exporter. I make this suggestion to the Government trusting that they will take it into consideration, because anything which will at the present time afford new markets for Canadian manufacturers is one worthy of our best consideration.
I shall reserve any remarks I desire to make with reference to tariff changes until the resolutions are before the committee of the House. In making the suggestions 1 have presented, let me repeat that they are made not in a spirit of opposition to the proposals of the Government to secure additional revenues to carry on the public services of the country, but rather because I believe they are in the public interest and should commend themselves to the House and to the country.
Mr. W. F. MAiCLEAN (South York): Mr. Speaker, I trust the House will bear with me for a few moments while I -address myself to the question raised in these- proposals and in the statements -made by the -hon. Minister of Finance. The proposals of the minister to raise a revenue sufficient for the engagements of the -country and to carry on our share of the war meet with
. AUGUST 20, 1914
my approval, will meet with the approval of the Canadian people. We must do our share in maintaining the honour of the Empire, and we shall do it both in the way of money and in the way of sending our contingents to the scene of warfare. That sentiment was well expressed yesterday on both sides of the House; hut while we have to raise money to .meet the ordinary expenditure of this country and for war purposes and because of the same extraordinary conditions which have arisen we must also do something in order to carry on the ordinary business of this country. We must do something for the Empire, but we must do something also for Canada. The minister in his speech referred to the fact that business was more or less dislocated by this great war which has sprung up in Europe and to which we are a party. We must, however, carry on the business of the country; we must keep our industries and manufactures going; we must find employment for our people. While this is a war measure and dealing with sources of income for the Dominion, we must find some way -and a budget must deal with the general situation in the country-to increase the currency and the credit resources of this country for the benefit of trade. The present issue of Dominion notes is thirty million dollars with a gold reserve of 25 per cent. The minister proposes to increase that issue to fifty million. I commend him for doing so, but will that he sufficient? WhJe it may be sufficient for the ordinary commitments of the country and the war expenditure, as there in it any provision for keeping trade going and of preventing, [DOT]if possible, the stagnation which threatens to overwhelm the industries of this country? The Government ought to ask for power to increase the issue of Dominion notes to at least one hundred million dollars and, if necessary, to keep the gold reserve at 25 per cent. In order to secure gold sufficient to maintain the reserve at 25 per cent, we might have to issue bonds. Perhaps in time of war it might be necessary to have a 25 per cent gold reserve; a 15 per cent reserve would probably meet the circumstances. I am not going into the details of that; but it is absolutely necessary that the issue of Dominion notes should be ..greatly increased over the amount proposed by the minister, and the necessary gold reserve can be secured to maintain that currency in the best possible shape.
The minister has also made the proposal to use Dominion notes to any amount for 3J
what is practically general business purposes. In connection with the currency of Canada I have advocated in this House on previous occasions that we ought to have a system of rediscount in this country such as now exists in the United States and for which there is now organized a .system of reserve banks scattered throughout the United States. In that proposal there is the central idea that the United States are not going hereafter to took to the banks for the currency and the credit of the business community; but they intend to make the currency rest upon the credit of the country; and they intend to make the currency rest upon the credit of the country by way of national notes .secured by gold reserve, and .also by increasing the available money of the country by establishing reserve banks or banks of rediscount which will rediscount for the hanks by use of national notes, commercial paper and other securities that may be offered to the banks. In Canada with the commitments that we have and confronted as we are with this great war, not only must we have means of increasing the resources of the Government for war and for ordinary purposes, but we must have means to supply the country with sufficient currency to carry on business. It might be said that our banks can do this. Gan they? Is the Government to-day, in the face of this war, able to go to the banks of this country for assistance? Our banks to-day have of total available assets one thousand five hundred million dollars. Yet apparently the Minister of Finance says to-day that he sees no prospect of getting money from the banks for the special requirements to which he has referred, but that he must go as a borrower outside of the country. That is probably the right course to pursue; but does this House and this country know that of that one thousand five hundred million dollars, $133,000,000 is used up by call loans outside of Canada and $67,000,000 of call loans in Canada? If our banks had not sent that $200,000,000 out of the country for purposes of stock speculation-which I absolutely deprecate, because it is not to the welfare tf the country-that money would be available to meet this situation; but it is not available. Business is likely to be paralyzed in this country; and at a time when we are going into ways and means and discussing the special conditions of this country, we ought to discuss the broader and greater issue, namely, not only how we are to finance the Government but how we are to

finance the general business of Canada. What oueht to commend itself to this House and to this country in the light of the experience of the present day and of the great progress of national finance and banking as illustrated by the practice in other countries? It is that the currency of the country, that is the money in circulation, ought to be absolutely the creation of the Government, and it ought to rest on the security of the State and on the credit of the nation. We should not rely upon our banking organizations for the currency, but should have an absolutely stable currency in large amount in the shape of national notes secured by gold reserve. In the United States the Secretary of the Treasury took the necessary authority, and to-day has $500,000,000 of government notes which he can deposit in any of the banks for the purpose of moving the crops. We have gone at it in a roundabout way. We have allowed our banks to increase their currency by 15 per cent on their capital and reserve, and in a way that has relieved the situation. But it is not sufficient for the condition of affairs that exists to-day. What they have done in the United States with so much success is what we must do. But, more than that, it is proposed here, according to another resolution I have seen, practically to adopt this principle of rediscount by means of national notes. I commend that absolutely. In view of the distressed condition of the country, in view of the fact as stated by the Minister of Finance that unemployment is in sight, that there are factories and industries which would be willing to give employment hut cannot do so because they cannot get the necessary accommodation from the banks, it is the duty of Parliament to find a way, by improvement of our banking laws and our currency laws, to insure sufficient capital and sufficient currency to carry on the business of the country.
The system of national currency has been adopted all over Europe except in Great Britain. And to-day, practically, the Bank of England note is a paper issue guaranteed by the State. It may be based on gold, but the Bank of England paper to-day is practically what may he described in the words of the United States Secretary as ' government money.' And that is the best money in the world. It used to be called ' greenbacks ' in the old days in the United States. United States notes are the best money in the United States, and it is the best money in Canada to-day, and we must
have that system. We have not the right kind of currency nor the right kind of banking.


Mr. MACDONALD:: What do you propose?


Alexander Kenneth Maclean: Practically two things. The metal currency of the country in the form of tokens is absolutely provided by the State. Why should not this State follow the example of all progressive states and have all the currency of the country in national notes or tokens secured by a gold reserve-the amount of which I will not discuss-thus providing an issue of a national currency that will be elastic enough to meet conditions?


