1916-03-17

DOMINION LOAN-$75,000,000.

[Stage Direction]
Sir THOMAS WHITE moved second reading of Bill No. 60, to authorize the raising, by way of loan, of certain sums of money for the public service.
Sir WILFRID LAURIER:: The Bill is not printed.


Sir THOMAS WHITE:: I understand
that the Bill is not printed. I would ask my right hon. friend to be good enough to facilitate the passing of the Bill. It is founded on the resolutions which were adopted yesterday respecting the raising of $75,000,000 by way of loan. The Bill will be printed by Monday, and I should be glad to have the second and third readings facilitated. The matter is of importance in connection with negotiations now being conducted.


Wilfrid Laurier: Upon the
statement of my hon. friend that the matter is urgent and important, I would not raise any objection; but I cannot see, without a more detailed explanation, why it is so urgent. Do I understand that my hon. friend wants to have it at once assented to?


William Thomas White: What I desire is that the Bill should receive its second and third readings and go to the Senate next week.	-


Wilfrid Laurier: To be immediately assented to?


William Thomas White: To be assented to in the near future. My right hon. friend is aware, as I stated yesterday, that we have been negotiating in New York for the raising of a loan; and it is necessary that this legislation be passed before the issue can be made.


Sir ROBERT BORDEN:: We could hardly have the second reading without the Bill being printed.


William Thomas White: Then I shall
withdraw my motion.
Motion withdrawn.



TAXATION OF PROFITS.

[Stage Direction]
The House in Committee of Ways and Means on the proposed resolution of Sir Thomas White (Minister of Finance) respecting the taxation of excess profits; Mr. Rhodes in the Chair.
Paragraph 2, let sub-paragraph, agreed to.
On paragraph 2, proviso "a":
Provided however-
(a) that the amount paid or payable by any person under the provisions of part one of the Special War Revenue Act, 1S15, shall be deducted from the amount which such person would otherwise be liable to pay, and the minister shall have power to determine any questions that may arise in consequence of any difference in the several periods for which the taxes under the said Act and those proposed herein are payable.
Mr. MACDONALD:: This is the enacting clause of the resolution, and it seems to be the proper clause upon which to hold any general discussion of the resolution. In' view of the fact that last night, before the committee rose, the minister, on being interrogated, intimated that he would consider any suggestions that might be made, I should like to point out the effect of the 'imposition of this tax upon every person connected with mining or kindred industries, where the enterprise involves the development of natural resources, and where the development cannot take place except by the employment of capital. The situation has been this.
During the past autumn, throughout Canada generally, there were a great many propositions promoted and on the verge of being capitalized through the assistance of foreign capital, and this legislation will seriously interfere with the consummation of any such capitalization. Indeed, the an-

no uncement which my hon. friend the minister made in his Budget speech about a month ago has had the effect of absolutely discouraging any attempt to promote industries of that kind. When a person with a proposition, no matter how good, goes abroad with the idea of obtaining the capital necessary for development, the possible investor inquires whether or not this is one of the companies which would be affected by the Budget of the Government. The person interested would be bound to tell the possible investor that it was one of those companies. It is well that persons should invest with the view of developing coal, silver, nickel, gold or other minerals. The person who invests in an enterprise of that kind, particularly at this stage of the world's history, does so with the hope of making some special profit. He takes bigger chances than are taken in the ordinary financial or industrial company. These deal with settled conditions. Business may vary or fluctuate; dividends may be small or great, but there is always a certain basis on which to proceed. It is the same with an industrial enterprise formed for the purpose of producing some special article used in the country. The production of the article is necessary to meet the needs of the people, and the person who invests in that industry knows that the question of receiving dividends depends upon his being able to produce the article as a saleable commodity, and that the price of the article will furnish him with a reasonable profit. But when a man goes into the mining industry, the conditions are entirely different. There may, or may not, be a large quantity of ore; all that has to be taken into consideration by the person who invests. To a very large degree the investment of capital in the mining industry is a gamble. If my hon. friend is going to throw into the melting pot these propositions, he will create a further menace which will intimate to the outside capitalist that the utmost he can get from his investment, after taking all chances, is 7 per cent, before the Government intervenes to take part of the profit. The minister will see that he is menacing the development of that industry everywhere. In addition to that, the party who is looking for capital [DOT] is not in a position to assure the possible investor that the Government may not, at a subsequent session, proceed to levy upon that class of industry to a greater degree. The minister may say, as he said last night, that this tax is going to last for only two vears. My hon. friend is not taking into
consideration, it seems to me, the very serious financial position which Canada is in as a whole when he invites us to believe that this or that or the other tax is going to stop at the end of two years. N The question of where taxation is going to end in this country, under our existing financial conditions, is a matter whch my hon. friend cannot determine, and he does well to put in a saving clause in regard to the future. The consequence is that the party looking for investment in a mining proposition cannot give any assurance that the tax will not be increased in the future, or that the percentage which is now taken is to be the limit.
For a moment, I might refer to that situation. It is all very well to be optimistic and to say that Canada will be in this or that position. There is no sign of the war ending. We do not know, even' in this House, all the commitments that we are making. We have not the information that we ought to have as to just how much this war is costing us to-day, or how much it has cost us since the last data was furnished to the House. Without that information we are in the dark. The extent of the. obligations which we may assume in the future is absolutely problematical and impossible to estimate. It seems to me that this House ought to have that information before taxation Bills and loan Bills are passed. I mention that incidentally to the point which I desire to make, that the party going to look for capital for a mining proposition cannot give assurances of any definite character that the percentage of profit, ito be taken from the man whose investment he desires, will be limited to that now proposed. That being so, the effect in regard to that particular industry is that it will be impossible for any one who has a mining proposition in this country to exploit it by obtaining the necessary capital for its development.
My hon. friend has gone so far as to put in an additional clause in the Bill which means that in determining the amount to be paid by a mining proposition the extent of the exhaustion of the ore in the ground will be taken into consideration. That is only so far so good. It minimizes the situation, but to a very infinitesimal degree. Mining is a natural industry in this country, quite as much so as agriculture. We all hope and believe that, particularly in the far northern country, there is an illimitable store of minerals, the development of which will mean a tremendous expenditure for

supplies and the increased prosperity of the country at large. This industry stands apart, as I have said, from the ordinary industrial and financial industries. It requires spec-ial consideration. I submit that the minister's proposal menaces the future of this industry, and that the slight amendment which he has made in no wise does away with the possibility of injury.


William Thomas White: I am really obliged to my hon. friend from Pictou for bringing up this matter for discussion. I need not say that I appreciate the benefit of his views upon any subject that may be under debate in this House. He has put forward his representations very temperately, and I propose to answer them as fully and frankly as I may be able. I think that my hon. friend and those connected with the mining industry, or I should rather say some of them, are unduly apprehensive as to the effect of this measure upon their industry. The Government is fully aware of the extreme importance of that industry in the national economy of Canad.a. It is one of the great natural industries, as my hon. friend has observed, and, certainly, the Government would be the last to take any step unless indispensably necessary in the national interest which might have the effect of in any way injuring the mining industry, or retarding the flow of capital into this country. I think I shall be able to, show before I take my seat that there is no ground for apprehension on the part of the mining community. This tax is, as I stated last night, for a limited period. My hon. friend questions whether I was justified in making that statement. I certainly was justified in making that statement, because it represents the intentions of the Government.


Edward Mortimer Macdonald: If you need money, what are you going to do?


William Thomas White: I am coming to that. My hon. friend says that the war may he prolonged for two or three years. For myself, I can scarcely see how that is possible. But it may be possible. But should the war be prolonged for the next two or three years, and the financial responsibility of the Government correspondingly increased, it would then, undoubtedly, be necessary to take such measures as might be expedient in the public interest to meet the situation which we should then-be confronted with. That statement is in no way inconsistent with that which I made last evening, namely, that this particular 
measure is for a period only. The principle of the resolutions, it would appear to me, indicates that. The principle of the-resolutions is in effect that those individuals, firms and companies, which since the outbreak of the war have been able to maintain a rate of profit beyond what we have fixed upon as a fair and normal prewar standard, shall contribute a fraction of that excess for the purposes of the war. It is a fact with regard to many businesses in Canada that the largest profits resulting from the war, either directly or indirectly, have been made, during the 18 months since the outbreak of the war, by reason of the increase in the price of commodities, due to the demand which arose by reason of the outbreak of hostilities, and in supplying of munitions and other requirements in connection with the war itself. I do not mean to say that if the war goes on there will be a less demand for commodities and munitions, but I do not think that, as the country becomes better organized to meet the new conditions, the prices which obr tained during the past 18 months will obtain in the future. Therefore, it would seem to me that I am perfectly justified in stating, as I do, on behalf of the-Government, that this is a temporary tax. In- making that statement, I largely meet the argument of my hon, friend that capital might be discouraged from embarking upon Canadian enterprise. It is hardly conceivable that an enterprise could be-established within the next few months, and before the termination of this legislation, earn such large net profits that the moderate tax which we are taking from them would be -a serious matter to the individual, firm, or company in question. Therefore, I do not believe, for myself, that when it is realized, as I believe it is now realized, that thi-s is a temporary measure, the effect which my hon. friend anticipates will be produced, or will continue, if such an effect has already been produced.
My hon. friend has, I think, made a statement which, if made by a responsible minister of the Government, would do more to retard the flow of capital through this country than this Budget. But as he is not .speaking on the authority of the Government, it will not have that effect. My hon. friend has clearly indicated the view that the war will probably be prolonged for a considerable period. As to that, I do not know that the information of any one is better than that of another. Itiis not for us to guess or speculate as to the-

length of the war. I never believed that the war would be a short war, but, on the other hand, I do not believe that it can be unduly prolonged. It would seem to me that if the war should continue for a period of, let us say two or three years more, civilization would almost be destroyed, and the economic resources of the world would almost disappear. I believe that long before any such date, as my hon.' friend has in his mind, the forces at work, making for the conclusion of this war, will be such that it will be concluded, and concluded on the terms we are contending for; because although the German nation has apparently been winning victories on land, it has Teally been losing the war. This war will be determined in the last analysis by superiority in resources, in men, in munitions, and in money.


Edward Mortimer Macdonald: The Minister of
Labour does not think we are going to win?


William Thomas White: I think he
does; I know he does. I happen to know that the Minister of Labour is certain we will win. The Government is certain we are going to win; not only that, but we are going to leave no stone unturned to make certain that we shall win. That, among other reasons is my motive in bringing down this budget. I want those who can afford to pay, to pay. There is no one who will be taxed that cannot afford to pay, and I know of no one who is not willing to pay. Iii fact, I know the people are anxious to pay the tax [DOT]imposed by this budget.
This measure, therefore, being a temporary measure, it is not conceivable to me, when it is understood, that it will have any effect in retarding the flow of capital towards this country. Let us assume for a moment, however, that it would; let us assume that my hon. friend is right, and that it would have some effect in retarding the flow of capital to this country. I ask this House, would that be a good reason for a Government refraining from faking any taxation action that it might deem indispensible towards the winning of this war. Suppose that at the time of the war between the North and the South, when the United States was torn in twain, it had /been suggested for a moment that the proposals of the Secretary of the Treasury designed, and necessary, for the prosecution of the war by the North,, would have the effect of retarding the flow of
capital into the, United States; would such a suggestion have been listened to seriously? In Canada tb-day, does anyone consider seriously whether general business is going to be impaired or not? General business is of extreme importance. I yield to no man in my desire that the Government should carry on this war with a minimum of inconvenience to the business of the community. I desire that the war should be carried on, in so far as we can carry it on, with our full power, in such a way as to interfere in the least possible degree with the business activities of this country. I desire that on the grounds of business itself, but I desire it more strongly on the ground that, the more we can promote business, the greater the industrial and commercial activities of the country, the better will we 'be able to sustain the economic burden of the war. Therefore, in answer to my hon. friend I may say that while I do not believe that the effect of this legislation will be to retard the flow of capital to this country, I am bound to say that the first duty of this country is the conduct of the war, and that business considerations, while of great importance, are really secondary; and I believe the public in this country take that view. I believe that the public takes that view.
What is the object of this taxation? I have been talking, members of both sides of the House have been talkifig, and with the greatest sincerity, of the seriousness of this war, and there is no divided opinion as to the reality of the menace to the Empire and to Canada. We all have supreme confidence that the issue will be decided in our favour, but we have been alive to the peril, and, so far as I have been able to observe, hon. gentlemen on both sides of the House, my right hon. friend the Prime Minister and my right hon. friend the leader of the Opposition, hold the view that we must put forth the utmost efforts in order to bring about the results which we believe will be brought about, namely, ultimate and conclusive victory. We have been talking about liberty, civilization, and religion being in the crucible, and about the safety of Canada and the integrity of the Empire being menaced by this German peril. We believe that. We are so remote, fortunately in one sense, unfortunately in another, from the scene of the conflict that it is not possible for us, with all the imagination we possess, to visualise what is going on in Europe. You would, not hear any


Edward Mortimer Macdonald: What company was that?


William Thomas White: I will give my
hon. friend the names privately. These gentlemen would not like to have their names mentioned in the House. My hon. friend is apprehensive about the mining industry. I think he has totally miscalculated the effect of the Bill upon that industry. The principle of the taxation is this: If net profits have been made, in the case of companies, including mining companies, in excess of 7 per cent, we take one-quarter of the excess and one-quarter only. Does my hon. friend know that, excluding nickel companies, only twenty-four mining companies in the whole Dominion paid dividends last year? My authority is the Canadian Mining Journal.


Wilfrid Laurier: They are not very prosperous, then.


William Thomas White: The extraordinary thing is that some were exceedingly prosperous.


Wilfrid Laurier: Only the
twenty-four are prosperous.


William Thomas White: Others are engaged in the business, but they are not affected by this tax, and many of these are not affected by the tax. The point I am making is that the mining industry has nothing seriouls to apprehend from this tax. We are fighting for this country, we are fighting for every business in it, including mining. On what principle can I, or can the Government, leave out mining industries from the operation of this tax? On what principle can I tax a manufacturing company, a transportation Company, a trading company and pass by the Hollinger mines worth $10,000,000, or $15,000,000 or $20,000,000 and earning up to $2,000,000 net profits? On what principle can I pass by the Nipissing mine earning $1,200,000 a year and worth brobably $5,000,000. How can I pass by copper companies in view of the fact that copper has doubled in price since the outbreak of the war? On what principle can I pass by the nickel companies -which are making enormous sums out of the natural resources of the country? I appreciate to the full what the mining industry at Cobalt and Porcu-

pine means to the province of Ontario and I appreciate the importance of the mining industry to British Colnm'bia, but the point I make is that the mining industry is not going to, be injured materially by this legislation and I shall show my hon. friend from Pictou that he has misjudged the effect of the legislation upon these mining companies.
I do not believe there is a country in the world in which lefes revenue is derived from mining than Canada. Take the highly mineralized area in Northern Ontario, Cobalt and Porcupine and other mineralized areas; I was surprised to-find the other day that the entire amount of revenue derived by the province of Ontario from its mineral areas was about $300,000. It cannot be sqid that in so far as Canada is concerned there is anything in the situation that would retard the flow of capital towards this country for the purpose of embarking in the mining industry. The Minister of Mines of British Columbia was here the other day and I inquired of him how much revenue they derived from the mines of British Columbia. He informed me that they got $150,000. I do not know of any country in the world in which such small amounts are taken from the mining industry by way of royalty 'and taxation as in Canada. I do not believe that the imposition of this moderate tax is going to have the effect, amongst a community as intelligent as the mining community of causing them to slacken their efforts in the development of that great natural resource. We go to the legislation of the United States; the United States is a great mineral country and yet there has been an income tax imposed not only upon the subsidiary mining companies but upon the holding companies. The maximum allowance made by the United States'for exhaustion of capital is only five per cent. I think that is too small, and I shall deal with that phase a little later on. Take the nickel companies of Canada. The International Nickel Company, which has its refining plant in the United States and operates, I believe, through a subsidiary company at Sudbury, had earnings of nearly $10,000,000 for the nine months ended December 31, 1915. Now I do not believe that public opinion would sustain the Government in taxing all other industries in Canada and passing by these mining companies.


