1915-02-23

PRIVATE BILLS INTRODUCED.

[Stage Direction]
Bill No. 48, to incorporate Austral Insurance Company.-Mr. Bickerdike.
Bill No. 49, respecting The Calgary and Fernie Railway Company.-Sir James Aikins.
Bill No. 50, respecting The Canadian Western Railway Company.-Sir James Aikins.
Bill No. 51, respecting The Kettle Valley Railway Company, and to ratify and confirm an agreement with the Vancouver, Victoria and Eastern Railway and Navigation Company.-Mr. Green.
Bill No. 52, respecting The Montreal, Ottawa and Georgian Bay Canal Company. -Mr. G. V. White.
Bill No. 53, to incorporate The Marcil Trust Company.-Hon. Chas. Marcil.
Bill No. 54, respecting The Toronto Terminals Railway Company.-Mr. Macdonell.
Bill No. 55, to incorporate Vancouver Terminal Railway Company.-Mr. Stevens.


[Stage Direction]
Mr. E. A. LANCASTER (Lincoln and Niagara) moved for leave to introduce Bill No. 56, to amend the Insurance Act, 1910.
He said: The Bill deals simply with that class of life insurance policies known as renewable term policies, under which a man takes out a policy for six months or a year and is called upon to pay an increased premium each time that he renews it. Such policies as at present issued give a schedule of the rates which each man will have to pay, the premiums increasing steadily until he reaches the age of sixty; but the insurance company gives him no assurance as to what will happen when he reaches that age or after he passes it. The man finds that when he is sixty years of age he is at the mercy of the insurance company, and has to pay enormous premiums or lose all the money that he has paid in premiums up to that time. This Bill gives him an option at any time to exchange that policy for what is known as an ordinary life level premium policy by paying to the company the difference in the premiums that he would have paid, with compound interest computed yearly, so as to make the policy equitable to every one. That is the purpose of the amendment. It is not the custom to debate a Bill on its first reading, so I will defer any further remarks until the second reading.
Motion agreed to, and Bill read the first time.


[Stage Direction]
Hon. C. J. DOHERTY (Minister of Justice) moved for leave to introduce Bill No. 57, to amend the Senate and House of Commons Act. He said: The purpose and effect of this Bill is to render eligible to and capable of sitting in this House and of sitting in the Senate all officers and men in active service in the military or naval forces, notwithstanding the fact that they receive the pay pertaining to their position as such; and furthermore to provide that in the computation of days of absence on the part of any member of either House, any days during which he may be absent on active service in the military or naval forces shall not be computed.
Motion agreed to, and Bill read the first time.

[Stage Direction]
On the Orders of the Day being called:
Mr. TURRIFF:: A few days ago I asked the Prime Minister if the Government had taken any steps to appoint counsel to

protect the rights of the people in connection with the coming meeting of the Railway Commission to consider a proposed general increase in freight rates. Is the right hon. gentleman now in a position to answer my question?


Sir ROBERT BORDEN:: It is the intention of the Government to appoint counsel.



FEDERAL LABOUR BUREAU.

[Stage Direction]
On the Orders of the Day being called:
Mr. W. M. MARTIN:: Is it the intention of the Government to introduce this session any legislation looking to the creation of a federal labour bureau?


Robert Laird Borden: The Minister
of Labour has had the subject under consideration. 1 cannot give my hon. friend a definite answer to-day, hut if he will repeat his inquiry later, we will he prepared to make an announcement.



THE BUDGET.


[Stage Direction]
Consideration of the proposed motion of Hon. W. T. White (Minister of Finance) for Committee of Ways and Means, resumed from February 11.
Mr. A. K. MACLEAN (Halifax):: In resuming the debate on the motion that the House resolve itself into Committee of Ways and Means, let me point out that a review of the Budget speech or financial statement of the Minister of Finance naturally involves three main considerations: the war supply; the ordinary or civil supply; and the ways and means proposed to supplement the existing sources of revenue.
A few words indeed will suffice to express my views regarding the war supply, which has been outlined in the Budget speech of the Finance Minister, and by resolution. In August last, the war supply Bill amounting to $50,000,000, was submitted to Parliament by the Government, and was speedily and unanimously voted. In the same prompt, generous and patriotic spirit will the representatives of the people vote the proposed war supply of $100,000,000. Engaged in one of the most momentous as well as one of the most tragic of wars known to human history, we are fortified by the strong belief that it is a war not for domination but for the preservation of our national and individual liberty; a war for the extermination of military

autocracy and the perpetuation of democratic institutions and rule by the people; a war to enforce the submission of nations to their treaty obligations and to the well established principles of international law; a war to redress the wrongs committed against an outraged people and to restore to a kingdom its sovereignty and its soil. In these circumstances, enjoying an unshaken belief in the justice of our cause, let me say, Mr. Speaker, that His Majesty's loyal Opposition will with promptitude and unanimity facilitate the passage of the War Supply Bill of $100,000,000, and we shall ever stand ready to supplement the same in order to continue the struggle to a successful issue and until peace under proper terms may be safely assured.
In doing this, however, we impose one condition upon and exact one promise from the Government: a strict accountability for the destination of the moneys so voted and a faithful realization on its part of the great trust resting upon it. The people of Canada expect from the Government unceasing vigilance against departmental follies and laxities, and dishonest contractors and patronage brokers. Nothing should more instantly provoke the overwhelming indignation of Canada than the thought that money voted for war purposes was diverted from its true destination by the profane hands of dishonest contractors and vendors, patronage brokers and party camp followers, and more so if it occurs owing to the lack of vigilance or duty on the part of the national trustees, the Government. I realize it to be too true that in Canada the public sense respecting Government expenditures is not so delicately and correctly adjusted as it should be, and it frequently appears but like the voice of one crying in the wilderness to protest; yet I feel it to be our duty to fortify as much as we can by protest the weak places in public expenditure. Having said this, I shall no longer direct your attention to that feature of the Budget programme.
Upon the balance of the Budget programme I find myself in'unqualified conflict with the Government. Our national expenditure, revenue and taxation is a domestic affair, always demanding the most careful and mature consideration, not less in war than in peace, but rather more. National and individual interests to-day call louder than ever in our history for a frank, critical consideration of what might be termed this year, the civil Budget. We are on the threshold of a new era in Canada. New economic issues of tremendous

importance are on the horizon. Old issues are likely to pass away, other problems are before us. We must abandon many of our national practices. National finance, as Gladstone once remarked, is more concerned with expenditure than with revenue. There never was a time in our history when a critical examination of our finance was so necessary as to-day, because we have had from the Minister of Finance the most disastrous financial statement ever delivered by a Finance Minister. Therefore, while intending to do no violence to a reasonable construction of the public sense of a party truce, I propose at some .little length dealing with the matter of expenditure.
Therefore I approach consideration of the matter of our ordinary revenue and expenditure. It being some days since the Minister of Finance delivered his Budget, I wish to refresh the memories of honourable gentlemen by repeating the summary of the financial statement made by him in respect to the fiscal years 1915 and 1916. The financial operations for the year ending March 31 next are estimated about as follows:
Revenue, (estimated).	$130,000,000
Expenditure ordinary. $140,000,000
Capital and special..	50,000,000	190,000,000
, Deficit for 1914-15	$ 60,000,000
The result of our financial operations for the year ending March 31 next will therefore show an excess of ordinary and capital and special expenditure over revenue, to the extent of $60,000,000, which will accordingly increase our debt to that extent, being the greatest in any year since Confederation. To this, of course, must be added the war expenditure for 1914-15 which the minister estimates will reach the amount authorized, $50,000,000. Including this amount the addition to the public debt will exceed $110,000,000. I do not wish to emphasize the war expenditure at the moment-in fact I mean to exclude it altogether from my remarks and calculations-but rather the fact that our ordinary and capital expenditures for the fiscal year ending March 31, 1915, will exceed the revenue by about sixty million dollars, increasing the net public debt by that amount.
l,et me summarily state the conclusions reached by the Minister of Finance respecting the next fiscal year. The estimated revenue and expenditures for 1915-16, calculating revenue on the basis of taxation in force prior to the presentation of the Budget speech a few days ago, is as follows:
Revenue (on previous tariff duties) $120,000,000 Ordinary expenditure. $140,000,000 Capital and special
expenditure	 40,000,000
Investments, Treasury bills and bank indebtedness	 24,000,000
War expenditure	 100,000,000

	304,000,000
Excess of expenditure	$184,000,000
Eliminating again	entirely	the war expenditure, it will be	seen	that	calculating
revenue upon the basis of the old tariff taxation, we were face to face with an estimated deficit of eighty-four million dollars, for the next fiscal year. Taking, therefore, the present and the next fiscal years together, we find that our total expenditures, exclusive of war expenditure, will probably exceed revenue, calculated on the former customs and excise rates, by over $144,000,000.
The Minister of Finance proposes meeting this situation partially by special and tariff taxation, and to the extent he recovers revenue from such sources the deficits I 'have stated will be reduced.
These figures, which disregard altogether war expenditures, disclose a condition in our finances which is indeed serious and calls for our careful consideration. Might this situation have been avoided by a sound businesslike administration of the public services? Is the Government wholly or partially responsible for this condition in our finances? Were the supplemental taxation measures introduced by the Minister of Finance avoidable under careful administration of public affairs? Were the causes producing the condition avoidable? These are questions which are agitating the people of Canada to-day. These are questions which we, as the parliamentary representatives of the people, must seriously consider and examine. While not a popular subject for exposition, I must discuss with some particularity the matters involved in these questions. I think I shall be able to show that our present financial condition was almost entirely avoidable, that it is due to an utter disregard of public interests and the lack of sound administration of the public services.	I think I shall be able to
show that the Government deliberately and in the face of warning, brought about our present financial condition, that they never did and are not today making an effort to maintain the equilibrium between revenue and expenditure, and place public expenditure upon a sound basis. They are almost entirely responsible for o.ur present financial position. It was once remarked of the financial record of one



of the governments of Great Britain in office a few years ago that,- " they were the heirs of a highly solvent estate; they have reduced it to a declaration of partial insolvency." Might not the same observation be made to-day respecting this Government?
On this side of the House we long ago prophesied the present condition of our finances. From the first day hon. gentlemen opposite assumed the treasury benches they gave great promise of prodigality in expenditure and regarded it even as a virtue. Extravagance has characterized their expenditures ever since. The country was promised and expected something quite different. The present Government party, when in Opposition, promised, if elected to power, a reduction in public expenditure. The late Government's ordinary expenditure was characterized as extravagant and wasteful. When in 1910 ordinary expenditure was about eighty million dollars, the present Prime Minister was so seriously alarmed and impressed with its magnitude that he declared it to be prima facie evidence of corrupt expenditure. They promised time and again by their leaders that if honoured with the confidence of the electorate, they would carry on the public services for a much less sum. And they professed much regard for the sanctity of public pledges given by political leaders. In their election handbook of 1911, I find this:
If there is one thing more clear than another in the government of a democratic country it is that political leaders should be held to a strict account for their pledges, and platforms. These form the basis of the contract between them and the electorate. These undertakings are solemnly given. They are not actionable in Courts	of Law	,and	therefore all	the moreshould	they be	held	cognizable in	the great
moot courts of the people, and their terms rigidly exacted.
Let	us see	if	they have	observedfaithfully their pledges. Under this code of political ethics are they guilty or not guilty? What are the facts regarding their	ordinary	or	consolidated	fund expenditures? Here are a few figures showing ordinary expenditures since 1910:1910	
$ 79,411,749 121911	
87,774,198	321912	
98,161,440	771913	
112,059,537	411914	127,384,472 991915	
140,000,000	001916	
140,000,000	00
Does this show a fulfilment of their public pledges? Do these figures indicate restraint or prodigality in expenditure? If an ordinary expenditure of $79,000,000 in 
1910 was prima facie evidence of corrupt expenditure, are not honourable gentlemen constrained to admit that an expenditure of $140,000,000 in 1915 is a plea of actual guilt? The expenditure of $140,000,000 in 1915 is almost double that of 1910, and I have no doubt that were it not for the little restraint that actual conditions have enforced upon them, the ordinary expenditure of 1915 would be more than double that of 1910. Such, doubtless, was their intention, for the amount voted for ordinary expenditure in 1915 was over $156,000,000. When the late Government came into power in 1896, ordinary expenditure was $36,949,000, and in 1910, fourteen years after, it was but $79,411,000; a little more than double the amount, and that was in a period of prosperity and development and rising revenues. The present Government have almost managed to double in less than four years, the expenditure of 1910, which they charged was prima facie evidence of corruption. Let me put this question to honourable gentlemen'. Has any substantial change occurred in Canada since 1910 in respect to our material condition, our needs and necessities, to drive ordinary expenditure from $79,000,000 in 1910 to $140,000,000 in 1915? Let hon. gentlemen answer.


Robert Laird Borden: May I ask whether my hon. friend regards a considerable portion of the expenditure as unjustifiable?


Alexander Kenneth Maclean: I do, and I propose to prove it later on.


Robert Laird Borden: Did my hon.
friend move against any of it in the House?


Alexander Kenneth Maclean: I fail to see how the absence of a formal motion relieves the Government of its responsibility.
There is another way of looking at the matter. Was the increased expenditure for 1913, 1914, 1915, and the proposed expenditure for 1916 accompanied by a corresponding increase in revenue? Has it that doubtful justification even? Let us appeal to the arbitrament of the actual figures, starting with the year 1912-13, the first full year in which honourable gentlemen were in power after the elections of 1911.
Revenue.	From all	Ordinary
sources.	expenditure.
1912-	13	$133,212,743	67	$112,059,537	411913-	14	
126,143,275	31	127,384,472	991914-	15	
130,000,000	00	140,000,000	001915-	16	
120,000,000	00	140,000,000	00
In order to make a fair comparison, in these figures I have estimated the customs and excise revenue for 1915-16 on the basis of taxation prevailing before the recently

added taxation. What does this disclose? Falling revenue and rising expenditure. For 1916 they do not suggest a reduction in expenditure. They propose continuing it at $140,000,000, as in 1915, knowing full well that customs and excise revenues on the basis of the taxation in force a few weeks ago would very materially fall and produce a much smaller revenue. " Oh, no," says the Minister of Finance. " We must count upon ordinary expenditure for 1916 reaching the amount of $140,000,000 the same as for 1915, notwithstanding a falling revenue; but we will just impose more taxation to meet the deficit, that is all." No reduction in expenditure, but more taxation to increase the revenue. They decide first what they shall expend, and then consider how they are going to get the revenue. Would it not have been prudent first to determine what the country could reasonably pay in taxation in 1915-16, and afterwards determine the amount and character of expenditures? I ask honourable gentlemen if this criticism is not just? Is not the conduct of the Government in the circumstances open to the gravest censure? Was not this a fitting season for the Government to practise economy and implement its pre-election pledges?
Let us look at it from another point. Do trade conditions warrant it? Did not trade figures for the past three years stand as a storm signal to the Finance Minister? Let us look at the volume of our total export and import trade since 1913. It is as follows:
1912-	13	$1,085,264,4491913-	14	
1,129,744,7251914, calendar year.. ..	860,615,163
More than a year ago the Government had evidence of declining trade. The official figures give the total trade for 1914 at only about $40,000 over 1913, and this was due to the abnormal fall exports of wheat in 1913 owing to an early harvest. The Government know that the total trade of the present fiscal year will be much below last year's, and that next year, 1915-16, the decline will probably be greater still; and yet in the face of such facts and in the light of such knowledge, we are calmly informed that ordinary expenditure for 1916 will be $140,000,000. What have honourable gentlemen to say to this?
I have been speaking in general terms, and it might well be asked of me to point out with some particularity the expenditure increases I object to, what departments of the public service I complain against in respect to expenditure, and where and how I would suggest reductions in expenditures for the coming year. I propose to do this, and I think I can present a case which the hon. gentlemen will find difficult to answer. If I fail it will not be for the want of facts. It will be due to my inability to marshall and present actual facts as they are. I feel sure that the record of the expenditures of the Government during the past few years carries its condemnation.
I have prepared a statement showing the expenditures of several of the important departments or branches of the public service, but not including 'the Militia Department which I purposely eliminate for the moment, for the years 1911-12, 1913-14, and the expenditures estimated and to be voted for 1915-16, and I invite the careful attention of the House to the several increases. The figures for 1914-15 are not available, and I take the estimated expenditures for 1915-16 as they would be practically the same, and for the further reason, that I am seeking to establish the view that our proposed expenditures for 1915-16 are, in view of all existing conditions, enormously excessive, and the failure to reduce them the real cause of the freshly imposed taxation. The statement is as follows:
	Expenditures by Departments.		
1911-12.	1913-14.	1915-16 Estimated.Civil Government	
Fisheries	
Mines, Geological Survey	
Immigration	
Quarantine	$ cts. 4,774,678 00 843,856 98 261,718 83 1,364,999 93 182,392 43 * 1,756,565 46 10,344,487 21 2,443,846 23 2,277,099 87 9,172,035 47	$ cts. 5,607,794 95 1,229,519 19 470,506 66 1,893,297 77 220,927 83 2,182,470 95 19,007,512 63 3,849,983 86 3,286,480 25 12,822,058 44	$ cts. 7,024,253 41 1,561,400 00 547,275 00 1.875.000	00 248,000 00 2,254,928 00 22,351,830 46 4.215.000	00 3,475,079 50 16,677,355 25Public Works	
Customs	
Dominion Lands	
Post Office	
23i