William John Macdonald: Would you issue
that currency to the banks?


Alexander Kenneth Maclean: At present the banks
issue over $100,000,000 of their notes, and that together with the Dominion notes and coinage, practically supplies the needs of business. Instead of allowing the banks to issue notes, I would lend national notes to every solvent bank up to within its paid up capital and rest. The details of interest charged therefor I will not go into now, but the interest rates should be low. Then let the hanks withdraw their issue. In this way you would immediately do away with the foolish and antediluvian business of the banks exchanging their notes through the clearing house, balances being settled in Dominion notes which are practically gold. That is a roundabout way. With a national currency secured by gold there would be none of this clearing house work, and our national notes would circulate in the United States as their national notes circulate here. The United States had to finance itself in times of stress and trouble by means of national notes. For a while these notes were at a great discount. I can remember when what was called ' gold ' was quoted at $1.60. That is, if you had $1.60 in United States national notes you could get for it one dollar in gold. But those notes came to par and they are the best money in the world to-day. To my mind, that is the only currency suitable to the conditions of this country.
Now, let me tell the House and the country what is the actual condition of business in this country to-day. The banks are organized largely on the deposits of the people, and if the manager of a bank -I care not how large it is or how great

its capital-finds any morning that some depositors have withdrawn deposits, he is much concerned. In cases word is actually sent out to the branches of the bank all over the country that they must go slow on discounts and let up in accommodating the customers. Why? Because they know that if some persons are withdrawing their deposits to-day, others may be withdrawing theirs to-morrow, and in order to keep strong in case they are called upon to pay out more deposits, they refuse accommodation to the people. But, under the splendid new principe of rediscounting- new at least to America-when a bank manager finds that either his head office or his branch offices are being called on for deposits, he knows that he can take the notes already on discount in his bank to the reserve bank, cash them 3 or 90 per cent or 95 per cent at a reasonable rate of interest, and have national notes to meet all his requirements and to pay depositors or any one else. Our banks are timid because of the present condition of affairs. They cannot rediscount; the bank that would rediscount in Canada to-day would lay itself open to suspicion. The great feature of banking in Europe, especially in London, is the system Of rediscounting. The Bank of England, whenever it wants money or gold in a time of emergency, says to its bill brokers; ' Go out and sell these bills wherever you cam, and bring us the gold.' .Sometimes they are willing to submit to a farthing reduction in interest, and think nothing of it; they know that any day they can get either the gold or its equivalent. We must have that system in this country if we are to inspire our banks with confidence to carry on business at all times and to provide money sufficient for the business of the country.
The business men of Canada to-day are concerned even more about the currency of this country and about providing finances for the country's needs than they are wmii regard to the war itself. I believe that the country looks to-day to this Parliament for a clear declaration of the inauguration of a new policy with regard to banking and currency in Canada. It must come. It took a long time to work it out on the other side, but they have worked it out, and if we wish to stimulate our industry, to assist the development of our country and to find employment for our people, we must establish some such new system. In doing so it is not necessary that we should do anything hurtful to our banks; not for one moment do I propose that when they withdraw their note issue the Government should take charge of and furnish the entire note issue.
There is an intimation in another part of the Order Paper that the Government proposes to issue additional notes up to any requirement as against securities deposited with fiscal agents of the Government named for that purpose. When we come to that I may discuss the matter at some length, but just now permit me to point out that the immediate requirement of to-day is not merely a war budget; it is a general budget; it is the declaration of a financial policy and the establishing of a system of taxation that will meet the requirements of such conditions as exist to-day. We want a currency and an expanded banking system that will meet all the requirements of the country. The farmers in the West want banking facilities in order to market their grain, and the best way of doing that is under a system of national notes. We are trying to ease off the situation in a roundabout way in regard to helping the farmers in the West. We propose to empower the banks to make loans on grain, etc., but if the banks have not the currency and have not the means whereby they may do so, what is the good of such legislation ? The requirements of the co.untry iare in the direction of a much larger issue of national currency, and I think that the minister, when he brings down his resolution dealing with the issue of national notes, ought to make it at least $100,000,000. Later he ought to take power to issue an amount of national notes for purposes of rediscount; if not at this session, then in the approaching session. We should then have a system of banking the fundamental principle of which would be (1) the currency of the country to be national currency based on the credit of the country and represented toy national motes. (2) A .system of rediscount by means of national notes.
Our banks practically confess that they are unable to carry on the business of this country. They are willing to help their present customers in a way, but can they help new customers? New customers have to be helped. The minister has various proposals in connection with rediscounting, as far as they go. He says the Government will make advances against securities deposited with them. Who is to be the judge to see that there is fair treatment in regard to that very matter? If it is put in the hands of the banks themselves, they may he willing to initial the .securities of certain interests or individuals friendly to them.