Mr. TURRIFF:: Was it the International Nickel Company or the Canada Copper Company that earned the $10,000,000?


William Thomas White: The International Nickel Company. I mentioned the subsidiary company at Sudbury, which is called,
I believe, the Canada Copper Company. I give that as an illustration of the large earnings of these mining companies, and I am going to show later tnat the amount we shall take from these mining companies is so small that it will have no appreciable effect on the mining industry at all. Only comparatively few mining companies in Canada are subject to the tax, and they will contribute very much less than my hon. friend has in view. The mining companies desire to contribute. Some of them would rather that the tax was on a basis so that they would not have to contribute so much; that is no doubt very natural. I hear there are also -a few, but very few, who would rather not pay anything at all. But we should not be justified in acceding to their request and exempting them from the operation of this tax, provided of course that they made large profits. I can say this: that those in the mining industry who do not desire to pay are decidedly in the minority; the great majority do want to pay; they recognize it as just that they should pay, and among these I am happy to say are the Americans.
Let us for a moment consider the principle of the application of this measure to the mining industry. I admit that it is [DOT]more difficult to apply a measure of this kind to mining companies than tb manufacturing, industrial or commercial business. The reason is that mining, as my hon. friend from Pictou has pointed out, is a calling in which there are many disappointments, and in which abnormal profits must be looked for. I think that is generally admitted. A man who might be quite content with seven per cent in a manufacturing business would not invest in a mining company upon the basis of a seven per cent return on his investment. It must be borne in mind that a man who speaks of getting say twenty per cent in a mining company, especially a company that is operating metalliferous mines, knows that in that twenty per cent there is a large return of his capital each year. That is among the reasons why, in mining, a larger return is required than in the case of an ordinary commercial or indus-

trial enterprise. The same remark would apply to other businesses-I do not say that twenty per cent would apply-in which the capital invested is depleted from year to year. The resolution I have brought down relates net profits to capital. I would call the attention of my hon. friend from Pictou to the fact that in the resolution originally brought down we used the term " net profits." I may say that mining had not escaped our attention, and for this reason, among others: We had examined carefully the American income tax legislation-, in which provision is made for an allowance for exhaustion or depletion oi capital not to exceed five per cent of the gross output in any one year. It did not appear to us that we should place a limit of that kind upon the amount that we should allow for exhaustion of capital. There are. some mines whose average life is eight or ten years. I am speaking of metalliferous mines. Then other -mines, such as coal mines, last for generations, and the same considerations,except in a general way, do not apply; that is to say, the percentage of exhaustion in a coal mine in a particular year is not so great as the amount of exhaustion in connection with metalliferous mines such as gold, silver and copper mines. We therefore deemed it improper to place any limit on the percentage which we should allow for exhaustion of the capital of a mine. In the administration of this Act it may be necessary for us in some cases to say we shall allow ten, twelve or thirteen per cent; and in other cases five, or two per cent. It all depends upon the character of the mine with which we are dealing. The hon. member for Pictou will, I am sure, concede that if we tax what are known as profits and distributed to shareholders, say under the mining laws of the province of Ontario, but which are really not net profits, and deduct from those profits a proper amount, as we should be entitled to do under the provisions of this Act, for depreciation of plant and machinery, and for exhaustion, in the case of some mines, to the extent of ten, twelve or more per cent of the value of the mine, they take on a very different complexion from what are ordinarily understood as profits in the payment of dividends to shareholders in mining companies. The result of dealing with the profits of mining companies in that way- and it is a proper way to deal with them- will be to make the net profits appear to he much smaller than the apparent profits which are published from time to time. So much for that phase. I have not considered [Sir Thomas White !
it necessary to place any limit in the Act, because I think in its administration the judgment of the officials should be left unfettered, although, of course, they will have to act on some principle which will be fair to all. I do not, however, consider it necessary to fix in the Bill a limit of percentage to be allowed for the exhaustion of mines. I have dealt with the matter of net profits, and it does seem to me that in dealing with them in that way we are placing the mining industry on a parity with all other industries.
Now we come to another question, which I am sure my hon. friend from Pictou has given attention to: the question of capital, of reserve, rest and accumulated profits. My hon. friend will observe, by an amendment I shall make to the resolution, that "may" will become "shall."


Edward Mortimer Macdonald: In all companies?'


William Thomas White: I had great difficulty, I confess, in reaching a conclusion upon that point. I derived substantial advantage in reaching my conclusion from the discussion in this House. I have no small vanities which would make me disclaim the advantages received from a discussion in a House such as this. A minister brings down a comprehensive measure of taxation. He knows that it is more or less rough-hewn, and that he will obtain much more information after he brings it down than -he had when it was-drafted.. As long as the principle of a Bill is correct, inequalities can be corrected in this House, and a minister must be prepared to act in ithe light of information that he may receive from hon. members. I would call the attention of my hon. friend from Pictou to the fact that, in estimating capital we shall -have regard, not only to capital stock, but to rest, reserve, and accumulated profits. These will all be embraced under capital.
My hon. friend from Pictou is a lawyer, and I desire to make this statement to him. If we had proceeded absolutely logically we should have said: We will take the value of all the assets, real and personal, movable and immovable, of every company, firm and individual in Canad,a, and subtract the liabilities from the assets and the difference will be t-he capital. I need not, however, tell the House that that would be a Herculean task for the officials charged with the administration of this measure. In -the case of most companies the capital, reserve, and accumulated profits are accurately stated, in their reports, and one

would feel perfectly safe in taking their statement where the capital stock has been paid in full: capital, so much; reserve and accumulated profits, so much, representing premium on the price of stock sold to shareholders, or profits which have been taken into reserve, or contingent fund, or allowed to jemain in profit and loss account. So in the case of an ordinary company for the sake of taxation, you have your capital, your reserve or rest account, and your accumulated, profits, substantially representing the capital of the. company invested in that business.


Edward Mortimer Macdonald: The gross capital?


William Thomas White: No, the net.


Edward Mortimer Macdonald: What about the liabilities?	.


William Thomas White: I think I am right. I am speaking of capital, reserve and accumulated profits only; I am not speaking of the total assets. I say that that substantially represents the capital of that company. Just as an individual has invested in a business $100,000 which would represent the value of its assets less its liabilities, so, in determining what the capital of a company logically is, you would say: What is the - value of its assets and what are its liabilities? You would then deduct the liabilities from the assets and in that way get the capital. If the business of a company has been conducted properly, if the stock has been all paid in cash, you will find that that will correspond with capital stock, rest, reserve and accumulated profits.
Mining companies present difficulties in ascertaining the capital invested in them, because there is no necessary connection between the nominal capital of a mining company and its real capital, which is the value of its mines. Therefore, you will find, these anomalies. You will 4 p.m. find a company incorporated some years ago, say, with a capital of $250,000 or $500,000, and you will find that the property to-day may be worth $5,000,000; that a holding company has probably been created, holding the stock in the original company, now the subsidiary company of the holding company, and that the dividends are being paid, say, at the rate of 15 or 20 per cent upon a capital of $5,000,000. Now, this taxation will apply, of course, to the underlying company; but it will be necessary, in order to be perfectly fair to the mining industry, that in considering what its capital is, under the provisions of this Bill, you have regard to the amount of its fully paid up capital and to the values of its reserves, rest and accumulated property, the three together, as I have stated, representing substantially the value of the mine. In my opinion, that is absolutely fair and just, and it is the principle that would be applied to financial institutions, private individuals and firms in business. The first question is:	What is the
true amount of your capital? The second is: What is the true amount of your net profits ? Now, relate your net profits to the true amount of your capital and you will easily be able to make the calculations called for in this measure. Therefore, I think, in view of the statement I have made, that the apprehensions of those engaged in the mining industry that this tax is going to be oppressive, will be allayed, if not entirely removed, because, on the one hand, the so-called profits are cut down to a net basis, and on the other hand, the capital, reserve and accumulated profits are deemed to be the value of the property, less the liabilities, of course, that is, the true capital invested in the enterprise.
I do not, at the moment, desire to say anything further than this, that, if these resolutions and the Bill which I shall introduce later should meet, as I believe they will, with the approval of this House, it will be our object to administer this legislation, while strictly, in accordance with the legislation, with good judgment and with scrupulous fairness to all parties concerned. The administration will be under the Department of Finance, the tradition of which I believe has been good, and I certainly desire to pass it on unimpaired. It has been suggested here that political con siderations might enter into the adminis tration of this measure. I do not believe that that view is shared in by a majority of the members of this House, nor that it is shared in by hon. gentlemen opposite. We are bringing in an exceptional measure under exceptional conditions, and the House realizes the fact that this is a Bill that under normal conditions would not be brought down. I am sure hon. members will have confidence that this measure will be administered fairly and justly to all parties concerned, and most certainly without regard to political considerations in order that the end may be accomplished that we have in view in introducing this measure, namely, that we may raise a substantial amount of revenue to cover our expenditures in connection with the war.

Perhaps I have spoken longer than a minister should in committee; but the hon. member for Pictou, I know, is sincerely interested in this matter; he has a wide interest in mines; he is sympathetic to the mining industry; he is well informed; he has put forward his views; he has raised questions; he has made representations, and I have thought that his desire was that I should deal with this matter, so that those engaged in the mining industry may be reassured as to certain matters about which they have been in doubt, namely as to what net profits mean and as to what capital means in connection with their industry.
There is another thing. My hon. friend has touched upon the question of the certainty of a tax. It is a good principle in taxation that those who are liable to pay a tax should be able, within reasonable bounds, to ascertain what the tax will mean, because in many cases, they make their future arrangements accordingly. Now, this Bill should be through this House in the course of the next couple of weeks-at least I am hoping it will-and once it becomes law, there will be no difficulty whatever, because the legislation will begin to operate at once, if any mining company is [DOT] desirous of ascertaining what its taxation will be, in making their return and having the officials of the department check it over and make an assessment upon it. I think we should be able to begin making our assessment in May. Returns will he called for in May or June, or, if any are unduly apprehensive about the amount they will have to pay, they can easily ascertain substantially what it will amount to.
Again I thank my hon. friend from Pictou for giving me an opportunity to make this statement.


John Gillanders Turriff: If I criticise some of the points in this Bill, I want it distinctly understood that I am not in any way opposing the taxation of corporations. I do not believe that any hon. member on this side objects to the taxation of corporations, but we criticise the inequality of the taxation. Under this Bill, one man is taxed, while two or three others who should be equally liable are not reached at all. Suppose a man hae $100,000 invested in a mercanatile business, he is taxed; but his next door neighbour has $500,000 invested in some other way, and no attempt is made to take a dollar from him. If a man has his money invested in bonds, securities, or real estate, from which he derives a big 
income, the Minister of Finance does not make the slightest attempt to get at him. And that is the reason vdiy this Bill, in my judgment, when it comes to be understood, will not be popular.


William Thomas White: My hon. friend
understands, of course, that this tax
*
applies only to companies making over seven per cent profit; it is a tax, not upon capital, but upon profits beyond a certain amount. I explained that last night.


John Gillanders Turriff: I understand that perfectly. But what I object to is that -the man who has millions invested, -and is making more than seven per cent on his investment-


William Thomas White: Do they make that?


John Gillanders Turriff: If he is not making more than seven per cent, he is making far more in amount than the man with $250,000 in a commercial business that may be making over seven per cent; yet he is not called upon to pay a single dollar. I was not here last night, but I understand -that the objection offered by the Minister of Finance to an income tax was the difficulty of collecting it, and the fact that many would escape. To my mind, it would not be a bit more difficult to collect an income tax than it will be to collect the. tax imposed under this Bill. This will be an expensive matter, and you will only get at a certain small proportion of the community, whereas, if the tax were evenly distributed over the wealth of the country, and every man who -has wealth, who 'has an income, were called upon to pay, the tax would not fall so heavily upon our industries.
The Minister of Finajice has just spoken about the capitalization of mines. I am not sure that I clearly understood what he said. Suppose that a mining company, organized a few years ago, has a paid-up capital of $250,000. They bought a property for $100,000 and spent $150,000 in plant and in carrying on the business. Between tnat time and the time when this tax comes into effect they make a fine discovery of ore, so that the mine, instead of being worth $100,000,'is worth $1,000,000. In that case, is that $1,000,000 capital, or is it not?


William Thomas White: Assuming that $1,000,000 is a proper valuation in the opinion of experts, then I should say the true position of that company would be this:

Its capital is $250,000, and its reserve, rest, and accumulated profits make up the balance. Its capital, for the purposes of this Act, would be $1,000,000.


John Gillanders Turriff: That is what I was not clear about. Now, the Minister of Finance discussed the nickel companies, and spoke of the readiness of the American owners of mines to pay their share of these taxes. Will he. say that the International Nickel Company will pay taxes under this legislation? For my part, I do not see how it is possible for the minister to tax that company. He may tax their subsidiary company, the Canada Copper Company. The minister has just stated that these companies are making vast sums of money, the price of copper having doubled. But the minister will find himself practically up against a stone wall in the case of the Canada Copper Company, for that is a subsidiary company. It d,oes not sell 'ore, nor does it sell the finished nickel. It roasts and smelts the ore at Copper Cliff, near Sudbury, and turns out a matte which is shipped to the International Nickel Company. It does not make the slightest difference to the Canada Copper Company what it charges for the matte. Our nickel goes into the United States and is refined in New Jersey, and the company is making millions. The Solicitor General (Mr. Meighen) said the other night that it was making $5,000,000, but the Minister of Finance said that a subsidiary company was making $10,000,000.


William Thomas White: No, the main company.	'


John Gillanders Turriff: Then that makes it very clear. The Minister of Finance says they make $10,000,000, and the Solicitor General the other day said they made $5,000,000.


Mr. HANNA:: That was last year.


John Gillanders Turriff: They were talking within a week of each other.


William Thomas White: I read from the Canadian Mining Journal:
The International Nickel Company, in the three months ended December 31, 1913, earned some $3,423,246 ; and in the nine months ended December 31, 1915, earned $9,741,828.
-We have not the figures for last year.


John Gillanders Turriff: I would recommend my hon. friend to give that information to his colleague, the Solicitor General, who, in order to turn an argument, stated that their profits were $5,000,000. But the point
I want to make is that my hon. friend is not able to tax the International Nickel Company; he cannot possibly tax them. While' our own people have to pay the tax, these gentlemen, living across the line, who take our ore over there, refine it over there, 1 keep 2,000 men at work all the year round, and have all their big-salaried men in the state of New Jersey, cannot be taxed one dollar under this legislation. My * hon. friend will not make any attempt to tax them, simply because he cannot do it under this legislation. Then there is their . subsidiary company, the Canada Copper Company. Copper has gone up, as my hon. friend has stated, to double the price it was a short time ago. Nickel has gone up, in spite of all the Solicitor General has said, to practically double the price it was two years ago. Allied nations in Europe are offering almost fifty cents a pound for nickel, and are willing to make long contracts for it. The price of nickel is practically double what it was before the war. You cannot get at the profits of the Canada Copper Company to tax them to any extent, simply because they are only a subsidiary company, and it does not make any difference to the shareholders whether they sell their matte for five cents a pound or for fifteen cents a pound-the profits are made on the American end.


William Thomas White: I do not at all agree with my hon. friend's conclusion.
I think the Bill has a provision that will meet the case in point.


John Gillanders Turriff: I hope that is the case. If we can tax the International Nickel Company, I shall be very much pleased, because if there is any one institution in this country that ought to pay a tax of this kind, it is that particular company, who take our ore out of Canada to the United States, refine it there, sell it to our opponents-not directly, but indirectly-scatter it all over the world, and make huge profits. If my hon. friend can so word his Bill as to tax a company' organized in the United States, operating in the United States, whose dividends are distributed in the United States, I shall be most delighted to hear it. But it seems to me he wall have quite a contract on his hands to collect the tax from the gentlemen who are now so anxious to say that they want to pay a share of it. I venture to say a good many of them are saying that with the knowledge that they cannot be taxed. At all

events, if they can be taxed it will be a very good thing.
My hon. friend states that this is a war tax. I hope that it is a war tax, and that every dollar of it that will be collected will go to the war funds. But we have to take that statement with a little grain of salt; because my hon. friend last year told us that the direct taxes he then imposed were war taxes. My hon. friend said that the extr-a cent imposed on letters and post cards was for war purposes, and that every time a man, woman, or child in Canada bought 10 cents worth of stamps during the past year the additional revenue went to the war fund. But what was the result? From what I have heard in the House during this session, the Post Office Department stole it all from the Government.