Now, let me examine these severally. Let us inquire in a spirit of fairness if they are open to criticism. Let us inquire if there . exist the facts to prove that degree of reckless and improvident administration of some branches of the public service which merits criticism and the withdrawal of confidence by the people in the Government. First, let me take the expenditures for Civil Government which cover salaries and contingencies of all the departments, at Ottawa, the High Commissioner's office at London, and the salaries of the lieutenant governors of the provinces. What is the record of increases in this branch of the service?
Civil Government Expenditure.
1911-12	$4,774,678 00
1913-14	 5,607,794 95
1915-16		7,024,253 41
We find that the cost of Civil Government in 1911-12 was $4,744,678.00; for 1913-14, two .years later it was $5,607,795.95,an increase of $663,116.95; for 1915, $6,850,257.91 was voted and it looks as if it would all be expended by March 31, 1915, an increase over 1911-12 of $2,000,000, an increase of $1,342,461.96 over 1914. For 1915-16, we are asked to vote $7,024,253.41, which in round figures is nearly $200,000 over 1915, $1,500,000 over 1914, $2,300,000 over 1912. These figures speak in condemnation of the Government more effectively than I can, and I leave them to hon. gentlemen for food and reflection. Has anything occurred in this country to justify this increase within the past thirty-four months? Does increased revenue, expenditure, trade, immigration, productions, or an improved public service account for it? This can only be accounted for by unnecessary additions of officials and increases of contingent expenses. Some increase was inevitable, but it is beyond human credibility that any justification exists for this enormous increase within such a short period. What have hon. gentlemen opposite to say about this? The ministers to-day say, we cannot reduce the service without inflicting hardships. My reply is that if the unnecessary increases had not been made there would be no decreases necessary to provoke hardships.
A return recently presented to Parliament is my authority for the statement that some -10,000 additions were made to the Civil Service list, in both the outside and inside service, I assume, in about the period .of two years. This number of additions may be capable of some explanation, but quite inconsequential. In the time of the present Government the Civil Service has been pros-
[Mr A. K. Maclean.]
tituted for political exigencies at the expense of the country while deteriorating the character and value of the Civil Service.


Mr. A. C. MACDONELL:: Would the
hon. gentleman be in favour at the present moment of reducing all civil servants' salaries say by ten per cent?


Alexander Kenneth Maclean: What I want to point out to my hon. friend is that under a sound administration of the public service of this country the cost of civil government would be two millions of dollars less to-day than it is, and there would be no necessity for my hon. friend to ask such a question.
Take Indian expenditure, which for the same period is as follows:
1911-12	$1,756,565.46
1913-14	 2,182,470.95
1915-16	*2,244,928.00
To be voted.
Here the increase in 1914 over 1912 was just a little short of $425,000. The Estimates to be voted for 1916 are again in excess of 1912 by $588,000. The administration of this department has increased in every province. In Nova Scotia I see it has increased seventy-five per cent in two or three years. The increase in salaries for Indian Affairs for next year in Nova Scotia alone makes an increase of 140 per cent over the present year, 1914-15. A recent return showing dismissals and appointments by departments credits the Indian Affairs branch with 135 dismissals and 295 engagements in about two years. This means that for every vacancy created there were, two appointments made. In this branch unnecessary offices have been created, not for the good of the service or the Indians, but for friends of the Government. The increase since 1911 has been about $750,000, an amount no one will believe to have been necessary.
The increases in Fisheries expenditures are as follows:
1911-12. . *>
$ 843,856.98
1913-14	 1,229,519.00
1915-16	/.. .. *1,561,400.00
To be voted.
Here we find for 1914 an increase of $385,663 over 1912, and the Estimates for next year, 1915-16, exceed 1912 by $717,000, and this, notwithstanding the fact that a part of the staff in the Fisheries branch will next year be in the Naval branch of the department, which diminishes the Civil Service vote of the Fisheries branch by $100,000. An examination of the ser-

vices performed by' this department will disclose nothing to justify this increase.
Next, take the Mines and Geological Survey expenditures:
19X1-12	$261,718.83
1913-14	 470,506.66
1915-16	*547,275.00
*To be voted.
In the Mines and Geological Survey branch the increase for 1914 over 1912 is $208,787.83, while for 1915-16 over 1911-12 it is over $285,000. The amount to be voted for salaries alone for the Mines and Geological Survey for 1915-16 is $358,775, being $97,000 more than the total expenditure of all kinds in this department in 4 p.m. 1912, and $114,500 more than the total expenditures of all kinds in 1910-11. This branch of the service has the record of 103 engagements of officials in two years, which pretty well tells the story, and I shall not say further about it other than to observe that the increase in a great measure would never have been incurred if the good of the service was the only motive. Examine it critically or otherwise and you are bound to reach the conclusion that the increase is almost indefensible.
Let me next inquire into Immigration expenditure just a little carefully. The figures for this period are:
1911-12	$1,364,999.93
1913-14	 1,893,297.77
1915-16	*1,875,000.00
*To be voted.
In 1911-12 the cost of this branch of the service was $1,364,999.93. In 1913-14 it was about $500,000 greater, over $800,000 greater than in 1910-11. For the ten months ending January 31, 1913, the expenditure was about equal to the total of expenditures for 191112, or $1,301,399, and let me with emphasis call your attention to the fact we are asked to vote $1,875,000 for 1915-16. The business of this department is immigration. While its expenditures were increasing, let us see how its business was getting along. In 1911-12 we had an immigration of 354,257, whereas in the calendar year 1914 it was 168,859, just about one-half. In 1915 our immigration will probably.be from 50,000 to
75.000,	and the amount we are asked to vote for that year is $1,875,000, which is $500,000 i n excess of expenditures of 1911-12, when we had an immigration of
354.000,	and about the same as the expenditure of 1913-14 when we had an immigration of 384,878. The return respecting dismissals and appointments credits this
department with 110 dismissals and 343 engagements in about two years, which gives the scent to a great deal of the extravagance. I think the few facts I have given about this branch of the service cannot fail to impress one. It is expensively operated. The amazing fact is this, that apparently they do not propose cutting down expenditures, notwithstanding our financial condition and the almost complete loss of immigration. Their policy is to keep up expenditures and increase taxation, notwithstanding that the business of the department is at a standstill.
Next, take Dominion Lands expenditures, closely related to the immigration service. Let me give you the revenue and the. expenditure since 1912 in connection with this branch of the service:
Revenue. Expenditure.
1911-	12... .'	$3,775,856	97	$2,277,098	S71912-	13	
3,402,026	63	2,462,623	921913-	14	
3,036,030	32	3,286,480	251914-	15	*2,996,271	39	f4,063,120	361915- 16	
J3,457,000 00
* Estimated. t voted. t To be voted.
You will have noticed how revenue since 1912 has been declining and expenditure increasing. In 1914 there was a deficit of $250,000 in this service, the first since 1885. In 1915 there will be a deficit of probably over $500,000. Unless the Minister of the Interior undertakes heroic measures, he will soon have a deficit of $1,000,000 and more in this department. There is no defence whatever for the financial record of this service for the past few years. For 1916 there should be a reduction in the Estimates of expenditure of from $1,000,000 to $2,000,000. With declining revenue and diminishing immigration and homesteading, we have increasing expenditure. The homestead entries for the past three years show the following decline:
No. of Acreage, entries.
Fiscal year ending March 31,
1913		 33,699	5,391,840
Fiscal year ending March 31,
1914	
31,829	5,092,640Calendar year,	1914	
25,623	4,099,680It cannot	be	asserted truthfully	that 'this
vast increase in the administration of Dominion lands has any business justification, or was necessary for the welfare of the service and the protection of public interest. The business of the department did not warrant such increasing costs of administration. Expenditures made for purely political and partisan purposes is the open sesame to the business record of this department.

Let us inquire briefly into Customs expenditures. A comparison of Customs revenue, with the cost of collection for say five years, might be of interest:
Year ending	Revenue.
March.
1911		$ 71,838,088 46
1912	
85,051,872	181913	
111,764,698	731914	
104,691,238	431915	*77,000,000	00
Expenditure.
1911	$2,187,174	761912	
2,443,846	231913	
3,150,776	751914	
3,849,083	861915	*4,000,000	00
'Estimated.
In 1911-12 it cost $2,187,174.76 to collect customs revenue amounting to nearly $72,000,000. For the year ending March 31 next, it will cost $4,000,000 or more to collect about $77,000,000 of revenue. No person, I may safely say, will be so presumptuous as to contend that the increased cost of this branch of the public service can be sustained by any fair consideration of the facts and circumstances. It is obvious that the service has been overmanned, that unnecessary outports have been established and unnecessary salaries paid, until a few short years of such practices have brought about the condition which the Minister of Customs admits is unsatisfactory. Besides, a great injustice is being done to those legitimately engaged in the service. In about two years, a return shows that in the Customs service there were 271 dismissals and 1,649 engagements. This tells the tale. The minister now says he cannot reduce the number of employees at the present time. A difficult task I grant you. I am pointing out the causes, not the effects, of the improper administration of the Customs service. The Minister of Customs is responsible for the causes bringing about the effects which he says can only be rectified by causing hardship. If it is difficult to repair the wrong by reduction in the service and expenditures he is to blame for that condition, and in that respect his administrative record is gravely censurable.
Just a few words as to Public Works expenditure on revenue account. In this case the figures are:
1911-12	$10,344,487	211913-	14	
19,007,512	631914-	15	*20,000,00.0	00
'Estimated.
Here we find the expenditure for 1914-15 one hundred per cent greater than the year ending March 1912, when revenue and trade conditions were much more favourable. The Minister of Public Works asks for a

vote for 1915-16 of over $22,350,000 which, roughly speaking, is about what he expended in 1914-15. I recognize the necessity of public works expenditure. I admit that works commenced cannot well be abandoned, but why should the expenditures of the present fiscal year and of the next fiscal year respectively exceed the expenditures of 1912 by $10,000,000? Does the Minister of Public Works pretend to say that the conditions of trade and revenue justify his expending $10,000,000 more this year in public works than was expended in 1912? The estimated expenditure for public buildings and harbours and rivers alone total $18,379,580 for next year; this might well have been reduced for the present by 50 per cent. I do not believe that the people of any province of Canada would have objected to the most drastic measures on the part of the Minister of Public Works during the present year and during the next fiscal year in connection with public works expenditure. Many of these projected works were without justification, the necessity for others have at least temporarily passed away by reason of the declining business of the country. Expenditures for these purposes should have been reduced to the minimum this year and next year. And bear in mind that the expenditures to which I have referred do not include votes for dredging and dredging plants nor for other public works of an important or national character, whether proposed to be made under ordinary or capital' expenditure. In respect to public works expenditure is it not time to adopt some rational policy? Is not this the time to commence? Circumstances will compel us in the near future, and I believe public opinion is condemnatory of the present method of spending money on public works. In this respect the present Government have been great sinners.
The Post Office Department deserves much attention, but I can devote to it just a moment. That this branch of the public service would sooner or later come into disrepute under the administration of the late minister was inevitable. Cancelling unnecessarily existing contracts, awarding contracts without tender, awarding contracts to tenderers other than the lowest, was bound in the end to tell. I do not know what is the record of this department in respect to additional employment. It would rank high. Perhaps a few figures showing the revenue and expenditure for i few years would be profitable:

Receipts.
. .$ 9,146,952 47 . . 10,492,349 18 . . 12,051,728 86 . . 12,954,529 92
Expenditure. $ 7,954,222 79 9,172,035 47 10,822,804 57 12,822,058 44
Here we find the usual surplus of one
million dollars and over in recent years reduced to zero practically in 19X3-14. In 1914-15 there will he a probable deficit of from $500,000 to $1,000,000, the first deficit since 1900, and probably a still greater deficit will be found in 1915-16. And why? Extravagant and inefficient administration affords the answer. There is no sound business reason for it. There may have been reasons for a small portion of this increase, but in the main it cannot be defended. For the past Jew years this department has been operated almost as much for political purposes as for the public service. One could easily present a strong and unanswerable indictment against the administration of this department during the past few years, time, however, will not permit it. Investigation of this department would disclose many of the causes necessitating the new taxation proposals of the Government.
Now, Sir, I have gone into these matters with some particularity, to lay the foundation for the contention that our proposed ordinary expenditures for the next year are excessive in the extreme, as the expenditures were last year. I have shown that the several branches of the public services have been carried on during the past three years with what appears indefensible extravagance. The same is true of most other departments. The gradually increasing annual cost of operating these branches of the public service has not been for the good of the service or for the necessities of the service, or rendered necessary by the business or trade of tne country. If this condition is difficult to remedy this year it is chargeable to the Government itself which deliberately and improperly created such conditions. The estimated ex penditure of $140,000,000 on revenue ac count for next year cannot be defended. Had the public services been administered during the past two or three vee-s with solely an eye for the public good and the public service, the ordinary expenditure would for the present year be at least thirty or forty million dollars below the amount which will be expended, and the additions to the public debt for the present fiscal year would have been that much less, and the estimates for ordinary and capital expenditure for next year, 1915-16, might easily be $40,000,000. below what they are.
No effort has been made towards reduction. Every effort is directed towards increase.
Will any man seriously argue that ordinary expenditure for the years 1915 and 1916 could not l^ave been well kept within the amount of expenditures for the years 1912 and 1914 when they were in round figures respectively ninety-eight millions and one hundred and twelve millions of dollars. Why should not our ordinary expenditures this year have been within the 100-million dollar mark, and why should not the proposed expenditures of next fiscal year be within the same amount? The fiscal year 1910-11 was a fairly prosperous one. It is a year memorable in the history of both political parties. It was in that year that hon. gentlemen opposite were contending that we were so prosperous and our future so well assured, that we should engage in no tariff alliances with our neighbours. In that year, our ordinary expenditures were eighty-seven million dollars. Mr. Speaker, do you know, or does any hon. gentleman know a strong, substantial, incontrovertible reason why our expenditures for 1915-16 should be in excess of that amount, namely, eighty-seven million dollars? Under a careful administration of the public services, during the present fiscal year, and next, there need not have been any substantial deficit, if any, in respect to capital and ordinary expenditures over revenue. Consider our declining revenue, trade and immigration, . the cessation of railway construction, that our borrowings from abroad have ceased, that the public debt interest account rose during the present year by nearly nine million dollars, that we face a probable annual pension charge of ten million dollars, that the world's capital is being dissipated by the great war now in progress-in view of all these and other circumstances prevailing during the past year and likely to continue during the next, can it be seriously contended that our current expenditure for 1914-15, and the proposed current expenditure for 1915-16 are justified? A reduction of fifty million dollars and more in ordinary and capital expenditure for 1915-16 would easily be possible if hon. gentlemen opposite were attempting to govern this country solely for the country's good. The Minister of Finance apparently has no control over his colleagues in respect to expenditures. He seems to be without influence among them. I venture to say that no im-paidial man can do otherwise than condemn the expenditure policy, of the Government ever since they came into power, but

particularly of the present fiscal year and as; proposed for the next; and it is for this reason that they are directly and conclusively responsible for the new taxation recently imposed upon the country. They could easily have avoided this fresh taxation, but they made not a single effort to do so. Do not the facts I have presented to the House conclusively sustain that contention?
In respect to its ordinary expenditures this year and next, the Government is apparently proceeding upon the theory that trade and revenue will suddenly resume its former proportions immediately after the end of the war. There is nothing to indicate that this will happen; in fact, the trend of opinion is to the contrary. Compare the course now being pursued by the present Minister of Finance with that of his predecessor in 1908 and 1909, when there was a slight recession in trade. In 1909 Mr. Fielding reduced his ordinary expenditures by over ;five million dollars, just the amount of the decline in customs revenue that year. A small amount, it is true, but based upon sound business principles. In that year there was an excess of revenue over ordinary expenditure of over twenty million dollars, but still in the circumstances Mr. Fielding felt justified, on account of the recession in trade and the decline in revenue, in reducing his ordinary expenditure below that of the previous year.
Let us now consider the methods that are proposed for meeting the Government expenditures-methods which I consider objectionable. In order to meet the estimated deficit of about $60,000,000 of capital and ordinary expenditure for 1915-16, over revenue calculated on the basis of the former rates of taxation, it is proposed to raise more revenue by special taxes, stamp taxes and increased customs taxes. We are informed that the war expenditures are for the time being to be met by borrowings from the British Government. Therefore it is quite clear that the additional taxation is made necessary by our excess of capital and ordinary expenditures over revenue.
I understand hon. gentlemen opposite to contend that the fall in revenue and the fresh taxation imposed is due to

the war. If I am not correct in this, let the correction come now. At any rate this point is worthy of investigation. I personally do not believe our loss in revenue is in any substantial degree attributable to the war.
I would here like to remind Government supporters that they have always contended that an excess of imports over exports was to be deplored, and that an equality was the condition to be desired. During the past year imports have diminshed considerably while out exports have pretty well maintained the normal. We therefore find that close relation between imports and exports which Government supporters claim should prevail. I ask the Minister of Finance if that condition of affairs to-day appears to 'be productive of good results. And they are making things worse by encouraging this " buy in Canada " propaganda, which I am sorry to see members of this Parliament are supporting. I can understand local patriotism encouraging the purchase of local productions, when it is a reasonably fair thing to do so; but I cannot understand any sane mail in this country encouraging the preposterous policy of discouraging purchases from abroad. That is but adding to the sorrows and difficulties of the Government. I would think that every man in this country who has reached the years of discretion would have learned in the first few weeks of the war the economic truism that to have exports you must have imports as well. The first few days of the present war must surely have impressed that lesson upon all men now living.
It is difficult to estimate to a nicety what will be the fall in revenue for the year ending March 31, 1915, due to the war or as a result of the war. Imports were declining, war or no war, with the consequent fall in revenues. I am of the opinion that our customs revenue will be found to have fallen but little this year as the	result of	the
war. Our customs revenue for the year ending March, 1914, was $104,691,000; for the year ending March, 1915, it is estimated at the Customs Department at $77,000,000, a decline of $27,000,000.
I have here a table showing our dutiable imports, and the duty collected each month during the calendar years 1913 and 1914:

Month.	Imports on Dutiable Goods.	* * Duties Collected.	1913.	1914.	1913.	1914.January	
February	$ 34,358,564	s 26,234,666	$ 8,862,982	$ ' 7,029,88835,111,113	25,511,846	9,152,220	6,822,92545,630,678	34,944,885	11,912,314	9,337,771April	
May	32,431,932	23,945,085	8,463,576	6,458,27140,120,651	28,346,934	10,306,244	7,619,74637,836,560	27,794,320	9,684,724	7,414,597July	
August	
September	39,394,223	26,424, 70	10,077,223	6,988,91739,277,690	29,497,076	10,125,3~6	8,358,94837,997,562	22,575,997	9,906,183	6,016,60635,238,192	21,061,440	9,198,657	5,657,87132,338,858	18,697,737	8,346,778	5,113,062December	28,798,409	17,482,008	7,845,300	4,953,048Total, 12 months	438,534,432	302,516,964	113,881,577	81,771,650
From this you will see that the imports of dutiable goods from January to August, 1913, inclusive, eight months, was $304,161,411; while for the corresponding eight months in 1914 it was $222,699,782, a decline of $81,461,629. The duties collected in the same period were respectively $65,224,434 and $46,931,171, a total decline of $18,293,263 in the first eight months of the calendar year 1914 as compared with the same period in 1913, or at the rate of about $2,285,000 a month, or $27,420 for the year. The total decline in customs revenue for the calendar year 1914 as compared with the calendar year 1913 was $32,109,927; so on this basis it might possibly be argued that the loss of revenue in 1914 attributable to war conditions was less than $5,000,000. That, I submit, is a fair method of computation. It would be necessary to have the customs returns for January, February and March of this year to ascertain accurately the loss of customs revenue in the fiscal year of 1915 as compared with 1914, but I venture to say no decline greater than $5,000,000 can by any fair system of computation be assigned to the war. The Government must have anticipated the present trade and revenue conditions. Many banking and commercial men in this country have stated during the past few weeks or months that the financial conditions were not due to the war, but were for other causes inevitable. The Government itself was alarmed over the conditions prevailing during the present fiscal year. I remember seeing m the press last June or July that an Order in Council
had been passed to actually deport people from this country back to Europe.


Mr. ROGERS:: That is not correct.


Alexander Kenneth Maclean: I say I read it in the papers.	*


Robert Rogers: You must have been reading the Globe.


Alexander Kenneth Maclean: I do not know whether it is correct or not, but the matter was very much discussed in the public press, and I should like to have some further explanation than a flat denial from the Minister of Public Works about it.


Robert Rogers: I will be glad to supply it.


Alexander Kenneth Maclean: Tell me whaJt the trouble was?


Robert Rogers: An hon. gentleman, last night, just before the House closed, asked that such an order, if it existed, be brought down. I asked the Secretary of the Privy Council, and he gave me this reply: " There is no Order in Council ordering the deportation of unemployed in Canada." It has not been passed.
Mr. MACk^nN: I am glad to hear it, but that is only evidence of the fact that no Order in Council was passed. I assume, in view of all that appeared in the public press, that the Government must have been considering the matter. 1 am bound to accept the word of the Minister of Public Works that no Order in Council was passed.
I have only occupied the time of the House upon this point to emphasize the fact that while hon. gentlemen opposite have

said, and will doubtless say in the future, that the falling revenue for the present fiscal year was due to the war, the contention is not entirely founded upon the facts. Some decrease in trade, some small decline in revenue, may be attributable to the consequences of the war, but hon, gentlemen opposite must remember that a great deal of our export and import trade during the past few months has been directly attributable to the war. Let the war bear its own consequences, its own sins. Let the Government take care of its own obligations and its own shortcomings. The Government were more alarmed over conditions last July than now with the war on our hands. I do not mean you could infer this from their expenditures. That would only prove that they have not and never had any concern about the condition of our finances. I Should say in conclusion on this point that the excise revenues for 191516 will be about the same as for 1914-15.
Now, if the decline in revenue is not in the main attributable to the war, then the Minister of Finance should have boldly faced the situation to-day and he should have commenced a year ago or more by reducing expenditure to come within the revenues, and not by increasing taxation to produce revenue to meet expenditure. It was almost as easy to reduce expenditure to the amount of revenue as not to do so. This was not the time for increasing taxation in any form except strictly for war expenditures.
But there is to be a war expenditure ol $100,000,000, and we will be told that for this reason alone fresh taxation was necessary. I would not deny the validity of that position if such were the fact. It has been the practice of belligerent nations to meet war expenditures by taxation and borrowings. If such were all the facts and only considerations in our case a good defence might be made for taxation for war purposes. However, the minister has arranged for war loans from the British Government during the continuance of the war. There is much to be said in favour of this. Canada was a borrowing country. Her loans amounted to from $250,000,000 to $300,000,000 a year. That has been cut off, and in this and other circumstances to borrow upon favourable terms during the war, funding the same after the war, is perhaps amply justified. If the Minister of Finance saw fit to declare to Parliament as his policy, the meeting of war expenditures
fMr. A. K. Maclean.]
partially by taxation and partially by borrowings, I think he could have found justification for so doing, and the Canadian taxpayer would have met his proposals in the proper spirit. But such is not the case, and I say his proposed special taxes and customs taxation are caused solely by the fact that his expenditures are and have been absurdly excessive, and he should have kept within his revenue and on the former basis of taxation. He can give no reason for not having done so. The Government and not the war is clearly responsible for the psoposed taxation. Even if the proposed taxes were specially ear-marked and to be directly applied in reduction of war loans I do not see that the position of the Government would be improved or that they would thus be relieved of blame for our present position. In that case the deficit of consolidated fund account would have been all the greater and the additions to the net debts would have been just the same. In either event they are censurable.


Mr. MEIGHEN:: The hon. gentleman stated that annual borrowings of $250,000,000 to $300,000,000 had been suddenly cut off. Will the hon. gentleman give the cause? Do I understand him to say that it is caused by the war?


Alexander Kenneth Maclean: I suppose that was due largely to the war, or to some extent at legst, but even our borrowings were declining. I referred to the decline in the borrowings of the country as a justification for the minister in borrowing entirely the war expenditure.
At this time I am not going to discuss the taxation resolutions in so far as they relate to stamp and special taxation. If they were necessary, or were to be applied to war expenditures, I do not think they are open to serious objection as to principle, though they work some injustice and might be improved in detail. I think the tax upon proprietary medicines is so excessive as to be unjust and should yet be modified. That is all I propose to say about the stamp and . special taxes until the resolutions are before the Committee of Ways and Means, except to repeat that their imposition was not necessary at this time under proper economies and administration.
Now, I wish to discuss several aspects of the freshly imposed tariff taxation, but in rather a general way. The desire of the average man in Canada regardless of politics is to search for a justification of tax-

ation imposed by a government during a war period. Ordinary patriotism prompts a generous consideration oi such measures. Now the Government have decided that 25 or 30 million dollars of taxation shall be levied by increasing the general tariff 7J per cent, the preferential tariff 5 per cent, and the making of all articles now on the free list, with some exceptions, subject to a 7J per cent ad valorem duty, and a 5 per cent preferential rate. I have given this matter some little consideration since the announcement. I have honestly endeavoured to discover supporting facts for the tariff increases on any grounds and have failed. I have sought for a justification for the method employed and the principle invoked, for obtaining supplemental revenue, and I must say that the more thought I have given to it the more convinced am I that there exists no justification for the tariff resolutions. If we had to raise additional revenue surely this was not the proper method. The Minister of Finance sought the line of least resistance but apparently invoked no principle and gave no consideration to the interest of trade or tax payer.


Mr. PUGSLEY:: He took the easiest way out.


Alexander Kenneth Maclean: He took the easiest way to make a tariff. Having created these deficits and incurred these expenditures in an easy way, it was only natural 5 p.m. that he would resort to an easy method of obtaining additional
revenue.
As hon. gentlemen know we have in Canada a tariff based on the protective system. To raise the general tariff 7i per cent, to increase the preferential tariff rates 5 per cent and to say that it was done for purposes of revenue is a proposition to which I cannot subscribe. It is trifling with truth and the facts. That additions to the general and preferential tariff restrict trade and reduce revenue is axiomatic, and the proposal to increase protective tariffs in a war period is without parallel, I think. It does look as if under the banner of war the Government have brought into the citadel a tariff for protection and not one for revenue, and we are not even told how long the misnamed stranger is to be within' our gates. The country was entitled to a declaration from the minister, that this increased tariff taxation was to remain operative only during the continuance of the war as a war tax, or that it was likely to continue indefinitely. It is, I predict, likely to continue in force in the
main, so long as hon. gentlemen opposite are to remain in power.
'Some hon. MEMBERS: That will not be long.


Alexander Kenneth Maclean: Let us hope we will be relieved of the war and of the Government about the same time. On the day he delivered his Budget, and after announcing his tariff resolutions, the Finance Minister, concluded by a statement of the belief that his new tariff would produce revenue and stimulate Canadian industry and agriculture. Well if the new tariff is going to stimulate Canadian industry and agriculture then that tariff is here, just as long as the present Government is here, because if it is a stimulant to industry and agriculture, then we may always expect to hear it said that dread consequences will follow a withdrawal of the stimulant. I predict it will prove more of a depressent than a stimulant. Further, it seems to me that more political consideration entered into the making of the tariff than the consideration of producing revenue. Was it politics or principal that induced the minister to leave tea on the free list?


Mr. WILCOX:: Does my hon. friend
think there ought to be a duty on tea?


Alexander Kenneth Maclean: I do not think there
ought to be any special duties or stamp taxes upon anything. Was it political consideration advanced by political supporters in some provinces or his own business judgment that prompted this course in respect to tea? He could not have been expected to restore the tariff on the agricultural implements that he slightly reduced last year, amidst the plaudits of hon. gentlemen opposite. However, Government supporters cheered the other day when the tariff was increased on other agricultural implements for the stimulation of Canadian agriculture. How very strange this all seems. Here and there we find a sop to this interest or that interest, to this prejudice or that prejudice. Everything indicates that the new tariff was inspired by protection and-politics and not revenue or patriotism. It is utterly bereft of principle or reason.
Now, what should be the main features of a war revenue tax? It should be made as much as possible on articles relatively cheap and of universal consumption.; it should not be so high as to discourage consumption; it should be of such a nature that it could be remitted on the termination of the purposes for which it was imposed; it should be of such a nature that the

revenue would go directly and wholly, less collection charges, to the Treasury; it should not create new vested interests; it should not unduly contract trade; judged by these tests, and they are the tests usually applied in such circumstances, the tariff resolutions fail, and should not meet with favour from any person or class. To add 7J per cent ad valorem to our present general tariff could not promote revenue or trade. It is a heavy increase. It must restrict consumption, because it means increased cost to producers and to consumers, particularly in a period when the purchasing power of the country is diminishing. A revenue might possibly be obtained by an increase of 7J per cent in the tariff rates upon selected imports. Here and there items of imports might be found where this could be done with success from the revenue standpoint. Investigation would lead the way in selecting the articles. However, to increase horizontally the general tariff 71 per cent, the preferential tariff 5 per cent, and the placing of the free list articles under the genera] tariff, without exception practically, without discrimination, without consideration of the different facts that might apply to one article and not another, without regard to the existing tariff rates, without cognizance of disrupted world trade conditions, without reference to the fact that many commodities principally produced by the belligerent nations are to-day unavailable, without thought of the business conditions to-day prevailing in Canada, is beyond comprehension, and can only be understood upon, the theory that the tariff was intended for protective and not for revenue purposes; or that, maddened by the situation and the conflicting views of his friends and colleagues, the Minister of Finance concluded to revise the tariff with his eyes shut and his ears closed.


