1916-04-06

INTEREST ON BANK DEPOSITS.


[Stage Direction]
Mr. L. A. LAPOINTE moved for leave to introduce Bill No. 83, to amend the Bank Act.
Some hon. MEMBERS:: Explain.


Mr. LAPOINTE:: The explanation is very simple; I want to change the rate of interest on savings bank deposits.


Sir WILFRID LAURIER:: To what rate? *


Louis Audet Lapointe: I wish to make the interest 4 per cent.


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

[Stage Direction]
Hon. W. J. ROCHE (Minister of the Interior) moved for leave to introduce Bill No. 84, to authorize certain School and Dominion Lands to be included in the Taber Irrigation district, in the province of Alberta.
Motion agreed to, and Bill read the first time.


[Stage Direction]
Bill No. 82, to incorporate the Premier Insurance Company of Canada.-Mr. Nesbitt.

[Stage Direction]
[Questions answered orally are indicated by an asterisk.]

Mr. COPP:: 1.	Who supplied the coal for the soldiers' barracks in the town of Amherst, what quantity of coal was so supplied, what quantity has been supplied to date, and what is the total amount paid for same?
2.	What supplies were furnished to said barracks, respectively, by Edgar Fillimore, C. D. Shipley, D. A. Morrison, Morrison's Limited, Biden's Limited, P. D. Sonier, B. D. Bent and P. T. Smith?
3.	What price was paid for the supplies so furnished, and what was the total amount paid to each of the persons or firms above named?


Mr. KEMP:: 1.	P. IX iSonier, 233,210 lbs; prices, screened, $4.55 per ton; run of mine, $4.30 per ton; amount paid $702.05.
2	and 3. Edgar Fillimore: straw, 88,456 lb. at $12 per ton, $5^0.71; hay, 11,380 lb. at $21 per ton, $140.49; oats, 319 4/34 bush, at 80c., $255.47. Total, $926.47.
Morrison's Ltd.: bread, 110,185 lb. at 41c. $4,682.86; beans, 3,093 lb. 10 oz. at 5Jc. $162.41; white beans, 9,886 lb. 6 oz. at 64c., $643.27; sugar, (gran.), 3,093 lb. 10 oz., at 7c., $216.55; sugar, 10,5391b. 10 oz., at 74c., $764.12; pepper, 194 1b. 4 oz., at 14c., $27.23; salt, 3,422 lb. 5 oz., at lc., $34.23; split peas, 3,4221b. 5 oz., at 6c., $205.35; jam, 3,0931b. 10 oz., at 7|c., $239.76; jam, 8,935 1b. at 11c., $982.83; bacon, 3,0931b. 10 oz., at 184c., $572.32; bacon, 10,1611b. 2 oz., at 18c., $1,829; cheese, 6,878 1b. 3 oz., at 18c., $1,238.11; creamery butter, 11,134 lb. at 34c., $3,785.45; dairy butter, 2,6221b. 6 oz., at 28c., $734.26; vegetables, 40,651 1b. 4 oz., at 2c., $813.26; potatoes, 108,405 lb. at lc., $1,084.05; prunes, 3081b. 12 oz., at 10c., $30.88; rice, 255 1b. 2oz., at 4|c., $12.11; oatmeal, 316 1b. 8 oz., at 44c., $14.24; salt pork, 456 1b. 8 oz., at 18c., $82.17; paper bags, 300 at 95c. $2.85; paper bags, 300 at 78c., $2.34; twine, $5.73; lye, 22 tins at 10c., $2.20; total, $18,167.37.
P. D. Sonier: coal, screened, 192,210 lb. at $4.55 per ton, $432.93; run of mine, 124,030 lb., at $4.30 per ton, $266.85; 1,000 lb., $2.28; total, $702.05.
P. T. Smith, removing refuse, 364 loads, at 20c., $72.80; Biden's Ltd., none; C. D. Shipley, none; D. A. Morrison, none; B. I). Bent, none.


WBSTOVER COUNTY, N.S., TELEGRAPH OFFICES.
Mr. McKENZIE:: 1.	For what reason was the telegraph office removed from Charles McDonald's hotel, Dingf'Mr. Nesbitt.!	/
wall, Victoria county, ' N.S., to the home of Gordon McPherson, and on whose recommendation was this change and the new appointment made ?
2.	For what reason was the telegraph office removed from the residence of John W. Cap-stick, Meek Cove, Victoria county, to that of William Capstick, and on whose recommendation was this change and the appointment of William Capstick made?
3.	Can William Capstick, the present operator at Meek Cove, read and write?


Mr. ROGERS:: 1.	The telegraph office at Dingwall was removed to the home of Gordon McPherson at the request of David McDonald, who resigned, as he was unable to fill the position of operator; the change and new appointment was made on the recommendation of Dr. L. W. Johnstone.
2.	For political partisanship on the part of John W. Capstick, and the change and appointment of William Capstick was made on the recommendation of Mr. John McCormick.
3.	William Capstick is the agent at Meat Cove but the duties of the telegraph operator are performed by Morris J. Capstick.


SOURIS RIFLE RANGE.
Mr. HUGHES:: 1.	What was the total cost of the rifle range at Souris, P.E.I. ?
2.	What did the land cost?
3.	What did the butts, the cottage, the fencing, and the other things that make up the total, cost?
4.	Was the work done by tender or by day
labour ? *	.
5.	If by tender, (a) how many tenders were received, and (b) what was the amount of each?
6.	If by day labour, who was foreman or inspector, and what did he receive?
7.	If by tender, (a) who inspected the work, and (b) who finally passed it?


Mr. KEMP:: 1.	Site, $1,000; construction, $3,485; extras, $48.50; target frames, $82; fencing, $289; boundary stones, $45; superintendent of works, $171.50; total, $5,121.
2.	$1,000.
3.	See item 1.
4.	By public tender.
5.	(a) Three, ('b) Matthew and McLean, Ltd., Souris East, $3,485; Bernard Creamer, Souris, P.E.I., $3,576; Andrew F. McQuaid, $5,490.
6.	See No. 4.
7.	(a) John Lavie, Superintendent of Works, (b) Board of Officers; president, Major T. H. E. Inman; (members, Lieut.
A.	F. McQuaid, Mr. H. J. Knight, C.D. to R.C.E.


THE MINISTER OF MILITIA.
[Stage Direction]
On the Orders of the Day:
Mr. PUGSLEY:: I would like to call the attention of my hon. friend who is acting Minister of Militia to an answer which he gave yesterday to a question by the hon. member for Westmorland. The question and answer were as follows:
Mr. Copp :
1.	When did the Minister of Militia leave for the Old Country, and when did he return in the years 1914 and 1915?
2.	Who was Acting Minister of Militia during his absence in those years?
Mr. Kemp:	1914-left October 6 ; returned
November 9. Acting Minister, Hon. Mr. Hazen. 1915-left June 3 ; returned September 2. Acting Minister, Hon. Senator Lougheed.
If my hon. friend will turn to page 2375 of Hansard, he will find that the agreement in reference to fuses is dated 19th June, and the signature of the Minister of Militia approving of the contract is dated 19th June. That would be 16 days after the minister is said to have sailed for the Old Country. Surely there must be some mistake. Perhaps the acting minister will look the matter up.


Mr. KEMP:: I will look it up and see if there has been an error. I presume there must have been in view of what the hon. member states.


PROHIBITION-STATEMENT OF THE MINISTER OF JUSTICE.
[Stage Direction]
On the Orders of the Day:
Mr. J. H. BURNHAM:: I would call the attention of the Minister of Justice (Mr. Doherty) to a statement in the Toronto Star of -yesterday to the effect that the Minister of Justice could hardly have said that the provinces had the right to prohibit the manufacture and importation of alcoholic or intoxicating liquors, and that there must be some mistake in any reference to that effect. I would like to ask the minister what he did state in that particular.


Mr. DOHERTY:: What I stated upon
the subject will be found in Hansard of last Monday, and in Hansard of yesterday. I do not think, if I gathered it rightly, that the newspaper istatement represents exactly what I said. In so far as I am competent to speak, I do not think that there is any mistake in what I did say.


TAXATION OF PROFITS.
[Stage Direction]
Hon. ROBERT ROGERS (for the Minister of Finance) moved the second reading
of Bill No. 74, to levy a Tax on Business Profits.
Mr. A. K. MACLEAN (Halifax):: Mr. Speaker, by arrangement with the hon. Minister of Finance (Sir Thomas White), it was understood that on the second reading of this Bill, we would be at liberty to discuss in a general way its provisions, also the provisions of the tariff amendments under Bill No. 16 that had its second reading last week, and also any matters relating generally to expenditures. Accordingly, I take advantage of the opportunity to occupy the attention of the House for a few moments upon these matters. In the first place, in connection with the Bill now before the House, I beg to call the' attention of the Minister of Finance to the title. Section 1 reads as followis:
This Act may be cited as the business profits tax Act, 1916.
It was stated by the minister in his Budget speech, and frequently afterwards, that this taxation measure was to continue in force but for a period of two years, and that it was in essence a war measure. I therefore beg to suggest that the title of the Bill should be amended so that it may be cited as the " Business Profits War Tax Act, 1916," and not as it now reads. I think that with that amendment it will be made clearer to the country that the Bill is intended as a war measure purely and that the revenues to be derived under its provisions are for war purposes. I suggest this amendment also because it will be a further assurance to the country that the Bill goes into operation as but a temporary expedient for the raising of revenue for war purposes.
When speaking upon the Budget I expressed my opinion in reference to the principle involved in this Bill and I do not intend to occupy the time of the House in reiterating my views. I then stated what were, in my opinion, the fundamental objections to the Bill, and while they have been somewhat amended, my objections in substance still remain. My criticism of the taxation of business profits is that it eliminates as contributors to war revenues a great number of people who, I believe are willing to contribute, and who should be contributing at this time. There are a large number of people in this country in receipt of very substantial incomes from accumulated wealth of one kind and another, and it does seem an invidious distinction that in this period of financial stress, they should be eliminated as contributors to the public