William Thomas White: That is not true.


John Gillanders Turriff: They did not turn it over to the Government; they kept it.


William Thomas White: They did not.


John Gillanders Turriff: Will my hon. friend say that the Government got, for war purposes, all the extra revenue from the sale of those stamps?


William Thomas White: The entire revenue of the Post Office Department, like that of all other departments of the Dominion, finds its way into consolidated revenue fund; and every dollar of taxation that was collected last year, either by indirect or by direct taxation, was us'ed for the purposes of the war, as well as a very large additional sum.


John Gillanders Turriff: That is no information. I am quite certain that large sums other than those collected as revenue were used for the war. But the extra expenses of the Post Office Department have more than eaten up the extra revenue from the sale of postage stamps.


William Thomas White: Supposing that the extra postal taxation had not been imposed, would the additional expenditure of the Post Office Department not have had to be paid out of consolidated revenue fund?


John Gillanders Turriff: Well, yes. If that had been the case, the deficit would have been double what it is; that is the only difference. The deficit in the Post Office Department, I understand, will be something like $3,000,000 this year. If my hon. friend had not passed this measure last year, exacting an extra 50 per cent postage, the deficit in the Post Office Department would have been about $6,000,000.


William Thomas White: Would it not have had to be paid out of consolidated revenue fund? Of course, it would.


John Gillanders Turriff: If it had not been fpi
the extra revenue from the sale of postage stamps, my hon. friend the Postmaster General would not have been so extravagant. There was absolutely no necessity of'expending all the money that was expended. While on that subject, I want to say that if this Government would use the slightest economy, if they would economise in any degree at all, one-half the revenue which my hon. friend proposes to raise at the present time would not be necessary at all.


Mr. HENDERSON:: Oh, oh.


John Gillanders Turriff: My hon. friend from
Halton laughs, but why should it be necessary this year to spend 50 per cent more in running the country than was expended 4 or 5 years ago? Why should it be necessary? We were not at war at that time, we had a buoyant revenue, and there might have been some excuse for large expenditures; but to-day, when we have the greatest war of history on our hands, when we are called upon to provide tens of millions of dollars every [DOT] year for interest, and when the ordinary revenue has fallen very materially owing to the influence of the war, the Minister of Finance claps on full sail and goes ahead; he does not try to economise in the slightest degree, judging by the amounts he is asking for at this present session. What is wanted is not so much this tax Bill as some little economy on the part of the Government; if they would economize to any reasonable degree at all, it would not be necessary to have all this direct taxation. If we have got to have more revenue, I quite agree that it is best to raise it by direct taxation. I woulld like to see my hon. friend take some steps to make that taxation apply fairly equally. I do not suppose that it can be applied with absolute equality, but it should apply fairly equally to thoee who have money and are able to pay. It is very extraordinary that the Government should adopt a system of this kind when, in this very city of Ottawa, there are over a dozen millionaires, several of them multimillionaires, walking around with revenues of upwards of $100,000 per annum. Yet my hon. friend does not make the slightest effort to take a single dollar from one of them. It is the struggling man in business who is being taxed, and the .wealthy

concerns, in a general way, are going to escape. That is how it will work out to a very large extent. While I quite agree with the taxation of corporations, I would have liked to have seen some system of equality by which all would be taxed somewhat alike.


Mr. GREEN:: Mr. Chairman, in my opinion, the Budget is a very fair one. The hon. member for Assiniboia (Mr. Turriff) in his usual-shall I .say-reckless fashion-


John Gillanders Turriff: Say what you wish.


Robert Francis Green: Then I shall say reckless fashion-


John Gillanders Turriff: Free speech.


Robert Francis Green: -attempts to show this House that my hon. friend the Minister of Finance (Sir Thomas White) in bringing down this Budget is not taxing the moneyed man. In my opinion this Budget covers very largely the class that we want to get after, the class that is able to pay. As to the individual and the question of an income tax, the reason is apparent why this Government has not undertaken to impose taxation along that line. I am not going to take up the time of the committee this afternoon at any length; hut I simply wish to say that when the Budget was first brought down I was of the opinion that the taxation wa3 going to bear very heavily upon the mining industry. Knowing that capital is easily frightened, and especially such capital as seeks investment in the mining industry, I was much alarmed at the thought that it was possible and probable that this Budget as applied to mining companies would have the effect of keeping capital out of our country.	The difficulty of mining is
not so much to get capital for the mine of known value; it is to get capital for the prospect, for the undeveloped mine, because once you have a mine developed- there is nothing in the way of getting ample capital to operate it, because you can always show -rile profits that can be made. I interviewed my hon. friend the Minister of Finance and discussed the question with him, and he agreed with me that the mining industry was entitled to greater consideration than was an ordinary commercial company. The ordinary commercial company, if it is well managed, is in a better position after it has been operated for a number of years to make money than when it first started in, because it has established a reputation and is in a
position to do business appertaining to its particular line much better than when it commenced. The mining company, on the other hand, is producing something from the ground, and every ton of ore that is produced and marketed is just so much depreciation of its capital. The life of metalliferous mines is anywhere from 5 to 25 years; in some districts the life of a mine is much longer than it js in others owing to the geological formation which results in the ore bodies extending to a greater depth. The Minister of Finance has provided for that, and his proposition, as outlined this afternoon to me, is an eminently fair one. I have no hesitation in saying that I believe it will be acceptable to the mining interests of the province from which I come and the mining interests of Canada generally. There has been a great deal of misunderstanding as to just how this tax is going to be applied in connection -with mining companies, but from the explanation we have had this afternoon I think that that misunderstanding will be removed. I am further of the opinion that there is no mining company, in the province of British Columbia at least, that would seek to evade taxation for war purposes entirely. I believe they are all quite ready and willing to pay their fair share of the tax. They are just as confident of a satisfactory conclusion to this war as we are and just as ready to pay their proportion of the cost.
While on this subject, might I digress to say that the war has been very beneficial to the mining industry of Canada? I am not speaking now so much of the additional price obtained for the product, but of the fact that it has made the people of Canada and Great Britain, as well as this Government, see the necessity that exists for the reduction and refining of ores within our own community. The Government have arranged for the reduction and refining of zinc. An arangement is being made, I believe, for the refining of copper, and I am going to express the hope that the Government will never rest until they see that every pound of gold, silver, lead, zinc, copper and nickel produced in the Dominion is also refined within our own country and sold as finished products.


Edward Mortimer Macdonald: As my hon. friend
comes from British Columbia, could he tell me whether or not we have any actual refining of copper and lead here, or if we produce any of these minerals in a mercantile condition for sale?


Robert Francis Green: I cannot speak for the
Bast, but we have in the West, and have had for some time, a plant that reduces and refines lead and all the silver, copper and gold that may be contained within the lead product. We have in operation in British Columbia the electrolytic process for the reduction of zinc. It is producing electrolytic zinc, which is a very pure form of zinc and does not contain over .two-tenths of one per cent of impurities. That plant is in operation to-day and is being extended. It is at present producing 25 tons per day, but they propose to extend it to treat all the zinc ores that they can possibly handle. There is no copper being refined as such within Canada as far as I know. We do not go any further than bringing the copper into matte, or blistering it. I believe arrangements are now being made, and that a plant has been erected to refine in Canada as much copper as the home market will absorb, and I am in hopes that the Government will not rest until all metals produced in Canada are refined in this country.


Mr. CARVELL:: Would my hon. friend give us the capacity of the copper refining plant which is now nearing completion?


Robert Francis Green: I think that we produce in Canada to-day something like 60,000,000 pounds of copper. The manager of the works in question told me that their plant would provide for the normal consumption of Canada, which would be nine or ten million pounds a year. I do not think I can add anything further, except to repeat that I am sure the mining industry of British Columbia will be satisfied with this taxation after the explanation given by the minister this afternoon.


Edward Mortimer Macdonald: I am very glad that my kon. friend from Kootenay (Mr. Green) has corroborated a statement which I made early in the discussion to-day, as to the danger that might arise from imposing a tax upon the mining industry. While the minister's explanation, that the value of the metal in the ground, is to be considered as a portion of the capital upon which earnings have to be made before the tax is imposed, may relieve in some measure the fears of those who are interested in operating mines, yet it does not remove the fears that exist in the minds of those who may be approached for capital for the purpose of developing a mine whose real value has not been ascertained. My hon. friend the Minister of Finance states that this

is a temporary measure only, and not a final solution of the question. He may say that in the Bill he does not propose to make t'he tax applicable for a. longer period than two years; but when 1 suggested that the obligations imposed as a result of this war might not be concluded at the end of two years, my hon. friend proceeded to indulge in a lot of sidewind talk about the war, which was wholly irrelevant. I made no prediction as to how long this war was going to last. I could not predict that any more than my hon. friend could. It is not the exact date upon which this war will finish that will decide how long this country is to be taxed, but these two things will determine it; first, the extravagance of my hon. friend, and, secondly, the obligations imposed by the war. My hon. friend's extravagance is still going on this year. He said last night that the only way we could get money was by saving. I would point out that the Chancellor of the Exchequer in Great Britain has set an example by giving up his motor car and walking from Westminster to Downing street every morning. My hon. friend's idea of economy is to include in the Estimates $28,000,000 which he says he will not expend unless a supervening necessity-which might be a political question-arises.	Whether we should all be
in a sound financial position at the end of two years depends in the first place, upon whether the minister practices the economy he preaches; and, secondly, upon the amount of money we spend upon the waT. Although we have been sitting for two [DOT] months the Minister of Finance has not yet given to the House the total cost of the war to date, nor how much it is costing us each day. We agreed to my hon. friend taking power yesterday to borrow $75,000,000, and we have before us now proposals which are intended to raise a very large sum of money. And I say that before my hon. friend should ask this House and investors to believe that this taxation is to be purely temporary, he should give us a statement of how much we have paid on account of the war, and, secondly, he should set us an example in economy.
My hon. friend told us that nobody in England had raised any question in regard to the proposals made in the British House for carrying on the war. I venture to say that if my hon. friend will read the English Hansard he will find that the question how the money should be Taised there is a

matter of free discussion. My hon. friend must not think, simply and solely because he and his colleagues happen to be in power while the war is on, that everything the Government proposes must be ratified, and that free people in this House are guilty of lese majeste if we venture to criticise the Government's proposals, and suggest better methods of meeting our obligations. That attitude is entirely erroneous.
The Minister of Finance says, in an apologetic way, that this taxation is purely temporary, and that for the purpose of raising a certain amount of money this year he is putting a tax on industry instead of on wealth. I say that we have a perfect right to suggest that the tax should be placed upon wealth, and distributed fairly over the whole country. The mere fact of the war being on adds no weight to my hon. friend's argument.
The minister says that political considerations will not enter into the administration of the Act. I venture to say that if the terms of the Bill are the same as the terms of the resolution, the minister is taking into his hands vast power. He is taking power to nose into the private business of every concern of this country whose business comes within the scope of this Act.


William Thomas White: Would not that be the case if we adopted an income tax on individuals and companies?


Edward Mortimer Macdonald: 
William Thomas White: What I said in answer to the hon. member for Assiniboia was that the proceeds from the sale of stamps go into the Consolidated Revenue Fund of the Dominion.	.


Edward Mortimer Macdonald: Through the Post
Office Department.


William Thomas White: They go into the Consolidated Revenue Fund, no doubt through the Post Office Department.


Edward Mortimer Macdonald: I quite understand
'the point my hon. friend is making. My hon. friend knew quite well when he was making his statement that he was not meeting the point raised by my hon. friend from Assiniboia.


William Thomas White: He was.


Edward Mortimer Macdonald: Did not the people of this country last year think, when they were buying that additional stamp that went on to every letter and post card they mailed, that they were contributing to the Dominion treasury something that was to be ear-marked as a special-tax and which was to go into the fund that was to be devoted to carrying on the war?


Frank Broadstreet Carvell: Why did they mark it " war tax?"	)


William Thomas White: That was precisely what was d-one. The proceeds of the entire special war taxation went int-o Consolidated Revenue Fund, and out of that fund we paid for the purposes of the war very much more than was received from the special and the general taxation.


Edward Mortimer Macdonald: Is the minister-


William Thomas White: My hon. friend is only quibbling.


Edward Mortimer Macdonald: It is my hon. friend who is quibbling, and he knows it, because he knows that, if, in making that statement, he had said that the proceeds had gone into the Consolidated Revenue Fund through the Post Office, his statement would have been correct, I venture to state that the money that was received from the sale of those war stamps was not ear-marked and went into the Post Office Department.


William Thomas White: I consider my hon. friend's statement a mere quibble, and he knows it. There was never any intention of specially ear-marking any fund.
Sir WILFRID LtAURIER: Then, you did not ear-mark it?


William Thomas White: Under the financial system of this Dominion all' revenues, without any exception, even trust moneys go into Consolidated Revenue Fund. There is only one pocket that the Dominion has, and the point that T make is that last year we paid out of Consolidated Revenue Fund, into which the special and general taxation went, more for war expenditure than we derived from the special and general taxation, and I say that my hon. friend knows it.


Edward Mortimer Macdonald: I say further-and my hon. friend cannot contradict me-that he paid out to the Post Office Department $3,000,000 more than he got from it.


William Thomas White: That is not the point.


Edward Mortimer Macdonald: My hon. friend is a quibbler-let there be no mistake about that. My hon. friend speaks about the Consolidated Revenue Fund of this country. He receives from certain departments of this Government certain amounts. He pays out certain amounts. The net amount which he receives from the Post Office Depart-
ment, or from the Railway Department, or from the Customs Department, or from any of the other departments in any particular year, is the amount which each particular department has by way of surplus from its administration.


William Thomas White: No, it is not.


Edward Mortimer Macdonald: I beg my hon.
friend's pardon. The revenue of the Post Office Department for last year was $13,-
026,000,	and the expenditure was $15,969,000. The money from the sale of those postage stamps, which were intended as a war tax, which should have been ear-marked as a war tax and kept for war purposes, was not so kept, but it went into the Post Office Department, and was absorbed in the general administration of that department, and the department costs more to administer than what it receives from all purposes, including the war tax.


William Thomas White: What is the date of the Auditor General's Report from which my hon. friend is quoting?


Edward Mortimer Macdonald: I am quoting from the last one that has been laid on the table.


William Thomas White: What date is it?


Edward Mortimer Macdonald: For the year ended March 31, 1915.


William Thomas White: And my hon.
friend knows that the special taxation did not come into force until April 15, 1915.


Edward Mortimer Macdonald: Will my hon. friend say-


William Thomas White: Does the hon. gentleman want to quibble about that
again?


Edward Mortimer Macdonald: I was quoting that simply for illustration. I want to ask my hon. friend a question: Will my hon. friend say that the proceeds from the sale of those war stamps in 1915 have not gone into the revenue of the Post Office Department?


William Thomas White: Your hon. friend will only say that my hon. friend has said more than enough for his own good.


Edward Mortimer Macdonald: That is my hon. friend's ultimatum. My hon. friend has been indulging in the worst kind of quibbling in which I have ever seen any minister indulge.


Some hon. MEMBERS:: Oh, oh.


Edward Mortimer Macdonald: Hon. members laugh. I dare my hon. friend to deny that statement.


William Thomas White: You are caught with the goods.


Edward Mortimer Macdonald: Well, my hon. friend is caught in deceiving this House, and I
say so.


The CHAIRMAN:: Order. I must say to the hon. member that his remark is quite out of order-


Edward Mortimer Macdonald: Not at all.


Some hon. MEMBERS:: Order.