Mr. MIDDLEBRO:: Will the hon. gentleman give us his method of raising this taxation, which will measure up to the test which he has just suggested?


Mr. GAUVREAU:: It is your duty to give it to us.


Alexander Kenneth Maclean: My contention is that there is no necessity for any tariff increases. Surely the hon. gentleman must admit that if the Government which he supports had administered properly the financial affairs of this country, we would not have had a $60,000,000 deficit this year, and there would not have been an estimated deficit of $84,000,000 for next year.


William Sora Middlebro: The same would apply to every country in Europe.


Alexander Kenneth Maclean: worsted yarns, woollen and worsted cloth suitable for uniform clothing (not including women's dress stuffs or cloth with pattern), uniform clothing, cardigan jackets, woollen jerseys. woollen gloves, woollen socks, and men s woollen underwear of all kinds.
Now, what does this indicate? It shows that the world's supply of wool is below normal, and that the cost of raw wool is unusually high. That is a fact known to all. It also shows that an effort is being made to conserve our wool supplies in order to ensure supplies for British and Canadian troops and the citizens of Canada and the United Kingdom. Now, Sir, do you think that in the circumstances this was the time to tax raw wool, to add to the cost of clothing for domestic purposes and' for our troons, or to enhance the amount the British Government is paying to carry on the war? I would flatter the Government if I said this was a penny wise and pound foolish policy. It is worse. From the patriotic, business and revenue viewpoints it is reprehensible. The action of the Government in this respect is inexplicable.
There is another reason why it was unwise to increase the wool tariffs at the present moment. The cost of raw wool is now inordinately high. The increase, I suppose, has been on the average 70 per cent since August last and high prices will be maintained for a long time. Why should the cost be added to now? Why should this article be selected for taxation, assuming additional revenue was necessary? Then it is to be pointed out that it is the coarse or cross-bred wools used in the cheaper grades of woollen goods and army supplies which have increased the most. The price of the finer wools used in the more expensive goods has increased but little. Therefore, the recent tariff amendments will be borne by the class of goods and class of consumers' which can least afford it. The same is true of a great many other articles of consumption, such as rubber, hides, and other commodities too numerous to mention.
In respect to the cotton tariff it is to be particularly pointed out that the spread between the tariff rate on raw cotton and the finished product is more than compensatory to the manufacturer, it is protective by three or four per cent ad valorem, because of the low price of the raw material, and the small proportion of the finished product the raw material constitutes. Possibly the Government may obtain some revenue, hut I doubt if it will be as great as they expect. The price of raw cotton was extremely low when the season opened in the United

States last September, owing to want of shipping and the demoralization of the foreign exchanges, and doubtless Canadian manufacturers availed themselves of low prices and imported heavily. From September 1, 1914, to January 31, 1915, 37,038,294 pounds of cotton was imported into Canada of the value of $3,091,544. Considering the curtailment of domestic consumption and needs for the next year, this importation will meet the demand for raw cotton for a long time, and if so, not much revenue will come from cotton for the next ten months.
The Government are promoting a " greater production " campaign among agriculturists. Is it to be seriously argued that this was the opportune occasion to tax wire fencing and increase txation upon agricultural implements of many kinds, in fact almost everything which is a factor in agricultural production? Will this tariff stimulate agriculture? Will the placing of a tariff on many articles formerly free but produced only or largely in belligerent countries, such as drugs, certain woods and other articles, either stimulate trade, promote the welfare of our people, or afford additional revenue? [DOT]
Is the imposition of 10 cents per ton upon bituminous coal in addition to its present specific duty of 53 cents per ton, a desirable thing to such portions of Canada as must import American coal, particularly at a time when our railway earnings are declining and they are applying for permission to increase traffic rates upon coal to the extent of 10 cents par ton? We imported into Canada in 1914, 10,817,536 tons of bituminous coal of the value of $21,838,319, upon which duties were paid to the amount of $5,733,294.08. This was largely imported by the railways and by manufacturers for steam purposes, largely in Western Quebec and throughout the province of Ontario. If the railways secure an increase of 10 cents per ton for freight between the international line and Canadian points, this, with the additional tariff of 10 cents per ton, will constitute an addition of 20 cents per ton to the cost. That is a tremendous increase. I do not know anything more calculated at the present moment to reduce wages of railway operators and factory employees, and that I am told is likely to happen, than the addition of 10 cents per ton to the cost of coal for locomotive and power purposes.
The tariff changes afford a fertile field for just criticism and discussion, but I must conclude.

This was not a time for increased taxation which will be burdensome to the people. Economy and reduction in unproductive expenditure should have been the watchword of the Government. All classes of people are practising economy, and in our cities many are standing in the bread line. This was a time for the Government to practise economy in expenditure and redeem their pre-election pledges. The country is looking to the Federal Government for leadership in economies. The Government might have pursued that policy quite easily, and had they done so there would have been no special taxation measure this year. Additional taxation was not immediately necessary for war purposes. But the Government having determined otherwise I submit that the taxation should have been for revenue purposes purely, and not for protective purposes, as the war itself works for the prohibition of international trade. It should not have added to the cost of the actual necessities of life, now extremely high, and in many instances with the supply already below the normal. It should not have been so designed as to tend to the contraction of trade. In taxing raw products and goods formerly free there should have been displayed some discrimination and discretion. The tariff taxation should have been of such a nature as to be easily remitted at the close of the war, and I do not believe that the major portion of it can or will be remitted at the end of the war. The British Preference should not have been decreased, though its- increase might be justified. The proposals are altogether unnecessary and unjust. They will not accomplish to any great extent the purposes of the Government, while they will inflict unnecessary burdens upon the people, and put unnecessary obstacles in the way of the trade and commerce of the country. This is the view hon. gentlemen on this side of the House entertain in respect to the taxation measures of the Government, and I believe it is in harmony with the view of the great majority of the people of Canada.


Angus Claude Macdonell: Mr. Speaker, permit me to say on rising how pleased 1 was with the early remarks of my hon. friend from Halifax (Mr. A. K. Maclean). His words and mental attitude were pleasing, and his party supported him in his remarks with regard to the war, and I am glad that the party opposite are in accord with this -Government in the matter of expenditures necessary on account of war conditions. But from his remarks on the
domestic part of the Budget the members of this House and the country might very well expect an eight or ten-months session over the $100,000,000 war vote to be brought down later, provided he fought it as he now proposes to fight this Budget. However, I will meet the hon. gentleman half way, and congratulate him upon the British feeling which actuates him, and indeed the whole country, in regard to the war. I take his remarks as an assurance that questions pertaining to the war will be dealt with in this House in an absolutely non-partisan spirit. That part of his speech devoted to what is called the domestic matters of the Budget was very controversial.
My hon. friend has abandoned to-day the course of conduct he usually adopts- in a debate in this House, and particularly in a Budget debate. For he has been in the habit of following the line of least resistance with regard to debate, the easy and apparently simple course which would give to him and his party the least difficulty. But to-day he showed heroic courage almost equal to that of Baron Munchausen, when he attacked the policy of the Government. The most reasonable inference to be drawn from the words of the hon. gentleman is that no state of war exists. My hon. friend must have been sleeping for the last six months, for he has certainly shown no knowledge whatever of war conditions. My bon. friend has had a very substantial advantage. It is now ten or twelve days since the Budget was introduced, so I think he has had ample time to familiarize himself with what it contained and the form of his reply.
I was rather disappointed at the way my hon. friend attacked the civil servants of this country. He is an able man in debate, as^ those who have watched his career in this House well know, and I was rather disappointed to-day when he dropped down to small piffling things such as the salaries of the civil servants.


Alexander Kenneth Maclean: I wish to protect the civil servants.


Angus Claude Macdonell: These matters could be more properly dealt with in Committee of Supply.
I do not think I am doing my hon. friend very great injustice when I say that he appeared to be rather pleased with the shrinkage in the returns of the immigration and other departments of the Government. These shrinkages did not seem to weigh very heavily on him, or to impress him in any way with the seriousness of our pres-

ent condition, or to make him realize that we are to-day labouring in the throes of a great war. The hon. gentleman rather fell into a groove in that respect, which he could not get out of. Proceeding to criticise department after department, he reminded me of the old saying that the only difference between a " groove and a grave " is that of width and length. I hope my hon. friend will not take matters so seriously as to get into a groove of that kind; but politically he may if he continues in the course he followed this afternoon.
I was also surprised at his attitude with regard to the prosecution of public works, for he must know that the present war conditions make it imperative that the Government should do whatever they can in the way of providing employment under proper conditions for the people of this country. I do not think the Government have undertaken any new works recently. The works now going on were contracted for either by the old Government or by this Government before war begun. I would ask my hon. friend if he would approve of the public works at Halifax, for instance,, being abandoned. In the Estimates I find provision made for the following works at Halifax:	Dry-dock, $250,000 (p. 57); Citadel, $13,000 (p. 58); Customs examining warehouse, $100,000	(p.	58); Dominion
buildings, $5,000 (p. 58); Drill hall, $45,000 (p. 58); Postal station, $25,000	(p. 58);
Docks and wharves, $30,000 (p, 52); New terminal facilities, $3,000,000 (p. 52); to increase accommodation and provide machinery, $3,500 (p. 52); Willow Park sewer, $14,500 (p. 52). That is a total of $3,486,000. I ask the pardon of the House for referring to details of this kind, which should properly come up in committee, but as my hon. friend has shown me the way I think I am justified in referring to these matters. His attitude is that all public works should be stopped.


Alexander Kenneth Maclean: I did not say that.


Mr. J. D. REID:: That is what you said.


Angus Claude Macdonell: I took the hon. gentleman's words down. I did not find any argument in what the hon. gentleman said; all we got was words, words, words. We got no reasons. Some hon. gentlemen on the other side of the House may have seen some grain of reason in the attacks which he made upon these public expenditures.


William Pugsley: What about the $5,000,000 at Port Nelson?


John Dowsley Reid: That was started by you people.


Angus Claude Macdonell: My hon. friend from Halifax attacks those who are advocating the " Made in Canada '' propaganda. He thinks that is wrong; he condemns it. Surely tlie people of this country can do their own thinking in regard to buying where they want to, and if certain patriotic people want to buy goods made in Canada they should be allowed to do so, and, for my part, I commend them very highly.
My hon. frignd says that the deficit is not due to the war. I shall follow that up a little later; but I would like to say a word in answer to another statement which my hon. friend made. He said in all seriousness that the sum of $5,000,000, no more and no less, represented the loss in the trade of Canada during the current year attributable to the war.


Alexander Kenneth Maclean: The revenue.


Angus Claude Macdonell: Yes, that the revenue of the country had fallen by $5,000,000 on account of the war. I would like to know by what process of magic, reasoning, guessing, or otherwise my hon. friend arrives at the conclusion that the revenue of the country has suffered to the extent of $5,000,000 exactly. It is just a guess, as an hon. gentleman behind me says. In the next breath the hon. member for Halifax admitted that the general borrowing power of the country, which he said in the last year amounted to $250,000,000 or $300,000,000, had been cut off; that is, the general borrowing by industries, municipalities, provinces, cities, and so on. I think that is what the hon. gentleman meant?


Alexander Kenneth Maclean: Yes.


Angus Claude Macdonell: Finance is a very sensitive thing, money is very elusive, and if money does not come in, how does my hon. friend expect trade is going to be carried on? Money is timid enough, trade is timid, too, but if our borrowing power is cut off, even suppose we had no war, what is going to be the result? Suppose our borrowing power had been shut off during the six months immediately preceding the war, when this country was borrowing $1,000,000 a day or more, would not trade have come to a standstill? My hon. friend's own admission is sufficient to prove that the war, having stopped the inflow of capital to Canada, had at least something to do with the tariff conditions, and it had a great deal

more to do with them than the hon. gentleman will admit.
I desire' to say a word about the Budget. I believe that this Budget has been received with greater satisfaction than any Budget which has ever preceded it in the history of this country. There has been little criticism of the budget as far as I am aware, and we know that carping critics spring to the surface at the slightest opportunity, and if there is a chance of getting anything remedied that they believe to be wrong an outcry immediately commences. Whatever grievances the people think they have they will seek to have remedied. Beyond a few retail druggists who are complaining about the stamp on proprietary medicines, etc., we hear no criticism in the country of this Budget-at least I have heard none-except that which we have listened to in this House to-day. Why does the hon. gentleman not bring before the House some evidence of the public discontent with this Budget? It taxes those who are best able to pay the tax. I submit that this is a Budget for which the Finance Minister should have the greatest possible credit, and that the Government is entitled to whatever credit is due to a Government that acts wisely and prudently under the conditions and circumstances which confront us at the present time. The conditions are not. normal and an abnormal remedy must be applied. Under ordinary conditions taxes of this kind would not be imposed. They have been imposed because of the necessity of imposing taxes to raise revenue. The country cannot get on without revenue. What does my hon. friend suggest in substitution of the Budget that has been brought down?


Alexander Kenneth Maclean: Economy. The minister estimates a revenue of $120,000,000 for the next fiscal year without any additional tariff taxation. I say, get that $120,000,000, spend $30,000,000 or $40,000,000 less and you will have enorigh for your capital and special expenditures and will not require any further taxation.


Angus Claude Macdonell: The minister has
shown very plainly the need of these taxes. He has shown that there is a deficit between probable income and expenditure that has to be met. It cannot be met by magic, it has to be met by dollars and cents, and you cannot get dollars and cents without raising revenue by tariff or taxation of some kind.
At six o'clock, the House took recess.
The House resumed at eight o'clock.


Angus Claude Macdonell: Were the hon. member for Halifax (Mr. A. K. Maclean) now in his seat, I would ask him again what public works now in progress in Halifax he would drop and cease to expend money on, so that the Government and the country might have the benefit of his opinion in detail, as to the cutting down of expenditures, that is, if he is sincere in his professions. The hon. gentleman laboured at great length in dealing with the expenditure of the Government on public works, and I trust he will permit me to say that he succeeded in arguing on both sides of the question. In his opening remarks he said he was in favour of continuing the public works which had been commenced; but later on he got to the other side of the fence, and apparently wanted to have most public works indiscriminately cut down or cut out. The hon. member for St. John (Mr. Pugsley) took the same view; he considered that expenditure should cease on the Hudson Bay railway and the terminals in connection therewith. I would remind the hon. gentleman that it was he and his Government who let the contracts for the Hudson Bay railway, and I presume in the ordinary course they are responsible for that undertaking.


William Pugsley: The hon. gentleman only heard an interjection of mine. The view I intended to express was that I would do exactly as was done in 1908 at the time of the financial depression, when the Estimates for our public works were cut in two. I was Minister of Public Works at the time. I would do that with all public works to-day, and I would go slowly during this year of depression.