but we have to have a system of advances or of rediscounting which is in the hands of an absolutely independent body, organized, I suggest, as the great national bank of Canada. We want not only these national notes; we want a State bank- a great bank perhaps built up out of the Bank of Commerce and the Bank of Montreal, to be known as the Bank of Canada. Acting as the fiscal agent of the Government, it should have great capital; it should operate under a system of rediscounting, and it should emit the national currency. By conducting operations as the bank of the country, and by adopting the two great principles of national currency and rediscounting, such a bank should contribute in a large measure to more satisfactory financial conditions without in any way antagonizing the other banks. It would strengthen them.
If we have not grown as fast as we should have grown, it is because our banking and currency laws do not keep abreast with the requirements of the times. I give the minister credit for relying on national notes to help him out of this emergency, and I give him credit also for his proposal to issue national notes up to any amount against certain securities. But this policy should be not an emergency provision; it should be the bold and avowed policy of this country that our banking system shall be based on the principles adopted by other and modern countries, especially in old-fashioned Europe. Their system is far ahead of ours in the way of helping industries and obviating unemployment; yet we have gone on with this old system.
The hanks up to the present have claimed credit for upholding the credit of the country and doing everything they could to prevent financial depression. I give them a certain amount of credit for this, but it must be remembered that they have been given a monopoly of the banking business of Canada. The state must also go into the banking and currency business; it must be the ruling factor in finance. We want all our present banks. I like to see the capital of the public go into the banks, the banks making reasonable profit therefrom. They are entitled to all that, hut our old-ifashioned banking system is not equal to the requirements of this country. It is not equal to the requirements of the farmers; indeed, the farmers have had very little banking accommodation in Canada up to the present time.
Our banking system is not equal to the ordinary requirements of business and certainly it is not equal to emergency times like this. England is not disturbed in her financial policy at the present time, but she is willing to do anything that may be called for by the conditions. The courage of England's financial policy in the last few days is the admiration of the world. England has done everything to uphold the financial situation. She has kept the sea routes open, she has strengthened the bank of England, she has guaranteed the bank of England in discounting foreign bills. She has done everything necessary and she has pointed the way to us. All that is needed is more courage on the part of onr Government, following up what they have already done. Let them do all they can in this emergency session but let them come here next session with a currency and a banking proposal that will be equal to the requirements of the country. I regret that the Minister of Finance, when he dealt with the financial position of the country and the requirements of the Government, did not go a little further. I hope he will go further in discussing his other resolutions and tell the people what he intends to do, that all he can do he will do to aid and assist the business of the country in the effort to restore business from its present dislocated condition.
I know my own people in my own constituency; I know my own city and I know my own province; I think I know the feeling of the country generally pretty well, and I believe that all Canada is behind the Government in doing everything to save the honour of the Empire and especially to maintain the cause of freedom and free government. That is worth everything. I do hope, now that the isword has been drawn, that the allies, including England and her daughter states, will keep at it until the end so that once this conflict is over there will be an end of war. If we can get rid of war by supporting the mother country and doing our full share in every direction, we will have done something that will bring again peace and prosperity to the world. We have all wished to see militarism disappear; it is the curse of humanity in this day; we have to keep at it until it is finished. I care not how long the battle; it may be a most serious, long and discouraging struggle, but now that we have entered upon it we must see it through and our legislation must be based on the fact that it is to be a long and a severe struggle. If

that is the ease, and while this is an emergency measure we have here to-day, we must revise our orientation in regard to our financial structure and organization. We must come back here next session and establish a system of currency and of national credit adequate to the requirement of the country. The national credit is based on the savings of the people whether in insurance companies or banks or saving societies and on investments of one kind or another; also the credit of a country is based largely on securities that our companies issue. We have been issuing in this country, as they have in United States, a class of watered securities that have injured the credit of this country and caused enormous losses ito our people. If we had in Canada now the money we have lost in speculation and watered stocks engendered and encouraged by the action of our banks through their call loan system, we would not have needed any emergency proposals here-to-day. If we want to- hold up the national credit, which is partly based on the securities issued in the -country, we have got to take charge of all those issues, no matter what they may be. I read the other day that a great railway-corporation proposes to issue further -securities, perhaps with the consent of Parliament, I do not know; but from this moment there should not be any kind of security issued in this country that has not passed the approval of some responsible government board in the direction of -seeing that that issue will not hurt the national credit. The national credit of the United States has been injured by watered issues. Our national credit has been so injured. We saw the -stock exchanges closed the other day because of trading enormous stock carried on in Europe and this country and -supported by the banks of this country and other countries. If we have -control of the banks it is time we told the banks of this country that the savings of the people of which they are the custodians shall not be used for stock speculation, -and that if they are to be used for facilitating investment it must be on lines approved of by some responsible government board. The stock exchanges of Toronto and Montreal ought not to be allowed to be reopened until this matter has been cleared up. The way to do it is for the Government, in taking the wide powers they are taking now, to take further power to say that advances made by banks of this country for carrying stocks on margins shall not be allowed. Are we to know before this session closes
that the savings of the people, to the extent of $200,000,000, in the banks- of this country and placed on loans for stock speculative purposes in the United States, is to be ordered back if it can and not again used for that purpose? The responsibility to do this is on the Government. They have taken wide powers; let them take other power to stop it. They see the destruction that has been wrought. Let -anybody go into Montreal or Toronto or any of the towns of Canada and see the distress that has been wrought, how profits made out of real estate or mianuf-aoturing o-r merchandizing -have -been dissipated in years gone by. Nearly all the profits that have been made in Canada have been drawn into the maelstrom of stock speculation in Wall street and on our stock exchanges. I put protest on behalf of the people of this country, who-se deposits are in our banks and who to-day feel the great stringency in regard to currency, -against these two things, allowing our banks -any further to lend money for stock speculation purposes -and allowing any stock issue of any kind under -a federal charter or a federal Act of incorporation to go forth unless it has passed and been approved of by a competent board created by the Dominion for that purpose.


Mr. MICHAEL CLARK (Red Deer):: War -as viewed from some of its angles is a temporary triumph and prevalence of the abnormal, and it is quite in keeping with that thought that we should have had the shortest Budget speech on record. I shall endeavour to live in harmony with that speech by making my observations as brief as possible under the circumstances. I sincerely trust that nothing I say will he taken -in bad part by the Government or will inconvenience them in the slightest degree. There -are one or two observations, however, that I want to make upon the Budget, and upon the means taken by the minister to raise the money needed in this extraordinary -crisis in the -Empire's history that I should feel I was not doing my duty if I did not make. I listened to four speeches yesterday which have, I am -sure, never been surpassed and rarely equalled in the ability with which they voiced what is the national sentiment of Canada at the present moment, and I did not have any objection that I know of to a single sentence or phrase in any one of those speeches. However, a budget is a budget after all, and, however war may appeal to the imagination, a budget is necessarily a prosaic thing. It is a

practical thing, it is a matter of raising money, and as long as we have governments that introduce budgets, we shall have members who do not quite agree with the Government in the way they raise the money. I am sure that we in Canada have followed the example, to a very large degree, of the old country in uniting all the members of the community for the common purpose of national defence. I had an early opportunity of indicating what was the view of the members of the party to which I belong in the province from which I come on this matter, and I took the line which was taken about the same time by my leader-I was fortunate in doing so-of proclaiming, so far as I was concerned, a truce to all party strife. In the old country nothing has been more marvellous, I think, in the history of the world than the way suffragette troubles, labour troubles and all other troubles have disappeared and the people have united for a common purpose. I do not make this remark except for the purpose of a practical suggestion which I wish to link on to it. I am sure the Government will give attention to my suggestion, but I do not know whether their attention will lead to its adoption. We have on one of our coasts at the present time a number of men in jail who are not ordinary criminals. They are in jail .as the result of a labour dispute, and I cannot help thinking-and I offer the suggestion to the Government in all good faith-that it would be following the example of the old country in the matter to which I have referred, and following the example which has been general in our own country, if an appeal, which was made, I think, by my hon. friend from Nanaimo (Mr. Shepherd) when this matter was the subject of acute party discussion, were taken up at this present time, apart from any such party discussion, and [DOT]an act of clemency extended to these men, who, I repeat, are not ordinary criminals. I cannot help thinking that men who got into prison under such circumstances as did these men would be better off with their liberty at the present moment, with a chance of using any fighting powers they have on the Pacific coast, than lying in prison and being a charge on the public authorities.