Edgar Nelson Rhodes: -that the hon. minister is deceiving the House. I would respectfully ask the hon. gentleman to withdraw the remark. I think on reflection he will agree with me that it is unparliamentary.	.


Edward Mortimer Macdonald: Well, in deference to you, Sir, I will substitute this statement, that the attitude of my hon. friend has the' effect of deceiving the House and the country. I make this statement in the committee in the presence of the Minister of Finance, that my hon. friend, instead of appropriating the money received from the war taxes imposed by means of the postage stamps that have been sold throughout the country since the imposition of the tax for war purposes, has allowed it to go into the general revenue of the Post Office Department, where it has been absorbed, and 1 state that that department has been run at a loss; that instead of economy being practised, the grossest kind of extravagance has been indulged in, and that as the people of this country will realize, my hon. friend has permitted this money, which was collected for war purposes, to be diverted by the Postmaster General to the general business of the Post Office Department. That is the statement I make, and the minister can not controvert it. He can quibble as he pleases with regard to it, but he cannot deny it. I wanted to make that as clear as possible.
Some hon. MEMBERS : ~Oh, oh.


Edward Mortimer Macdonald: If the Minister of
Finance contradicts that statement, I would be glad to give way to him that he may speak now.


William Thomas White: I do not like continually to interrupt my hon. friend. I say that his statement is entirely unfounded-a quibble; and, having regard to the intelligence I know he possesses, I cannot believe
but that he knows it to be a quibble. But if he says he does not know it, I withdraw that expression. When he concludes his re* marks, I shall be glad to give an expression to my views.


Edward Mortimer Macdonald: I am not asking for an expression of the hon. minister's views;: I am asking simply whether this tax is ear-marked for the purposes of the war, or whether he allows it to go into the general revenue.


William Thomas White: I shall be glad
to deal with that.


Edward Mortimer Macdonald: And I shall be glad to hear my hon. friend. But I hope he will not deal in generalities about the money going into the consolidated revenue fund. We all know that all the revenues of Canada go into the consolidated fund. But we know also that in the case of the Government railways, for instance, the receipts are used to pay expenses, and only the balance of receipts over expenses, if there is such a balance, goes into the consolidated revenue of Canada at the end of the year. If there is no such surplus, nothing is added to the consolidated revenue fund. Now, as to the Post Office Department, the proceeds of the war tax were collected by the Post Office, and if there is no surplus in that department, the consolidated revenue fund does not get the money. So, my hon. friend cannot say that the money was devoted to war purposes. My statement is absolutely clear, and if he can controvert it he is welcome to do so.


William Thomas White: I certainly can.


Edward Mortimer Macdonald: We will await the
hon. gentleman's statement. We were discussing the question of whether this Budget would work injury to the mining industry. My hon. friend from Kootenay (Mr. Green) very frankly tells us of the injury which he conceives these taxes will work to the mining industry of his province.


Robert Francis Green: I spoke of the taxes as brought down. [DOT]


Edward Mortimer Macdonald: I was not going to misrepresent my hon. friend. When this Budget was brought down he thought that it would work great injury to the mining industry. But he says that, as a result of the amendments which have been made in' regard to operating mines, there would be no injury. And he says that
5 p.m. the companies of his province will not complain because they are asked to contribute something by way

of tax to carry on the war. But 'he cannot claim that the effect of these taxes will not be injurious so far as the prospector is concerned, the man who seeks to get capital into a mining venture.


Robert Francis Green: I do not think the Budget affects the prospector.


Edward Mortimer Macdonald: The hon. gentleman means that there is no tax levied upon the man, but that the taxation is confined to companies. But he knows that, as regards the future company, it will place difficulties in the way of the man who has to look for capital to work a mining claim which he believes to be good.


Robert Francis Green: If the hon. gentleman wants to represent my view, it is, as I said, that when this Budget came down I thought it would be injurious. I interviewed the Minister of Finance on the matter. But, with the amendment, and, with t'he explanation made by the minister, my opinion is that it will not injure the mining industry, nor will it place difficulties in the way of enfisting new capital in mining.


Edward Mortimer Macdonald: The hon. gentleman may be satisfied as regards existing companies, but he must appreciate the fact that the party who goes looking for capital to establish a mine will have to make a great many explanations to prospective investors before he can induce them to invest. We come back to the difficulty which underlies this whole proposition, the inability of my hon. friend, whether he be Minister of Finance or anything else, to give any guarantee to capital that this tax will not last longer than two years. We arg at a disadvantage in considering this question, because the Minister of Finance has not laid before the House a statement of the real commitments of this country in this war at the present time. We have dealt with generalities as to the expenditure of hundreds of millions, but we ought to know what we are spending day by day. Only with such information before us can the House and the country know whether or not this tax will be only temporary. Does the Minister of Finance mean to say that if it is necessary for him to continue this taxation after two years he will cut	off this	method of	taxation
and revert to some other method? If my hon. 'friends means to take that position and say that if we need taxation in this country we will not pursue the method we are now pursuing, after the 
end of two years, then you have some finality upon the question. But I did not understand my hon. friend to say that. He leaves it quite open, to himself, if the necessities of the country, in his judgment, require it, and if he is still in office, to pursue this method of taxation or any other method that seems good to him Hence the apprehension which many of us felt when this Budget was brought down that the possible investor outside of this country might feel, in fact, undoubtedly will feel, that a tax is being imposed in Canada which may be increased and which may have the effect of rendering wholly uncertain the returns upon such a speculative industry as mining necessarily is.


Mr. THOMPSON (Yukon):: My hon.
friend has just given expression to some views which to me are very interesting. I do not agree with him, however, witli regard to difficulty in getting money for mines ini this country. I have no doubt that the Minister of Finance would be glad, if he were able to do so, to announce that zhere would be some finality to this1 tax. How can the Minister of Finance, or the Prime Minister, or any other member of the Government, or the hon. member for Pietou, say when finality will come to this war tax? No one knows when the finality of these taxes will come, and so long as we are at war no one expects a cessation of these taxes. We cannot be at war without raising money, and there is only one way a Government can raise money, that is, by taxation.
My hon. friend raises the question of getting money for mines. I represent a mining community, and it may be interesting to this committee to know that the mining industry is the second greatest industry in Canada. It may be interesting to 'this committee to know also that the mining industry produces more tonnage for our railways than any other industry in Canada; in fact, that it produces more 'tonnage for railways than all other industries in Canada combined. I have in my hand a statement which is compiled' by the United States Interstate Commerce Commission for the period from 1900 to 1906.


Frank Broadstreet Carvell: Does that statement
cover gross tonnage or ton miles?


Alfred Thompson: It is the tonnage that originates as the product of mines.


Frank Broadstreet Carvell: That is gross.


Alfred Thompson: I am not referring to the mile tonnage, but to the actual tonnage which exists and which the different railways haul. I find in this statement that the products of mines represent 52 'per cent of the total tonnage hauled by the railroads of the United States during these 6 years. A similar compilation with regard to the Temiskaming and Northern Ontario railway, which, by the way, is the report I am quoting from, gives a similar statement; but the percentage is not quite so high-not quite 50 per cent, so far as that particular railroad is concerned. The point I desire to make is that in legislating for Canada no Government can afford to overlook the question of our mining industry, because of its tremendous importance.
To revert to the remarks of my hon. friend from Pictou (Mr. Macdonald), we very often have to go abroad for money to deveilop our mines. But let me ask him to what country we can go to-day for money to develop our mines where there are not war taxes. Can we go to Britain? The British Government does not permit money to leave Britain to-day for the development of mines in Canada. Can we go to France? There are war taxes in France. Can we go to Russia? There are war taxes in Russia. Can we go to Italy? There are war taxes in Italy. We do not want German money or Austrian money or Turkish money. Where else shall we go? To the United States? Are there no war taxes there? Six months before we put a war tax in this country, when we weTe at war, the United States put a wa. tax on-and they are not at war. -That war tax is still in existence. They have an income tax there. Therefore my hon. friend's argument falls to the ground, because you cannot go to the United States to get money for investment in mines if you are to go to a country that Jhas no war tax. So far as I am concerned and so far as that portion of this great industry with which I have some connection is concerned, there is no great fear about these taxes. So far as the mining industry and mining men in this country are concerned, they are as loyal, we are as loyal, as the hon. member for Pictou; they are prepared to pay their full share of these war taxes, and glad to do it.


Edward Mortimer Macdonald: I take exception to the proposition that the Guggenheimers of New York are as loyal to the British Empire as I am.


Alfred Thompson: I have no doubt my hon. friend does take exception to it, because he has no knowledge of the facts. I dare say that the men who are interested in mining in this country, and the mine workers, are as loyal as my hon. friend from Pictou, and just as willing to contribute their share to this tax. There is no question about that. We are at war, we have to get the money to carry on the war, and it is to the Minister of Finance that the country looks to find the money. He proposes this tax; it is not unreasonable, and I know that the mining industry will be satisfied with it. Why, Mr. Chairman, two weeks ago, the body which speaks in Canada for the mining industry, the Canadian Mining Institute, met in this City of Ottawa, and I had the honour of introducing to the Minister of Finance a delegation from that body. They presented to him their views, and they assured him, in my presence, that they were willing and ready to contribute their full share of this taxation. The Mine Owners' Association of Ontario sent a delegation on the following day, and I had the honour of going with that delegation to the Minister of Finance. They presented the same views. We are at one on this question, and I repeat, the mining industry is quite willing, able, and glad to pay its full share of taxation necessary to carry on this great war.
I do not agree with my hon. friend from Pictou when he says that because of this tax we shall not be able to get capital to develop our mines. It is not the investor who is hit; it is only those companies that are _ making big profits from the advanced prices of materials, which are largely caused by the war, that will be hit. These are the companies that are going to be taxed, and these only. The men making small profits will not contribute. I submit that the mining industry will not be affected more than any other industry. I represent a class of mining that is different from any other section of that industry.	We all know
that mines have a limited life. Coal mines have perhaps the longest life, nickel perhaps next, copper next, silver, I fancy, next, gold perhaps next, but the shortest life of all is that pf placer mining, which is the chief industry in the territory 1 represent. This was one of the questions which the gentlemen who represented the Mining Institute submitted to the Minister of Finance,	and it is

a question of prime importance. The answer of my hon. friend was of great importance to that industry, and the answer he gave satisfied them that he was going to deal with their industry in a fair and equitable way by recognizing the principle which underlies it. He recognized that he was dealing with an industry different from agriculture, railways, lumbering, or any other branch of industry the products of which can be reproduced. But metal once taken from the soil cannot be reproduced. The Minister of Finance recognized that basic principle and assured the delegation that in casting his Bill he would proceed on the principle that a percentage of the capital in the industry is being taken yearly and distributed in profits, if profits are made. That answer satisfied those gentlemen, and I submit it was a fair and reasonable answer. That is why the mining industry will accept this Bill, and will be ready and willing to pay their full share of the ta/x.


Mr. OLIVER:: The explanation given by my hon. friend from the Yukon (Mr. Thompson) puts this proposal of the Finance Minister in a light which I certainly never understood before. Is the committee to understand that the Finance Minister is being granted power under this Bill to fix, according to his own judgment, and without any control on the part of this parliament, the limit of taxation that a mining company shall pay. If that be the fact, it opens up a most startling situation. There is no doubt that the Minister of Finance is a man of the very best intentions, and I would cei'tainly trust him to do what was right in such a case, as' much as I would any other man in Canada. But the Minister of Finance to-day may not be the Minister of Finance to-morrow, and, in any case, this Parliament has a responsibility to the people and to the interests of this country which it cannot discharge by simply saying: we depend on the Minister of Finance. If that is the character of this legislation, it certainly has an application which I for. one never suspected. I thought it very questionable before, but it is certainly very much more questionable now. My hon. friend from the Yukon said that placer mining was a great source of wealth in that country. He said that the proposition now before the House would not adversely affect the mining interest. I suppose he was speaking particularly of the Yukon, Mining in the Yukon to-day is being carried on as the result of

an enormous investment of capital, I do not know just how many millions are represented in that investment, but I suppose it would be. perhaps $10,000,000.


Alfred Thompson: About twice that.


Frank Oliver: $20,000,000?


Alfred Thompson: About.


Frank Oliver: I am speaking of one
company-the Yukon Gold Company?


Alfred Thompson: Of that company only?


Frank Oliver: We will, for the purposes of my argument, assume that the Yukon Gold Company has made an investment of $10,000,000 for the purpose of producing placer gold in the Yukon. Necessarily, the life of a placer gold mine in the Yukon, as it must be everywhere else, is limited. I am not sure that the men who invested their money in that gold field knew what the life of the field was going to be when the investment was made. I do not know that that is known yet. I think it would be proper to say that it is absolutely not known yet. If the men who invested their money in that Yukon gold company's enterprise had had to face taxation legislation of this character, in which it was left, as I understand, absolutely in the hands of the Minister of Finance as to whether they should pay a larger or a smaller rate of taxation; as to whether they might be taxed out of business within a certain period of years, I am here to say that the money would never have been invested. There is no argument on that subject; it would never have been invested under those circumstances and with that prospect in view.


Mr. BURNHAM:: Does the hon. gentleman say that there is any discrimination involved in this resolution?


Frank Oliver: I do not say there is any discrimination involved in the resolution, and that is what surprises me. There is certainly discrimination proposed, under the explanation as given by the member for Yukon. He tells the House that it is proposed to leave in the hands of the minister the absolute right to vary the taxation on mining properties according to his best judgment. I know that such a proposal must have a most serious effect in preventing the investment of capital in the development of mining in Canada.


John Hampden Burnham: Is that the text of the resolution?	,


Frank Oliver: No, it is not the text of the resolution; but the House has been informed by the hon. member for Kootenay (Mr. Green), and by the hon. member for Yukon, both gentlemen representing mining constituencies, that the minister has explained, that this is to be the course taken. I am taking their explanation, as they have given it, I suppose, in perfectly good fait'h, and I am very much surprised and alarmed at the nature of the explanation. I would hope that it is not correct, and that the minister does not propose to assume any such unlimited measure of authority in dealing with a question that is so important as the taxation of mining properties. This is a different question from that of the taxation of other business enterprises, because the profits of a mining property exhaust the capital year by year, while the profits of any other enterprise djO not exhaust capital in the same way.
Speaking of the proposal as a whole, if I understood the minister correctly, he said that this proposal was strictly a war measure to meet war conditions. Therefore I would assume that it is a temporary measure of taxation not intended to be continued indefinitely when war conditions have ceased. If I am correct in that, and I believe I am, I would take the opportunity of putting this view before the committee. We are not expecting or proposing by this measure of taxation, or any other measure of taxation that we are putting in force, to pay the capital charges of the war. We are only proposing to provide for the necessary interest charges. These interest charges are not a matter of the continuance of the war; they are a matter of the period of the loan whidh is raised in order to provide for the war during its continuance. Any provision that only contemplates providing for the interest charges for a short period, or during the continuance of the war, is certainly inadequate. We must face the condition that we have when we have incurred a capital obligation of $300,000,000, $400,000,000, of $&00,000,000, and interest on that capital obligation must be met for at any rate, we will say, a period of thirty years. It seems to me it would have been the part of wisdom for the minister, in preparing this scheme of taxation, to have prepared a scheme that would be suitable and, would be available permanently for meeting these interest charges. It is most unfortunate if we are to have a temporary scheme of taxation imposed which admittedly has so many drawbacks
and difficulties to overcome when we have to meet a permanent condition. We should meet that permanent condition by permanent preparation, and not by temporary preparation. My understanding of the position of the minister is that he recognizes that this proposal is not a suitable proposal as a permanent means of raising interest on war loans. Is it because he realizes that this is a tax upon enterprise rather than upon wealth, and that, inasmuch as it is a tax upon enterprise it cannot be successfully maintained during the period of the war loan, while putting an obstacle in the way of the expansion of the industrial and commercial interests of the country?
If I remember correctly, the Minister of Finance, when introducing this measure, laid stress upon the excessive profits of munition contractors, the munition contracts being a war condition. Everybody will agree that a temporary measure, to apply to the excessive profits of munition contractors, would be fair and reasonable. Not to criticise or find1 fault with the gentlemen engaged on munition contracts, the fact undoubtedly remains that while the business of the country at large is not in a buoyant condition, their business is in a particularly buoyant condition. They are in a position to pay a considerable share of the taxation, and their profits will cease when the war ceases. It is, therefore, reasonable that provision should be made for taxation of war profits as a war measure. That is easily understood, which cannot be said for a scheme of taxation that applies to all business, and is only temporarily a war measure; for general business in some form or another will have to carry the permanent liability resulting from our war obligations.
The hon. member for Yukon (Mr. Thompson) mentioned that the United States have adopted income taxation as a war measure. That is a tax on wealth, and chiefly on accumulated wealth. Now, that is a permanent proposition. It stands to-day, tomorrow, and as long as the taxation is needed. It seems to me that a taxation measure, not necessarily on the exact line followed in the United States, but on the principle of laying down a system which would be as permanent as our war obligations, and which would be a tax on wealth rather than on industry or enterprise, is what would appeal most strongly to the people of this country, and would be more to the advantage of the country than the proposals made by the Minister of Finance.