revenues for war purposes. That is an objection to the revenue measure of the Minister of Finance that is fundamentally sound and one which cannot well be answered by him. It is all very well to say that this Bill applies to a particular class only, and was only intended to apply to that class, but I do say it is objectionable to find a large number of people in the country to whom this measure will riot apply when they are financially competent Ito respond very handsomely, and I think in many cases are quite willing to be taxed for such purposes. While business in this country to-day is quite prosperous, while the very men engaged in business are making handsome profits, still it is nevertheless the fact that in the period immediately preceding the cessation of war, and for some times afterwards, there will be disastrous declines in business and many will suffer very heavily. They might very well argue that they should be allowed to keep as large a proportion of war time profits in their possession as possible in order to meet the losses which inevitably will come upon them in the -months immediately preceding the arrangements for peace and for months, possibly years, following peace.
Having said these, few words in reference to the business profits taxation features of the Bill, I wish to say just a few words in relation to the mining taxation. After having given some reflection to the proposals to tax mining profits since the introduction of the measure to the House, I am still Of the opinion that it is a mistake and not in the interest of the country. We wish increased production of natural resources. Increased production of natural resources at the present time, and for years to come, will be out only method of paying off unfavourable trade balances and -heavy interest accounts abroad. There is, furthermore, this very serious objection: it will prevent the inflow of foreign capital for investment in the mining industry, particularly as regards metalliferous mines. It may be that the tax of 25 per cent on profits over 7 per cent may sound more dangerous than it really is, but the fact remains that up to the present time, some hundreds of thousands of dollars which would have come to Canada for investment in the mining industry have been withheld; that will be true of the future. But if the minister will persist in this taxation of mining profits, the percentage beyond which profits are taxed should be increased beyond 7 to 10
TMr. A. K. Maclean.]
per cent, for it is generally agreed that the industry is entitled to very much larger profits than that. I do not think it is fair to the mining industry to exempt profits only up to 7 of 10 per cent. The minister and his department are taking authority to issue regulations providing for a just method of arriving at the amount that should be deducted for the exhaustion of ore bodies. That is a very difficult thing to work out, and 1 'oubt whether it pan be done successfully. On the whole, then, this taxation, so far as the mining industry is concerned, is an unfortunate thing; it will impede investment of foreign capital, and prevent the development of that source of national wealth and, as a consequence, affect our revenue; and therefore I say that the Minister of Finance will not obtain from this tax on the mines industry any substantial amount of revenue. On the other hand, it, will deal what I fear will be a disastrous blow to a very important industry in this country. For these reasons I think this tax should be abandoned, or at least substantially amended.
Just a word with reference to the taxation of industries engaged in the supply of war munitions. In my remarks upon the Budget, I said I thonght it would be better business to see that all war supplies and munitions purchased by the Government should be supplied at a fair price.. I reaffirm that position to-day. But, if we are to tax profits made by those who are supplying munitions of war to the Government of this country, I think we are fairly entitled to receive from that source a greater percentage than the 25 per cent which the Bill provides for. I do not think that proposition can very well be controverted. In my opinion this class should be made to contribute more than 25 per cent of their profits in excess of ithe stipulated 7 per cent.
I was absent from the House when the Customs Tariff Bill was passed last week, and I should like to say just a few words upon it now. It seems to me a reprehensible thing, at this particular time, to increase, for protective purposes, the tariff upon any one particular product. I should have thought the abilities of the Minister of Finance would have been amply taxed in securing sufficient revenues for this country, without devoting any of his time to tariff amendments made purely for protective purposes and which will consequently cut down our revenues. However

strongly one might believe in a protective policy for this country, one hardly expects to find anyone bold enough to contend that m view of existing conditions, that there was any necessity whatever for increasing at the present time the tariff upon any one particular article for protective purposes. When you consider the great demand there is to-day for practically-everything we produce in this country, and the disabilities which importers and consumers suffer by reason of the lack of shipping, the high rates of insurance, one would think that these conditions alone afforded sufficient protection for any industry in this country, regardless of the tariff. I therefore say that it is reprenhensible that the minister should have seen fit at this time to increase the tariff on apples, and impose taxation for protective purposes upon fuel oil. The duty on apples will not accomplish the result the minister expects, and it will lay an increased burden on certain consumers i,n this country at a time when they should not (be expected to bear it In respect to the tariff rates to be imposed upon fuel oil, the Government has not given Parliament good and sufficient reasons for its imposition. The lack of shipping facilities for bringing oil from the United States to British Columbia should alone have been a sufficient protection for coal, if that was the purpose of this tax. I therefore submit that the House has not been given reasons sufficient to justify the two changes that have been made in the Customs Tariff Bill which passed * the House last week. There is no necessity at the present time for the imposition of any duty for protective purposes-and it was' admitted that these tariff changes were made for that purpose. The consumers in this country can not well afford to bear this additional taxation at the present time.
With regard to the tariff imposition of last year, and particularly the surtax of 7\ per cent upon the general tariff, I would point out that that tax has been in force now for practically a year, and I think it is quite clear that as a revenue measure it has been a failure. It is quite true that the minister secured a very substantial .additional revenue from his tariff taxation Bill of last year but it came from the 7i per cent tax upon free goods. That is a tariff imposed for revenue purposes, it is probably not so objectionable although it has been indiscriminately applied. I want to repeat what I
said a moment ago that, from the revenue standpoint, the surtax of 7i per cent imposed on the general tariff last year was a failure, apd should be removed. Our general tariff is at any time a very high one, and if we take into consideration the disabilities which the importer and the consumer encounter in the lack of transportation, in the high cost of insurance and in the high interest rates, surely they afford more than sufficient additional protection without our imposing the additional tax of 7i per cent. The 7J per cent added to the general, tariff is virtually prohibition against importation of a great many commodities; it imposes a burden which the people of this country should not be asked to bear at the present moment, and it should 'be removed.


Mr. BLAIN:: Has there been any general complaint or condemnation of the 71 per cent?
Mr. MACLEAN; I think the complaint is general and unqualified. When the Minister of Finance last year introduced his tariff measure providing for the surtax of 7i per cent to the igenefal tariff he assured the country that the manufacturers would not add this tariff to the cost of their productions. In fact, I think my hon. friend the member for Peel deliberately gave us in this House his personal assurance that this tax would not add to the cost of commodities.


Richard Blain: My hon. friend is wrong in that, but it is unimportant.


Alexander Kenneth Maclean: I do not think I am wrong, because I think one of my colleagues upon this side of the House, on the occasion of that statement being made by my hon. friend, read to the House a trade circular issued from Peel county disclaiming any intention on the part of a manufacturer to impose the additional 7i per cent to the cost of goods.


Richard Blain: I was asking my hon, friend if there had been any special protest to the House of Commons or to the Government complaining against the 7t per cent to which my hon. friend is referring.


Alexander Kenneth Maclean: I am not in a position to know what protests the Minister of Finance has received from the Canadian people, but I have no doubt he has received hundreds of protests. We, however, as the representatives of the people are here to protest against any unfair tax being im-


John Hampden Burnham: If the people are living under a delusion, how does it come about that there are complaints?


Alexander Kenneth Maclean: No complaints? My
hon. friend is wrong in saying that there are no complaints. -


John Hampden Burnham: Where is the delusion?


Alexander Kenneth Maclean: It is a notorious fact. I am saying that the delusion is harboured toy hon. gentlemen like my friend.


John Hampden Burnham: I beg your pardon.


Alexander Kenneth Maclean: He is under the delusion that this ^country is living in a period of such prosperity that no one is suffering from the high-pri'ced commodities which are of daily domestic use. For this reason, therefore, Parliament should take into consideration the question of the elimination of the surtax of 7j per cent, first, because it gives us no substantial additional revenue, and, secondly, because it operates as an unnatural degree of protection, and works out as practically a prohibition against importation, and consequently con-

tributes to the making of high prices of products.
We require additional revenue in this country, and ,we upon this side of the House, realizing that fact, do not Object to any efforts made by the Government in order to secure that additional revenue. Our interest account is climbing. Very shortly we shall be obliged to meet a very heavy pension list. There will be a diminution in excise revenue from liquors because of the general adoption of prohibitory measures by the several provinces. Therefore, for these and other causes, it is desirable that our revenue should be increased. There are some hon. gentlemen who consider it is not good business to impose additional taxation upon the people of a country in a time of war. Personally, I do not agree with that view. As I have pointed out on more than one occasion in the past, there are two ways of securing revenue: first, toy the imposition of fresh taxation measures, and, secondly, by measures of internal economy and the abandonment of expenditures that can be postponed, or that can be done away with entirely. These are the only two methods of meeting the financial necessities of the country to-day.
We upon this side of the House have frequently endeavoured to impress upon the Government the great necessity of economy in expenditure. We have urged this in the House and in Committee of Supply on many occasions, but I doubt very much if we have succeeded in impressing the members of the. Government as much as we hoped to do, or as we believe ,the country would like them to be impressed. The people will not object to taxation provided that it is used for the purposes for which it is imposed; but they will object to any taxation measures to produce revenue if a saving corresponding to the amount of such taxation might have been made in our ordinary expenditures which would have obviated the necessity for this taxation. There is- no purpose in securing twenty-five or thirty million dollars of revenue by fresh taxation if an equal amount by careful, economical administration might be saved in our general expenditures.
I think that that is a statement which can scarcely be gainsaid, and I am glad to see the hon. member for West Peterborough concur in it.


John Hampden Burnham: Two and two make four.


Alexander Kenneth Maclean: It is our duty as representatives-particularly is it the duty of

hon. gentlemen on this side of the House- to continue to press upon the Government the great necessity and importance of reducing expenditure to the lowest possible amount.
The member for Edmonton (Hon. Frank Oliver) the other night read a statement recently made by the Prime Minister of Great Britain which I should like again to read, because some of the members present to-day may not have heard the member for Edmonton give that statement to the House. The statement of the Prime Minister of Great Britain, which refers to expenditure, was as follows:
In view of the stupendous and unprecedented liabilities and obligations which the war is imposing upon us, if we are, as I think we are still agreed that we are to subordinate every other purpose to its effectual and successful prosecution, one of the first means which prudence and policy prescribe in the attainment of that object is the temporary reduction in every form, both of public and of private expenditure, which can be shown not to be directly conductive to that purpose.
Hon. gentlemen opposite, in answer to my contentions, will say: we have reduced very considerably the expenditures in this and that department-and they will point to very substantial reductions in what we call the larger expenditures. But the Government cannot effect the necessary reduction in public expenditure unless they recognise the value of reduction in the expenditures in connection with smaller matters; unless they go into the expenditures of the various departments in detail and endeavour to save here and there this and that amount, be it small or large. It is not sufficient for the Government to postpone the expenditure of amounts of money which involve millions of dollars, because the millions are, after all, composed of thousands, and if they can save the thousands they can effect a saving of millions.
We have discussed the expenditures of several departments here on many occasions; I wish very briefly to address myself to the House on that subject. We have frequently referred to the expenditures of the Public Works Department. True, there has been a reduction in that department. In the fiscal year ending March 31 last there was a very substantial reduction in expenditure over that of the previous fiscal year. But this reduction, after all, was not sufficient. I was surprised when I saw the character of some of the expenditures made up to December 31 last. I could understand that for the fiscal year ending March 31, 1915, we would have some large expenditures which had been commenced before the beginning of the war and which it was necessary for the Government to proceed with, but for the year ending March 31 last there were many expenditures upon public works which might well have been postponed. The expenditures of that department for 1911-12, as has been frequently pointed out, amounted in round figures to $10,000,000; they amount to over $12,000,000 for the year which has just ended. Will any man say that the Public Works Department could not have conducted its affairs during the past year with $10,000,000 as well as it could in 1911-12 under much more favourable conditions? Had they done this it would have effected a saving of $2,000,000, one-quarter of the amount which the Minister of Finance will get out of the operation of the Bill which is now before us, I assume that he contemplates a total revenue from the business profits tax of between $25,000,000 and $30,000,000 in the three years, or an annual revenue of about. $8,000,000. The Minister of Public Works and all members of the Government say that they do not purpose expending all the amounts set forth in the Estimates. Here let me say that when the Government take the position that they are justified in asking Parliament to vote sums of money which they do not contemplate expending, they are assuming a position which is constitutionally wrong. Hon. gentlemen have read an address delivered by a member of the parliamentary press gallery at a political club in Montreal the other day in which he dealt with the idea that Parliament is abdicating its true functions. Unfortunately, there is a good deal of truth in that view. In this country we have not Government by Cabinet; it is for Parliament to determine what moneys shall be voted and the purposes for which those moneys shall be expended. It should not be left to the discretion of members of the Government to determine whether they shall or shall not spend certain moneys. If Parliament does not contemplate the expenditure of certain moneys, the items in reference to them should have no place in the Estimates, and constitutionally speaking the Government are taking a false position when they ask us to vote moneys which they do not purpose expending.
Let me take another illustration in order to point out that the Government are not properly seized of the necessity of a proper investigation of the smaller expenditures