Mr. W. T. WHITE:: All these were your own Estimates.


William Pugsley: The Estimates were cut in two.	_


William Thomas White: But they were your
Estimates.


Angus Claude Macdonell: I would like to know what percentage of the Estimates were eliminated in the year the hon. member (Mr. Pugsley) refers to.


William Pugsley: Pretty nearly 50 per cent of the Public Works Estimates. I had made up my Estimates and submitted them to the Minister of Finance, and the Government considered the declining revenue, and it



was agreed to cut them in two, and they were reduced by about 50 per cent.


Robert Rogers: Do you recommend that reduction in connection with the public works at St. John for the present year?


William Pugsley: I would recommend a reduction all round; and let me say to the Minister of Public Works that the people of St. John are patriotic enough to stand it just as well as any other part of the country.


Angus Claude Macdonell: Perhaps the hon. member for-St. John (Mr. Pugsley) would tell us whether his Estimates in the year he refers to were reduced 50 per cent as compared with the Estimates of the then previous year?


William Pugsley: What I recollect is that the Estimates were made up with great [DOT] care.


Angus Claude Macdonell: I did not ask that
question.


William Pugsley: There were no amounts included but what I thought to be necessary in the public interest; yet, in view of the declining revenue they were cut in two.


Angus Claude Macdonell: Will the hon.
gentleman state to the House whether or not the 50 per cent to which he refers was written off the face of the Estimates of the then previous year? Were the Estimates of the previous year reduced 50 per cent- Will the hon. gentleman say that?


William Pugsley: I cannot say that.


Angus Claude Macdonell: I do not think my hon. friend from Halifax (Mr. A. K. Maclean) was candid in speaking of cutting down all expenditure on public works. He will recollect that the Estimates for 1914-15 were passed months before war was declared and before there were even rumours of war, and therefore the Government had no opportunity to reduce these Estimates. The first opportunity the Government has had to reduce Estimates comes now for the year 1915-16, and I will draw the attention of my hon. friend to some of the reductions made in these Estimates as compared with the Estimates for 1914-15. The hon. gentleman will see that there were reductions in all the departments he criticised for incurring excessive expenditure. The following statement shows the reductions:
[Mr. Pugsley. 1
Reductions in the Estimates for 1915-16 as compared with the Estimates for 1914-15.
Legislation	$	155,906
Immigration	 263,800
Railways and Canals	(income).. ..	255,361
Railways and Canals (collection of
revenue)	 1,253,000
Public Works	 11,038,825
Naval Service	 104,600
Lighthouses	 170,360
Dominion Lands	 588,040
Miscellaneous expenditure	 274,170
Trade and Commerce	 1,903,600
Railways and Canals (capital account)	  3,833,890
Public Works (capital	account) ..	3,321,300
Public Works (capital, Marine Department)	 474,500
Total	$17,780,320
If my hon. friend is fair he will admit that these reductions have been made in controllable expenditure; for of course as he knows there are certain expenditures that are not controllable.


Alexander Kenneth Maclean: The Public
Works expenditure on current account is reduced, it is true, eleven millions below the Estimates of last year, but there are still thirty-two million dollars-


Angus Claude Macdonell: I am not stating
what they were last year; what I am pointing out is that on the first opportunity to reduce expenditure this Government has had since the war, it has reduced expenditure to the large amount of over $17,000,000 on controllable items in connection with the departments which my hon. friend attacked.


Alexander Kenneth Maclean: You have reduced the whole lot $10,000,000, whereas the reduction should have been thirty or forty million dollars.


Angus Claude Macdonell: The total reduction
is $17,780,320, which is a pretty respectable cutting down at one stroke. I believe, Sir, that public opinion has endorsed this Budget to the full extent. The proposed taxation falls upon financial institutions and those who are able to bear the taxes. The revenue had to be _ raised, and the question confronting the Government	was	how	it could	be raisedin	the	most desirable	manner.The proposed taxation does not fall on the farmer or on. the workingman, and both these classes are throughly satisfied with the Budget as it stands at present. They ought to be satisfied. Hon. members	who	came	from rural	communities	can	speak	as to the	farmers;
but I can speak as to the men in

the cities, and they are thoroughly satisfied, because they realize that these taxes which are very necessary have been imposed very generally, principally upon the moneyed interests, and that they have not affected the artisan or workman except in a very minor respect.
My hon. friend cavils at protection. Protection seems to be the red rag that angers Liberals in this House and out of it. I have no apology to make for protection; l am a stalwart protectionist. Protection has built up Canada. When this country is in straitened circumstances, as it will he more or less, and as all other countries will be owing to the war, and after it is over, it will be protection and the protectionist interests and the * National Policy over again that will rebuild this country and put it back where it was before the outbreak of the war, and make it even more prosperous than ever before. My hon. friend from Red Deer (Mr. Michael Clark) is perhaps amused at that statement, but history will prove that it is the truth.
This afternoon I asked my hon. friend from Halifax a question which he did not answer. He was deprecating the immense amount of money spent on the Civil Service. I asked him if he would be in favour of a reduction of ten per cent in the salaries of all employees.


Alexander Kenneth Maclean: If the service
had not been improperly increased, the amount spent on it would have been more than ten per cent below what it is.


Angus Claude Macdonell: I will answer that
in this way. My hon. friend made a point of attacking the Customs Department. If he will take the revenue collected and the expense of collecting that revenue he will find that the percentage of expense for collection is not any greater to-day than it was five or ten years ago.


Alexander Kenneth Maclean: What will it be in 1914-15?


Angus Claude Macdonell: I hope it will be high, because that will mean a big revenue.


Alexander Kenneth Maclean: But the percentage of
revenue?
. Mr. MACDONELL:	I am not guessing;
I am just trying to give facts.


Alexander Kenneth Maclean: It will be over five per cent.


Angus Claude Macdonell: The Government are to be congratulated also on the arrange-244
ments they have made for their war borrowings. They have made arrangements to borrow all the money necessary for war purposes. Let me be reminiscent with regard to our borrowings. On the first of October, 1913, we paid off the last of the old Imperial guaranteed loan amounting to $8,273,333. This was the last loan which Canada had bearing the underwriting of the British Government guaranteeing it in the markets of the world. In 1869 there was $7,300,000 of an Imperial guaranteed loan outstanding. In 1874 it stood at $16,000,000. In 1885 it stood at $31,600,000, part of which was used to purchase Rupert's Land which made a Canadian nation possible, part for the defence of the country, part for public works, and so on. The last of that loan,	as I said, was paid off a
short	time	ago.	To-day we find
history repeating itself, but in a better way. Canada is borrowing to-day not by British guarantees, because the loan for which the Government have arranged is one made jointly with Great Britain. Canada is participating in that loan and in its advantages equally with Great Britain. Canada is getting the same terms as Great Britain, though no longer in the position of having Great Britain's guarantee. Great Britain is borrowing with Canada, and Canada is borrowing with Great Britain. It is to all intents and purposes a partnership; and on both sides of the House it is a matter of congratulation that Canada has lived through the early stages of her history with Great Britain standing behind her, and that now Canada is standing by Great Britain and Great Britain is standing by Canada, and Canada will stand by Great Britain to the end of this war and I trust to the end of time.
Notwithstanding our borrowings, the Budget makes out a strong case for a large amount of increased taxation. The situation must be faced. To temporize would be weak from a financial standpoint. The situation has to be grasped with a strong hand. The Government have presented a determined front to every phase of the war situation which has appeared. They have mastered the mobilization of the troops and have co-operated with Great Britain as regards our loans and other matters of importance connected with financing the war. Our trade has been protected by Government action as far as possible; our banking has been safeguarded and made permanent and strong, and quite recently the Government have provided seed grain and other assistance

for the farmers in the West who are in need, so that they in turn may be able to reap a large harvest and bear their share of the war taxation when the proper time comes. Although the fact is not pleasing to my hon. friend from Halifax, the Government are proceeding with the construction of public works. My hon. friend comes from a city. Does he think it would be wise or proper to discontinue in an hour all the public works in the cities in Canada? Surely not. Private individuals look to the Government for an example. They want to see a strong Government going on with its work, undertaking and facing its obligations; and the business men and capitalists throughout Canada are doing their share to prevent unemployment. They are giving employment to men whenever it can be secured; and wherever it cannot be secured, they are putting the men on short time and are treating them as humanely as existing conditions will permit. In that the Government is taking its share and it is right that it should do so. The Government is strong and Canada is strong, notwithstanding what we see in the Toronto Globe-because we all read the Globe; even gentlemen on this side of toe House read the Globe. I see by that paper that we are in for a "smash." In an editorial it tells us that the smash has actually arrived-Canada smashed, industry and enterprise smashed. It is a nice object lesson to Germany and the other continental nations whom we are fighting to be told by a paper of the prominence and eminence of the Globe that Canada is smashed.


William Pugsley: A bad moral.


Angus Claude Macdonell: That is not a desirable thing to say, and the statement is absolutely without foundation and is also very silly.
My hon. friend from Halifax spoke rather emphatically about there being no necessity for a revenue Budget. I presume he is aware of the fact that for the first ten months of the present fiscal year the revenue from Customs has fallen off $28,000,000, and that the estimated falling off for the whole year is $33,000,000. I am reminded by an hon. gentleman that the hon. junior member for Halifax rejoices in that fact.


Alexander Kenneth Maclean: Not at all.


Angus Claude Macdonell: My hon. friend says that there has apparently been no loss to Canada or to the Government by the interruption of trade and ocean traffic. My hon. friend surely knows better than that.
[ Mr. Macdonell.]
The falling off is due in a great measure to the use by the British Government of a great number of ships for the transport of soldiers and so on. Practically all ocean freight traffic has been tied up or ruined because there are not sufficient ships for the Canadian trade. My hon. friend comes from a maritime district, and knows that fact very well. It is no news to any one. The hon. gentleman has admitted that because of the war this country has not received a large addition to its finances. I am glau he makes that assertion; it simply corroborates what the Minister of Finance said as to the condition in which the country finds itself as a result of the war. My hon. friend is probably aware of the fact that borrowing in England is now prohibited by Royal proclamation; English investors of money cannot lend in the British Dominions without the consent of the Treasury Board. This circumstance operates greatly to decrease the flow of money into Canada, thus affecting not only the industries of the country, but the Government as well.


Alexander Kenneth Maclean: Is th; t not a good reason why the Government should cut down expenditures?


Angus Claude Macdonell: It is a good reason why trade has been almost ruined through the commercial congestion and depression which has been the result of lack of money.


Alexander Kenneth Maclean: I would remind the hon. member that the Minister of Finance estimated that for 1915-16, with the taxation now in force, he could get a revenue of $120,000,000, only $10,000,000 below the amount he will receive for the present fiscal year.


Angus Claude Macdonell: What does that establish?


Alexander Kenneth Maclean: If you have a revenue of $120,000,000, why do you not cut down your expenditures?


Angus Claude Macdonell: I have given the reasons why certain expenditures have been cut down, and I am endeavouring to give reasons why it is not possible to cut down everything. You cannot cut all expenditures down; my hon. friend knows that.
My hon. friend denies that this is a war tax, but I submit that this a war tax, if there ever was one. They are made necessary by the war, whether the proceeds are used to buy guns and war material or to make good revenue deficits caused by dislocation of trade and consequent loss of revenue. The war has closed off borrowing

by Canadian corporations, thereby diminishing imports.
The new taxes will pay interest on- war loans, pensions, and part of capital expenditure. The interest on the $50,000,000 to be borrowed this year and the $100,000,(LO to be borrowed next year will amount to nearly $7,500,000 annually. This the new taxes will have to provide for, together with interest on additional borrowings during the war. It must also provide for a pension list amounting to about $4,000,000 or $5,000,000 a year. If there were no war the Government could borrow money in the London market under the usual conditions, but, as I have attempted to show, the war makes that impossible.
Hon. gentlemen opposite take issue with, the Government with regard to these taxes, being war taxes. Hon. gentlemen opposite, especially the hon. member for Halifax (Mr..Maclean), have been wont in times gone by to cast eyes across tne border when looking for precedents and encouragement. What has happened in the United States, a neutral country, which is not embroiled in this war? Although they have no hand m the quarrel;' although they are simply bystandees, they have been affected to such an extent by the war conditions that they have experienced a very great decrease in revenue. Qn September 4, last, in making an address to Congress asking them to pass a war tax bill, President Wilson said:
During the month of August there was as compared with the corresponding month of last year, a falling off of $10,629,538 in the revenues collected from customs. A continuation of this decrease in the same proportion throughout the current fiscal year would probably mean a loss oi customs revenues from sixty to one hundred millions. I need not tell you to what this falling off is due. It is due, in chief part, not to the reductions recently made in the customs duties, but to the great decrease in importations ; and that is due to the extraordinary extent of the industrial area affected by the present war in Europe. Conditions have arisen which no man foresaw; they affect the whole world of commerce and economic production; and they must be faced and dealt with.
How did Congress face and deal with that message? They passed Bill No. 217 of the 63rd Congress, entitled an Act to increase the internal revenue and for other purposes. I wish to read one or two extracts from the report of the committee to which that Bill, together with the address of the President, was referred for report.
The Committee of Ways and Means, to whom was referred House Bill H. R. 18891, to increase the internal revenue, and for other purposes, having had the same under consideration, report it back to the House, with certain minor amendments.	,
Then follows, under the heading, " Necessity of this Legislation ":
The necessity for this legislation grows out of the reduction of revenue derived from customs receipts caused by the disturbed conditions resulting from the war in Europe.
The following table shows the value of the dutiable imports into the United States from the European countries at war during the fiscal year ending June, 1914, together with the estimated falling off in customs revenue during the next 12 months, computed on the basis of Tariff Act of October 3, 1913.
Then follows a table showing the estimated falling off in revenue during the next twelve months, which is totalled at $125,811,000. On the next page I find the following:
The necessity for this legislation cannot be traced to the Tariff Act of 1913. If it had not been for the war in Europe the Tariff Act of October 3, 1913 and the other sources of revenue would have yielded sufficient revenue to meet the demands of the Government.
Under the heading "Effects of the European War" is the following:
The countries now at war comprise Austria-Hungary, Belgium, France, Germany, Japan, Russia, Servia, Montenegro and the United Kingdom of Great Britain. If it were not for remained the same as those of last year; had remain the same as those of last year, the customs taxes levied by the present tariff Act from said countries would have yielded $133,079,000. This does not include the importation from other countries that will naturally bring the customs devenue that is directly affected by war conditions to an amount over $150,000,000. The fact that the ships of these belligerent countries carried over 80 per cent of the foreign commerce entering our ports and the further fact that war conditions have disturbed the lines of transportation belonging to these countries and forced many of their tramp steamers to remain in port, will seriously affect the importation of merchandise coming from neutral countries, and thereby cause a diminution of customs revenues from-neutral as well as belligerent countries.
It, therefore, seems to be the part of wisdom for the Congress to levy a tax at this time to take care of the deficit in our customs revenues brought about by conditions over which our Government and our people have no control.
Is that not -an exact parallel of the conditions existing here to-day? A non-belligerent-neutral country, situated as we are and subject to the same commercial conditions, saw fit to pass an act of this kind long before we introduced our legislation, and for the same-reasons. '	'
The proposed tariff changes do not, I submit, mean more protection. My hon. friend; as are all gentlemen opposite, is subject to the protection bogey. The ihcreased tariff, as my hon. friend knows, applies to raw materials, so that when raw materials come, into this country to be used in the mami-

facture of various commodities, duties will be paid upon them. My hon. friend spoke particularly to-day about wool and cotton. If they come in, as I hope they will, in abundant quantities, to be manufactured by the workmen of Canada and sold to our own people or Shipped, abroad, a duty will be paid on the raw material and there will be a compensation in that respect.
That will be an offset to any additional duty placed upon manufactured goods that may come from other countries.
My hon. friend is fearful for the British preference. The British preference is greater than it was before; the British manufacturer is better off; he gains 24 per cent as compared with his foreign competitor. Take an article which under the old general tariff paid 30 per cent and under the preferential 20 per cent. Add 7J per cent to the general duty and you have 374 per cent; add 5 per cent to the British preferential duty and you have 25 per cent; therefore you have a preference of 124 per cent whereas before the preference it was 10 per cent. So the British shipper is better off than he was by 2J per cent. Why this wail about the British manufacturer? Why this grief and fear on account of the British exporter to our country? He is better off than he was before, especially-


Some hon. MEMBERS:: Oh, oh.