Robert Laird Borden: I am informed by the Solicitor General that, with one exception, they have all been released.


Michael Clark: I must express my extreme gratification that the Government has anticipated my suggestion.

With regard to the proposals of the Budget, I have said that war is a triumph of the abnormal, and, I might have .added, of the extraordinary. I am bound to say that my hon. friend the Minister of Finance has met the extraordinary and the abnormal by very ordinary and very normal proposals. He has met this extraordinary state of affairs by a proposal to increase the debt of the country, which is not a new proposition, and by a proposal to increase the tariff. I do not think-and I should not be doing what I conceive to be my duty if I did not express myself firmly on this point-I do not think the Government has been happy in the way it has met this extraordinary crisis. As to the amount that is being voted, I do not think there is a man in Canada who will have a word of criticism to pass upon that, and if the Government needs to come back very shortly with a proposal to raise $100,000,000, I do not think there is a man in Canada will have a word to say in criticism of that; but I repeat, I do not think the Government are happy in the way they propose to raise it. I question very much the wisdom of disturbing the fiscal conditions of the country at all in the way of raising the tariff for the comparatively paltry sum which the minister will raise by that means. In the disturbed condition which existed before the war, and which has been immeasurably intensified by the war, I very much question the wisdom of that.
With regard to the increase in the debt of the country, I do not think that perhaps could have been avoided. The debt of the old land is largely, almost entirely, the residuum of the wars of centuries,	.and I do not think
that Canada possibly could have escaped increasing her debt. I would like to endorse at this point, however, the weighty suggestion which fell from my hon. friend, the junior member for Halifax (Mr. A. K. Maclean), that the Government should devote their utmost attention in every department to the most rigid economy in detail. That, if it be an abnormal suggestion .so far as the House ie concerned, is certainly a return to the normal on my part. I would like to endorse very strongly wihat fell from my hon. friend on that head.
With regard to the changes that have been made in the tariff, I think it is most unfortunate that the Government at this time should have had recourse to the in-

crease of the -duty upon two of what are the necessaries of life of the poor in this country. I do not want to utter a single word which would inflame any class animosity at this time, tout I think we shall [DOT]all .agree that the poor in this combat, whether in this country or in the old land, will bear more than their share of the suffering that the war will entail. It will toe the blood of the poor that will flow in the largest amount anyhow. As to the loss of treasure, the .poor newer have any treasure to lose. The poor will bear more than their share; tout when you tax the .sugar and the coffee of the country you make it certain that by the pressure of your taxation the poor will bear more than their share, for the French hahitant With a family of fifteen naturally uses far more sugar than the rich man who never has a family of fifteen-as least, I never knew one- who had You may toe absolutely certain that the difficulties of the poor will toe increased in this way. The same thing-applies in a minor degree to the tax on coffee.
I was very much interested in the steps which my hon. friend toais taken to see that those who are dealing in liquors do not wriggle out of their responsibilities at this particular moment in the history of the country. I wonder if my hon. friend has had his attention directed to some actions which perhaps are not wriggldngs, but which -are by no means lovely .actions, on the partof the sugar refiners in this country. I was talking to a gentleman yesterday who has some investments in sugar in this country, and who knows the industry thoroughly, and he told me of his intimate knowledge that since the war began men engaged in that industry who bought huge amounts of sugar before there was any question of war, and at the normal price prevailing before the war, have increased enormously the price they are now asking for that sugar. I think I am not going outside the .path of strict non-partisanship nor outside the path of any present duty when I call the minister's attention to that statement. I make it on my own responsibility and ask him to look into the .matter. When the people engaged in that industry are, according to those who know about it, taking this most reprehensible course of procedure, I do not think it is the .moment when the Government of the day should, for the paltry amount they are going to raise by this measure, increase the tax upon this necessity of the whole of the common people
of this country. In regard to the tax upon spirits and tobacco, the bigger it is the better in these times. As t general rule people ought to pay upon their luxuries.
I may be asked what I would have proposed to the Government as a substitute for the steps they have taken. I think that it would have been a most fortunate moment for the Government to have tried a little incursion into the realm of direct taxation. That would have been a triumph of the abnormal in Canada. Instead of increasing the duties which bear upon the poor, they would have had the great mass of the people of this country behind them if they had put a good fat tax upon incomes

let us Say a graded tax upon all incomes above $1,500 a year. I offer that suggestion to the minister because this may not be the last war budget that he will have to bring in. I am afraid it will not be. I offer that suggestion to him and to the Government as one well worthy of their consideration.
May I trespass one moment further upon the time of the House to remind the minister that the income tax in Great Britain was originally a war tax. The income tax in Germany to-day is a war tax. The same cannot be said of the income tax in the United States, but the fact remains that the income tax has recently been introduced into the fiscal system of the United States. I offer this suggestion in all good faith and without the Slightest desire to hamper the Ministry in doing anything to help the country under the circumstances prevailing at the present time. I apologize to the House for having said even these few words. I have fulfilled my promise that my Budget speech would be short.
I would not care to sit down without saying that I do not think my hon. friend the Minister of Finance used the language of exaggeration when he said that the national existence of Canada is at stake. I do not think it is possible to use language of exaggeration in regard to the tremendous crisis which faces not only Canada but the British Empire, the whole of the civilized nations of the world, and civilization -and -Christianity in the highest sense of the term itself. I do not think it possible to use exaggerated language about it. While I endorse what the Minister of Finance said on that subject, and while I appreciate to the full the gravity of the days, the months and possibly the years that are in front of us, I should still not be doing my duty to myself if I sat down without saying that I am a con-

firmed optimist. I believe that a war undertaken for the protection of self-government is one to which in the last resort the people of Canada will be prepared to devote their last drop of blood and their last dollar too. What I believe to be true of the people of Canada I believe also to be true of all the enlightened people of all the nations of the Empire and all the other nations with which we are allied at the present moment. I have the faith to look through the dark clouds that seem to hang over humanity as a pall and to see the silver lining to them. As I have read history, and as I look upon the circumstances under which we are at the present moment, I recall to myself for my consolation, as they are the support of my faith, the lines:
For God from evil still educes good,
And Freedom's seed still grows, though steeped in blood.