with a view to reduction and the curtailment of the total expenditure. In 1911-12 civil government cost the country $4,774,000; in 1914-15, $6,157,000, and we are asked to vote for next year $7,240,000, an increase of nearly 80 per cent in four years. The, fact that the .Estimates provide for a larger amount for the present fiscal year than was expended last year is an intimation that there is to be an increase in the Civil Service somewhere, either in numbers or by way of salaries. I think I may say without fear of successful contradiction that there cannot conceivably be anything to justify an increase in the cost of administration on account of civil government. There are many branches of the public service where the employees can have very little to do to-day. It is true that in one or two departments the number of employees has had to be increased. I assume that in the Militia Department a great number of clerks must have been added to the staffs since the beginning of the war. I can understand the necessity for that. I notice by a printed document which was distributed to the members of the House today that a great number of persons have been employed and are being employed by the War Purchasing Commission, numbering some 200. I suggest, and I think it is a fair suggestion, that the Government should have taken employees from these departments of the Government in which work has decreased and transferred them to those departments where additional work was created by the war. If 200 or 300 more people are employed by the Militia Department, if 200 persons are employed by the War Purchasing Commission, why could there not have been a transfer of civil servants from other branches to these particular departments, thus effecting a saving? The fact that civil government next year will likely cost over $7,000,000, as against something like $4,500,000 four and one-half years ago, is deserving of the investigation of Parliament and the consideration of the Government. I venture to say, even in a dogmatic fashion, that there can be no justification whatever for the whole of this increase. And we must remember that if in this way $1,000,000 could be saved, that would provide one-eighth of the total amount which the minister expects to receive from the Bill we are now considering. I say it is better to get a million dollars of revenue in that way than by taking it from the pockets of the people, and I know rMr. A. K. Maclean.]
that my hon. friend from Peterborough will agree with me.


John Hampden Burnham: Since my hon. friend
has referred to me, I think the statement that there is no justification for this increased expenditure certainly ought to be revised and ought not to go to the country.


Alexander Kenneth Maclean: I should not like to be understood as saying that there is no justification for any increase in any of the departments of the Government, but I repeat that I doufbt if there is any reason for that increase from $4,470,000 in 1912 to $7,240,000 in civil Government for the present year. It may he that my hon. friend may be able to justify some slight increase, but we will not occupy the time of Parliament this afternoon in discussing that. I was speaking in a general way.
Let us take the large expenditures in connection with immigration. This was discussed at length a few evenings ago, when the Minister of the Interior was in Supply. We find that the expenditures for 1914-15 were larger than ever before in the history o'f this country. The amounts which we are asked for the next fiscal year *are very substantial. Our im-
4 p.m. migration has fallen to a negligible quantity, and it is very doubtful indeed if we should even make any great effort at the present moment to secure immigration into this country. I think it is hardly fair to go to Great Britain and the European countries which are our Allies and there carry on an immigration propaganda.


John Hampden Burnham: Hear, hear.


Alexander Kenneth Maclean: Many things contribute to operate against a successful immigration campaign in the United States at the present moment. I do not say that we should abandon altogether our efforts to secure immigration, but I do say that we might very well pause and determine what will be our policy in respect to immigration before we again embark upon any vigorous policy in that regard. It is true, as has been said by some hon. gentlemen opposite, that the Immigration Branch has in its employ, in Europe, the United States, and elsewhere, a great number of officials who have been long engaged in this work, and that it would be unfair and unjust to deprive them of their employment. My answer to that is that their services could be transferred from that branch of the public service to another department of the service.

that other work could .be found for them to the advantage of the country. Closely related to immigration, there is the quarantine service, and while the expense in that connection is, relatively speaking, small, still it is quite a substantial amount. One would think that having no immigration or practically none, we would see some diminution in the cost of administering the quarantine branch, particularly at the eastern ports. During the last calendar year, there were landed at Halifax only 1,425 immigrants; at St. John, 1,697; at Quebec, 6,168; at Vancouver, 118; and at Victoria, 477; practically none. One would imagine that with this small immigration the expenditures of the quarantine branch might be very well reduced to a small amount. Surely the services of most of the medical men employed as quarantine officers at the several ports might be dispensed with. They are usually professional gentlemen who have private practices, and they could be very easily removed without causing any hardship. For instance, I find in the port of Halifax this condition, that there are there three medical men employed at yearly salaries of $1,200, $1,800 and $1,200 respectively. That is $4,200 altogether. During last year only 1,425 immigrants landed there. Two of these medical gentlemen have enlisted with pay. 1 do not see why medical gentlemen employed in the quarantine branch, if they enlist, should receive their salaries. I cannot understand that. It is surely unfair. They were only employed for a few months in the year at the most, and I say it is unfair to pay them their usual salaries. It is absolutely unfair, and there is no justification for it whatever. I find that one other medical officer has enlisted without pay. but another man has been appointed in his place. Among the quarantine officers at Quebec there are a great number of highly paid men and quite a number who are paid small amounts. They are employed for only a few months in the year. Some of them are medical gentlemen ' and have large practices, and I submit it is most objectionable that all these men should be continued in employment when there is practically no work for them to perform. These emjployees occupy quite a different position from the ordinary civil servant.


Mr. SCHAFFNER:: Do they receive both salaries?


Alexander Kenneth Maclean: Those who have enlisted? Apparently yes.


Frederick Laurence Schaffner: That is not the custom in the Civil Service.


Alexander Kenneth Maclean: I think it is true in that case. That is a relatively small matter, but a very great saving could be affected; it perhaps would amount to $100,000 anyway, and I say that that is worth saving. During the present and last session the Minister of Finance, in explaining his revenue taxation measures, stated that from this particular source, or that paritcular source, he expected to obtain $100,000 in revenue. I emphasize this point particularly for the purpose of pointing out to hon. gentlemen that a very great saving could be affected in our expenditures if some attention were paid to the smaller amounts. This is perhaps a small matter, but I refer to it more to illustrate the possibility of a total saving through various branches of the public service, if we lopped off $100,000 here, and $200,000 there, and a million dollars somewhere else.
Take the Indian Branch of the Department of the Interior. The amount there expended is quite substantial. In 1911-12 it was $1,756,000. In 1914, it had grown to $2,400,000, an increase of $700,000, without absolutely any justification whatever. I referred to this particular matter in discussing the Budget at the last session of Parliament. I think I gave to the House very cogent reasons why the Government, in increasing their expenditures in respect to this department, were open to censure, and I venture to say that I was not successfully answered. The expenditures for this branch for 1916-17 are estimated to amount to $1,965,000. There is no reason in the world why at the present moment, in connection with the Indian expenditures, we should not get back to the expenditures of 1910 and 1911. We would affect thereby a very considerable saving. There has been a very notable increase in my own province in connection with this branch.' The year before last a man was appointed as inspector who was not needed. The man who was then inspector had not enough to do, and did not want an assistant, and the Government could not even tell us who was responsible for the appointment. The Minister of the Interior threw the burden upon the Prime Minister and the Prime Minister disclaimed any knowledge; and the result was that not a single member of the Government would assume responsibility for this appointment. I venture to say that the person thus appointed as

inspector has not performed twenty-four hours' real service since his appointment. There is no reason why he should be retained; there was no reason why he should have been appointed. In my own province there are scores of doctors employed by the Interior Department as medical attendants for the Indians who cannot perform .any real service, and who were never expected to do so. Even if we cannot agree upon the desirability of dismissing them entirely and abolishing the office, surely hon. gentlemen opposite will agree with me that for the moment we should temporarily dispense with the services of most of them, *and thus effect a very considerable saving in this particular service.
Let me repeat that, in the Indian branch of the Department of the Interior, we could effect reductions in expenditures which would equal one-ninth or one-tenth of the total amount which the minister estimates to recover from the tax upon business profits. .


Richard Blain: I heard the hon. gentleman say that two medical officers employed by the Government in the city of Halifax had enlisted, and that they were receiving double pay. I wish to make the statement that that is incorrect. A moment ago I telephones to the Immigration Commissioner, and he says they do not receive double pay.


Alexander Kenneth Maclean: Why ask the commissioner? You might as well ask my hon.' friend from Richmond (Mr. Kyte.)


Richard Blain: He is in control.


Alexander Kenneth Maclean: He has nothing to do with it at all.


Richard Blain: I make the statement on the authority of the commissioner, and I am quite sure he is correct.


Mr. KYTE:: Early in the session I moved for a return showing the employees of the Government who had enlisted, and who were drawing double salary, and if that return had bean placed on the Table it might not have been necessary to speculate about whether they are receiving double pay or not.


Richard Blain: There would be no need for speculation if my hon. friend would try to get at the facts.


George William Kyte: Why is the information not on the Table?


Alexander Kenneth Maclean: I have no desire whatever to misrepresent the facts. I spoke from information afforded to me in a return for which I moved, and which I received just a few days .ago. I find that Edgar Douglas was appointed Immigration medical officer at Halifax on December 1, 1911, at a salary of $1,200, and under the heading, " When service ceased," I find " enlisted with pay." I find the same in respect to Dr. F. A. R. Gow, " enlisted with pay."


Richard Blain: When did they enlist?
.Mr. MACLEAN: A few months ago, six months ago. Then I find that another medical officer, John Rankin, was appointed December 15, 1913, at a salary of $1,200, " enlisted without pay." But I find that after he enlisted without pay, another person was appointed on January 3, 1916, at $1,200 as a substitute for Dr. Rankin. Surely my bon. friend did not expect that medical officers should enlist and draw their pay, and still get a paid substitute in their .place.


Richard Blain: I do not wish to interrupt the hon. gentleman, but as I understand it, there is no department in the Government that 'is now paying salary to men who have enlisted and who are drawing militia pay as well.


Alexander Kenneth Maclean: That is not correct.


Richard Blain: I think it is correct; I think there is no doubt about it.


Wilfrid Laurier: My hon. friend should blame the Government for giving a false return.