Angus Claude Macdonell: My hon. friends
laugh-as compared with the foreign competitor of course.


John Gillanders Turriff: You increase the duty
and make him better off.


Angus Claude Macdonell: Certainly, as compared with his foreign competitor. There is no doubt about that. If the general tariff had been increased and there had been no increase in the duty under the Imperial preference Canadian industries would have been ruined. Let us bear that in mind. If you increased the general tariff by 74 per cent or 104 per cent or 204 per cent and made no increase in the duty under the British preferential tariff, you would ruin the Canadian manufacturer; and for my part I adopt with the greatest possible enthusiasm the statement made by the hon. leader of the Government (Sir Robert Borden) on more than one occasion, in this House and out of it, both before and after the change of Government, that an industry in any Canadian city is as good for the Empire as an industry in Birmingham or any other British city-and much better for Canada. Surely the very essence of our relationship with the Old Country is the

freedom and liberty which Great Britain allows always. We can compete with her if we want to, but we want to buin* up the Empire as a whole, and an industry in Toronto or Winnipeg is as great a factor in building up the Empire as one in Liverpool or Manchester. England builds up her trade and commerce; she is building up her greatness on the islands of Great Britain, and we are building up her greatness overseas in our own time and in our own way and in our own name. Our friends are still fearful of the bogey of protection. They did nothing to reduce the tariff when they had the power to do so. They allow themselves that delightful liberty and freedom, that splendid isolation in this case, of being able to blow hot and cold, of standing first on one foot and then on the other. One gentleman advocates one policy and another gentleman another, and the whole party advocate one policy in one province and another policy in another province. There is no consistency about the party on any subject; and so it is with protection. They could have reduced protection if they had desired to do so, if they thought it too high when they came into power. When they assumed office in 1896, the average rate of duty was 29-79 per cent; in 1911, when the change of Government took place, tb,e percentage was 26-71 per cent; so there was a reduction of about 3 per cent, notwithstanding the fact that the average price of merchandise had increased between those two dates by from 30 per cent to 40 per cent. So I do not see any merit now in the hon. gentlemen beating their breasts and tearing out their hair and shrieking against protection.
Then, as to spending money, our friend of the Globe got funny the other morning.
I do not know where the reverend editor was the night before, but he said that the Government was spending money like a drunken sailor. Let me give the foundation for Mr. Globeman's talk about spending money like a drunken sailor. He makes the statement that during the three years the Conservative party have been in power they have been spending money in a reckless manner, like a drunken sailor. I do not wish to go back to ancient history; some of us are still young men, and we do not need to take figures one hundred years old. Let us take the three years before and immediately after the great victory of the people of September 21, 1911, and what do we find as a result in regard to the expenditure of money? The years 1909, 1910 and 1911 show a net increase in the public debt of $62,000,000, while the three years

1912, 1913 and 1914 show a decrease in the public debt of $6,750,000, and this notwithstanding the fact that in these three latter years the Government expended large sums of money, aggregating about $130,000,000, on capital account, which moneys were taken from consolidated revenue fund account.
What is the record of surpluses for the same three years? That is a test, which my hon. friend from Halifax tried to apply this afternoon. The surplus in consolidated account for the year 1912 amounted to $37,946,000 ; for 1913 it amounted to $56,960,000, and for 1914, $35,000,000, a total surplus of $129,576,000 for the three years.
My hon. friends say that the Government may have saved money in one pocket but paid it out of the other. The country has only one pocket as a matter of fact, only one chest of money; but I will answer even the argument they make, if it be an argument. The large expenditure during the last three years was due to the fact that the Government inherited obligations and debts from the old Government which they had to pay, with respect to public works and undertakings and contracts entered into, such as the Grand Trunk Pacific, the Quebec bridge, the purchase of Grand Trunk Pacific bonds to the extent of $23,000,000, the loan to the Grand Trunk Pacific of $8,000,000, besides railway subsidies authorized by the late Government. Let me give an instance.
Halifax was referred to this afternoon. Coming west, let us take the great harbour of Quebec. I am making a statement of facts and not an argument. I want it to be understood that this Government had been committed to make expenditures that they could not disregard. I am not quoting these figures for the purpose of getting hot justice from the electors of Quebec at the next election. The expenditures on Quebec harbour since the present Government came into power in 1911 up to date, that is, for three years, as compared with the expenditures made by the Liberal party during the whole fourteen years of their term of office, were as follows: By the present Government, during their three years, $8,841,379; by the late Government, for the same period of time, $3,338,307. The present Government spent $8,000,000 and the late Government $3,000,000. Why did the present Government spend the $8,000,000? On account of the National Transcontinental railway, on account of the Quebec Harbour Commission, and on account of the Public Works Department. The late Government built a railway to Quebec and left it. How could the railway operate without terminals
and facilities of that kind? It had to have these or the whole road would have been wasted and all expenditure lost. That is why they have had to spend money, and they have done it.
That brings me to the question of railway subsidies. My hon. friend talked about subsidies, and they have been spoken of in the press. It has been said that these subsidies were a bugaboo, a very dreadful thing. I want to face that condition and tell the House the facts. There has been a substantial increase in the last three years in railway subsidies, which accounts for an annual expenditure of over $10,000,000 in that period. Over $2,000,000 a year was authorized by Acts of the late Government, and over $6,000,000 a year has gone to the Canadian Northern railway and its constituents on account of the old Government's guarantee of its bonds for upwards of $56,000,000. The Canadian Northern railway also got guarantees from the provinces to the extent of $76,000,000. This $76,000,000 and the $56,000,000 guaranteed by the Dominion were contingent liabilities. The time came when this road had to have more money and the cash subsidy which this Government is paying at the rate of over $6,000,000 a year was granted to prevent the guarantees which had already been given from becoming actual liabilities. Those are the facts. If this Government had not given the road that cash subsidy, the contingent liabilities of $76,000,000 by the provinces and $56,000,000 by this Government would have become actual liabilities, and the country and the provinces would have been called upon to pay them. That seems to me a very substantial reason why the Government should have given the subsidy. So that when you take the $6,000,000 and the $2,000,000, that means that this Government have only granted a $2,000,000 guarantee a year or thereabouts, since they have been in office for railway subsidies.
My hon. friend this afternoon dwelt ad nauseam I was going to say, but I will say very extensively, on the net debt. We had not been three years in office when war broke out and dislocated all trade. Our predecessors had fifteen years of office, and let us now compare the net debt of Canada as left by our predecessors with what it is now. In 1896 the net debt was $258,497,000, and in 1911 $340,042,000. That is, in those fifteen years the net debt was increased by $81,500,000, or at the comfortable rate of $5,000,000 a year. I am not objecting to a Government's spending money

properly, nor do I suggest that the money was wrongly spent, but the facts are obvious and what is the use of shutting our eyes to facts and doing the ostrich act like my hon. friend from Halifax did this afternoon. I am not criticising hon. gentlemen opposite for increasing the debt by that amount, but I say it is idle for them to turn around now and criticise the present Government for not having greatly reduced the net debt. Now look at the figures of the present Government. On the 31st March, 1914, the net debt was $333,300,000, and on the 31st March, 1911, $340,050,000. Whereas the previous Government had increased the debt by $81,500,000 in fifteen years, the present Government reduced the debt by $6,750,000 in three years. These are facts, and we know that the old adage says that facts are stubborn things. They cannot be got out of the way by such arguments as my hon. friend from Halifax used this afternoon.
In addition to that, this Government since it has been in power has spent nearly $130,000,000 of money taken from the current revenues and applied and used it for capital expenditure. The estimated taxation for 1910-11 was $89,350,000 as against $27,700,000 in 1896, when hon. gentlemen opposite took office; or $11.50 per head of population in 1910 as compared with $5.40 in 1896. In other words the late Government increased the debt on the people of this country from $5.40 per head to $11.50 per head between 1896 and 1911. I am not quoting these figures in the tu quoque manner, but it is not fair to criticise this Government for increasing the debt of Canada when, if any odium should be attached on account of that increase, it does and should rest on hon. gentlemen opposite.
I have already referred to the large expenditures this Government has made on account of contracts which had already been entered into. Large sums had been invested in public works throughout the country, and unless money had been supplied to continue those works they would simply have remained in a dormant state or rotted away. Would hon. gentlemen opposite prefer to see these public works which had cost tens of millions of dollars, rotting away rather than to spend the amount necessary to complete them. The necessity of giving employment to people of this country had also to be considered. The Government must set an example in this respect, and if I have any criticism to offer it is that the Government have been too stingy in carrying on the public works of this country

under the present conditions. But certainly they should not be blamed for having increased the expenditure.
Our borrowing for war purposes will be enormous, but our credit is first-class as the public accounts will show. We must keep up the credit of Canada. We have built up Canadian credit, and that is why Canada can bear the strain to-day.
I have already referred to the large increase in the volume of trade which this country is annually transacting. This has made necessary a large increase in the public service and an increase in the expenditure of that service. I have here the figures showing the total trade of Canada with all countries for a few years past. In 1908 the aggregate trade was $650,793,000; in 1909, $571,268,000; in 1910, $693,211,000; in 191l' $769,443,000; in 1912, $874,637,000; in 1913,' $1,085,264,000; in 1914, $1,129,744,000. The trade in merchandise only for the nine months ending 31st December, 1914, is estimated at $744,000,000. Increase in trade and revenue means an increase in the cost of collection, customs expenses and so on. If the Customs Department is collecting twice the revenue it did some years ago, it needs a larger staff. Surely that does not need to be laboured. I maintain that the increase in the gross expenditure by this Government was under the conditions proper and unavoidable, and as I have said, great expense has been incurred in carrying to completion the undertakings entered into by the old Government. Take the Department of Railways and Canals.. Comparing the three years previous to March 31, 1912, with the succeeding three years, we have an average annual expenditure during the first period of $37,426,000 as compared with $41,489,000 in the latter period, and having regard to the very great increase done by the Department of Railways and Canals I do not think the increase a large one. The average yearly earnings of Government railways should also be considered. The average yearly earnings of the Government railways during the respective three-year periods were $10,208,000 and $12,698,000; that is the average yearly earnings during the last three years under the old Government amounted to $10,208,000 and under the present Government they had reached $12,698,000. That, together with the increases in wages of employees, accounted for the increase in the revenue expenditures. Income expenditure shows an increase of $71,000 a year in the different departments, and the capital expenditure

shows an increase of $663,000 per year, which increase is accounted for by the expenditures upon the National Transcontinental railway, the Quebec bridge, the Hudson Bay railway, the Government railway, Canadian Government railways, the Welland ship canal and the Trent canal. All of these works were authorized by the old Government, with the sole exception of the Welland ship canal, the Halifax terminals and the Prince Edward Island car ferry. The Welland canal was endorsed by hon. gentlemen opposite, and we have yet to hear any complaints from them in regard to the Halifax terminals. That being our position, it seems to me that it is the duty of the Government to make the best of the present situation, to stand by the country, and to exercise every possible influence and energy that the country possesses, individually and collectively, for the purpose of tiding us over the trying time and permitting Canada when the war is over to take its stand again as the senior member of the great overseas dominions of the British Empire.
What is to be done by the Government, by public men, and by the industrial and business men of this country? I have just taken a glance at the exports from Germany, and I find that they have been very large. The trade of Germany, Austria-Hungary and the other enemy nations has been destroyed as far as the British Empire is concerned. Last year Germany exported to different countries throughout the world goods to the amount of $2,402,967,000, and that trade is at large to-day. Any one can get it who can take it. A great part of that trade belongs to the enterprising people who can compete in the markets of the world which have hitherto been supplied by Germany, and I believe there is no part of the world that can compete for that trade in a more effective and able manner than the people of Canada. Let us go after the chance. Great Britain was the largest consumer of German goods in the world; in fact, she was a greater consumer of German goods than any other two countries put together. Last year Germany exported to Canada and other overseas British dominions no less than $50,000,000 worth of goods. There is no part of the Empire that is better equipped in point of natural resources, raw material and energy of men to secure that trade than Canada. Twenty million dollars worth of that trade is our own. The total volume of the trade that Germany has hitherto done with Canada amounts to about $20,000,000 a
year. But there is $50,000,000 at large for the British Empire to secure. We have a preference in all overseas British dominions with the exception of Australia, and therefore we should he able to capture two-thirds of that trade. As I say, we have a preference in all the markets of the overseas dominions except that of Australia, and as we are the premier manufacturing overseas dominion of the Empire, outside of Great Britain herself, we have a splendid opportunity of capturing that $50,000,000 worth of trade. Let us make the best of it.
I am going to refer for a moment to a matter and this time with the approval of my friend the Globe. I see that the Globe has been advocating that the country engage in a propaganda of industrial research. That is not a new idea; in fact, it is an old idea in Canada, and it is older still in
9 p.m. other countries. The idea is to invoice the aid and assistance of our . universities and great seats of learning and knowledge and to send out to the world practical scientific men equipped with expert knowledge, to secure information in regard to manufacturing processes! and to ascertain the location of markets, etc., with reference particularly to those products the supply of which hitherto has been in the hands of Germany and which is now available to any one who may be able to capture it. Let me point out that in the University of Toronto they are now making anti-toxine for the relief of persons afflicted by diphtheria. It is a purely philanthropic work that is being done by university graduates and is the beginning of what I trust will be a very large public enterprise in the near future. They are also manufacturing tetanus, an anti-toxine for the use of the Red Cross Society for the treatment of lock-jaw and illnesses of that kind. The university, on the first small order saved the Red Cross Society no less than $3,000. We have many opportunities of securing the business that has been thrown open by the dislocation of the trade which Germany formerly did with Canada and the rest of the world.	-
All of which means that Canada will have either to supply herself from abroad with what she has heretofore purchased from enemy countries, or make it herself, which is the preferable course to adopt.
We must ascertain the entire quality and quantity of the products that we will require under the new conditions, so that we may supply ourselves with all these goods from this time forward, which means aggressive industrial research, so as to submit to capital


Hon. FRANK OLIVER (Edmomon):: The Finance Minister, who presented the Budget, as well as my hon. friend from Halifax (Mr. A. K. Madem.), who criticised it on behalf of the Opposition, have both spoken of it as an extraordinary Budget, and as being excusable on the ground of extraordinary circumstances. 1 will agree that the circumstances are extraordinary and that the Budget is extraorumary. I will admit that