Sir GEORGE FOSTER (Minister of Trade and Commerce) :: I do not rise to interpose in this debate other than for one single and simple purpose. But before I proceed to that I want to say to you, Mr. Speaker, and to this House, how much I enter into the spirit of the closing remarks of my hon. friend who has just taken his seat (Mr. Michael Clark). In these days of comparative darkness and the approach of a struggle unparalleled in the history of the world, it is good for us, while acknowledging to the full all the seriousness of the conflict before us, to abate not one single jot or tittle of our hope and confidence in the ultimate triumph of the right. The feeling which prevails on both sides of this House and in all parts of this country is that, whatever may be said of other conflicts, in this we have no doubt of the righteousness of the cause we are defending.
What I rose to do was, not to say that my hon. friend who has taken hie iseait has made an unjust attack upon any portion of the commercial community, or the manufacturing community in [DOT]Canada, but to say to him that, from the knowledge which I myself possess, his informants have scarcely put him au fait with the facts of the case in reference to the attitude of the sugar refiners. I have had very close communication with the sugar refiners for the last fortnight, and I think I know the course which they have adopted. I have no other disposition than to give my meed of praise to the stand which has been taken by the sugar refiners of Canada during the last three or four weeks during which this crisis has been

upon us. The sugar refiners, not many in number in Canada, are in about this position, without going into details. They have a certain amount of raw sugars on hand which were bought when prices were normal. They have a certain amount of refined stock on hand which they have made and are now making from those sugars. Consequent upon the condition of things raw sugars are rising in price and will continue to rise in price probably for a more or less indefinite period. The whole situation is such as to make that pretty nearly a certainty if anything can be certain within a short range from the present. The sugar refiners of Canada have done this; they have in some cases not raised the price one single cent at which they sell to the wholesalers; in some other cases there has been a slight, but a very slight, rise in the price to the wholesaler. The wholesalers are under a certain arrangement with the refiners from whom they get their supplies, and the refiners are holding them to this arrangement, the purpose of which is to prevent the wholesalers from taking out more than they normally should from the refined supply and so exhausting the supply of sugar which at the present time, as far as refined sugar is concerned in Canada, is at an exceedingly low price compared with that in other countries. The wholesalers supply the retailers, and they again are exercising all through this country the power of restraint over the retailers, who are anxious to buy at the present price, being pressed by three different varieties of call. They are pressed for the normal call that the householders of this country have for sugar from day to day and week to week. That is the legitimate one. They are pressed !by a call from the hoarders amongst the householders of this country who, whether in full or in semi-panic or for whatever other reason which appeals to them, are putting in stocks greater than are necessary for present and for nearly approaching consumptive uses. That, when spread over a large area of territory and a large number of householders and families, makes a very important factor in the distribution. These they meet by simply averaging about what was the normal call from these retailers' last year's consumption and keeping them as nearly as possible to that. Where they are asked for a hundred bags by a retailer they give him ten or twenty or thirty bags, accord ing as that normal average is reached. That explains two of the different calls. The other is an insidious one, but still an im-

portant one. It comes from those who would buy from the wholesalers and retailers at low prices as much sugar as they can and speculate with it by sending it over to the adjoining market in the United States, where ito-day sugars are wholesaling at nearly seven cents per pound, while the Canadian price is from four and a half to five cents per pound, and where retail sugars are selling at eight and nine and ten cents per pound. This morning, just to satisfy myself, I called up the retailers of sugar in the city of Ottawa, and the quotations were from five and a half to six cents per pound and no more; and still I find that in the markets of the United States sugars of the same qualities are selling at eight, nine, and ten cents. Yesterday the refiners detailed the whole of their business operations so far as they possibly could for my satisfaction. It is the determination of the refiners to keep to the present prices as nearly as possible, moderated only by what will gradually take place, namely, the injection of raw sugars for refining purposes at increased cost. I think I need not say anything more with reference to that than to give just the facts of the case, and I give them because I am sure that my hon. friend from Red Deer (Mr. Clark) would not wish that any injustice should be done to these men. So long as the sugar refiners do as welll as they have been doing, and give the householders of this country the refined sugar iat the prices they have been charging, we have not very much fault to find with them. I wish I could s'ay as much for the dealers in beans. Some of the dealers, having or buying beans at very low cost, are trying to .sjelll. them -at about five or six times the cost and are holding them for those prices in different cities, thus sending up the price of this natural product beyond normal. The whole question of food prices is a very difficult one, but at the same time it is a very important one. I thought it only right to say this with reference to sugar, so that the House would have the knowledge I have at my command in that respect.


[Stage Direction]
Motion agreed to, and the House went into Committee of Ways and Means, Mr. Blondin in the Chair.
Progress reported.

[Stage Direction]
On motion of Sir Robert Borden (Prime Minister), the House went into committee
to consider the following proposed resolution, Mr. Blondin in the Chair:
Resolved, that it Is expedient to provide that a sum not exceeding fifty million dollars ($50,000,000) be granted to His Majesty towards defraying any expenses that may be incurred by or under the authority of the Governor in Council during the year ending the 31st day of . March, 1915, for-
(a)	The defence and security of Canada;
(b)	The conduct of naval or military opera-tiotns in or beyond Canada;
(c)	Promoting the continuance of trade, industry and business communications whether by means of insurance or indemnity against war risk or otherwise; and
(d)	The carrying out of any measures deemed necessary or advisable by the Governor in Council in consequence of the existence of a state of war;
Further resolved, that the Governor in Council be empowered to raise by way of loan, temporary or otherwise, such sums of money as are required for the purpose of making any payment authorized by any Act founded on these resolutions.
William John Macdonald: Will the public statement in regard to this expenditure be made now?


Robert Laird Borden: We are taking
the resolution up now pro forma. That information will be given on the second reading of the Bill.


Mr. SINCLAIR:: Will the minister be
kind enough to explain what assistance he intends to give in regard to insurance for our shippers? A good deal of interest is being taken in that question throughout the country. We all know that a good many ships are tied up in the St. Lawrence, and the war is so near that it is impossible to safely send ships across the Atlantic at the present time. Does the Government intend to guarantee the shipping that is now ready to cross the Atlantic?


Robert Laird Borden: The Minister of Trade and Commerce has at present under consideration some representations which have been made to him in regard to that subject. Later on, before the end of the session, be may be .able to .make a statement.
Resolution reported and concurred in.
Sir ROBERT BORDEN thereupon moved for leave to introduce Bill No. 3, for granting to His Majesty aid for military and naval defence.