Alexander Kenneth Maclean: I am going to place myself in the strong position of relying on this return.
IMr. BLAIN: It is an old return; there has been a change since.
(Mr. MACLEAN: This return was presented to me just a few days ago.- If there has been any change recently, well and good.
Mr. BiLAEN: As I understand it, the change took place last November. Prior to last November, double salary was paid in many cases, perhaps in all cases; but my information is, and I am speaking in the hearing of ministers of the Crown, that since last November, no employee has received double pay. ,


Mr. CASGRAIN:: That is right.


Alexander Kenneth Maclean: I said a moment ago that I preferred to take the statement furnished to me by the Government's return to the House in answer to a motion of mine.


Richard Blain: I would expect my hon. friend to be up to date.
IMr. ROGERS: There is nothing in the return to show that they were getting double pay.


Mr. PROULX:: Just the other day the Minister of Justice stated that the inspector of penitentiaries at Kingston was getting his salary as inspector, and also his salary as a militia officer.


Mr. LEMIEUX:: That is Inspector
Hughes?


Richard Blain: That was before the change made in November.


Rodolphe Lemieux: He receives double pay anyway.


Alexander Kenneth Maclean: At any rate it is quite clear that the immigration officers at several ports in Eastern Canada have for some time at least received departmental- salaries, though practically without departmental employment. But supposing the position taken by my hon. friend from Peel is correct, and that it has been correct for some months past, I say that the fact that we had no immigration should have impelled the Government to revise their departmental policies in respect to employees at these ports where immigrants enter the country, and to reduce their staffs of immigrant medical officers, and abolish mainy offices, retaining just the number of men that were actually necessary.
Just a word or two about some of the other departments. In the Department of Marine and Fisheries I notice there has been steady and substantial increases in the expenditures. I have not recently investigated them in detail, and I will not say that some of them are not justified, but when I find that the expenditures have , grown from $843,000 iin 1911-12 to $1,455,000 last year I ask myself the question: Is that great increase justified; is it necessary for the efficiency of the department? Mind you, Mfr. Speaker, this is exclusive of the expenditures made specially for the Naval Service Branch. When hon. gentlemen opposite were sitting on this side I remember that frequently they occupied the time of the House in condemning the employment of so great a number of fishery officers in the several provinces. We were told that in my province there were hundreds of officers who were actually performing mo .service, and that their connection with the department should cease. There is no particular energy being displayed in the administration of the Fisheries Department at the present moment that I know of. There has been no new programme inaugurated requiring the labours of additional employees. Would not this be a good time for hon. gentlemen opposite to carry out some of the suggestions which they made a few years ago? I think it is quite true that perhaps in each province they could very well dispense with the services of 100 or 200 officials, if not absolutely for all time to come, then temporarily. We upon this side of the House feel that if during the period of the war we oan induce the Government to make any considerable saving in public expenditure we will have accomplished something, and we will feel that we have properly discharged our duties as an Opposition to the country. I venture to suggest to the Minister of Finance and the Government that if they will make a detailed investigation of the expenditures of that particular department, a saving of some hundreds of thousands of dollars might be made without doing any injury to the efficiency of the department or to any interest in the e >untry at large.
During the past week or more, or ever since the hon. Postmaster General made his statement, we have had more or less of a running discussion in connection with the expenditures of his department. I wish, however, to say a few words in addition to what has already been said by other hon. gentlemen on this side of the House. Let me give to the House the figures in respect to the expenditures, because I know figures rapidly, pass away from the minds of hon. gentlemen. Since this Government came into power the expenditures in the Post Office Department have been as follows:
1911-12	$ 9,172,000
1918-14	 12,956,000
1914-15	 15,950,000
1916-17 (estimated) . . ..	17,486,000
So that we have an increase of nearly $8,000,000 since 1911-12. That is a most startling increase. The obligation rests upon hon. gentlemen opposite to give very cogent reasons, much clearer reasons than they have given yet, for that tremendous increase in a period of five years. I do not deny the proposition that we must expect increases in some of the great departments of the public service. In many cases it is



a good indication, and in itself it affords no ground upon which one may condemn a Government or a department. But we have expected from the Postmaster General some more valid reason for this great increase than we have received from that hon. gentleman up to the present time. What I fear is that hon. gentlemen opposite are reverting to their natural tendency to deficits in that particular branch of the service. Hon. gentlemen opposite have a record behind them in respect to this department. I find that during the period when they were in power, prior to 1890, it usually cost this country 30 per cent more than the total revenue to administer the department. I find that some time after the late Administration came into office, from 1901 or 1902 down, that department was administered at a cost of about 90 per cent of the total revenue, and that it had a surplus of about 10 per cent. Some hon. gentlemen opposite took the position a few days ago that this branch of the public service should not be able to boast a surplus, and that all the revenue from this source should always be expended for the advantage of the public. There is something to say in favour of that, but that is not the position in which we find ourselves. We do not find that the revenue has merely been expended, but we find a tremendous deficit. The hon. member for Frontenac (Mr. Edwards) advanced that argument some two or three weeks ago, but if that were the position to-day the Opposition would not be upon such strong ground as that which we occupy. It is not a question of the Government not having a surplus, but it is a question of a deficit last year of $3,000,000, a deficit tips year of perhaps $5,000,000, and, if they keep on at the same ratio, a deficit next year of probably $6,000,000 or $7,000,000. I submit that it is a good business proposition that there should be some parity between income and outgo in connection with the administration of any branch of the public service. That is the standard which anybody would advise for the conduct of any private business, and, in so far as is possible, that is the standard which should be adopted by the Government in respect to the expenditures of any particular department. The Postmaster General sought to justify this increase in his expenditure by the reason that he was called upon to engage in extraordinary expenditures in connection with rural mail delivery, in connection with additional railway mail subsdies, and in connection with increased pay to  -
the civil servants of his department According to the figures he gave, this would account for an annual increase of about $1,250,000. But we find that the increased expenditure of 1915 over 1914 was just about $3,000,000; so the $1,250,000 does not account for the full additional expenditure. He says further that he was obliged to make unusually large expenditures because of increased business in places like Montreal, Toronto and Quebec. I do not know what business he referred to as having increased. It was certainly not the business of the Post Office Department, because the revenues did not increase very substantially at any of these places. For instance, the gross revenue at Quebec in 1914 was $184,362, and in 1916,	$213,563; at Montreal, in 1914,
$1,625,000, and in 1915, $1,590,000; at Toronto, in 1915, $2,703,000, and in 1915, $2,905,000. These figures certainly do not indicate any increase worth speaking of at these important points. Surely we can have some slight increases in the revenues of a department without necessitating an increase in the expenditure. The increase in the gross revenue at these three points was very small indeed; so this reason given by the Postmaster General the other night that the increased expenditure was due to increased business at certain points does not hold good. He has signally failed to account for the alarming deficit -in his department. It is all very well to say that expenditures have increased; they are expected to increase in the Post Office Department, I suppose; but let us not forget that the revenues have also increased very substantially. The Postmaster General is looking merely at one side of the account. He would have us believe that the revenue was constant and that he had to meet unexpected and unusual expenditures which was responsible for a deficit of $3,000,000 last year, and probably $5,000,000 this year. My hon. friend from Oxford (Mr. Nesbitt) suggests that a gTeat deal of the revenue secured by the Department during the past year, under a strict accounting, should not be credited to the Post Office Department. However, I do not propose to discuss that particular point this afternoon.
I made the statement some time ago that the system of letting our mail contracts by tender had been practically abandoned by this Government. The Postmaster General did not agree with that statement. He said that the department had strictly adhered to tender and contract, and he thought it a

splendid system. I repeat to-day what I said on two occasions in the past, that the system of tender and contract has been practically abandoned by the present Postmaster General, and more particularly by his predecessor, until now nobody in the country has any confidence whatever in the integrity of the system. I know numbers of people who ordinarily would tender for mail contracts, but who absolutely refuse to do so to-day; and I say the practice of the Government justifies the course of such people. I do not know whether I can at once put my hands upon some evidence I had on this point, but I might refeT to a question put to the Government this session by the hon. member for Cape Breton (Mr. Carroll), and answered by Mt. Cas-grain, as follows:
Q. Who has the contract for carrying the mail between the tram car and the post office at Glace Bay?-A. William Grade.
Q. What remuneration does he receive?-A. $345 per annum.
Q. What was the amount of his tender; who were the other tenderers, and the respective amount of their tenders?-A. Tenders were received from Daniel McIntosh at $350, and Joseph Devoe at $400. Mr. Devoe reduced his tender to $345, and the contract was awarded to him. On account of the enlistment of his son, he withdrew his offer, and the contract was given to William Gracie at the same price.
I have in mind four different cases of just that kind this session, the Government giving the information in reply to questions. One was in answer to the hon. member for Bonaventure (Mr. Marcil), who cited a similar case the other day, and so did the hon. member for Richmond (Mr. Kyte) a few days ago; an answer given to a question by the late Mr. Law was of the same nature-all indicating that the department absolutely disregarded the system of tender and contract. I say the Poet-master General- hae no right to award contracts to persons who are not the lowest tenderers. The Postmaster General has no right to allow a man -whose tender is higher than the lowest to put in a second tender which is lower than the lowest previously in. But it has been done in hundreds and hundreds of cases since 1911, when the present Administration came into power. It was done in scores of cases in the calendar year 1915. I -have personal knowledge of a number of such cases.
t	_


Mr. GRAHAM:: Did it ever occur when the late Government was in power?


Alexander Kenneth Maclean: Never in my experience as a supporter of the late Administration
164J
did I ask that such a thing be done. It may have been done, but if it was, it was just as reprehensible then as it is now. This country has never had a Postmaster General who disregarded the system of ten-% der and contract to the extent the predecessor of the present Postmaster General did; and I suppose the -staff of the department has been so badly trained in recent years that it would be difficult for them now to revert to more correct methods. I do not know how the evil is to be corrected. One method might be for the Postmaster General to resign and let some one else come in, or he might give the matter his serious and earnest consideration, and see that the practice of tender and contract was not departed from hereafter. I was disappointed when the Postmaster General justified, a little while ago, the awarding of a contract to a person whose tender -was not the lowest. That is not what I expected from a good public administrator. Had he not attempted to justify it, I should have thought that he was not responsible for this very improper and reprehensible practice; but it was quite clear that he sought to justify it, and he even looked around for applause, and received some from hon. gentlemen sitting around him. So I must believe that the Postmaster General is a party to this improper practice.


Frederick Laurence Schaffner: I think the hon.
member said that the tender was $345 per yeaT. Does he know the distance and how many times a day the mail has to be delivered from the tramway?


Alexander Kenneth Maclean: I do not think that is important.


Frederick Laurence Schaffner: It is very important.


Alexander Kenneth Maclean: There are only two
things to do: you must either respect the system of tender or disregard it. If you frequently disregard it, you might as well abandon it altogether.


Frederick Laurence Schaffner: I wanted to know if the mail contractors are paid a$ much in my county as they are in my hon. friend's county.


Alexander Kenneth Maclean: I agree with my hon.
friend that there are many instances whete mail contractors do not receive a sufficient amount.


Frederick Laurence Schaffner: I think so too.