Mr. H. H. STEVENS (Vancouver):: I have listened with a good deal of interest to the numerous arguments made toy hon. gentlemen opposite against these taxation proposals. I do not intend to speak at any great length; but one statement has been made which I feel I cannot let pass unchallenged. The hon. member for Pictou, for the second time in this debate, practically charged the Finance Minister with intentionally deceiving the House on the question of taxation, and he based his argument on the expenditure and revenue of the Post Office Department. The hon. member on a former occasion made use of these' words:
The hon. Finance Minister last year, in the most solemn tones that he could command, asked for the imposition of an additional tax of one cent on every letter that went through the mails of this country, for the purpose, forsooth, of meeting war expenditure. Taxes upon patent medicines and upon various things were included, the minister saying that the people should willingly accept the imposition of this taxation in order that we might thereby provide the funds to pay the interest upon the debt that we were contracting in order to fight the battles of old England. I tell you, Mr. Speaker, that the proceeds of not one of the stamps that were put upon letters in all parts of the country were devoted to war purposes. Every cent and every dollar made up from this source was appropriated by the Post Office Department for the purpose of paying the extra clerks in Montreal and Quebec, and of meeting the boundless run of extravagance that was begun by Hon. Mr. Pelletier, and that is being ..continued by the present Postmaster General.


Edward Mortimer Macdonald: Hear, hear.


Henry Herbert Stevens: My hon. friend says,
"hear, hear." He took up a blue-book and was endeavouring to lead the House to believe that there was a deficit in the Post Office Department this year of at least $3,000,000, when the Finance Minister forced him to acknowledge that he was Teading from practically an ancient report, or at least not from a report of the revenue and expenditures for this year; and my hon. friend went on to make a bitter and unjustifiable attack on &>e Finance Minister. Now, I wish to give the House the actual figures of the revenue and expenditures of the Post Office Department since this tax of an extra cent was imposed in April last. For the nine months from April to December of the year 1915, the revenue of the Post Office Department was $14,019,874, and the expenditure $11,705,370: that is there was a surplus for the nine months ol $2,314,504. I submit that in view of these figures, which the hon. member for Pictou cannot deny, he owes an apology to this v

House and to the Minister of Finance for the reckless and unjustifiable statement he made. The figures show that there will be a surplus of $3,250,000 for the Post Office Department this year, and that will go to assist in the prosecution of the war. The hon. member for Pictou knows perfectly well that under the system of financing we have in this country the total revenues go into Consolidated Fund, and the surplus from that fund is now being used for the prosecution of the war. Certainly now is not the time to suggest that we should have a new system of financing, or that we should ear-mark every dollar from this source and that so as to be sure that it is used for war purposes. Why, in order to keep track of every dollar and allocate it to this or that fund, we should have to double the staff of the various departments.


Frank Broadstreet Carvell: You could not find places for them.


Henry Herbert Stevens: My hon. friend's mind is running back to the time when he was sitting behind the treasury benches.


Frank Broadstreet Carvell: I meant that you could not find sitting room in the departments.


Henry Herbert Stevens: I do not think my hon. friend's remark is very pertinent.


Mr. A. K. MACLEAN:: The hon. member for Pictou was endeavouring to estimate the net result of the financial operations of the Post Office Department for the present fiscal year.


Henry Herbert Stevens: And he made a pretty poor fist of it.


Alexander Kenneth Maclean: He was urging a more economical administration of that department, and contending that if. the department were economically managed it would at least pay for itself, and would not eat up the revenue which the Government was obtaining from wiar stamps. Will the hon. gentleman tell me what he estimates the deficit of the Post Office Department will be for the year ending on the last of this month, not crediting to the Post Office Department the revenue from the war stamps?


Henry Herbert Stevens: I will answer that in a minute. My hon. friend says-and I am surprised at the hon. member for Pictou being suddenly struck dumb, as he usually has the last word.


Edward Mortimer Macdonald: My hon. friend will hear from me at the proper time.


Henry Herbert Stevens: I am glad that my hon. friend has found his tongue again.


Mr. McKENZIE:: They can, not both speak at the same time.


Henry Herbert Stevens: My hon. friend says: "I was endeavouring to show what the deficit is this year." He can figure and he can produce blue-books by the ton, but he will not be able to show what the deficit is this year; he will find a surplus in nine months *of $2,314,504.


Alexander Kenneth Maclean: But that is counting war-tax revenue.


Henry Herbert Stevens: Certainly, and the tax was put on for war purposes.


Alexander Kenneth Maclean: That is not counting only the Post Offive revenue, but in-'[DOT]oluding revenue from other sources-. What is the result without the war-tax revenue?
. Mr. STEVENS: I will come to that in a >second. Let me lay down this as a fundamental principle - and the Postmaster 'General in the former Government and the Tight hon. leader of the Opposition will [DOT]agree with me-that the Post Office Department is not supposed to be a revenue-producing department.


Frank Oliver: It used to be.


Mr. LEMIEUX:: Not with the Tories in -oifiee.


Alexander Kenneth Maclean: Answer the question.


Henry Herbert Stevens: I will most assuredly answer the question. The policy originated by the right hon. gentleman now leading the Opposition, when Sir William Mulock was Postmaster General, and when they reduced the postage from three cents to two cents, w-as this: That they did not want the Post Office to be a revenue-producing department, but they wanted it simply to pay its way. In the year ended March 31, 1914, there was a deficit in the Post Office Department, but 75 or 80 per cent of the business concerns throughout Canada showed a deficit during the first few months after the war broke out., and the Post Office Department was probably affected in its revenue more severely than any other department.


Alexander Kenneth Maclean: The revenue of the Post Office Department did not fall off. My hon. friend is not answering my question.


Henry Herbert Stevens: If my hon. friend will not be patient until I come to his question, I
will answer it now, even although it makes my remarks disjointed. My hon. friend asks why there was a deficit in the Post Office Department? I say: because the Government carried out one of the most important planks in its platform, namely, the extension of rural mail deliveries throughout this country plus the parcel post system. Will the hon. .gentleman or his leader take the responsibility of condemning here the policy of the Government in extending rural mail deliveries?


Alexander Kenneth Maclean: It is not necessary,


Henry Herbert Stevens: He certainly will not, and no sane man will condemn it. But my hon. friends from Halifax and Pictou are condemning the Government, and indirectly placing themselves in the position of condemning rural mail delivery and increased postal facilities. I will give my hon. friend an illustration right in my own district.


Alexander Kenneth Maclean: My hon. friend is not answering my question. He was going to do so a minute or two ago.


Henry Herbert Stevens: I am answering it as fast as I can.


Alexander Kenneth Maclean: He will forget about it soon.


Henry Herbert Stevens: My hon. friend keeps on interrupting with new questions. Let us take the revenue and expenditure of this year. I show here by official figures from the accountant of the Post Office Department, that in nine months we have a surplus of $2,314,504.


Alexander Kenneth Maclean: Including the war stamp taxation.


Henry Herbert Stevens: Certainly including the war stamp taxation, and this surplus is going to assist in financing the war, just as the Minister of Finance told the House a year ago.


Frank Broadstreet Carvell: What would be the result excluding the war stamp tax?


Henry Herbert Stevens: Judging from the amount of the war stamp tax, I should say, although I have not the figures before me, that the Post Office Department will come out even, and that is exactly the policy which the right hon. gentleman followed for years and which this House is not prepared to turn down, namely, that the Post Office Department shall break even. '


Alexander Kenneth Maclean: There will be a deficit of from three to five million dollars in that department.


Henry Herbert Stevens: Then there is all the
more credit to the Minister of Finance for his financing. My hon. friend has not at all succeeded in getting over the malicious attack of the hon. member for Pictou on the Minister of Finance when he stated that the minister had a deficit in the Post Office Department, and that he was deceiving the House and the country. The Minister of Finance has, by his method of financing, succeeded in producing a surplus which is being devoted to the prosecution of this war, and a few dollars here or there are not particularly concerning my hon. friends opposite. I repeat that, so far as the increased expenditure is concerned, you have the parcel post, rural mail delivery, and increased postal facilities throughout the Dominion.


Mr. EDWARDS:: Over $4,000 in the
county of the hon. member for Pictou.


Henry Herbert Stevens: The hon. member said: " Why did the minister not put on an income tax?" Two or three years ago my hon. friend from Assiniboia (Mr. Turriff), and my hon. friend 'from Edmonton (Mr. Oliver) and others raged in this House about the trusts, mergers, and combines, about this industrial concern and that industrial concern, as if they had no right to exist in the country. Now they say: "Why does the Minister of Finance tax the industries of the country? why does he not leave those industries free?" Yet many of them are making huge profits out of war expenditures at the present time. They know this, if they know anything, that the people of Canada welcome the proposal of the Minister of Finance as a most radical advance in the system of taxation. The minister has cut the ground from under the feet of my hon. friends opposite, and that is what causes them so much anxiety, because it gives them mighty little to condemn this Government for on the hustings. The people are behind the Government. I would like my hon. friend from Edmonton and my hon. friend from Pictou to stand before the labour element in their constituencies and condemn this Government for the taxation proposals contained in this measure. They will go in a nice, quiet, gentlemanly fashion to the captains of industry and say to them: "You poor fellows; you are paying all this taxation; why do you not get after this nefarious and socialistic Government and put it out of business?" Then when they come to the working men, they will forget to say: " Why did you not ask for an income tax?"


Edward Mortimer Macdonald: My hon. friend spoke about a white British Columbia some time ago.


Henry Herbert Stevens: My hon. friend will, at least, say that I have been consistent in my opinions. I have a deep regard for the hon. gentleman's leader, yet the right hon. gentleman has not been quite so consistent, perhaps, as I have been in regard to a white British Columbia. In British Col-umbit he was in favour of it, but down here for fifteen years he drifted, with not very much done, except to disallow 144 Acts of the British Columbia Legislature. If the hon. member for Pictou or the right hon. leader of the Opposition desires to fight out the question of a white British Columbia in British Columbia, taking the stand the hon. gentleman suggests at the present time, I am quite satisfied.
Now, let us have a word as to the income tax. These hon. gentlemen know perfectly well that there is not a province in Canada that does not impose an income tax. This is a system of taxation which is peculiarly adapted to the provinces, and it has always been considered inadvisable for the Dominion Government to invade that field of taxation. I venture the suggestion that these hon. gentlemen would not dare to include that as a definite plank in their platform. My hon. friend says that this system is not permanent. If our present methods of taxation do not bring the result desired, we may have to resort to many other forms. But the system introduced by the Finance Minister last year has been a splendid success, and we know that the system introduced this year has been accepted throughout the length and breadth of the country, and it also will be a success. But if the war continues and the expenditure increases, and if the people of Canada must bear a larger burden of taxation, I think they will be prepared to bear it cheerfully.
I desired to speak on the mining aspect of this question, but I will refrain, except, to make one observation with regard to copper, which may be of some interest. I do not know that this is exactly time to introduce this suggestion, but I do not know of a better. Last year, in discussing the Budget, I strongly advocated the refining of copper in Canada. 1 understand that the Government has given the .matter a great deal of attention, and with such success that a copper refinery will be established. To strengthen this idea, let me give a few

figures. Last year, we exported from Canada
221,000,000 pounds of copper. As I understand it, our copper is exported mainly in the form of matte. On the other hand, we imported 115,000,000 pounds of copper- about half the amount of our export. Here is the point to which I would draw the attention of the Government and the House. For the 220,000,000 pounds of copper that we exported, we received $25,000,000; but for the 115,000,000 we imported we paid $19,000,000. In other words we exported copper at 11J cents and imported copper at 161 cents. That should emphasize the necessity of having copper refineries within our own borders sufficient to supply all Canada. It is poor business to sell copper at 11| cents and to import copper-a great deal of it re-imported-at 16S cents.	,	[DOT]


Frank Broadstreet Carvell: The hon. gentleman
<Mr; Stevens) congratulates the Government on having arranged for the refining of copper in Canada. What has the Government done to bring about this condition?


Henry Herbert Stevens: I do not think it is my place to deal with that. I leave that to the Finance Minister. I pressed this matter upon the attention of the Government last year, and others have done the same. The intimation is conveyed to me from other sources that steps in the matter have already been taken. Certain gentlemen wrote to me asking for information which I gladly supplied, but that was a private matter, and I do not think it would interest the House.


Edward Mortimer Macdonald: My hon. friend, rushing to the defence of the Minister of Finance, charges me with maliciously attacking that hon. gentleman. I plead not guilty to the charge of malice. I admit that I spoke with some vigour. But if it is necessary, in order to make clear our views on this side of the House, to speak with vigour, I hope the hon. gentleman will not take that as indicating any malicious feeling. Coming to the rescue of the Finance Minister, he produces from somewhere-and in view of all the circumstances one might be pardoned for doubting the authenticity of his figures, a statement the effect of which was to show that the money collected by the post office as war tax did not go to the financing of the war, but went to pay expenses of the Post Office Department. He showed that for nine months' operations, including the money that came from the war tax, there would be a surplus of $2,300,000. In other words,
taking the revenues from ordinary sources and add,ing the revenues that came from the sale of w^ar-tax stamps, you get an amount, which, when all credited to the post office, amounts to $2,300,000 more than the expenses' of that department. This proves exactly what I have said-that this money went to the Post Office Department and not to pay war expenses. Then the hon. gentleman said, a little disingenuously it seemed to me, that the policy of all governments was not to have a surplus in the Post Office Department. Well, turning to this report, I find that from 1903 down to 1911, under the administration of my right hon. leader there was a surplus every year, the lowest being $400,000 and the highest $1,100,000.


John Hampden Burnham: But what is-
'Mr. MACDONALD: My hon. friend is usually dreaming about something in the clouds, or something thousands of years or thousands of miles away, and wants to ask a question about it. I do not mind answering a question that relates to the subject.


Henry Herbert Stevens: The hon. gentleman himself is not backward in asking questions.


Edward Mortimer Macdonald: I have shown surpluses under the Liberal Government. Now, take the policy of this Government down to 1915. In 1911 there was a surplus of $1,100,000; in 1913, $1,800,000; in 1914, $1,177,000. So, the policy of both Governments was to have a substantial surplus in the Post Office Department. As a result of the administration of somebody, they now have a deficit of $3,000,000. The hon. member for Vancouver says we have a surplus of $2,300,000, with all the returns not in. But if he will look at the Post Office Department figures and consider the balance shown, he will see that there are many deductions to be made, which, apparently, are not made until the end of the financial year. Now, what amount of money was collected in the war-tax stamps? In the financial year 1915 the amount collected from the sale of stamps at 2 cents was $14,558,000; in the financial year 1914 it was $14,392,000. That was all as a result of the sale of stamps at 2 cents apiece. Since April, 1915, every letter of the kind that passed through the mails in those two years at 2 cents, cost 3 cents. In other words, if you take the figures of 1915 and 1914 as being any indication, the revenue that would be derived for the year from

these additional war tax stamps would be $7,000,000.