379 [DOT]
extraordinary circumstances would justify an extraordinary Budget, but I do not admit that the Budget presented by the Minister of Finance is a Budget that is adapted or auequate to the extraordinary circumstances which now have to be faced. My criticism would be, that notwithstanding the fact that the Finance Minister has introduced a new principle into the taxation of the country, there is still evidence both in the items of the Budget and in the arguments which have been made in support of it, that the Government itself does not realize the gravity of the present situation, either in regard to the financial condition of the Dominion or in regard to the duty of Canada as a part of the Empire in this present time of stress and trial. There has been criticism of the Budget on the ground that it does not recognize the changed financial conditions of the country by a reduction in the proposed expenditure, a point which has already been dealt with. But it is surely elementary, if our revenues are declining, and if there is no other prospect than that they will continue'to decline for an indefinite period, that it is the part of wisdom to introduce measures of economy of a substantial nature. That is a point that does not seem to have been considered by the Government as being of importance. My hon. friend (Mr. A. C. Macdonell), and I believe the Prime Minister as well, when this point was being dealt with, satisfied themselves and their friends by asking the member for Halifax (Mr. A. K. Maclean) in what particular he would reduce the expenditure, and especially if he would be willing to reduce the expenditure at the port of Halifax. I can only say that however satisfactory that form of answer may have been to the Prime Minister and to the hon. member, I do not think it will be satisfactory to the people of Canada. It is the gentlemen who occupy the Treasury benches and their friends behind them who are responsible for the disposition of the public moneys. They are answerable to the people for what use is made of these moneys, and it is for them to say when ana where and how moneys shall be spent, and to submit to criticism if money is spent for which provision has not been made, or for which no provision is intended to be made, so far as the Budget discloses.
I do not intend to weary the House with figures; but there is a point which has struck me in regard to the question of revenue and expenditure, of debt and deficit, that I will try to place before the
House at this time. I gather from the speech of the Minister of Finance that in the current fiscal year there will be added to the public debt the sum of $60,000,000, not including moneys borrowed on account sf the war. That increase of debt occurs, notwithstanding the special taxes imposed for revenue purposes at the last session of Parliament, which the Minister of Finance, when he announced them in his Budget of last September, expected would realize $7,000,000 during the six months of the current fiscal year then ensuing. That is to say, our shortage as between actual expenditure and actual revenue, based upon the tariff taxation as it was a year ago, was not $60,000,000 but $67,000,000. \ye have taken $7,000,000 more out of the pockets of the people of this country during the current six months than would have been taken out unaer the system of taxation that prevailed before the short summer session.
Again, I find that, notwithstanding this increase of taxation, expecting a further increase of the debt during the coming year to the amount of another $60,000,000, exclusive of war expenditure, the Minister of Finance brings in additional taxation which he hopes will yield $30,000,000. But besides that special taxation, which he proposes by his Budget just brought down, is the $14,000,000 of extra taxation which will accrue because of his Budget proposals of September last. We are carrying, then, a load of extra taxation, as the result of the Budget of last September and the present Budget, of not $30,000,000, but $44,000,000. The load of taxation has been increased for the year which we are about to enter upon to the amount of $44,000,000, and we shall still have a difference between revenue and expenditure, on the estimates of my hon. friend, of $30,000,000. Therefore we are $74,000,000 behind in our business transactions as expected for the coming year, aside altogether from war expenditure, according to the statements made by the Minister of Finance. That is a sufficiently startling condition to warrant the statement I have already made, namely, that the 'Government scarcely seem to have appreciated the gravity of the situation. Although our revenues have fallen so tremendously even in the face of such enormous increased taxation, we still are unahle to meet the requirements of the public service, according to the estimates of my hon. friend.
The Government of to-day may have some means of creating something out of nothing, of creating money otherwise

than by getting it from the people by way of taxes. But, unless they have some other means of securing money, they are taking the position that they are not called upon under present circumstances to do what every other person, corporation, government, or other organization throughout the world has to do, that is, to bring its expenditures into some comparison with its revenues, present or prospective. As I read the Estimates, as I have followed the Budget statement, the Government have absolutely ignored -that as being a necessity. If I have read correctly the Budget statement of the hon, Minister of Finance, he proposes to make the same expenditure on current account and on capital account during the coming year, and to face the shortage of which he speaks, as he did during the present year, when he had no such reason to expect a shortage, and had not found it necessary to impose an enormous additional burden of taxation upon the Canadian people in order to bring his revenue even approximately up to his (expenditure. I do not wish to labour the point unduly, but surely it is the business of those charged with the administration of the affairs of our country to keep some reasonable balance between revenue and expenditure without adding repeatedly and seriously to the burdens borne by the people. If the Government are going to take the view that expenditures may be made freely, liberally, and carelessly, and that the result is simply an increase in some measure of the burden of taxation, and that this burden is something that really makes no *serious difference to the people, I can only say that I do not think they appreciate the *seriousness of the situation or (the means that should be taken to remedy it.
I do not wish to deal with the question of the war or the war expenditures at any great length; but it appears to me that, if the Government has failed in its appreciation of the gravity of the financial situation of the country as it stands at present, it has failed even more seriously in regard to the gravity of the situation so far as the great world-war now in progress is concerned. The Government has a duty besides that of collecting taxes and spending money. It has a duty to give inspiration and direction td the minds of the people of the country in regard to all great questions that may come up for consideration, and ten times more so in a case such as that which confronts Canada, the Empire and the world at the present time. I do not wish to be misunderstood as to my
[Mr. Oliver.}
conception of the position of the Government of Canada. The Government of Canada is hot responsible for the occurrence of this war, or for its direction. The responsibility of the Government of Canada is that Canada shall take her proper part, with her men and with her means, in supporting the cause with which the interests of Canada are absolutely bound up: the maintenance of the prestige of the British Empire and the preservation of human liberty throughout the world.
The existence of the war has been used, it appears to me, as an excuse for a great many actions on the " part of the Government and for a great many omissions on the part of the Government for which there is no excuse. As I have said, this Government neither directs the war nor is responsible for it, but this Government is responsible for the part that the Canadian people take in the war; and it is there, it seems to me, where they have failed in discharging their responsibilities; failed at any rate in appreciating the measure of their responsibility in the Budget proposals that they have laid before the House.
In the Budget proposals of last summer, the Finance Minister announced the necessity of a war loan of $50,000,000. We have been informed since this session opened that $50,000,000 will keep practically 50,000 men in the field for six months. We are proposing another war loan of $100,000,000 to last, I presume, for a year, and, if I understood the Prime Minister correctly, his statement was that we were to have 90,000 or possibly 100,000 men in the field. If 50,000 men require $50,000,000 to maintain them for six months, certainly $100,000,000 will not maintain 100,000 men for a year at the same rate. I do not wish to press this point; it is a question that is eminently for the responsibility of the Government, but the facts and figures are as I have stated. Do they believe that they can keep 100,000 men in the field for twelve months on an appropriation of $100,000,000, and is 100,000 men the limit of their intention in regard to the aid that they are to give the Empire during this war? We do not know how long this war may last;, we do not know what turn it may take; we only know what our duty is and what results we desire to see achieved. At such a time, if ever, our resources should be conserved so that the money can be found and the men oan be put in the field and kept there as long as the necessity remains. This is not

a time to dismiss lightly with a wave of the hand the question of expenditures, of deficits, of revenue or lack of revenue. This is the time above all others when every care should be taken, when every dollar should be conserved, when every portion of the credit of the country should be maintained to the highest degree as long as it can be so maintained. What is the use of our saying that we are in this war to a finish with our last man and our last dollar when we are throwing money right and left on this, that or the other expenditure, connected with the well-being of this country, it may be, but still not necessary in any degree for the maintenance of Canada's position in connection with the war? We are liberal with our money; the money that we spend in military support we borrow in England, and we go to England also to borrow the money that we spend over and above our revenues for the very .ordinary current expenses of the country.
In following the remarks of the hon. member for South Toronto (Mr. A. C. Mac-donell), I noted that he made a strong point of the commitments of the late Government with regard to large public expenditures of various kinds, and especially with regard to railway expenditure, and gave these commitments of the late Government as a reason for the large expenditures at the present time of the present Government. I will not go into that matter at any great length, except to say in regard to one of the great commitments of the late Government, namely, the Transcontinental railway, that,
[DOT] if my memory is correct, when the late Government went out of power that railway was within fifteen per cent of being completed. That was three and a half years ago. I do not know how long it is taking this Government to complete that fifteen per cent, or how much money they are spending on it, but if they are using the same energy and the same economy that their predecessors used, certainly that expenditure should have been off the slate before now. In regard to the Canadian Northern, my hon. friend told of the guarantees by the Federal Government and of guarantees by the Provincial governments, and said that the enormous cash bonus paid by this Government was necessary in order to protect the guarantees already given by the Federal and Provincial governments. The cash subsidy paid by this Government to the Canadian Northern railway had practically no bearing on the security for the guarantees given by either the Federal
Government or the provinces. The Canadian Northern railway was a sufficiently completed system, upon the guarantees given by the Federal Government and the provinces; and the grant of money by this Government was of their own motion, of their own desire to, as I presume, gratify the ambitions of the projectors of the Canadian Northern railway, but with absolutely no justification from a financial point of view, as the conditions are at the present time. They must take the whole responsibility for the vast expenditure of cash that they have made in regard to the Canadian Northern railway for that part of its line which runs through the province of British Columbia. The late Government was not responsible in any particular, in any degree, for a dollar of that expenditure either directly or indirectly, by reason of commitments, obligations or for any other reason.
I desire to draw the attention of the House more particularly to the means that is proposed by the Finance Minister to raise increased revenue. We will admit that if he keeps up his expenditure he must have revenue, he must have money, and he must get it either by increased taxes or by increased borrowings. As to what proportion should be increased taxes and what proportion should be borrowings I shall not argue, that is not the point I wish to bring forward. I wish to say that, assuming the necessity for increasing the taxes, I for one am glad to see this Government adopt the principle of direct taxation. I do not say that the details are in all particulars as I would like to see them, but it is certainly an important point that a Government whose policy is tariff for protection should, at this time of stress and serious conditions, adopt the principle of direct taxation as a means of raising revenue and of meeting a deficit. It is, in the first place, a square, straight admission that their tariff is a tariff for protection and not for revenue. If an increase of tariff would give increase of revenue now was the time to make that increase of tariff if it was revenue the Government wanted. We maintain that it is a fact that undue increase, of tariff will not give revenue, and the direct taxation features of the Budget are an absolute admission of that contention.


Arthur Meighen: Has the hon. gentleman not just argued that the increase in duties which we made last year had produced some $7,000,000 more revenue than

would have been obtained if we had not increased them?


Frank Oliver: Yes.


Arthur Meighen: Now he is arguing that an increase does not give more revenue at all.


Frank Oliver: No, my hon. friend is
mistaken. I say that if the Government wanted to raise $30,000,000 at this session, being a Government whose policy is a policy of protection by tariff, if they believed that any increase of tariff would raise that $30,000,060, now was the time to show their faith by their works. But they knew that no possible increase that they could make in the tariff would give them that amount of revenue and therefore they did not take that means of raising the additional revenue, they adopted the system of direct taxation as a means of raising revenue while they did increase the measure of protection already in force. I do not know how far this will be acceptable to the people of the country. I am inclined to think that there are many people who would have accepted a higher tariff for purposes of revenue, but that there are very few of the general body of consumers who will accept the higher tariff for purposes of protection and at the same time direct taxes in order to raise revenue.
How much revenue is expected to be raised by these two means of taxation? I understood the Finance Minister to say that he expected $30,000,000, of which he expected to get from $8,000,000 to $10,000,000 by direct taxation and. the balance of $20,000,000 or $22,000,000 by indirect or protective duties. The Toronto Star has gone into -[DOT]-the matter somewhat and figures that, on the business of last year, the direct taxes proposed by the Budget, exclusive of the Patent Medicines tax would produce $14,000,000, and I cannot imagine that the Finance Minister had not those figures at hand when he framed the Bud.'fi he had in mind receiving a larger proportion of revenue from the direct tax side of his Budget than he gave the House to understand. His hopes of revenue centered rather on the direct taxes than on the indirect taxes. With regard to the direct taxes let me point this out. We all agree that there must be taxation, there must be revenue, and the whole question as between one party and the other, and between any two individuals in arguing upon taxation, is in regard to the fairness of the taxation. If the taxation is equally levied according to the ability of the different

people to carry it, then it is carried easily and without detriment to the country. But if it is levied unequally, if the man of small means and great responsibility is compelled to carry more than his share and the man of greater means and less responsibilities carries less than his share, then there is an undue burden resting upon one section of the community, and, as a consequence, the whole community is hampered in its progress. In the scheme of direct taxation that the minister proposes I find that of $14,000,000 the banks will contribute $1,000,000, and the trust companies $1,000,000.


John Dowsley Reid: Are you against that?


Frank Oliver: Not at all. Then $300,000 is expected on insurance premiums, $7,000,000 from increased postal rates, and $3,000,000 from railway passengers. It appears to me that the ordinary man who uses the postal facilities is bearing an unduly heavy share of this burden of taxation, wh'ile the great financial interests are bearing an unduly light proportion. Furthermore, I do not agree with the Finance Minister that it was not advisable to levy an income tax. I do not know where he would go for money except where money is. The burden should be levied according to the ability of the people to bear it. The burden should be laid equally, but the minister is not doing that when the banks with their great resources and profits pay only $1,000,000, and the trust companies with their profits only $1,000,000, while the ordinary people who write letters pay $7,000,000, and the people vrho ride in railway trains pay $3,000,000. The principle of direct taxation is sound, but the principle must be carried out in a sound way. The advantage of direct taxation is that the tax can be levied according to the ability of the person to bear it. When the tax is not so levied, when it is levied lightly on the wealthy and heavily on those who are not wealthy, it has many of the disadvantageous features of the ordinary protective tariff.


Oliver James Wilcox: Do not the banks and the trust companies post letters?


Frank Oliver: They will help to pay that tax, of course. But does not my hon. friend think that the banks, with their hundreds of millions of free circulation and the advantages they have at the hands of the Government of Canada, might fairly be asked to pay a larger share than they are being asked to do?


Oliver James Wilcox: My hon. friend said that the stamp tax would fall entirely on the poor people.


Frank Oliver: Oh, no, I said the poor
people would pay the greater part of it.


John Dowsley Reid: Oh, no.


Arthur Meighen: Give us the figures.


Frank Oliver: I have not got them.


Arthur Meighen: If my hon. friend had taken the trouble to get them, he would have found that he was far from the facts.


Frank Oliver: I do not think my hon. friend could get those figures.


Arthur Meighen: We will try.


Frank Oliver: The side of the Budget
proposals that calls for the most attention, and will probably receive the greatest attention at the hands of the people, is the proposals relating to tariff increases. It was quite in order that my hon. friend from South Toronto (Mr. Macdonell) should be the member on the Government side of the House to follow my hon. friend from Halifax (Mr. A. K. Maclean), and defend this high tariff Budget. As I read it, the tariff was made for Toronto, by Toronto and in Toronto.


William Thomas White: It was made in Canada for Canadians.


Frank Oliver: But only for some of the Canadians, very few in fact. We are anxious to see a tariff framed for all Canadians, just as we should be glad to see a system of taxation that would lay the burden equally on the shoulders of all of us. The proposal to increase by 5 per cent the duty on goods coming from Great Britain, and by 7i per cent on goods coming from other countries, is, in fact, an increase in the tariff of 25 per cent. By a stroke of the pen the Finance Minister or the Government of this country have raised the tariff by one-fourth. They have made the tariff of Canada to-day higher in many particulars than the so-called National Policy of 1878, which was reduced in many particulars by those who framed it after they had had experience of it for 16 years. By the introduction of this Budget, the Finance Minister has taken away in important instances the advantages that were given to this country by the tariff reductions of 1904.