Alexander Kenneth Maclean: But whom are they to
blame but themselves? What system can you devise for making mail contracts other than the system of tender3 Would you leave the question to patronage or to the department entirely? If so, T venture to say that instead of the Post Office Department costing $15,000,000 or $11,000,000 yearly, it would cost $35,000,000.


Mr. EDWARDS:: Supposing a contractor had given good service and yet the Post Office Department advertised for tenders and the original contractor's tender was, say, $5 higher than the lowest tender. Does my hon. friend think that there might not be cases like that where one would be justified in allowing the original contractor to lower his price by that $5?


Alexander Kenneth Maclean: I will answer my hon. friend in this way. In the first place, the supposititious case which he has put is not on all fours with the four cases which I had in mind and which are referred to in Hansard of this session, nor is it like the case which I have specifically referred to. In every mail contract there is always a provision enabling the department to renew it. When a mail service has once been put up for tender, there is nothing left for the department to do but submit to the result of the tenders. It might well happen in many cases that, if the retiring contractor's price was but a few dollars above the lowest tender, the department might be justified in awarding the contract to him for some reason such as the unreliability of the lowest tenderer or something like that. The only security, however, that this country has for a proper administration of the Post' Office Department is the system of tender. If you abandon that system, in a few years you will have the Post Office expenditure consuming half the revenues of the country. In that respect, the Post Office Department is entirely different from the other departments.


Mr. WEBSTER:: Would you advise the
Postmaster General to accept the lowest tenders in all cases?


Alexander Kenneth Maclean: The law practically
compels him to do so.


John Webster: There is a rural mail
route in my constituency for which there are three tenders, one, $1,197; another, $1,350; and the third, $1,500.


Frederick Laurence Schaffner: I would not give the contract to any of them.
[Mr. Sehaffner.J


John Webster: What would you do in a case of that kind?


Alexander Kenneth Maclean: That is not a very difficult case;


John Webster: The maximum amount
in Ontario is $30 per mile. These tenders are away too high.


Alexander Kenneth Maclean: There is not a great
deal of spread between - the highest and lowest tender in that case, and if the lowest tenderer can give the department the security required by the statute, why should he not receive the contract?


John Webster: But in this case you are going to pay him more than the business is actually worth, because he is a friend of yours.


Alexander Kenneth Maclean: Do I understand my
hon. friend to say that the lowest tender is too high?


John Webster: Yes.


Alexander Kenneth Maclean: In that case I would noi award the contract at all. It frequently happens, and properly so, that the department declines to give a contract to the lowest tenderer on the ground that the amount' of the tender is excessive. There may have been collusion, as there frequently is, and the minister has in his department some officers who are employed in that work practically all the time.


John Webster: You speak of collusion. There is no collusion. One tenderer is a Conservative and the other two are Liberals, and the two Liberals are the two high tenderers.


Alexander Kenneth Maclean: I can hardly apprehend the point that my hon. friend is making, and I do not think he apprehends my argument. During the last two sessions we have repeatedly urged upon the Government the necessity of the greatest possible reduction in public expenditures. We have been doing so because of the unusual conditions which surround us and by reason of our financial necessities. We are not satisfied with the response which we have secured from the Government up to date in regard to our many demands in this re- ' spect. We feel that they have not paid the proper heed to our requests for greater economy in public expenditures.


Mir. LALOR:: Where do you suggest that the Postmaster General should start in to economize by reducing expenditure? You have given a general statement; it would

be interesting to know what suggestions you would make to economizing.


Alexander Kenneth Maclean: It is very difficult for me to answer my hon. friend's question directly. It would require a great deal ol time and study, but I want to point this out to him, that the administration of the Post Office Department has apparently been debauched during the last four or five years. I have not the slightest hesitation in making an estimate of the losses of the department on account of the disregard of the system of tender. I venture to say that the department has added to its expenditures by nearly $1,000,000 just by reason of that.


Joseph Philippe Baby Casgrain: You are absolutely
wrong.


Alexander Kenneth Maclean: There are many districts in my province in which the Post Office Department can hardly get persons to tender. How can you expect them to tender when tenders are so diregarded?


Mr. BOWMAN:: Do I understand the hon. gentleman to say that that system prevails throughout the Dominion? '


Alexander Kenneth Maclean: I know it does in my province. I noticed, in looking over Hansard a few days ago, a case similar to the one I referred to a moment ago, contained in the answer to a question asked by the hon. member for Medicine Hat (Mr. Buchanan). I think, therefore, it is a fair assumption that, if you find a department engaging a certain form of administration in one province, it will be indulging in the same practice in other provinces. I have no doubt that the same practice prevails in other provinces.


Joseph Philippe Baby Casgrain: Does my hon. friend know that throughout the country the general complaint is that tenders for carrying the mails are let at starvation prices?


Alexander Kenneth Maclean: The hon. gentleman said the same thing a few days ago and he also boasted of our system of calling for tenders for mail contracts. It may be quite true that many mail contractors are performing services at unprofitable figures, but they are responsible for that condition.


Francis Ramsey Lalor: Can my hon. friend give any cases in which the tenders that were accepted were too high, the country thereby losing money?


Alexander Kenneth Maclean: The department is bound to lose money when it disregards the tender system.


Joseph Philippe Baby Casgrain: Does my hon. friend mean to say that the department would give the contract to the highest tenderer? I may tell him that that has never happened since I have been Postmaster General, and I do not think it happened before, either.


Alexander Kenneth Maclean: I do not think that I made the statement that the hon. member did give contracts to the highest tenderers. I was answering a question put to me by the hon. member for Haldim-and as to whether the country was losing anything through a contract being awarded not to the lowest tenderer but to one of the higher tenderers. I say that the department would* lose the difference between the amount of the contract and the amount submitted by the lowest tenderer. The statute requires the Post Office Department to solicit tenderers. In that respect there is a statutory obligation on the part of the Postmaster General. That this has not been done is an unfortunate thing for the department and for the country.


James Bowman: So far as my riding is concerned, the system of calling for tenders has been absolutely carried out in every case. In my riding 50 per cent of the mail contractors are Liberals; the other 50 per cent are Conservatives.
M*r. MACLEAN: I am very glad to hear it. No doubt my hon. friend approves of the .conduct of the Post Office Department in respect to mail contracts so far as his own constituency is concerned. That he is quite satisfied indicates that he does not meddle with the affairs of the department. I trust that he will use his good offices with the Postmaster General with a view to seeing that the same policy is established with respect to other constituencies.


Francis Ramsey Lalor: That is the policy in every constituency.


Mr. BEST:: The hon. member for Halifax is right in respect of some cases. I plead guilty to asking that the lowest tender be disregarded in one case where the lowest tender was $1,175-the (distance was 24 miles. The contract was let for $575, and the remuneration is considered to be good.. I think the Government was justified in doing that. The hon. member is justified

in stating that expenses have increased very much. In the county of Dufferin the post office expenses have increased by ' over $17,000 by reason of the establishment of rural mail deliveries. I think that if there is any class of people in Canada today who ought to have satisfactory accommodation in this respect it is the farming community. I do not think there is a member on the opposite side who will disagree with that view.


Alexander Kenneth Maclean: The hon. gentleman who has just taken his seat has referred to a case which I was not discussing. If the amount of the lowest tender ie excessive, certainly the tender should he disregarded. It was the intention of the Fathers of Confederation in framing the first Post Office Act that the Post Office Department should be administered practically by statute. Its ramifications were so many that it was thought that for the safety of the department and the country, a system of tendering should be imposed upon the department by law. The less interference in connection with mail contracts that there is on the part of members of Parliament, the better, I think, it is for themselves and for the department. If one goes through many fit the files of the Post Office Department relating to mail contracts he will find that members of Parliament interested in intending mail contractors improperly use their influence with results which are not favourable to the department, and which are financially disastrous to the country.


John Hampden Burnham: Then why is the hon.
gentleman interfering?


George William Kyte: We know that the Post Office Department will not award a contract until they have first consulted either the Conservative member for the county or the defeated candidate in the last election.


Francis Ramsey Lalor: Was that done when the
Liberal party was in power?


George William Kyte: Speaking for my own constituency, I say no. I was never consulted by the Post Office Department with regard to any tender after it had been submitted to the department.


Alexander Kenneth Maclean: My purpose in referring to expenditures was two fold: first to point out to the House that there are many instances in which, without injuring the efficiency of public services, very substantial reductions might well be effected. Secondly,

we should not look only to what are usually referred to as the larger and more important expenditures in the matter of effecting reductions. If the minister of the several departments would investigate in detail the many small expenditures that might be reduced or temporarily abandoned they would in the aggregate effect such economies as would reduce very substantially our total expenditures. It is only too true that additional revenues must be secured, (and the only way to secure additional revenue is by imposing fresh taxation on the people. But when we are imposing fresh taxation for war purposes it is our bounden obligation to see that at this critical period, our departmental expenses be reduced to the mimimum amount. It was for the purpose of impressing these facts on the Government that I have ventured to occupy the time of the House at greater length than I had anticipated when I rose this afternoon.


Richard Blain: I am sure that my hon.
friend is anxious that the facts should go upsn record. On March 23, page 2181 of Hansard, when the Immigration Estimates were under discussion, the hon. member for St. John made this statement in reference to the Order in Council that we have been speaking about:	"I found the Order in
Council passed in November was published in the newspapers." In several places on the pages of Hansard on this occasion the statement was made that the Order


Alexander Kenneth Maclean: I do not think that that would apply to the class of officials that I was discussing.


Richard Blain: This statement was made in the discussion. It was made by the Minister of the Interior himself, and subsequently by the hon. member for St. John, who said that he had looked it up and found the fact to be as stated. This moment I spoke to the Minister of the Interior on the matter and he said that the Order in Council was passed on the first day of November, just five months ago, and that since that time, in every department of the service, both inside and outside, no double pay has been given by the Government. It would have been only fair if my hon. friend had obtained that information . before he made the statement.	'


Mr. MACDONALD:: Did my hon. friend ask the minister whether or not he had told the House, when discussing the Estimates of the Immigration Department, that one of

the reasons why he had to maintain these figures at such a high point was the fact that money was paid to these officials who were away on active service?


Richard Blain: I am making the statement that if my hon. friend was in the House, and if he would look at Hansard, he would see that the minister made the statement that the Order in Council was amended on the 1st of November, 1915, so that no man who enlisted after that date would receive double pay. The hon. member for St. John (Mr. Pugsley) corroborated the statement, saying that he had looked it up and found it to be correct, and had also seen it published in the newspapers.


Frederick Laurence Schaffner: I thoroughly agree with what has been said by the hon. member for South Bruce (Mr. Truax), that it is high time that the delivery of mails was extended beyond cities and towns to the farmers in the rural districts. I have been able to establish in my constituency only about three rural mail routes in all these years, and the reason I have such difficulty in establishing them is that in every case tenders are called for, and no person can be got to do the work for what the Government is willing to pay. There is the greatest difficulty in getting the mail carried from the trains to the post offices in various towns, because of the small sums which the Government is willing to allow. In my constituency, since this Government came into power, no contracts have been given for carrying the mails between the post offices and stations, or anywhere else, except t* the lowest tenderer.