Henry Herbert Stevens: Has my hon. friend eliminated from that calculation all the 5 cent stamps, the registry stamps, and the 1 cent stamps? Are his figures for 2 cent stamps alone? Has he eliminated the parcel post -and the newspaper fees which are paid in bulk?


Edward Mortimer Macdonald: As my hon. friend, who came here to give information for the Government, failed to give information on the vital point, we can only take the figures here and make an approximation.


Henry Herbert Stevens: There should be a certain reduction.


Edward Mortimer Macdonald: Suppose we strike off


Henry Herbert Stevens: Strike off one-half.


Edward Mortimer Macdonald: Not at all; I do not assent to that. But suppose we say that $5,000,000 was obtained 'as the result of the sale of this additional 1 cent stamp, then the Post Office Department' got at least $4,000,000 in the period my hon. friend has mentioned from the sale of war-tax stamps, and they are including that in their $2,000,000 surplus. The result is that if we cut out of their figures the $4,000,000, which they got from the war-tax stamp, there would be a deficit at the end of nine months of $1,700,000, instead of a surplus of $2,300,000. The result of all this goes to show that my hon. friend the Minister of Finance, instead of taking this money, which the people of Canada paid on the supposition that they were paying it for war purposes, and appropriating it for war fund account, as he should have done, permits the Post Office Department to treat it just the same as the revenue from any other stamps sold in the post office and absorb it into their fund and charge it up in their account; and if there is no surplus in the Post Office Department on the 31st of March, my hon. friend gets nothing for the war.


Henry Herbert Stevens: Yes, but there is a surplus.


Edward Mortimer Macdonald: My hon. friend does not know whether there is going to be a surplus. He has some figures, but not all of the figures. We are told that there was a surplus of $2,300,000 in the Post Office Department for the nine months, including the 
war tax, the amount of which my hon. friend cannot tell us. If $4,000,000 was derived from the sale of war tax stamps, then in that particular year they derived their surplus from the sale of the war stamps.-Had it not been for this additional revenue-there would have been a deficit of $1,700,-000-and all the returns are not in yet. All my hon. friend has done is to prove exactly the statement I made. My hon. friend the Minister of Finance, instead of getting a large revenue from the sale of war tax stamps, is not going -to get a cent; it will' all be absorbed by the Post Office Department, and instead of going to pay interest on the debt, as the people of Canada were led to believe, it is being appropriated by the Postmaster General to run the Post Office Department.


John Hampden Burnham: Why do you not back
up your statements with facts?


Edward Mortimer Macdonald: My hon. friend has wakened up again. He is usually dreaming-about


John Hampden Burnham: No, it was only a nightmare.


Edward Mortimer Macdonald: My hon. friend has one of these nightmare spells of his every once in a while. My hon. friend has been sleeping so far, he has not followed me when I have shown that the Minister of Finance has allowed the Postmaster General to take away the money derived from the sale of war tax stamps, instead of leaving it in a fund where he could use it to pay the interest on the war loans. The Minister of Finance knows it, and the House knows it. My hon. friend does not want to bear the onus of this situation. I can quite understand that he would not; but there is the fact, and it is useless to deny it.
I wish to refer to a suggestion the hon. member from Vancouver (Mr. Stevens) made 'with reference to -the attitude of hon. members on this side of the House towards labour. My hon. friend is the last member in this House who should talk about labour. So long as the Liberals were in power, he denounced the right hon. leader of the Opposition (Sir Wilfrid' Laurier) to the labour men for having vetoed the fake legislation that he and his Conservative friends were passing in the Provincial Legislature. The moment, responsibility came, my hon. friend evidently forgot all about a white British Columbia. But the labour men of British

i8sr
Columbia have found out my hon. friend and gentlemen like him, as was shown in the attitude of the labour leaders in British Columbia towards the Conservative party in the elections held there within the last few weeks. So it does not lie in the mouth of my hon friend to talk to anybody about labour.


Henry Herbert Stevens: My hon. friend raised
the question; I did not.


Edward Mortimer Macdonald: I said nothing
about the labour question.


Henry Herbert Stevens: You certainly did.


Edward Mortimer Macdonald: Not at all. We on
this side have no fear of a comparison of records in regard to the treatment oi the subjects of the great nation which is one of the most valued allies of the British Empire in this war.


Robert Laird Borden: A word in regard to what my hon. friend from Pictou (*Mr. Macdonald) has said. He seems to have a remarkable idea of the operations of the Post Office Department, or any other department -of this Government Apparently, as far as I understand his argument, he imagines that when the Post Office Department has a surplus of $1,000,000 or $2,000,000 or $300,000,000 at the end of a year, it takes that and locks it up in the safe, and appropriates it the next year for the purposes of its expenditure.


Edward Mortimer Macdonald: I took an entirely
different view, and my right hon. friend must know it. I said it was the Minister of Finance, because he gets the surplus.
bir ROBERT BORDEN:	All I have to
say is that if my hon. friend did not mean that, he meant nothing; because the Minister of Finance has stated over and over again, and every one in the House except my hon. friend knows it, that when .there is a surplus in any department of Government, that surplus goes into the consolidated revenue fund and


Edward Mortimer Macdonald: I said so.


Robert Laird Borden: -and is available for all the purposes of the country.


Edward Mortimer Macdonald: I said so.


Robert Laird Borden: Then, if he said that, he argued precisely the opposite to that, because he declared that this surplus was to be used for the Post Office Department and for nothing else, and was retained
by the Post Office Department. His argument, outside of that, was absolutely futile. If he was under the impression that the surplus was so used, then there was something in his argument; if he was not under that impression then he has simply been wasting the time of the House in what he has said, because there is no point in it, apart from that. The Minister of Finance imposed a tax, which has assisted in bringing about a surplus for the present year of $3,000,000, so far as can be estimated, in the Post Office Department. That surplus goes into the general revenue of the country, and is there available for the purposes of the country, and among other purposes for the purpose of carrying on the war.


William Thomas White: For the payment of interest.


Robert Laird Borden: For payment of interest on war loans.


William Thomas White: And pensions.


Robert Laird Borden: Yes, pensions, or anything else. This surplus is simply so much additional assets in the public revenue of this country for all purposes, including the purposes of the war. That is the whole fact about it, and it makes not the slightest difference whether it goes into the account of the Post Office or of the Railway Department, or of any other department; the main, essential fact is that the money is there as the result of certain taxation, and, being there, is available for the purposes of the war.


Edward Mortimer Macdonald: But if there was a deficit in the Post Office Department, there would be no money for the war.
At six o'clock the House resumed, and then took recess.
The House resumed at eight o'clock.



PRIVATE BILLS.


[Stage Direction]
Bill No. 28, respecting the Kettle Valley Railway Company, and Vancouver, Victoria and Eastern Railway and Navigation Company.-Mr. Green.

[Stage Direction]
The House in Committee on Private Bills, Mr. Rhodes in the Chair.
Bill No. 25, to incorporate the Western Canada Telephone Company-Mr. Green-in committee.
[Stage Direction]
On section 9-acquisition of business of other companies:
Frank Oliver: In regard to this section, I would like to understand whether it is contemplated to empower this company to acquire telephone properties within the limits of other provinces than British Columbia.


Robert Francis Green: No, that is taken care of in a following section.


Frank Oliver: If it is taken care of in a following section, we might allow the clause to stand until we reach that section.
Section allowed to stand.
On section 9a-sale, lease or amalgamation with other companies; sections of Railway Act to apply:


Frank Oliver: What is the meaning of the application of these sections of the Railway Act to this telephone company?


Henry Herbert Stevens: I have forgotten just now, but this addition was made at .the request of Mr. Lighthall, representing the municipalities of Canada.


Robert Laird Borden: With regard to the use of streets, there are some clauses in the Railway Act making it necessary to obtain the consent of municipalities.


Frank Oliver: I would like to be certain on that point. That might stand until we ' deal with the other clause. I do not wish to interfere with th^ Bill if it does not apply to the province of Alberta, but if it can be considered as reaching Alberta, I wish to be particular about this point.


Henry Herbert Stevens: I suggest that you read clause 17, then, Mr. Chairman.
On section 17-restriction as to line in Prince Rupert and in certain provinces:


Frank Oliver: I observe that section 17, which is intended as a saving clause, covers the point that has reference to Alberta, in so far as the construction of new lines is concerned; but it does not cover the point of the acquiring of existing lines or rights in other provinces. I think that is important.


Henry Herbert Stevens: The words "operate and maintain" would cover that.


Frank Oliver: I do not think so, because these words are subject to the word "construct." That is the only question I wish to raise in regard to the Bill, and, if it is agreed on the part of the promoters to accept that principle, I would ask that the

point be made definite in this particular section.


Mr. BLAIN:: I think this clause would cover it. They could not operate a line in other provinces without first procuring the consent of the legislatures, and, not having the power to operate, there would be no use of purchasing a line in those provinces. Whether it covers the point or not, it was discussed very fully in committee, and the committee decided that the clause did cover the point raised by the hon. member for Edmonton.


Frank Oliver: I would be inclined to disagree. I think that the words "operate or maintain " are subject to the word "construct," and it would be so construed. There would be no harm done by making the provision that I suggest. I respectfully suggest that such an amendment be made.


Richard Blain: There would be no objection to covering the point mentioned by my hon. friend.


Frank Oliver: While the Provincial
Government of Alberta owns and operates a provincial telephone system, the city of Edmonton has a system of its own, which it had established before the province undertook the operation of telephones. There are also other private enterprises occupying territory that the Government has not yet entered upon. It is not desirable that this territory should be occupied by an outside telephone company except with the consent of the Government of Alberta.


Richard Blain: The counsel had that matter before him, and he understands that it is fully covered by this clause. If this company proposed to purchase in the province of Alberta or the province of Saskatchewan any line which is now in-operation, they would have to do it subject to this Bill, and the Bill would not allow them to operate the line without first obtaining the consent of the Government. Therefore, it would be useless for them to purchase a line in Saskatchewan or Alberta unless they had the right to operate it.


Frank Oliver: I may be wrong, but my
reading of the Bill is that it provides that they shall not operate or maintain the line they have constructed, but it does not provide that they shall not operate and maintain the line they have purchased.


Richard Blain: There is no objection on
the part of the promoters of the Bill to have that covered if my hon. friend thinks it is necessary.


Henry Herbert Stevens: This clause was inserted at the request Of the hon. member for Strathcona (Mr. Douglas), with exactly the object in view that my hon. friend has, to his entire satisfaction and to the satisfaction of the counsel of the committee, and it was accepted by the promoters of the Bill.


Robert Laird Borden: I do not think that the words will bear the meaning which my hon. friend from Edmonton puts upon them. They are in the disjunctive-the company shall not construct, shall not operate, shall not maintain, any line of telephone without the consent of the Lieutenant Governor in Council in any of the provinces mentioned.


Frank Oliver: I am willing to accept the interpretation of the Prime Minister. There is, however, a further point in regard to section 17 that I wish to draw attention to. The concluding words are:
But this restriction shall not apply to the construction, operation or maintenance of long distance lines of the company into or through the said city of Prince Rupert or into or through any or all of the said provinces.
The latter words contemplate giving the company the right to construct a long-distance line across the province of Alberta without the consent of the Governor in Council. Now, they cannot construct a line across the province of Alberta with out either purchasing a right of way or occupying the road allowances. Therefore, I think it is only reasonable that when we empower them to build across the province of Alberta they should be subject to the consent of the Governor in Council, just as any other telephone line is that is constructed within the province. I do not see why a difference is made between a line that is carried completely across the province, and a line that is carried only into the province.


Robert Francis Green: The object is not to empower the company to build across the province, but to allow them to connect up with the lines in the hon. gentleman's province. They are not looking for local business, but they want to connect their lines up and do a through business. If the hon. gentleman insists, I see no reason why we should not say, "'subject to the consent of the Governor in Council." The company is not seeking to construct any new lines, but simply to connect up with the lines already in the province.


Frank Oliver: I have no objection at all to the organization of the company, except
that when it comes inside the province of Alberta it must in some degree conflict with the conditions existing there. I think that as the principle is recognized in the remainder of the section, we might very well recognize it here by striking out all the words after " Prince Rupert Then they would have rights within the province subject to the Governor in Council, which is really all that the company requires.


Henry Herbert Stevens: I should like to point out that at almost every sitting of this House we pass Bills allowing railway companies to operate telephone lines over their systems, and through any provinces. This section specifically prevents the company from operating in Saskatchewan, Manitoba or Alberta without the consent of the Governor in Council. Surely there can be no objection to this company connecting up its lines for long-distance purposes. In the event of their getting consent from the province of Saskatchewan, what objection could there possibly be to their having communication between Saskatchewan and British Columbia, so long as the local business of the province of Alberta is thoroughly protected? We are giving this privilege to dozens of railway companies, and I cannot see any objection to giving it to this company. I think my hon. friend will agree that there has been little danger to the interests of the provinces.


Frank Oliver: The situation of a railway company is entirely different. No province is operating a monopoly railway system. Permission to construct a telephone line alongside a railroad is entirely different to permission to construct a telephone line alone. My suggestion was simply to strike out the words after " Prince Rupert. That would leave the matter where it ought to be, namely, that when the company goes into or crosses a province it is subject to the consent of the Governor in Council of that province.


Richard Blain: Perhaps we had better let
the section stand for the moment.


Robert Francis Green: The solicitor tells me that section 17 was inserted in the particular shape in which it is now at the express request of the hon. member for Strathcona (Mr. Douglas). It was his opinion that it would be wise to give the three provinces the power to construct long-distance lines. I understand that he is on his way here. As all the rest of the Bill has been put through the committee stage, I think we



had better let this section remain as it is, because the matter was discussed very thoroughly in the Railway Committee. If the bom member insists, rather than let the Bill stand, I will agree to have the section struck out; but, under the circum- . stances, I would like to have the Bill go through committee to-night, and, if there is any valid objection, we can deal with it later


Frank Oliver: I do not wish to delay the Bill at all, nor to d,eal lightly with the consideration given to it by the committee, but the greater part of this section clearly contemplates the consent of the Governor-in Council of any other province than British Columbia for the extension of telephone lines into that province. That is agreed?


Robert Francis Green: Yes.


Frank Oliver: The last line, however, provides that the extension can be made without the consent of the Governor in Council. That is a contradiction in terms, and I may say that I feel very strongly on that point from the fact that the province of Alberta operates its own telephone lines, excepting in the city of Edmonton, which operates its telephone lines. I have been communicated with by the mayor of Edmonton in regard to this Bill. I do not wish to insist too much, but I would withdraw all opposition if the promoter would agree to out out the words after the words "Prince Rupert": "Or into or through any or all of the said provinces." That would leave the section carrying out its original intent, which I maintain is contradicted by the insertion of those words.


Henry Herbert Stevens: Would my hon. friend
accept this suggestion:	Let the Bill go
through committee and be reported, and let the third Teading stand until he has an opportunity to discuss this section with the hon. member for'Strathcona, and then before the third reading that amendment can be made if it is thought desirable. I think the hon. member is really making a mistake in pressing for the striking out of this section.
Mr. OLIVER. I would not feel justified in taking that course. It is as plain as print can make it that the last line of the section contradicts the first part. We want to carry out either the first intent or the last intent, and I certainly suggest that the first intent be carried out and that the words I have read be struck out.


Robert Francis Green: I have no desire to press .
this section against the hon. gentleman s views; and, if he is not prepared to let the Bill pass through committee and be reported, and then make an amendment if necessary on the third reading, we will strike the words out now; but I would have preferred to have the Bill go through the, committee to-night.	,


Frank Oliver: In the committee is the
proper place to make changes of this character, and I would ask the promoter to make the change in the committee.


Robert Francis Green: Perhaps it would be better* if we strike out anything at all, to strike out everything after the word " aforesaid," and thus cut out all the restriction part of the section.


Frank Oliver: I have no objection to that at all. I am not concerned in that.


Robert Francis Green: I move, then:
That all the words after " aforesaid " in the tenth line of section IT be struck out.