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

[Stage Direction]
On motion of Hon. C. J. Doherty (Minister of Justice), Bill No. 2, to confer certain powers upon the Governor in Council and to amend the Immigration Act, was read the second time, and referred to a special committee composed of Sir Robert Borden, Sir Wilfrid Laurier, Sir George Foster, Mr. Pelletier, Mr. Pugsley, Mr. A. K. Maclean and Mr. Doherty.

[Stage Direction]
On motion of Hon. W. T. White (Minister of Finance), the House went into Committee to consider the following proposed resolution, Mr. Blondin in the chair:
Resolved, that it is expedient to provide that in case of war, invasion, riot or insurrection, real or apprehended, and in case of any real or apprehended financial crisis, the Governor in Council may, by proclamation published in the Canada Gazette:
(a)	Authorize the making of advances to the chartered banks by the issue of Dominion notes upon the pledge of securities, deposited with the Minister of Finance, of such kind and amount as may he approved by the Treasury Board; such advances to he repayable at such times as the board may determine with interest at a rate likewise determined by the hoard of not less than five per cent per annum;
(b)	Authorize the chartered banks to make payments in the bank notes issued by such banks instead of in gold or Dominion notes, the total amount of the notes of any chartered bank circulation at any time not however to exceed the amount of its notes issuable under the provisions of the Bank Act, and of an enactment founded upon the next succeeding clause of this resolution;
(c)	Authorize the banks to issue excess circulation, from and including the first day of March in any year to and including the last day of August next ensuing, or during any part of such period, to amounts not exceeding fifteen per cent of the combined unimpaired capital and rest or reserve fund of the respective banks, interest to be payable on such excess circulation at a rate not less than five per cent per annum;
(d)	Suspend the redemption in gold of Dominion notes;
(e)	Authorize, in so far as the same may be within the legislative authority of the Parliament of Canada, the postponement of the payment of all or any debts, liabilities and obligations however arising, to such extent, for such time and upon and subject to such terms, conditions, limitations and provisions as may be specified in the proclamation.
William Thomas White: I desire to move a slight modification in this resolution. In section (a),.after the words 'chartered hanks' I desire to insert the following words: 'and to the saving banks to which the Quebec Savings Bank Act, 113, applies.' There are two specially chartered savings banks, one in Quebec

and one in Montreal, and I desire that this arrangement [DOT] shall apply also to them.


Mr. NESBITT:: Would the minister say
how far he proposes to extend section (e) ?


William Thomas White: This is enabling legislation. It authorizes the Government by proclam atiton to declare what is known as a moratorium. A moratorium may be general or it may be limited, and for such time and such conditions as the Government may determine. At the present time there appears no necessity for a moratorium of either a general or a limited kind, and so far as I can see no such necessity is likely to occur. We are taking the legislation as a precautionary measure, so that in case of an emergency arising in which it appears to be in the public interest that a moratorium proclamation should be issued, of a limited or of a general character, the Government will be in a position to act. The legislation does not of itself have the effect of postponing-the maturity of obligations, hut merely gives the Government authority in the matter should occasion arise. It is not in the mind of the Government at the present time that such a proclamation is to be issued.


Edward Walter Nesbitt: I understand that. But
the reason why I asked the question is that while I can see that occasion might arise when a moratorium might be proclaimed to a limited extent, I do not think that unlimited power in such a matter should be given ito any government. The Parliament of Canada is the only authority that should have such power.


Mr. GERMAN:: Has this Parliament
power to give the Government the authority here proposed?


William Thomas White: I think there is no question that within the jurisdiction of the Dominion this Parliament has such power. Of course, matters of property and civil rights, under the British North America Act, come within the jurisdiction of the provinces. But there is a wide range of Dominion jurisdiction, as for instance, bills of exchange and promissory notes, interest, the regulation of trade and commerce, 'banking, and the issue of paper money. What we desire to have is what, I think, almost all European nations haKre-legislative authority under which, should occasion arise, the Government may act. On the second reading of the Bill I will give full information as to what has been done by the British and French Governments.


William John Macdonald: It is a igood thing to see the Minister of Finance so optimistic and to hear him express the opinion that it will not be necessary to issue a proclamation in the terms of the Act proposed. I should be inclined to agree with him that as matters are at present, perhaps, i-t is not necessary to issue such a proclamation. But I apprehend that every prudent business man in 'this country who realizes the conditions foreshadowed for our business interests in Canada must feel that the minister should reserve to the Government the right to put this proclamation into force should conditions arise which some think are very near at hand. It is well to be optimistic, but I believe that we are on the verge of conditions in which a proclamation of that bind, limited in its nature, will be imperatively demanded. I believe this power should be given to the Government.


Mr. PUGSLEY:: I regret to have to
disagree with my hon. friend (Mr. Macdonald). I do not think it would be wise in this country to issue such a proclamation, nor do I think it would be wise to give the Governor in Council the power to issue such a proclamation. Conditions here are different from what they are in the old-world countries. I think it would be better to run the risk of a few people being sued than to issue a proclamation under which a great number of people would be able to set their creditors at defiance. Such a measure would disarrange our affairs and destroy credit, and I think the authority proposed should not he given to the Government by this Parliament.


Alexander Kenneth Maclean: I presume that
the Minister of Justice will be prepared to make a statement on behalf of the Government upon the subject of the extent of the jurisdiction of Parliament in relation to this proposed legislation, and the scope it is proposed this legislation shall have.


William Thomas White: I may say that this matter, like many other matters that have arisen since the outbreak of war, has continuously engaged the attention of myself and of the Government. I appreciate to the full the argument of my hon. friend the member for St. John as to the gravity of taking a step which would postpone the payment of obligations. Speaking for myself, and speaking also for the Government, I can say to this House that no step bringing into foTce a moratorium enactment, either of a general or of a limited character, would be taken unless it were made perfectly clear to the Government, who should and
would be in touch with the financial and business community, that such action was imperatively necessary and in the national interest. It is impossible to define the circumstances and conditions under which the Government would take such action, but I can conceive of conditions arising under which this Government, like the Government of Great Britain, might feel it in the public interest incumbent upon them to make a moratorium proclamation, either of a general or limited character, and for such time and subject to such terms and conditions as the Government might think proper.
I have kept in the closest possible touch with the Canadian situation. I have consulted with leading members of the financial and business community, and, to-cLay, according to the opinions that have been expressed to me by men whose opinions are entitled to weight in the community, there is no occasion, so far as I can judge, for the Government taking any action of the character which we are discussing. As far as the immediate future is concerned, I repeat I do not see that any such action is necessary. I am not asking for this legislation, which is general in its character, with a view of the Government immediately taking some steps under it, but I am profoundly convinced of the wisdom of having on the statute books of Canada a general legislative enactment under which the Government may, should the emergency arise, take steps that may be imperatively necessary in the financial and business interests of the community.