Mr. W. H. BENNETT:: As a matter ol fact, any one who looks at the record will find-in this I am speaking of my own riding-that the courier service is generally performed by retired farmers or men who have a little money and own horses. They tender at a very low price. No man ever makes a living out of this service, or professed to.


Mr. GASGRAIN:: Hear, hear.


William Humphrey Bennett: At Penetanguishene,
where the post office is fully half a mile from the station, the service, which is four trips a day, is performed for 53 cents a day. Similar cases will be found all through. In the first place, all applicants for these contracts must tender against the hotels in the town, whose bus drivers can throw the mail on the bus and carry it to the post office with really no extra trouble. In Orillia, in my constituency, the courier makes eight
trips a day, and he has to start in about six o'clock and be on duty until well on to midnight, for which he receives $1.66 per day. When my hon. friend from Halifax talks about exorbitant figures 5 p.m. for courier services and men getting contracts without competition, he does not talk within the record.


Alexander Kenneth Maclean: I was not speaking about exorbitant figures, but simply pleading to have the system of tenders respected.


William Humphrey Bennett: I know of no case in the last three years in my riding in which the contract has not been 'given to the lowest tenderer, whether he be a Liberal or a Conservative.


Mr. HUGHES:: I think the most serious part of the charge of the hon. member for Halifax was that when three or four men tendered the contract was not given to the lowest tenderer, but that the highest or some favourite was communicated with and asked to reduce his tender to a little below that of the lowest tenderer, and the contract was then given to him.


John Hampden Burnham: Where was that?


James Joseph Hughes: That was in the case mentioned at Glace Bay and in other cases. As a matter of fact, I know that this has been done in several cases in my own province, and it has become so common that a great many people think it is of no use to tender, because if they do not stand in well with the Conservative member or the defeated candidate, even if their tender is the lowest, they will not receive the contract.


Joseph Philippe Baby Casgrain: Can my hon. friend give one instance in his own constituency in which the mail contract is let for a price which is too high?


James Joseph Hughes: No, that is not the charge.


Joseph Philippe Baby Casgrain: Oh yes, it is.


James Joseph Hughes: The Postmaster General, just a few moments ago, stated that the mails were carried for a very low price, that in many instances the work was done for prices that were too low.


Joseph Philippe Baby Casgrain: Then where does the public interest suffer?


James Joseph Hughes: Well, the public interest suffers in this, where does the fairness come in when a special man is communicated with and asked to reduce his tender, when he is informed that he must bring it down to a certain figure before he will be

allowed to enter into a contract with the department? The system of tendering is done away with; it is simply a farce.


James Bowman: What proof has the hon. gentleman that the tenderer was communicated with?


James Joseph Hughes: He must have been communicated with.


Some hon. MEMBERS:: Oh, oh.


James Joseph Hughes: The Postmaster General will not deny that.


James Bowman: That is only an allegation made by yourself.


James Joseph Hughes: I know it as a matter of fact, and the hon. gentleman knows it, if he is qualified to give an opinion on this subject at all. The Postmaster General knows that it is done. How otherwise would the highest tenderer reduce his offer to a figure a little 'below that of the lowest tenderer unless he was communicated with and given the figures of the lowest man? There is no other way in which it could be done.


Mr. DEPUTY SPEAKER:: ''Might I remind the House that the motion is for the second reading of Bill No. 74, an Act to levy a Tax on Business Profits.


Edward Mortimer Macdonald: The discussion has drifted off into matters of detail, but it was understood, as the hon. member for Halifax has said, that the general condition of the country might be reviewed at this time on this measure, which, after all, is a measure for raising revenue for the Government. First, let me say that the evidence as to gentlemen who are not members of this House being continually consulted by the Post Office Department as to whether contracts should be awarded to certain persons, is contained in numerous returns which have been brought down to the House by the Postmaster General; and I may say for the information of my hon. friend that I shall be glad to submit to him several returns brought down by the Postmaster General relating to post office matters in my constituency, from which it can be seen that the practice of the department is to [DOT]continually consult some gentlemen in that constituency for advice in regard to that subject. One would think, to hear hon. gentlemen, particularly the hon. memoer for Dufferim (Mr. Best) discussing this question, that because it costs this country $17,000 more to carry the mails in his county

than it used to do, that was a very meritorious thing in this year of grace, 1916.
The Minister of Finance, in his Budget speech of this, year, reiterated the absolute necessity for economy in regard to every phase of public administration in this country, and the necessity of dispensing with all expenditures that might not be deemed absolutely essential. I submit that where you have in one constituency an increase of $17,000 for the carrying of mails, you have a case, not of economy, but of reckless disregard of the principle which the Minister of Finance declares to be absolutely essential.


Richard Blain: Was the increase all in one year?


Edward Mortimer Macdonald: That was the statement given by the hon. member for Dufferin; I am merely quoting what he said.


James Bowman: The increase alluded to was in connection with rural mails.


Edward Mortimer Macdonald: I know that.


James Bowman: The only way in which it could be reduced would be to withdraw rural mail delivery from the farmers of the country.


Edward Mortimer Macdonald: My hon. friend need not have any misunderstanding about my position. I db not propose to withdraw rural mail delivery. The Minister of Finance is right when he says that we must economize, and my hon. friend ;(Mir. Bowman) need not make appeals to class, or to the farmers particularly. He need not allege that it is .a great thing to go on being a 'spendthrift in providing rural mail delivery, and that because the Government are spendthrifts in increasing mail routes we should not S'ay anything about it.


James Bowman: I may say that the reason for the increase was created before the war, that is, the rural mail delivery system was introduced before the war. That being so, how could you possibly reduce that expenditure without withdrawing rural mails from the people of the country?


Edward Mortimer Macdonald: I am not speaking about withdrawing anything that existed before the war. My hon. friend admits that if the increase of rural mails means extravagance, then it is something entirely different from economy. The situation is this: My bon. friend thinks that the Min-

ister of Finance should not economize in regard to rural mails 'but should be a spendthrift.


James Bowman: Certainly not, but 1 think that rural mail should not be withdrawn.


Edward Mortimer Macdonald: My hon. friend can discuss this when I get through. He asked me a question, and I stated my position. He says that, because rural mails were instituted before the war began, we should not take them away. I do not propose to>
withdraw them, but I say to the Minister of Finance that there is no use in talking about economizing in this or that department, if he is going to permit the Postmaster General and his department, whether in regard to rural mails, or in regard to anything else, to abnormally increase the expenditure. That is not economy. Of what use is it for the Minister of Finance to say:
From this viewpoint it is our true policy to augment our financial strength by multiplying our productive exertions, and by exercising a rigid economy which reduces to the minimum all expenditures upon luxuries and non-essentials.
I care not in what department it may ibe; you can make a specious argument about the desirability of this improvement, or of that, which on account of the war has become a luxury, but when you make that argument you are running counter to the views of the Minister of Finance, who declared that rigid economy is absolutely needed to-day.


Joseph Philippe Baby Casgrain: Would it be the policy of my hon. friend not to establish any rural mails at all during the wax?
(Mr. MACDONALD: If the financial position of this country is, as I understand it to be, and as the Minister of Finance says it is, then the establishment of new rural mail routes in this country, having become a luxury, should he suspended until this country returns to its normal condition. The Minister of Finance will not take the responsibility of saying that my position in that regard is not correct.
What is the position of my hon. friend in regard to this matter? The Minister of Public Works says, " hear, hear." Probably he would do in regard to those Estimates,-which the Minister of Finance is not going to spend, which have only been put in to bedooked at, or spent only in cases of strictest necessity,-what he did
on a previous occasion where an estimate for a post office was put in before the war and left in the Estimates since the next year, and some one having whispered to the Minister of Public Works that it would be desirable to buy a site as a matter of political importance and necessity, he last year, when this country was struggling with the necessities of war, struggling with the problems which are today looming up more distinctly on the horizon, to please political friends, proceeded to buy the site for a new post office building, so as

Mr, ROGERS: If I remember the case rightly, it was that expropriation proceedings had started before the war in connection with the site, and they were carried out.


Edward Mortimer Macdonald: people to-day? For the first time, direct taxation has been imposed upon the Canadian people within the last year. For the first time the tax-gatherer has gone round, and business people and others have been asked to contribute immediately and directly from their revenues to the finances of the country. In order to provide for the extravagance, which my hon. friend from Halifax (Mr. Maclean) pointed out, the Postmaster General proceeded to appropriate the proceeds of the sale of war stamps sold through his department. I submit to the Minister of Finance that, in regard to that matter, he should provide that the sale of war stamps be through the Inland Revenue Department. Then we would have an opportunity of ascertaining just how much money was received from that source, and how much taxation the people were paying directly in that way on account of the waT. My hon. friend the Postmaster General takes all the money derived from the sale of these extra stamps, includes it in his general receipts, and nobody can. tell how much has been paid; it is lost track of. If my hon. friend had done as he ought to have done, if he had provided for the sale of these war-tax stamps through the Inland Revenue Department, just as he provided for the sale of those other stamps from which the country gets revenue, for inland revenue and excise purposes, the country would know where the tax was coming from, would be in a position to trace it and would be able to ascertain whether is was being properly applied. Instead of that it is absorbed by the Postmaster General and it is absolutely lost in so far as its original purpose to help the w;ar expenditure is concerned,
This country stands face to face with four great problems. First, there is this tremendous expenditure that is rendered necessary by the war and as to the necessity of which we are all agreed. The Minister of Finance will be bound to agree with my proposition to him, that in regard to the expenditures which are made for the war, the most careful scrutiny should be exercised. We have just finished debating a problem in this House regarding that phase of the subject. What is the use of my hon. friend urging a "rigid economy which reduces to the minimum all expenditures " unless the greatest care is exercised in regard to the. honest expenditure of money for war purposes?
'Then we have a railway problem in this country. As I said a few moments ago, 
we hear rumours in and about the House of Commons of the Government coming to this Parliament before it prorogues and asking us to assist some of the great transcontinental railways. The problem is a very serious one. Already the commitments of Canada in regard to the Canadian Northern railway are of the most onerous character. We have not up to this time seriously considered, as we ought to have done, what these commitments are, how they should be worked out and what has become of the guarantees which the Government has given in connection with that enterprise. There is in addition to that a rumour as to assistance to a railway in Quebec and as to assistance to the Grand Trunk Pacific. If my hon. friend the Minister of Finance proposes in this session to ask this country to make further commitments in regard to these enterprises, when our finances are subject to great stress, is it possible for him to declare that economy in post office expenditure is not essential in the interest of the country? It does seem to me that some hon. gentlemen opposite do not yet realize as they should that the financial position of Canada is of such a character that the words of the Minister of Finance must be respected. But the great trouble with the Minister of Finance in regard to this matter is that he does not convince either the House or the country of his sincerity when he preaches economy. With one hand we provide for a propaganda for economy' that is to be undertaken while he makes the announcement that he allows $20,000,000 to $25,000,000 to remain in the Estimates under these conditions :
Our Estimates contain numerous items hitherto adopted by Parliament, representing works with which it is not our intention to proceed during the period of the war. The policy adopted from its outbreak, which has given such excellents results to date, of proceeding only with works actually under contract, will continue to guide us.
If my hon. friend is sincere in that profession of economy, why does he keep these extravagant and unnecessary items in his Estimates? There is no use of any one starting out to assert the necessity of economy in his household if he has the money in his pocket and shows that he does not intend to economise, and notwithstanding the financial situation in which he may happen to be at this moment or at the outbreak of the war, starts into a line of absolutely reckless expenditure? That is what the Minister of Finance is doing. His