[Stage Direction]
Amendment agreed to.
Section, as amended, agreed to.
Bill reported, read the third time, and passed.
Bill No. 23, to incorporate the Ontario Niagara Connecting Bridge Company- Mr. German-in Committee.
Edgar Nelson Rhodes: There is an amendment, notice of which was given by Mr. Reid, but it does not state whether by addition or in substitution for any section. It appears clear, however, that the intention is to cover section 11, which was eliminated in the Railway Committee.


Mr. PARDEE:: I think section 12 of the Bill practically covers the amendment proposed. The amendment is tautological.
The said bridge shall be constructed and located under, and be subject to, such regulations for the security of navigation of the said river as the Governor in Council prescribes.
and so on. Section 12 of the Bill provides:
Notwithstanding anything in this Act contained, the jurisdiction and control of the commissioners for the Queen "Victoria Niagara Falls Park in respect to the matters placed under their jurisdiction and control by virtue of chapter ninety-six of the statutes of 1892 of the legislature of Ontario, and the powers of the said legislature in respect of the Niagara Falls Park and River Railway Company, shall continue the same as if this Act had not been passed.

So you see the amendment and the section mean, in effect, exactly the same thing. We as a Parliament pass federal legislation. We must have the power to pass it. I cannot see, then, why we should lamper the Bill with a great deal of verbiage that is not necessary in order to protect the rights of the Niagara Park Commissioners.


Richard Blain: The object of this amendment is to re-insert in the Bill section 11, which was struck out in the Railway Committee. It was stated by the Counsel for the Government that this section was not required, as the point was covered by the Railway Act, and so the committee struck out the section. But on reconsideration it was found that the Railway Act does not cover the point, and so the acting Minister of Railways (Mr. Reid) gave notice of motion to re-insert the clause that had been struck out.


Frederick Forsyth Pardee: But does not section 12 exactly cover the point covered by the amendment?


Richard Blain: No, I think not. That point is up for consideration also, and was fully discussed in the committee, and it was decided, in order to protect all the interests concerned,, that this clause should be reinserted.


Frederick Forsyth Pardee: Did the legal adviser of the Railway Committee take the view that a Bill that is passed in this Parliament being of a Federal character, must have the consent of the provinces, or have we the right to pass legislation here without the censent of the provinces.


Richard Blain: That question was not up for consideration in the form in which my hon. friend puts it. But, I repeat, the minister was quite emphatic, and so was the counsel, that the clause that had been struck out in committee should be reinserted.


Edgar Nelson Rhodes: It is intended that this amendment should be the reinstatement of section 11, which was eliminated.
Amendment- agreed to.


Mr. T. J. STEWART moved:: That section 10 be amended by adding the following as subsection 2:
" The cormany shall not construct any of the works mentioned in section 8 in or over any property of the province of Ontario or under the control of the Commissioners of the Queen Victoria Niagara Falls Park without the consent of the Lieutenant-Governor in Council.''1 119i


Frederick Forsyth Pardee: I have the same objection to this as to the other. We are passing Federal legislation, and I do not see why our bills should be cluttered up with words which only have reference back to the provincial legislature. If we have the right to pass this legislation at all, we have the right to pass it wholly.


Thomas Joseph Stewart: The reason the Ontario Government want this amended clause inserted in this Bill is, that they are the owners of six or seven hundred acres of land at Niagara Falls, in that portion of territory that the promoters of this Bill ask the right to construct this railway, 6,000 feet southerly from the northerly boundary of the county of Welland. Now, the promoters of the Bill surely do not expect "the Ontario Government to allow them to pass through this beautiful park, which cost the Ontario Government large sums of money, without allowing that Government to have some say about where the road is to be built I might say that the Ontario Government has under consideration at the present time the building of a large power plant in this particular section where the railway is intended to run, and I think the promoters of this Bill should be quite prepared to secure the consent of the Lieutenant Governor in Council to the location of this road. I think it would be ridiculous and most unfair for this Government to allow this Bill to pass without this park land being protected. So far as the bridge is concerned, the regular standard clause will give the necessary protection. !


[Stage Direction]
Amendment agreed to.
Bill, as amended, reported, read the third time and passed.

[Stage Direction]
The House resumed in Committee of Ways and Means, Mr. Blain in the Chair.
Mr. LOGGIE:: If the accounting period of a firm be the 31st January, 1915, will the first accounting period be one year back from that date?


William Thomas White: If the accounting period ends on the 31st January, 1915, the first payment would be in respect of the entire year ending on that date, the next accounting period would be the period ending on the 31st January, 1916, and the next on the 31st January, 1917.


William Stewart Loggie: The business man would have no option to make it the following year.


William Thomas White: It -would be impossible to discriminate, and it is necessary, in our view, that we should get in the period succeeding the war, because large profits are made in that period.


William Stewart Loggie: A large portion of this period was prior to the war-from August back to the first of that year. The minister has spoken of net profits. I
9 p.m. suppose that means the profits after certain amounts are laid aside for depreciation, and al-so for bad debts, if there have been any bad debts during the year.


William Thomas White: Undoubtedly.
ivfr. CARVELL:	Would the minister
kindly explain the principle on which depreciation will be allowed in -the working [DOT]of the Act?


William Thomas White: The principle
would be the usage in a particular business with respect to the matter of depreciation. My hon. friend, as a lawyer, will know precisely what I mean when I say that the question of depreciation is a question of fact. The depreciation may be more in the case of one class of business than in another; it depends entirely upon the facts of the case. It is obvious that if a business has a certain amount of apparent profits at the end of the year, and on the other hand, there has been an ascertainable depreciation in the value of the machinery or plant, that should be deducted in order that the true net profits might be arrived at. Of course, there are elements besides depreciation that enter into the question of net profits; the expenses of the business an4 interest upon borrowed money are elements as well as depreciation.


Frank Broadstreet Carvell: Borrowed money would not be depreciation. If I understand the minister, he proposes to ask the different companies which he imagines would come under the provisions of this Act to submit statements. We all know that companies keep their books in many different ways. Some companies might write off five per cent a year for depreciation; some might write off as much as ten per cent. Take a company like that, and,, perhaps, their books would show that their capital was all gone. Of course, it would not be gone, because they would have a valuable plant left. Reserves might be established and used for replenishing the plant. In that case they would take care of the depreciation. In other cases there might not have iMr. Doggie.]
been enough money around to provide for depreciation. As a matter of good busines, a sum should be set aside for depreciation, but often it is not. It may have been paid out in dividends. In a case like that, would the minister consider that the company was entitled to write off, or reserve, a reasonable amount for depreciation, considering the nature of the business, or would be take the statement as furnished, by the company, and the conditions under which the company has been carrying on its business or keeping its books. We know that there are some classes of business that would depreciate to a very much greater extent than others. Take the ordinary manufacturing establishment; probably the depreciation there would not be anything like so much as it would be,- say, in the case of public utility corporations. In the case of a telephone company, for example, the depreciation naturally would be very great, because there is a depreciation of pole lines and cross arms, while there is obsolescence of the telephone plant generally. New ideas are coming forward, new switch boards and things of that kind are being introduced. If you take a manufacturing concern, on the other hand, say the Dominion Iron and Steel Company-I am taking that as an illustration-there is not very much depreciation of the machinery for the making of steel rails or steel rods. If I have made myself clear, does the minister feel like laying down any general principles upon which this question of depreciation might be determined in estimatng the taxation payable by a company?


William Thomas White: I draw the attention of my hon. friend to section 5, subsection 3:
No deductions from gross profits for depreciation or for any expenditure of a capital nature for renewals, or for the development of a trade or business or otherwise, in respect to the trade or business, shall be allowed except such amount as appears to the minister to be reasonable.


Frank Broadstreet Carvell: That is the whole question : what does thg minister consider reasonable?


William Thomas White: This Act, like any other Act, will be administered by the officials of the Government, the minister of course being responsible as head of the department. No principle can be laid down except this: that depreciation must be considered in estimating the net profits. The question of what is a reasonable depreciation in connection with any business is a

matter to be determined, as the officials may be able to determine, according to good usage in businesses of that character. For example, it may be quite proper in connection with one business to allow 2 per cent or 5 per cent; in others the depreciation may be much larger. It depends entirely upon the character of the business and upon the depreciation which necessarily results from the operation of the machinery and plant. I do not believe that I can give any more definite information than that. My hon. friend knows that depreciation, as I have said, is a question of fact. It seems to me that it is no more difficult to determine what is reasonable depreciation than it is to determine the reasonable value of property. That is determined by assessors all over the country yearly in connection with municipal and other assessments.


John Hampden Burnham: Is that the principle
which the minister is now laying down?


William Thomas White: The principle
which I lay down is that thd depreciation must be considered to be fair to a business, but as to the precise percentage, I cannot say definitely, because that will depend upon the facts.


Frank Broadstreet Carvell: I think -that, probably,
that is the only answer the minister could give, although I thought that possibly he might have had in his mind some general rules which he could give to the committee, and through the committee to the country, so that companies and persons liable to be assessed all over Canada would have some would have some way of figuring out the matter for themselves, Take two businesses " of exactly the same kind; one plant would naturally depreciate to a much greater extent than the other, because it depends upon the degree of permanency with which the plant has been created in the beginning. You might have one plant that would be practically permanent, and another more or less temporary, yet producing the same result in the end. Of course, in the one case, there would be very much less depreciation than in the other. In any case where real depreciation could be shown as the ordinary result of carrying on the business, regardless of what the books showed would he take that into consideration in arriving at the net profits of the concern?


William Thomas White: What we should * do is to call upon the companies, such as I think my hon. friend has in mind, for a
statement, and in that statement, no doubt, an allowance would be made for depreciation. If that appeared to be too great an amount, it would be within the power of the department to disallow it, and, possibly, to allow a lesser amount, In the first instance we would ask the company or firm to make a return. I fully appreciate my hon. friend's point. Let us take the case, say, of electrical machinery, or of machinery in connection with public utilities; it is subject to very considerable depreciation. Not only that, but the progress of invention has frequently to be taken into consideration. I do not believe I can lay down any general principle, except to say that it is a question of fact, to be determined upon the evidence before us at the time and upon the usage respecting the plants of industrial and other concerns. I think, for example, that a technical expert could inform the department as to what would be a reasonable amount to allow in connection with a certain class of business, or even a particular plant in that business. There might be a greater depreciation in connection with one individual business than in another individual business of the same class; but we would strive to act uniformly.
Mr. LOG-GIE: Would the department be
willing to accept the last balance sheet prepared by a firm from their books? I do not mean that this should apply to the future, but that it should be taken as evidence of the results of the last year's business. For example, a firm has been doing business in a certain way, and, when it prepares its balance sheet, it writes off what, in its judgment, is the proper amount, and presents its business in the true light to its bankers. If an established business, following its usual practice for years, had written off bad debts and depreciation and given a statement to its bankers, would such a statement for the last year's business be acceptable to the department?


William Thomas White: I would not say that it would be conclusive evidence, but I would say that it would be prima facie' evidence, and in all probability such a statement would be accepted; but it would not do for me to say that it must be accepted, because there must be power in the department to say: " We do not agree with what has been done." But, in connection with such a business as my hon. friend has in view, I think I would be justified in saying that there would be a very strong probability of its being accepted.


Rodolphe Lemieux: Would my hon. friend
be kind enough to illustrate by example the exact meaning of subsection " c " of clause 2?


William Thomas White: It was brought
to our attention after these resolutions were laid before the House that many Canadian businesses, and many businesses such as British, French and Belgian loan companies operating in Canada, are obliged, under taxation measures in the United Kingdom, France, and Belgium, to pay very heavy war taxation in those countries, so much heavier than our war taxation that ours appears trifling by comparison.


Rodolphe Lemieux: Do not be too modest.


William Thomas White: It is a fact. I might tell my hon. friend exactly what was brought to my attention. The amounts which some Canadian companies, and some non-Canadian companies operating in Canada, are obliged to pay in the United Kingdom, France, and Belgium would surprise him. They certainly surprised me. It was felt that, as these companies are taxed in respect to their Canadian business, to add this tax to the taxes they already bear, and whose proceeds go to the same cause, would be to put an oppressive burden on them. Consequently, we thought it would be advisable to insert subsection " c."


Rodolphe Lemieux: How would you do in the case of 'a transportation company?
, Suppose the Canadian Northern, or the Canadian Pacific, or any such transportation company having head offices in Montreal, Quebec, St. John, or Halifax, and coming under this measure and having offices in the United Kingdom, France or Italy, were hit there also, how would you arrive at the difference in the amounts taken from them? Would you completely relieve them from the Canadian tax and let them pay on the other side?


William Thomas White: They would be liable under this measure. Let us assume that a transportation company, such as my hon. 'friend has in mind, were liable here for say $500,000 or $1,000,000; let us assume that they were taxed under the Act that is referred to here for purely war purposes in Great Britain, or in France, to an amount aggregating $250,000, we should deduct $250,000 which they are obliged to pay abroad from the total amount called for by this measure, and they would pay us the balance.


Rodolphe Lemieux: Perhaps I am wrong in my statement of the case, but I have seen in one of the Western papers the statement that the Canadian Pacific would escape the taxation on account of a certain clause in their contract with the Canadian Government exempting them from taxation. Has my hon. friend read that' clause and is the Canadian Pacific exempt?


William Thomas White: In my view the Canadian Pacific is not exempt. There is nothing in this measure that is, in my judgment, inconsistent with, or in violation of, the legislation to vdrich my hon. friend refers, and which is contained in the statutes of the year 1881.


Rodolphe Lemieux: What is the exact bearing of that exemption of 1881?


William Thomas White: The section to which my hon. friend refers is section 16 of the Act respecting the Canadian Pacific railway, assented to on February 15, 1881, and it is as follows:
The Canadian Pacific railway, and all stations and station grounds, workshops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the company shall be for ever free from taxation by the Dominion, or by any province hereafter to be established, or by any municipal corporation therein, and the lands of the company in the Northwest Territories, until they are either sold or occupied, shall also be free from such taxation for 2d years after the grant thereof from the Crown.
My view >
ie that this legislation is not inconsistent with or in violation of the section which I have read. I think it is only fair to say that in so far as I am aware the Canadian Pacific Railway Company is not desirous of escaping the obligation of paying this war taxation. Would the committee oblige me by reconsidering section 2? In the second to the last line of subsection "e" of section 2 I desire to ask the committee to strike out three words, "the profits of." We are exempting the parties liable to taxation to the amount of any tax paid under any legislation for raising revenue for the present war, in force in France, Russia, Italy, Belgium, Servia, Montenegro, Japan, or the colonies or dependencies of any of these countries, in respect of the profits of any business. It was pointed out to me that in France, Belgium and England the war tax is not necessarily in respect of profits as this Bill is. If we strike out the three words the section will read,

"in respect of any business liable to taxation."


Alexander Kenneth Maclean: Subsection "b" of section 2 is for holding companies.


William Thomas White: Yes.


William Stewart Loggie: And subsection "a" is to provide that the amount paid under the Special War Revenue Act of 1915 shall be deducted if the banks pay more under this legislation. If they pay less, which Act applies?


William Thomas White: The existing legislation still continues to apply.
Paragraph 2, as amended, agreed to.
On paragraph 4:
That the business to which the tax shall apply are all trades and businesses (including the business of transportation), of any description carried on, or partly carried on, in Canada whether continuously or not except :
(a)	the business of any person the capital employed in which is less than fifty thousand dollars, other than a business which, or twenty per centum or more of which, is or has been the manufacturing or dealing in munitions of war or in materials or supplies of any kind for war purposes;
(b)	the business of life insurance;
(c)	the business of farming and live stock raising; and
(d)	the business of any company, commission or association not less than ninety per cent of the stock of which is owned by a province or a municipality.


William Stewart Loggie: In my opinion this will be the most difficult clause of all to enforce. If I understand the minister correctly, his object is to compel firms that are exclusively engaged in supplying war materials to pay a portion of their profits to the Crown.


William Thomas White: That is right.


William Stewart Loggie: I wish to draw the minister's attention to the difficulties he is going to encounter when he attempts to enforce this clause. For example, in the Auditor General's Report he will find certain war expenditures. I told ith-e House the other day that the patronage committees gave the names of those from whom prices . were to be asked for war supplies and these committees practically decided who should furnish them.