William Pugsley: Does my hon. friend not think that the very fact of Parliament's giving to the Governor in Council the power to bring this law into force will disarrange credit and interfere very seriously with business conditions?


William Thomas White: 1 think not, for this reason: that the circumstances of the time are abnormal. In my Budget speech this afternoon I pointed out precisely what has taken place. I suppose among the most conservative nations in the world, if not the most conservative, is Great Britain; yet upon the occasion on which this Government took certain action, which I shall explain to the House later in connection with this same Bill, we had this condition in Great Britain. It was upon the eve of the declaration of war by Great Britain against Germany. Monday the 3rd of August had been a legal holiday. The Imperial Government declared

three additional holidays, and they proclaimed a moratorium, subsequently ratified by legislation, under which the maturity date of bills of exchange which had been accepted prior to August 4 were postponed for one month. They stood ready to suspend the Bank Act. That was the situation that existed in England by reason of the crisis that prevailed at that time. In France a moratorium-because the word ' moratorium ' is applied to the proclamation itself-was brought into effect. The public mind, therefore, has been prepared for this general moratory legislation. While personally I should be the last to bring any such legislation into effect unless it was imperatively necessary in the interests of the public, at the same time 1 believe that this general legislation should be upon the statute' hooks of all countries. My bon. friend has said that so far as indebtedness is concerned, it is better that debtors should be put to the inconvenience even of what might be regarded as oppressive legal procedure in a critical time; that it is better that that should be done than that legislation of this character should be put into effect, with its disturbing and deranging influences. I should be disposed to agree with my hon. friend in so far as his expression of opinion relates to what might be called ordinary contractual indebtedness throughout the country. The courts of the land are able, through the power which they have, to delay actions, and, by their control over costs, to prevent undue advantage being taken, and I assure my hon. friend that no mere pressure in connection with ordinary indebtedness would cause me to bring into effect this extraordinary legislation. The question however, is much wider than that; on the second reading I shall be glad to tell the House what was done in Great Britain and the effect it had upon Canadian acceptors of bills and upon corporations and others whose securities were payable in London.
It was very fortunate, so far as Canada was concerned, that this happened in the month of August. The moratorium proclamation in Great Britain applied, as I have stated, with certain exceptions, to bills of exchange accepted prior to the outbreak of war, and it was afterwards extended to all payments maturing iunder contracts, with certain minor exceptions. But it was specifically made not to apply to debts owed in Great Britain by parties, firms or corporations resident or having their chief place of business outside the British Isles. The result was that Can-
[Mr. W. T. White. 1
adian and other companies and individuals who had obligations to meet in London during the month of August were not entitled to the benefit of the moratorium, and on the other hand were by the moratorium put in the position that they were unable to obtain payments which were due to them by their British debtors during the period of the moratorium. So far as parties outside of Great Britain were concerned, then, they had to pay, but the parties who owed them in Great Britain were not obliged to pay; the moratorium postponed the obligations. I may say that save as to accepted bills of exchange, financial houses of London practically ignored the moratorium, and declined to take advantage of it. By reason of a splendid stroke on the part of the Imperial Government, whereby they guaranteed the Bank of England on discounts of all acceptances prior to the outbreak of war on August 4, the situation has been very much eased, and at the present time there is comparatively little inconvenience from the moratorium so far as Canadian interests are concerned.


William Pugsley: How long does it last?


William Thomas White: Until September 4, one month from August 4.


William Pugsley: Then it ceases?


William Thomas White: Unless it is further extended. The effect of the moratorium was to postpone for one month the maturities of bills of exchange which had been accepted prior to August 4. But British financial interests practically ignored the moratorium except in so far as it affected acceptances, and the action of the Government has greatly relieved the situation. I made the modt careful inquiries through the office of the acting High Commissioner as to the effect the moratorium would have upon the obligation of Canadian companies to provide interest, sinking fund and principal payments during August. August, fortunately, is what we call an off month financially. Very few interest or sinking fund payments fall due in August, and principal payments usually mature on July 1 or January 1. In another thing Canada was fortunate. Canada is a drawing nation, and Great Britain is an accepting nation. Many of our financial institutions had accepted bills of exchange in the usual course which had gone forward from Canada or New York. The effect of the moratorium was to postpone those payments which fell due prior to August 4 for one month. Under the law and on' the authority of a decided case

which arose out of the war of 1870, the postponement of the obligation of the acceptor automatically extends that of the drawer and the endorser. Therefore the moratorium, which was first put into effect in Great Britain, resulted not only in postponing the date of payffient of the bill for the benefit of the acceptor, but also extended similarly the liability of drawers and endorsers. The matter was dealt with specially also by a subsequent proclamation on the part of the British Government.
Now the situation is rapidly becoming normal, and it would appear to me unlikely that after September 4 the British moratorium will be continued in effect. That, of course, is a more or less enlightened guess. We cannot tell; and I am strongly of the view that, while a government should be reluctant in the extreme ito bring into effect even to a limited extent a moratory law, and should only do so upon the clearest possible evidence that it is required in the interest of the financial and business community and after consultation with the leaders of the financial and business world, still I am firmly of the opinion that such a general law ought to be on our statute books in order that it may be availed of in case of necessity.


Edward Walter Nesbitt: My inquiry was made
with a view to finding out whether the minister intended the moratorium to apply to ordinary trade bills. I am much obliged to the hon. gentleman for his very explicit explanation. At the same time, apparently he intends to make it unlimited. He says the courts now have power to govern to a certain extent the payment of ordinary debts, but this would overcome anything that the courts might do so far as the Dominion Government have power. I do not think the Government ought to have power to stay ordinary trade bills being paid, up to a certain amount anyway. I can quite appreciate that the Government should have power to pass this legislation in case other countries pass it, and I think it should be done, but to interfere with ordinary commercial transactions and allow-we may as well speak openly-dishonest people tc take advantage on payments they should make and could make, is something that should not be done except with the whole voice of Parliament. That, of course, the English people were able to do as Parliament was sitting there. I think it was perfectly safe for the Governor in Council to have a limited liability in this matter with reference to international
affairs and very large affairs; but further than that I do not think it should be extended.