position is that having $20,000,000 or $25,000,000 in my Estimates here, I want the country to understand that although I am talking about economy, I can spend that money if I want to, because I have it in my power to spend it if I chose to do so; there is no restraint on my spending it if I desire to do so, and I ask you to give me the money and make it available for me to spend if 1 see fit-that is what the Minister of Finance says. Yet he asserts that he desires to be economical. When it is said that this $20,000,000 or $25,000,000 should be taken out of the Estimates, some hon. gentlemen say: Oh, well, you cannot tell whether the war will end within a few months. I want to ask the Minister of Finance-and I suppose he will be speaking on this subject before the discussion concludes-to be frank enough to tell us whether, if the war does end, he would venture to undertake the expenditure of any portion of that $20,000,300 or $25,000,000 before the end of this financial year? The Minister of Finance will not venture to take that position. The commitments of this country in regard to the war, and the possible commitments in regard to railways and other conditions in this country, the Finance Minister himself knows will never permit him, within this financial year to 'spend this $20,000,000 or $25,000,000 if he carries out that programme of economy which he lays down for himself and the people of Canada. If that is so, why does he put it there? Why is he not frank with the House and with the people? I am told that the Minister of Finance has announced that he is going to spend a large amount of money upon a newspaper propaganda in regard to economy. He might as well save every cent of that money in regard to this newspaper propaganda if he is going to leave that $20,000,000 or $25,000,000 in the Estimates, while on the one hand preaching economy and on the other having this money spent if political pressure compels him to do it. That is the situation. We have the war and we have the possible railway commitments. We have the financial situation which was exposed to the House by my hon. friend in his Budget, and which we discussed when that Budget was brought down in February. But what have we in addition to that? We have thrown upon the people of Canada at this time, in order that we might he prepared for our future, certain necessary requirements to which we must pay particular regard. We must do something to further our agricultural and mineral developments. In order that the financial equilibrium of
the country may be 'maintained, in order that when the war stress is over, when the world resumes its ordinary avocations and our people once more are engaged in their old employments, we must have lines of policy laid dbwn in reference to agricultural and mineral developments along which we can advance. But, the Minister of Finance comes along and strikes at the mining industry. He says that it is a matter for congratulation that he did not strike at the farmers and he thinks he should be applauded for that. But while he does that with one hand, he strikes at the mining industry with the other. He has introduced a Bill which, if it had passed in the form in which it was presented to the House, would have absolutely prevented, as the minister knows very well, any development of the mining industry in this country. It is true that my hon. friend has so amended the provisions of the Bill that he is going to take into consideration the ore in the mine; and he will, no doubt, congratulate the country upon the fact that 'by reason of these amendments, the mining industry will not be injured at all. That has been his attitude from the day he brought down the Budget; nobody was going to be hurt; only one or two men would he affected to any material degree. But I maintain that these proposals are a menace to every person, not only in this country, but elsewhere, who is interested in the mining industry. The Government, instead of frittering away the revenues of this country on the building of a wharf here, anc^ the construction of a 'building there, should, at a time like this, direct its 'expenditures along some definite line of the country's proper development, and in that way bring about results of the greatest possible importance to the country.
I have received a telegram from the Ross-land Board of Trade giving their views on this Bill, and I might take this opportunity of reading it to the House:
Rossland, B.C., March 29, 1916.
E. M. Macdonald, M.P.,
Ottawa.
At a meeting of the Rossland Board of Trade resolution was unanimously passed recommending- that the new war tax Bill he amended by taxing incomes over $2,000, and taxing personal property, and that the machinery of each province be used in the collection, thereby saving immense sums, as it was considered that this method was the most equitable; and failing in this, that the minimum capital affected he reduced to $25,000, and the spread between persons and corporations he changed from 3 to

2 per cent, and that the retroactive features apply only to those supplying war materials.
Jesse Kemp,
Secretary, Board of Trade,
Rossland.
The suggestion which these gentlemen make in regard to the retroactive feature seems to me a most reasonable one. If my bon. friend puts into effect the Budget which he has announced, and pushes it to the limit of the powers which are given to him in the Bill which he has submitted, and to which we are asked to give second reading, he will be doing the greatest possible injury by making these taxes retroactive in every case, whether it is a partnership, a firm, an individual, or a corporation. The Minister of Finance, in making these people contribute a percentage of the profits they have made in previous years, is appropriating money to which, according to all the laws of justice and fair play, he has no right.
The Roseland Board of Trade suggests that if the retroactive feature is to come into force, it should apply only to those supplying war materials. They give my hon. friend a reason why he should act in the one case and not in the other. For the first time in the history of this country we have a Minister of Finance interfering with the mineral possibilities of this country, and imposing a tax on an industry which should not be interfered with, unless every other industry amd individual in the country is to be taxed ailso.
I am not going to point out again the discriminatory nature of my hon. friend's proposals. He is leaving wealth in the hajids of scores of people in this country who have never used it for the development of business by which another man might be able to make a dollar. My hon. friend is discriminating in favour of that class, and against those who have money invested in industry. I cannot believe that he will put this taxation into force in the terms in which the Bill empowers him to do it; and it is probable that in the months to come, when he finds out how unpopular the taxation is, 'he will attempt to deal with it as he did with those items in the Estimates which he told us were put in only for show and were not intended to be expended. For a long time we have been endeavouring to find out which were the items that were not to be expended. Just imagine a Finance Minister putting an item of a quarter of a million dollars in the Estimates to provide for the carrying on of a Geodetic
I Mr. Macdonald.]
Survey to define the boundary between New Brunswick and the United States' Imagine the enormity of it! He is also asking Parliament to vote $1,000,000 for the Yukon, where there are only 8,000 people; that means that the people of Canada will have to pay every one of these 8,000 people, men, women, and children, a bonus of $12C to $125 for the purpose of remaining in the Yukon. Why, it is absolutely farcical. Will my hon. friend say there is any justification for the expenditure of a quarter of a million dollars on t-he Geodetic Survey? What sense or use is there in a proposition of that kind at a time like this? I have given two conspicuous examples that have been disclosed as we have taken up the Estimates, and I could cite other instances along the same line. Items of a similar character were disclosed in the Estimates of the Minister of Mines only a few days ago. It does seem to me that the Minister of Finance paid no attention to the preparation of these Estimates at all, except perhaps to ask each minister to he a little careful, and it depended on the whim and humour of the different ministers whether any care was taken in drawing up the Estimates. The Minister of Finance simply placed his imprimatur on the Estimates proposed, and they were then laid on the Table. Yet all the time the Minister of Finance was going about preaching economy, telling us how necessary it was to be prudent in our public and private expenditures. He expected the people oi this country to take him at his word, while he allowed these anomalous and farcical propositions that I have mentioned, to remain in the Estimates. He expects the people to allow themselves to be taxed undeT this taxation measure without resenting it; tout I venture to say that they are thinking perhaps more deeply in these war times than ever before, and my hon. friend must not assume that, because he sailed along with good luck for two years, he is going to escape that close scrutiny and careful examination of his financial proposals and his expenditures which will certainly be given by the people of this country this year. Every day we are coming nearer to the point when, owing to the enormous expenditures occasioned by the war, it will not be necessary for the Minister of Finance to preach economy, because the people will have to practise it, and when they have to practise it and the stern reality is forced home upon them as to the condition of things, they

will realize how fictitious is the economy which the minister has suggested in his Budget of this year and in the Estimates *which he has presented to the Canadian people.
I mention three lessons which it is important for the people of this country to take into consideration at the present time: the necessities of the war; the railway problem and how it is to toe solved, and the necessity of having close regard to the development of agriculture and of our mineral resources. There is another matter to which I wish to refer. My hon. friend has apparently never paid the slightest attention to how the produce of this country is to be carried to markets across the ocean. The mercantile marine of Canada and of Great Britain has been almost swept off the seas. In Canada the problem of transportation by land, so far as the facilities apart from the financial problems are concerned, has been solved and well solved, so far as our requirements for the next twenty years are concerned, by the construction of three transcontinental lines. But if you scrutinize the Estimates carefully, you will find out that gross extravagance characterizes Civil Government, and characterizes this matter and that matter along lines that do not mean a return to this country of a single advantage; you will find further that this Government has never moved one foot along the line of providing adequate facilities for transportation across the ocean. Of what use are the crops in our western land and our mineral resources, those two essential things out of which Canada must get the money with which to pay her bills when the war is over, if the murmurings which we already hear from our western friends as to the lack of facilities for ocean transportation are found to be based upon stern realities? The day is near when we shall find that we have no ships in which to carry our produce across the ocean. Hon. gentlemen who do not live near the sea-and I say it without any feeling of disparagement to them-do not realize perhaps as keenly as do we who live in the Maritime Provinces how acute the problem is. We realize that the situation is imminent, and is one which any Government ought to be prepared to face with a greater degree of consideration than any other -situation that faces the Canadian people at the present time.
My hon. friends might well revise his Estimates; he might economize in regard to millions of dollars that he has placed in them and proceed with expenditures that will provide for adequate facilities for transportation across the ocean, which will be the great necessity during the next ten years, as any one who thinks must realize. Of what use will our agricultural or our mineral wealth be if, when we have taken it to our ocean front on either side of this country, we are met by the handicap of having no mercantile marine directly or indirectly interested in it which will enable us to provide for the ocean transportation of our products. My hon. friend the Minister of Finance has not in his Budget shown an appreciation of the importance of them. In his Estimates he has not shown economy; in his taxation measures he has not provided a scheme by which taxation will be evenly distributed; his taxation measures are discriminatory in their nature between our mineral industries and our ordinary industries, whereas they should be imposed in such a way as to be evenly distributed throughout the country. My hon. friend has fallen short of the duties imposed upon him at this serious juncture in our history in that he has shown himself, in these measures which he has submitted to this House and to the country, incapable of dealing with the problem in an adequate manner.