Arthur Meighen: There were no reductions then.	*


Frank Oliver: In 1894.


Mr. MICHAEL CLARK:: That is a great point. They need points badly.


Frank Oliver: The Finance Minister said that this was a tariff for Canadians. I
notice that some Canadians will do very well out of it. I see our old friend the lumber combine figures quite successfully in this tariff. Lumber dressed on one side only was made free under tne tariff of 1894 as a concession to the special conditions existing at that time in the prairie regions of Canada. It has been recognized as being an important benefit to the people of that western country. There have repeatedly been demands made upon the late Government and this Government to have that condition of free lumber removed. My hon. friend has removed it, and to-day that lumber stands under a duty of seven and one-half per cent.


John Dowsley Reid: That is a war tax.


Frank Oliver: We will deal with that
lat^r. Lumber that costs $15 a thousand and was free, now pays $1.12$ a thousand duty. Lumber that costs $20 a thousand which formerly paid $5, now pays $6.50, and lumber that costs $25 a thousand formerly paid $6.25, now pays $8.25. If there is one institution or organization in the Dominion of Canada that did not merit consideration at the hands of this Government it was the lumber combine. My hon. friend has seen fit to place a taxation that is unjustified, unwarranted from	any point of
view upon the people of western Canada who depend	largely upon
imported lumber. While my hon. friend is preaching a campaign of patriotism and production, while' the Minister of Agriculture is lecturing, and sending lecturers, throughout the West enjoining the farmers on the prairies to raise stock, to go into cattle and hogs, which must have shelter in buildings made of lumber or they cannot live, the Minister of Finance puts a bar of from $1 to $1.50 a thousand upon the use of that lumber for the benefit of an industry and an organization that, I say, has no claim upon the consideration of this Government or of the people of this country from any point of view. Just how far the lumber combine will benefit by this duty I cannot say, but I find that during last year we imported lumber to the value of $4,428,000 and that on that amount the revenue to the country will be $221,000.


Mr. WRIGHT:: How much of that lumber came in free?


Frank Oliver: It all came in free.


William Wright: It would affect the calculation if some of this were free and some dutiable.


Frank Oliver: The Trade and Commerce returns show that in the year ended March 31,	1914, we imported free of
duty $4,428,341 worth of lumber, upon which, with the duty now imposed, the consumer would pay, or the treasury would receive $221,000. But while we iim ported four and a half millions worth we exported nearly twenty million dollars worth showing that we are not dependent on imports for our supply of lumber. As a matter of fact, I fancy, for every thousand feet of lumber we import, we consume twice as much as we import, and if we do, then, as a result of the imposition of this 7i per cent duty, while we will pay the treasury $221,000, we will pay the gentlemen who constitute the British Columbia lumber combine $442,000. The duty of 71 per cent will cost the settler in the Northwest, on this calculation, not $221,000 but
10 p.m. $663,000 in addition to what he has been paying in the past. That is one of my hon. friend's contributions to the campaign of patriotism and production.
Now, take cement. We imported-709,000 cwt. in the year I have mentioned of a value of $332,564 and the duty collected amounted to $69,684. On that amount of cement there will be $24,279 of additional duty under the increased tariff. In other words, the cement combine, these good Canadians, these true patriots, these gentlemen who are out for patriotism and production, get the benefit of a 30 per cent additional protection at the hands of my hon. friend. And the consumer of cement pays $24,000 in addition? No, he pays on whatever amount of cement is used in Canada that is purchased in Canada as well as on the amount that is imported. I do not imagine that we import one-quarter of the cement that we use.


John Gillanders Turriff: One-tenth.


Frank Oliver: If we import only onetenth of what we use, then this little increase in the tariff, instead of costing $24,000 additional, will cost $240,000 to the consumer of cement. Again a boost for the campaign of patriotism and production!


William Wright: We know that cement
was reduced a few years ago-I think it was two years ago-and that in practical operation the foreign manufacturers of cement put half of the reduction in their own pockets and the consumers did not benefit to the extent the hon. gentleman is setting forth.


Frank Oliver: I do not know anything
about that, but I think I can demonstrate that the producers of cement will benefit to the amount I say by the change which has been made in the tariff and I do not think that my hon. friend the Minister of Finance will question that.


William Thomas White: Oh, yes, I will.


John Dowsley Reid: No one will agree with you oil that.


Frank Oliver: However, that is a matter the facts will demonstrate, and there is no doubt about it the consumer will have to pay. I notice that this Budget provides that mowers and reapers and binder twine are not subject to this increase of 7J per cent. That is an important omission. It is of great advantage to the people of Western Canada particularly, and to the farmers of all Canada, that mowers and reapers are not subject to this increased duty, but mowers and reapers are not the only implements that are necessary to carry on this campaign of production and patriotism.


Mr. GRAHAM:: Ask them why they were left off the list of articles subject to increased taxation.


Frank Oliver: I wonder why they happen to be left out of the list of articles subject to the increased taxation, unless the increase was liable to raise their price. Some of the gentleihen on the other side can answer that question at their leisure, I will not press for an answer at the moment. While mowers and reapers are exempt from this increase of duty, there is a long list of other agricultural implements that are not exempt, and which might be, such as engines, threshers, ploughs, harrows, drills, seeders, rollers, packers, hay-rakes, potato-diggers. The plough, as everybody knows, is the symbol of agriculture; it is the fundamental implement of agriculture, and the plough pays an increased duty of seven and a half per cent. We imported in the year ending 1914, one million dollars' worth of ploughs and the duty on them was two hundred thousand dollars. If we import one million dollars' worth of ploughs next year they will pay $275,000 duty, which means that the campaign of patriotism and production will be aided by levying an additional tax of $75,000 upon the men who buy the ploughs.


William Pugsley: That is the way the
farmers are made prosperous.


Frank Oliver: Yes. In this country I do not think that we import the larger pro-

portion of our ploughs. We have men in Canada who make ploughs; they are very excellent ploughs, and they are made in such numbers and of such quality that they are even exported to the United States to compete in the United States markets with the product of that country. So that, if we import one million dollars' worth of ploughs, we may reasonably believe that we produce three million dollars' worth in this country. And so our bill in respect to ploughs, under the seven and a half per cent increase, will be not $75,000 but $225,000, $75,000 of which will go to the Treasury, and the balance to the patriotic manufacturers of ploughs to aid in the campaign of patriotism and production.
I hope the House will pardon me for taking so much time on this feature of the case, but my hon. friend from Toronto was so insistent on the point that everybody was satisfied with this tariff, that I am sure hon. gentlemen will permit me to show to what extent we have reason to be satisfied with it. But there , are people besides farmers who are interested in this tariff, because many of the people of Canada use cottons and woollens. In the year ending 31st March, 1914, under eight particular items, we imported woollens to the value of over twenty million dollars, blankets, worsteds, tweeds, etc., and upon that importation we paid a duty of five and a half million dollars, if we buy that same quantity of woollens next year, then under the five per cent and seven and a half per cent increase we will pay in the neighbourhood of $1,225,000 additional to what we paid before. Remember we do not get all these goods from Great Britain and they do not all come under the preference, although the larger portion does. In cottons, taking four items, we imported seven million dollars' worth last year, and we paid on that $1,225,000 duty. Averaging the five per cent and the seven and a half per cent increase, we will pay in addition $409,000 on the same importation next year. I do not imagine that we import one-half the cottons we use in Canada. We have immense cotton factories, we must be producing a great deal of cotton goods, and I think we produce at least twice as much as we import, so that while the Minister of Finance takes less than half a million dollars out of the people for the Treasury, his friends, these good Canadians, these patriotic manufacturers of cotton, will draw down anywhere from one million to one and a half million dollars. There 25
is no doubt they are highly satisfied with the increase in the tariff. There is another class of patriots in this country who ought to have attention at this particular time,
I speak of the manufacturers of boots. In the year ending 1914 we purchased $4,225,000 worth of boots and we paid $1,225,000 duty upon these boots. Taking the increase at seven per cent, because the larger portion of these boots comes from the United States, we will he paying $300,000 more duty upon the same quantity of boots imported next year. But everybody knows that we only import a comparatively small part of the boots we use in this country. I fancy that we make at any rate three pairs of boots in Canada for home use for every pair that we import. If that fact is a fact-and it is unquestionably a fact in this time of strife and hardship, when the cost of living has gone up and the means of living have gone down-my hon. friend the Minister of Finance, by his Budget, is handing to the manufacturers of boots in Canada approximately $1,000,000 a year.


William Pugsley: What does the hon.
member for St. Antoine (Mr. Ames) think of that?


Arthur Meighen: Perhaps the hon. gentleman, while he is on the subject, will say why this Government raised the duty on boots by five per cent?


Frank Oliver: My hon. friend will have all he can handle in explaining what his Government has done. The point is what his Government has done, not what the late Government did.


Arthur Meighen: It is you I am asking
for an explanation. I hope you will make it. [DOT]


Frank Oliver: My hon. friend is asking for an explanation of something that is not pertinent to the subject. We are discussing war taxes that are being imposed at the present time.


George Perry Graham: So-called war taxes.


Frank Oliver: Yes. My conclusion is
that, if the estimate of the amount of home production is correct, to those sterling patriots who are producing boots in Canada so greatly to the credit of Canada, and who are so strongly upholding Canada in its share of this war that is in progress, my hon. friend the Minister of Finance has handed out a little matter of $1,000,000 at this time, when every man is wondering where his revenue is to come from and how



he can make his expenditure and his revenue meet.


Michael Clark: That is the way the bootmakers die for the flag.


Frank Oliver: In the exposure that we
have had lately, if there is any class of manufacturers in this country who are not entitled to special consideration at the hands of this Government, it is our friends Who make boots.


William Pugsley: Who make boots for
the army. There are some very good makers of boots at St. John.


Frank Oliver: Who make boots for the
army. My hon. friends have spoken of this Budget as a war Budget. It is a war Budget inasmuch as it is a Budget that is placed before the country while a war is in progress, but it is not a Budget which provides for meeting the expenses of that war. That we have on the authority of the Minister of Finance, and the facts are evident on the face of the record. The war is responsible for many things; but it is not responsible for the mismanagement of the finances of Canada which has occurred since our friends have taken office, and which has resulted in a deficit as between current revenue and current expenditure for the current year, amounting, on the authority of the Minister of Finance, to, I think, $20,000,000. .


William Thomas White: 


Frank Oliver: $10,000,000 this year, and that is with an additional and special tax, which is expected to produce $7,000,000 during the last six months of the year, so that it really amounts to a deficit of $17,000,000 on current account.
I would like to see the Government appreciate their responsibility in regard to the part that Canada has to take in this war. They have not done so up to date; and it is not right or fair-I will not go further and say what ought to be said-that the Government should make the pretence, should hold out the false signal, and declare that the existence of this war is a reason why they increase the burdens on the people of Canada for the benefit of their particular friends. We hear a great deal in war time	vessels sailing under false ,
flags. When this Government put forward, as tneir excuse for increasing tne tax burden upon the people of this country, the existence of the war in Europe, tney are sailing under a false flag; they are attempting to

trade upon the patriotism of the people for the benefit of their particular friends and supporters, the manufacturing interests. This is neither a time nor an occasion when any government of any British country siiould come before Parliament and the people with such a proposal. This is a time when we ought to have fair play, fair dealing, and square talking. The Government should not attempt to mislead public opinion by mis-stating the facts of the case, putting upon their stamp, " war tax," when not a particle nor a fraction of the cost of the stamp is intended to pay any part of the war cost.


Arthur Meighen: What about the interest?


Frank Oliver: We are not even paying the interest.


Arthur Meighen: Oh, yes.


Frank Oliver: Accorumg to the statement of the Minister of Finance, we are not even providing enough money to pay the expenditures that we have undertaken, aside altogether from the war, let alone interest. We have to borrow money to pay the interest, as my hon. friend knows.


Arthur Meighen: Nonsense.


Frank Oliver: Patriotism and production ! The words sound well, and there is no doubt that there is great need in Canada at the present time both of patriotism and of proauction. Why is it that our friends are holding meetings here and there throughout the country and urging upon the farmers in the West to increase their acreage, to increase their production, for the sake of patriotism? Do they know why the farmers in the West have not increased their acreage during the past few years? Do they know that the acreage of production in the West in 1914 was no greater than it was in 1911, and do they know why?


Mr. BURNHAM:: Yes.


Frank Oliver: Does my hon. friend know why?


John Hampden Burnham: Economically the
world can consume only a certain quantity of food, and if you increase production, as some hon. gentlemen furiously profess they intend to do in the West, you will only heap waste on the market. While you may interchange manufactures and have five pianos or five motor cars or five anything else you like instead of one, you cannot eat any more than you did before, no matter what you may do.


Frank Oliver: In 1914 the area of production in the West was no greater than it was in 1911, and to-day the Government and the people who claim to have leadership in Canada are urging upon the people of the West to increase their production. Do our friends recall the conditions that existed throughout the prairie provinces immediately after they took office in 1911? Do they remember the tremendous crop that was on the ground, the unfavourable weather conditions that existed, the grain blockade that took place, the rotting of the grain in the stooks and in the granaries? Do they remember what was done when pressure was exerted in this House to secure an outlet for this grain by means of reduced railway rates and by means of tariff concessions in respect of trade with the United States? When it was too late, railway rates were reduced, but no tariff concessions were made. Railway rates were reduced for grain that was routed through, but not for grain that was sold in the States subject to the tariff; it had to pay the higher rates. Well, I can assure my hon. friend that when a farmer has seen his crop rot on the ground or in the granary, and when he has not the wherewithal to seed that ground the next year, he is just in the same position as any business man would be. In the first place, he is discouraged; in the second place, he cannot go on. And when the next year prices were abnormally low; when oats were selling in the province of Alberta at 15, 16, and 18 cents a bushel, what was done by this Government to relieve the situation? Anything? Nothing, absolutely. Since that time the changes in the United States tariff have given an advantage to Canadian producers. There has been a reduction in the duty on oats, and last year the reduction of the United States duty to 6 cents a bushel enabled the people of the western country to dispose of their oats, I shall not say at a living price, but they were able to get rid of them, and they would not have been able to do so otherwise. Yet my hon. friends wonder why production stands still. They think that by issuing pamphlets and by holding meetings in board rooms of banks they can instruct the farmer how to increase production. If they would give the farmer the benefit of a market, then he would increase production. At the present time, owing to the war, he has a market. Give him reasonable accommodation at the bank and you shall not need to issue pamphlets or hold lectures; he will increase the production all right enough. But he has to have 25i
the money. Unless you are prepared to let him have the money, he cannot make the production. If these kings of finance, who are so wise on every subject after everything is over, would make their arrangements so that they could and would finance the farmers of the western country during this year of high prices, I will guarantee that they will increase production. But talk will not do it, and the levying of extra taxes will not do it. The 25-cent increase that is proposed to be placed in the tariff by this present .Budget is a campaign against patriotism and against production, and it will take years and great effort-on the part, I am sure, of some other government than this-to overcome the loss that the country-will sustain by reason of its impos^on.
On motion of Mr. J. H. Burnham (West Peterborough), the debate was adjourned.
On motion of Hon. W. T. White, the House adjourned at 10.30 p.m.
Wednesday, Febru?ry 24, 1915.