William Manley German: As I understand the
British North America Act, all matters of civil rights are referred to the provinces and the collections of debts are matters of civil rights. Does the Finance Minister propose that this Parliament has a legal right to give to him authority to postpone the payment of a debt say by a company incorporated by Dominion charter if the indebtedness is due and' owing in any one of the provinces in the Dominion of Canada? For instance, a mercantile corporation incorporated by Dominion charter is indebted in large sums of money in one or more provinces of the Dominion of Canada. Does my hon. friend contend that the passing of this Act would authorize the postponement of the payment of those indebtednesses and prevent the creditors in one province or other collecting those debts -against the company incorporated by the Dominion charter?


William Thomas White: If my hon. friend will
look at subsection (e) he will see that the authority that we are asking is only that which may be conferred by the Parliament of Canada acting within its jurisdiction. Questions of simple debt or contract would appear to be within the jurisdiction of the several provinces as coming within the subject of property and civil rights. But, on the other hand, there is undoubtedly a very wide jurisdiction within which the Dominion could act if, as I have said, it should be imperatively necessary. For example, the Dominion has the large field of bills of exchange and promissory notes, banking and interest. How far that would clash with provincial jurisdiction in the matter of the payment of interest I do not for the moment express an opinion because I have not reached a conclusion on it. The Dominion has authority of a wide-reaching character under the clause of the British North America Act which gives its jurisdiction over the regulation of trade and commerce and bankruptcy and insolvency. How far the courts of the land would authorize the Dominion of Canada to go under the jurisdiction thus conferred upon it by the British North America Act I am, of course, unable to express an opinion. They might go pretty far. I think it clear that simple debts and contracts would come within provincial jurisdiction.
The question does not arise of course with

respect to the legislation of Great Britain for the reason that Parliament there has legislative authority over every subject, and there is no division of jurisdiction as there is here. I do not believe that my hon. friend and I see this matter in very different lights. If he has it in mimj that it would be my view that the Dominion can pass a law under which indebtedness of every kind whatsoever throughout the Dominion could be postponed, I would say to him at once that the Dominion in my opinion has no such jurisdiction. We are discussing a legal question which is fairly clear in some of its aspects, but which in other aspects presents difficulties, whose solution would depend upon judicial decision.


Mr. DEVLIN:: Have the law officers of the Crown advised whether such a moratorium would affect deposits in banks?


William Thomas White: I have not asked the law officers of the Grown specifically as to that matter, nor have I considered whether the proclamation might apply to that or not. As a matter of fact I think that general legis-laion should be had and once it is adopted the Dominion Government could in any emergency that might arise act after taking the advice of its legal officers as to the legality of its action.


Mr. W. F. MACLEAN:: In regard to subclause (a) I would like to ask whether the minister takes control of the rate of interest the banks may charge to customers?


William Thomas White: When I made this arrangement I took up with the banks through the chairman of the Bankers Association the question of interest, and I requested of the banks-and I must say they have met me in the fairest spirit-that during this period their rate of interest should notjtbe increased, and that they would meet the situation reasonably and fairly giving such extensions of credit as might be possible and consistent with, sound banking, and generally cooperate in meeting the situation that has arisen. The banks are desirous of doing everything they can to assist the Government in the conditions which now prevail owing to the outbreak of war.


William Pugsley: No doubt the week or two following immediately upon the outbreak of war will have been the worst period so far as financial operations are concerned, no matter how long the war may last. In England they have adopted a moratorium. Having got over the crisis so far as financial operations are

concerned, why should we enact legislation, our power to enact which is exceedingly doubtful, which may have the result of disturbing the credit of the people of this country. Take our trade with the United States for instance. The people of Canada buy in the neighbourhood of four or five hundred million dollars worth of goods a year from the United States, and they must necessarily get credit from the people of the United States. Now, what is going to be the effect when it is published in the United States that conditions are such in Canada that this Government has thought it necessary at a special session of Parliament to ask authority to proclaim a moratorium which will relieve for such a period as the Government determine debtors from the obligation to pay their debts? It is going to interfere most seriously with the credit of the people of this country. How is the public going to know when and how you are going to exercise that power? How are they going to know what class of debts will be affected, and in what mode you are going to exercise that power when in operation, or for how long -it is going to exist? I say that unless the minister can tell us to-day, after the war has been in operation for some three weeks, that there is in his opinion a necessity for issuing this proclamation and bringing a moratorium into force he ought not to ask Parliament to entrust him with the power to issue such a proclamation.


William Thomas White: In answer I can simply say that in Great Britain they have introduced such .a law as we are introducing heTe.


William Pugsley: Was not the proclamation in England issued (by virtue of an old statute?


William Thomas White: They introduced a Bill
which went through the House at once.


William Pugsley: Only referring to the
banks.


William Thomas White: Oh, no, a general moratorium. Our Bill is founded upon the English Bill. We can discuss this more fully on the second reading. I say in all frankness it is not in my mindi that any moratory proclamation is necessary, but it is my opinion that we should have this enabling Legislation upon the statute-book of Canada just as it is on the statute-book of the United Kingdom.
Resolution reported -and concurred in.

Mr. WHITE thereupon moved for leave to
introduce Bill No. 4, to conserve the commercial and financial interests of Canada.


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

[Stage Direction]
On motion of Hon. W. T. White (Minister of Finance), the House went into committee to consider the following proposed resolution, Mr. Blondin in the Chair:
1.	Resolved, that it is expedient to increase the power of issue of Dominion notes by providing that the Minister of Finance shall hold gold-
(a)	to the amount of twenty-five per cent of the Dominion notes issued up to a total issue of fifty million dollars (instead of up to a total issue of thirty million dollars as heretofore) ;
(b)	as respects Dominion notes issued in excess of fifty million dollars, equal to such excess.
2.	Further resolved, that Assistant Receivers Generals' offices be established at Regina and Calgary.
Resolution reported and concurred in.
Mr. WHITE thereupon moved for leave to introduce Bill No. 5, respecting Dominion notes.
Motion agreed to, and Bill read the first time.
Robert Laird Borden: I suppose it
would be better to postpone the second reading of the Bills until to-morrow?


Sir WILFRID LAURIER:: Very well.
On motion of Sir Robert Borden, the House adjourned at 6.07 p.m.
Friday, August 21, 1914.