William Thomas White: Surely not.


Mr LOGGIE:: Surely. I think I shall be able to prove to the minister that certain firms have been paid for supplying war materials, which, outside of that particular business, have no existence as firms. The individuals composing the firm may exist.
I hesitate a little about reading names, but I would draw the minister's attention to page 68 of part ZZ, Auditor General's report which shows that $3,935.67 was paid for supplies for army purposes. One of the items of that amount was 10,046 pounds of potatoes, at 44 cents a pound, which is about $7 a barrel. I do not believe that this firm exists outside of this particular transaction.


Mr. LALOR:: What is its name?


William Stewart Loggie: Armstrong & Ferguson, of Newcastle. There is now, no such firm in Newcastle.


Francis Ramsey Lalor: My object in asking was that a mistake might have been made; these might have been evaporated potatoes. The price is ridiculous for ordinary potatoes.


Frank Broadstreet Carvell: There is no doubt about them being ordinary potatoes.


William Stewart Loggie: materials from its total sales? As I understand this resolution, it is to the effect that, if a firm sells in war materials, less than 20 per cent of its turnover, it does not pay anything on its sales of war materials provided it does not earn over 7 per oent profit. That is a fact according to the resolution?


William Thomas White: No.


William Stewart Loggie: The business of any person the capital employed in which is less than $50,000-
If they sell over 20 per cent in war materials that does not apply, but if they sell less than 20 per cent, they must, to be liable for taxation, have a capital of $50,000. Is that the meaning of the subsection?	.


William Thomas White: Yes.


William Stewart Loggie: Then, a great many firms that supply war materials will not pay one cent, while small firms, such as the firm I have mentioned here, that do not do any other business than to supply war materials, must pay. A firm that supplies twenty or thirty or forty thousand dollars worth of war materials will not pay one cent if it does not have 20 per cent of its gross sales in war materials, and if its capital is under $50,000. Am I right?


William Thomas White: I think my hon. friend's statement is pretty clear. Under these resolutions, as brought down, the taxation was to apply to businesses which had a capital of at least $50,000 , and not to businesses which had a capital of less than $50,000. We made an exception, however, in the case of businesses which dealt exclusively in manufacturing war munitions or in furnishing supplies. The idea was that those businesses were making money directly out of the war, and, in many cases, the profits would be abnormal, although I do not say that that would always be the case. It was drawn to my attention that, as the resolutions were drawn, a firm which had received an -order for $500 worth of war supplies, or $26 worth in one case, but which was carrying on its business otherwise as usual, that is to say, not manufacturing for war purposes ' and not furnishing war supplies, would become liable. That, of course, seemed manifestly unfair, because the war.business was such a small proportion of the total business. It therefore seemed to us that we might fairly amend the resolution by providing that, if a company with a capital

of less than $50,000 dealt in war munitions or furnished war supplies to an amount not exceeding 20 per cent, it should be allowed to come under the provision exempting companies with a -capital of less than $50,000. As we had to fix a percentage arbitrarily, we fixed it at 20 per cent. The business of a company witn a capital of less than $50,000 is not likely to be very considerable, and 20 per cent of the gross amount did not seem to give them such a large amount of profit as should deprive them of the exemption enjoyed by other businesses.


Mr. GUTHRIE:: I would like to call attention to subsection " d " of section 4, which exempts from the operations of this measure:
The business of any company, commission, or association not less than 90 per cent of the stock of which is owned by a province or a municipality.
That amendment, I think, covers a number of cases in the province of Ontario where corporations are practically owned by municipalities, and I understand the intention of the minister is that such corporations shall not be subject to the tax. I do not think that the exemption is quite broad enough in its language to include all corporations that are operated by municipalities. I have in mind at present a street railway company, an incorporated company, all the stock of which is now owned by the municipality, except a few shares to qualify a board of directors. Such a company would be included under subsection "d" because, as over 90 per cent of its stock is held by the municipality, it would not be subject to the tax; but under the Ontario Public Utilities Act there are a number of corporations created which have no capital stock. They have capital, and capital is subject to taxation under section 2, but that capital is not divided into shares. Under the Ontario Public Utilities Act, -any municipality may appoint a hydro-electric commission, a waterworks commission, or a light, heat and power commission, for the operation of the public utilities of the municipality, and that Act, declares that those commissions shall be bodies corporate. Now, I would fear that, under this section, they might be subject to taxation unless they were explicitly exempted. I would therefore suggest that words of this kind be added to subsection "d":
Or any municipal public utility commission authorized by any provincial statute.


William Thomas White: I think the point raised by my hon. friend is well taken, and I am indebted to him for drawing my attention to the matter. The city of Guelph owns the capital stock of a street railway company, and it did not seem to me expedient that the tax should apply in such a case, and it also did not seem expedient to me that the tax should apply to a public utility corporation owned by a province. There are two points to which my hon. friend referred. As to the first, I have an amendment to propose which I think will meet the situation. I move:
That subsection " d " of section 4 be amended by adding, after the work " stock,"' the words " or capital."
If that completely covers what the hon. gentleman has in view, I need not deal with any other point. Did I understand him to say that the expression " company, commission, or association," is not wide enough? I think it is wide enough.


Hugh Guthrie: I think the amendment suggested by the minister will cover the case. This applies not only with regard to the city of Guelph, but to all places in which the Hydro-Electric is in operation. These commissioners, under the Public Utilities Act become corporations. They have no stock but they have capital. I think the change will cover it.


[Stage Direction]
Amendment agreed to.
Frank Broadstreet Carvell: I do not want to oppose the proposition, but I am surprised to hear that under the Hydro-Electric they make profits of seven per cent. I understood that in Ontario they were getting power at cost. Of course, I have always said, that I know places where private corporations sell electric energy at cheaper rates than it is sold for in Ontario. However, that is their affair.
1 wish to mention a point which has been called to my attention in three different cases, and I am sure it will be of direct interest to many throughout Canada. Subsection " a " of section 4 refers to:
The business of any person the capital employed in which is less than fifty thousand dollars.
The question I have to ask would not affect a corporation, and possibly it would not affect a partnership, as it would be assumed that all the property that the partnership hold would be employed in the conduct of the business. But take the case of a private individual who runs a business
in which he has not $50,000 invested, and who has also property in other forms-other investments. Would the term " business " in that case cover only the business that the men ordinarily carries on, or would it cover his private property as well?


William Thomas White: I would call the attention of my hon. friend to section 10:
The capital employed in the business of any person other than an incorporated company, shall be taken to be the fair value of all assets real and peisonal, movable and immovable.
I think that presents no difficulty. If a man had $50,000 invested in, let us say, a dry-goods business, that amount could he easily ascertained. But if he had property outside of his business, that would not be " capital " for the purposes of the Act.


Frank Broadstreet Carvell: I wanted the minister's opinion because, as I have said, this matter has been brought to my attention on several occasions. I agree with the minister;
I think he has given a proper definition.


William Stewart Loggie: Why should not the rule apply to an individual as well as to a company? If the company were running a business and had a house in the town rented, that would not be counted the same as in the case of similar property owned by a private individual. Why?


William Thomas White: A company is incorporated for the purpose of carrying on a business. What business it can carry on will depend upon its corporate powers. What it would he liable on would be the net profits made in carrying on its business.


William Stewart Loggie: I do not think it is a very important point, but I cannot see why a corporation should have more power tljan a person. A person can carry on a grocery and have a house in the town rented, and the house is not counted part of his capital. But the minister says that if an incorporated company has a house that is part of its capital.	[DOT]


William Thomas White: Why should an
incorporated company have a house? If part of its business is the holding of real estate for profit, the house would be a part of its corporate enterprise, part of its business. On the other hand, my hon. friend might own real estate in Manitoba, and he might have a business in the East-and I am told he has a very fine business in the East-but the taxation measure would apply only to the amount of capital he has in the business and not to his property holdings

in Manitoba. But if he were to incorporate a company with power to hold, deal in and speculate in real estate, to carry on a hardware business and run electric tram cars- one of these companies whose charters go through here in a few minutes on Friday nights-^we would have to deal with that on its merits and count all its operations as . part of its business.


William Stewart Loggie: The minister deals with
a supposed company, but I want him to come down to facts. Not only might a company have a house rented outside of its regular business, but it is a common practice. There are two companies in my own town that have several houses.


William Thomas White: Part of their
business.


William Stewart Loggie: I do not see why the minister cannot be consistent. Why apply one principle to a person and another to an incorporated company? I do not think the point is a very material one, but I would like to see the minister consistent.


Alexander Kenneth Maclean: In the case of an incorporated company, whose sole business is holding real estate, and having capital of $50,000, there would be no question as to *its liability. But take the case of an individual, who owns, say, $100,000 of real estate in the form of buildings. He has no other occupation than the collection of rents. Would he say that that person was conducting a business which, under the resolution, would make him liable to taxation?	-


William Thomas White: My hon. friend has asked a question about a matter that is within the penumbral region sf light and shade, on the one side business and on the other non-business. I should think it would be a question of fact. I do not think any practical difficulty is likely to arise. If an individual were engaged in the real estate business or in buying and selling and renting property-


Alexander Kenneth Maclean: Supposing he was an aged man of 99 years and could not conduct the business.


William Thomas White: If he wae an aged man of 99 years, I would be disposed to let him off altogether. I think if it were his business he would be liable to act, but in the case of a private individual holding some real estate here and there 
throughout the country and deriving some revenue from it, it would haidly be described as business.


Alexander Kenneth Maclean: If incorporated it would.


William Thomas White: The point is that when a company is incorporated it is incorporated to do business. Every company is carrying on some sort of business in the exercise of its corporate powers.


Alexander Kenneth Maclean: It might be incorporated merely to hold real estate and not to deal in it.


William Thomas White: Then I suppose the Act might not apply because it would not earn the necessary amount. But if the property appreciated to such an extent that its earnings were sufficient to bring it within the provisions of the Act, then probably the Act might apply.


Some hon. MEMBERS:: Carried.


William Stewart Loggie: I do not want that clause to carry; that is an awful clause. I think the minister ought not to press clause 4, subsection "a", to-night. The minister has not touched on the suggestion I mad,e to him-and I am making this suggestion merely on the strength of what he has told the committee the object of this legislation is-namely, that those who have made large profits from war supplies should pay a portion of the tax. What I urge is that a very, very large portion of the war supplies, in small amounts, will not pay any tax.


William Thomas White: In small amounts.


William Stewart Loggie: A very large amount in the aggregate will not pay. I see one firm here in Fredericton who have supplied $4,951.59. If their sales are not 20 per cent of the business they do not pay a cent.


William Thomas White: That is not a very large amount.


William Stewart Loggie: I know it is not, but in the aggregate it will be a very large amount.


Mr. R. B. BENNETT:: Will the hon. gentleman tell me why he should pay?


William Stewart Loggie: If the minister will accept a suggestion of mine he will pay.


Richard Bedford Bennett: I want to know why he should pay.


William Stewart Loggie: The minister said he should pay.


Richard Bedford Bennett: I want to know why.


William Stewart Loggie: One of the objects of the legislation was to get at those who supplied material for the war on which they made a good profit. Why would the minister not consider taxing the sales, ' 10 p.m. say, a quarter of one per cent, or one-half of one per cent, or one per cent?-tax the war supplies according to the amount sold. He has records of all these sales, and then he could deduct the amount of the tax so collected from the tax collected under this resolution in each case.


William Thomas White: My hon. friend is very solicitous for the minister. He stated a while ago that I should be surrounded with difficulties. I desire to tell him that that is the normal position of my official life, and therefore he must not be unduly anxious about it. I did consider the proposal put forward by my hon. friend, which only goes to show that intellects sometimes think alike. It would lead to manifest hardship. In some cases, to my knowledge firms supplied goods at cost; and since the War Commission has been established, from inquiry I have made I am quite sure that the profits have been certainly not abnormal; the profits have been normal, reasonable, and in many instances low. The attempt to tax all parties who have been engaged in manufacturing munitions and supplying goods, on a percentage basis, would lead in some cases to actual loss to those supplying the goods. I did give the matter consideration as I said, and for the reason I have now given I came to the conclusion that it would be unfair and unjust to adopt a percentage basis. Therefore, at the risk of some trouble-because we are born and live to meet and overcome trouble-I thought it proper that the section should remain as drafted, rather than that <a percentage basis should be established.
I am going to suggest, as this is Friday night and some members are leaving town, that if the committee feel disposed to pass section 4 with the amendment proposed by the hon. member for South Wellington (Mr. Guthrie), and concurred in by the committee, we should adjourn and take up the matter again on Tuesday.


Edgar Nelson Rhodes: Shall this clause
carry?


William Stewart Loggie: No, not carried.


Frank Broadstreet Carvell: I thought that the motion of the right hon. the leader of the Opposition relating to shells was to come up on Tuesday.


William Thomas White: I do not know that there has been any arrangement to that effect. If that has been arranged by the Prime Minister and the leader of the Opposition, of course the arrangement will be carried out; but I am desirous of getting these resolutions put through, and I would say that it is the intention to go on with them on Tuesday.


Frank Broadstreet Carvell: I have no objection; I
was only pointing out that when the House adjourned on Tuesday last that was the understanding.


William Thomas White: If there was an understanding between the Government and the Opposition with regard to going on with the resolution relating to the Shell Committee on Tuesday, of course we shall go on; but if that is not the case, the Government desire to go on with the consideration of these resolutions. It is over a month since the Budget was brought down, and the Government can hardly be considered to have acted unreasonably with regard to the resolutions before the House.


William Stewart Loggie: I would like to ask the
minister if he would not allow that clause to remain over until Monday, and think the matter over? I was very much interested in the minister's explanation that war supplies had been given at cost price. That, of course, I did not anticipate; it puzzled me in a way. After all, and over and above it all, I am persuaded that the suggestion I have offered to the minister is the easiest one to meet, and provides the more equitable way of the two in the interest of all concerned. He would get a considerable revenue from it, and I certainly think it is worth considering.


William Thomas White: I would prefer,
if the House concurs in the view, that section 4 be passed, and if, on thinking it over on Tuesday, or when the House resumes consideration of the resolutions, I feel myself persuaded by the arguments of my hon. friend, I will ask the House to re-open the matter.


Rodolphe Lemieux: If a contract for war
supplies is given to a Canadian, and is carried out by an American firm, would that American firm be liable to taxation?


William Thomas White: If the contract was carried out in the United, States by a United States company it is evident that we would have no jurisdiction to reach that company.


Rodolphe Lemieux: Could the Government not keep from the amount to be paid to the American firm a share of the profits?


William Thomas White: My hon. friend is no doubt aware that we have not paid American firms anything. Everything that has been paid, or will be paid, for contracts placed by the Shell Committee, or by the Munitions Board, is, or will be, paid by the Imperial Government.


Rodolphe Lemieux: I know that the Canadian Government has no jurisdiction over American companies, but in the case of a contract which is given to a person in Canada for war supplies, and which is handed over to an American concern, whether it be to Schwab or to any other concern, the payment is made by Canad,a. Would the .Canadian Government not be justified, when making payment under the contract, in retaining a certain amount?


William Thomas White: My hon. friend is a lawyer of renown, and is acquainted with the principles of international law. He would have to consider the locus of the contract. I do not admit that the Canadian Government have made such a contract, but assume that the Canadian Government did make a contract with an American firm, in the state of New York, or anywhere else in the United States-a contract for the delivery of fuses or of munitions of any kind-upon payment under the terms of an express contract would the Government of Canada be authorized to ,say: We shall not pay that amount; we are going to deduct a certain amount because we need to raise revenue in the Dominion. My hon. friend will see that international questions would at once arise.


Frank Oliver: I do not suppose that the minister would object to those members who have views in regard to this section bringing them forward, on Tuesday, even if we consider the section to be passed?
Sir THOMAS. WHITE: I have so much regard for this committee that any reasonable request will be met readily and with pleasure.


[Stage Direction]
Paragraph agreed to.
Progress reported.

On motion of Sir Thomas White, the House adjourned at 10.15 p.m.
Monday, March 20, 1916.