John Hampden Burnham: Just for a few moments I wish to speak upon the reckless extravagance of- the language of the hon. member for Pictou (Mr. Macdonald). I have been amazed and disconcerted at his attack upon the Post Office Department in relation to -rural mail delivery. If there is in this country one class of people entitled to consideration and to the development of the means of correspondence and of transacting their business; if there is one class that is entitled to more attention than it has hitherto received in this country, surely it is the farming class,. My hon. friend has been wearing away the weary hours this afternoon by reckless vituperation of a department that is doing everything it possibly can for the transaction of the business of this country. In one moment he has been condemning extravagance and in the next asking for it. Such absurdities should be done away with. It is time for us to speak and. act like men. There is a very great difference between the speech of the hon. member for Pictou and that of the hon. member for Halifax (Mr. A. K. Maclean) who spoke this afternoon with deliberation, and in a commonsense way ap-

pealed to the people to give careful consideration to the questions at issue, instead of devising, as the hon. member for Pictou did, a wild, whirlwind of talk that had no bearing upon any subject on earth, except, perhaps, to disconcert the Postmaster General in the arduous duties which he is called upon to perform. As a farmer and as a representative of the farmers, knowing whereof I speak, I desire to say that I hope there will 'be no further economies which would restrict the distribution oi rural mail. Our farmers are entitled to better and more generous treatment than they are receiving at the present time, and 1 hope there will be no successful attempt to scare the Postmaster General into that absurd thing called economy in connection with such a public service as this which affords absolutely necessary facilities to the farmers of Canada to transact their business.


Joseph Philippe Baby Casgrain: They will not scare me.


Sir THOMAS WHITE (Minister of Finance):: My hon. friend from Pictou and the hon. member for Halifax have referred to the expenditures, actual and proposed, of the Government. As I stated in my Budget speech, this is essentially a time for economy, but I submit that from the outbreak of the war the Government has exercised that economy, and I think I can prove it to the satisfaction of the House and of the country.
At the outbreak of the war in August, 1914 the policy of the Government as enunciated in the Budget speech was that works under contract should be carried on. The industry of the country had been somewhat dislocated by the war; there was considerable unemployment, and we regarded it in the public intered that those works which were under contract should be continued. That policy was continued during 191a and is in effect to-day. Apart from the war, in connection with which our expenditures will be increasingly heavy, it has been the settled policy of the Government to proceed only with works under contract and with such other works as are indispensably necessary in the public interest, and with no others. Let us see what has been accomplished under that policy. For the fiscal year which ended on the 31st day of March, 1914, a few months before the outbreak of the war, the total expenditures of the Dominion were over $180,000,000. For the fiscal year which ended on the 31st day of March, 1916, our 
expenditures, including a very large amount of interest which we were obliged to pay upon our war expenditure, amounted to $165,000,000. The estimate of our expenditure for the fiscal year 1916-17 apart from the war 'is $160,000,000. Let me point out to the House the significance of these figures. Included in the $160,000,000 which is the estimated expenditure for the fiscal year 1916-17 is $37,000,000 of charges upon the public debt. In 1912 the charges in connection with the public deibt were only about $13,000,000; in 1914, before the outbreak of the war, they were only about $14,000,000. By reason of our expenditure upon the war, we shall have to face for the coming year interest on public debt to an amount oi $37,000,000. Taking the $160,000,000 estimated expenditure for the fiscal year 1916-17 in the light of that statement, we find that if wA subtract the increased charges on public debt due to the outbreak of the war we get an expenditure (other than for war) in the neighbourhood of $135,000,000 for the coming fiscal year. What was the position when this Government assumed power in 1911? The Estimates of the fiscal year 191MB were the Estimates of the late Liberal Administration. I desire to call ithe attention of the House to the fact that the Estimates presented by the late Administration on December 2, 1910, and on May 9 and 'May 17, 1911, amounted to about $157,000,000. Yet, Mr. Speaker, out estimated expenditure for the coming fiscal year, embracing as it does an item ot $37,000,000 fOT interest and charges upon our public debt, an increase of some $23,000,000 over the interest and charges upon the public d'ebt for the fiscal year preceding the outbreak of war, and of some $25,000,000 over the interest and charges upon the public debt for the year 1911-12, our estimated expenditure for the coming year is only $3,000,000 in excess of the Estimates of the late Liberal Administration in 1911-12.


George Perry Graham: My hon. friend will admit, I suppose, that there is a difference between a time when a war is on and a time when no war is on. Nearly all arguments have been in favour of strict economy because there is war.


William Thomas White: Does my hon. friend mean to say that there was riotous extravagance when the late Government was in power-that there was no economy?

[DOT]2623


George Perry Graham: What is reasonable expenditure-and the minister said so several times in his statement-when there is no war hiay be extravagance when there is war.


William Thomas White: My hon. friend fails to observe the point that I am making. The expenditure undeT the Liberal Administration. in 1906 was $83,000,000, and in 1911-12, $135,000,000. For the fiscal year 1913-14, before this war broke out, our expenditure was $187,000,000. The point I am making is that we have observed economy and are observing it daily. Instead of an expenditure of $187,000,000, which we had in 1913-14, we have an estimated expenditure fOT the fiscal year 1916-17 of $160,000,000 only, which includes $37,000,000 of interest and charges upon a public debt
which was greatly increased on account of the war. If I am able to show that from $187,000,000 we have reduced our expenditure to $160,000,000, including added interest charges due to the war, I think I have gone far to meet the charge that the Government is not observing economy, lust to conclude that portion of my argument, I may say that before coming to the House this afternoon I obtained the figures of the ordinary, capital and railway subsidy expenditures of the Dominion Government as of March 31, 1914, as of March 31, 1915, and. as of March 31, 1916, as follows:
Capital Expenditure.
1915-16.
National Transcontinental Ry. .. $4,503,250 06
Quebec bridge	 2,739,421 55
Hudson Bay railway	 4,331,392 91
Welland ship canal	 4,740,131 53
March 31.1914. March 31, 1915. March 31,1916.
Ordinary	
$108,766,993	87	$117,190,246	07	$107,730,367	42Capital	
33,196,898	12	36,063,877	21	32,749,339	97Railway subsidies	
19,036,236	77	4,630,273	69	1,400,171	42

War	$ 46,574,587 11 $134,650,640 26
Total war to March 31

It will be observed that in respect of the total expenditure of the Dominion there has been a reduction of $20,000,000 in the past two years.	-
At six o'clock the House took Tecess.
The House resumed at eight o'clock.


William Thomas White: The figures which I gave before six o'clock referred to our expenditures for purposes other than the war. I pointed out that the Government had endeavoured to effect all possible economy. For the fiscal year ending March 31, 1915, our total expenditure upon ordinary capital account was $187,000,000. For the fiscal year ended March 31, 1916, that expenditure had dropped to $165,000,000. The Estimate for the coming year, that is the fiscal year which began on April 1, 1916, and will terminate on March 31, 1917, is $160,000,000. I pointed out also that in that Estimate was embraced as large an amount as $25,000,000 for interest and charges upon public debt, due to our heavy war borrowings. I also point out that, included in the Estimates for the coming year, are some $3,000,000 for pensions. So I think that, apart from our expenditures upon the war, the figures indicate that the Government has put forth a strong effort to reduce it's ordinary capital expenditures. My hon. friend from Halifax (Mr. Maclean) referred to the figures of 1911-12. If I refer to them it is not with the object of instituting any comparison between the record of the present Government and that of the late Government. It does not appear to me that this is a proper occasion upon which to do that, and for the most part such comparisons serve no very useful purpose; at least that is my view. But in connection with the matter of expenditures in ordinary times, it is to be pointed out that in any country, in a period of great material development such as Canada was going through for many years previous to the outbreak of the war, increases in expenditure in all departments of Government are to be expected. In that connection I may be permitted to quote the view of my predecessor, the hon. Mr. Fielding, expressed in his Budget speech of 1904: He said:
X have on several occasions, in referring to decrease which we have been able to show, pointed out that no Finance Minister in a country like Canada need be ashamed if he has to come before Parliament and acknowledge

that he is increasing the public debt. That ought to be the normal condition in a young country like ours, with vast resources to develop, with improvements all around us waiting to be done, and with courageous men ready to do them.
Our expenditure for the year 1911-12, upon the Estimates of the late Government, was about $135,000,000, the Estimates being about $158,000,000. There was a large programme of public works under way, and many large undertakings of national magnitude; and from 1911 until the outbreak of the war, there was undoubtedly a steady increase in the expenditure of the Dominion Government upon ordinary capital account. We had such undertakings on capital account as the National Transcontinental railway, the Quebec bridge, the St. Lawrence ship channel, afterwards the Halifax terminal, the Hudson Bay railway and later the Welland canal. So that, as I have stated, we had a large capital programme under way at the time of the outbreak of war. Our ordinary expenditures had also increased with the development of the country, and in this connection, as showing that a comparison between our expenditures before the outbreak of the war and the expenditures of 1911-12 could hardly be regarded as fair, I desire to point out that the total trade of Canada in 1911 was seven hundred and fifty million dollars. That total had increased to over one thousand million dollars in 1914. There was a slight reduction owing to the war in 1915, but for the fiscal year which has just terminated the total trade will undoubtedly aggregate over twelve hundred million dollars, so that the trade of Canada, the imports and exports of the Dominion, have almost doubled in the five years since 1911 to 1916. Some attention has been .paid to the matter of expenditures in the Immigration Department. I think it is only fair to the department to point out that there was a steady increase in immigration up until the year of the outbreak of the war. In 1910 the immigrant arrivals were 208,000; in 1911 they were 311,000; in 1912 they were 354,000; in 1913 they were 402,000; in 1914 they were 384,000; and in 1915 they were 144,000, whereas for the first 11 months of the fiscal year 1916, the immigration had dropped off, owing to the war, to 42,000. In addition to the expenditures upon various services of the Government, we had a fairly large programme of harbour and port development work that necessarily followed upon the railroad policy which had been adopted by the previous Government. We had one trans-
continental line completed, but with many extensions being built, and two further transcontinental lines in process of completion. It was absolutely necessary, if these three transcontinental lines were to operate successfully, that there should go hand in hand with their completion a development in the	ports of Canada.
Consequently, we had large expenditures to face at Halifax, St. John, Quebec, Montreal, Vancouver and Victoria. As the result of the responsibilities which devolved upon us to meet the public need, our expenditures grew from $135,000,000 in 1911-12 to $187,000,000 for the fiscal year ending March 31, 1915. I am excluding war expenditure, I am dealing only with ordinary and capital expenditure.
The question of the public debt has been touched upon, and may be touched upon later in the course of this debate. Without attempting to draw any comparison between the records o.f the two parties in that regard, because I do not believe that sound conclusions can be drawn from the mere fact of an increase or decrease in the public debt-the question is, for what purpose public debt has been increased rather than whether or not it has been increased as a matter of fact I find that the public debt in 1908 stood at $277,000,000, in 1909 at $323,000,000, in 1910 at $336,000,000, in 1911, at $340,000,000. It dropped in 1912 to $339,000,000, in 1913 to 314,000,000, and in 1914 to $335,000,000. I desire to point out that on 31st of March, 1914, that is at the end of fiscal year preceding the outbreak of war, the national debt of Canada was less than it had been in 1911.
I come now to the year of the war, 1914-15. By reason of the reduction in our revenues, principally after the outbreak of the war, and of our war expenditures which amounted to about $60,000,000 for the year in question, there was an increase in the national debt of $113,000,000. Since the outbreak of war, the responsibility of the Government has, of course, greatly increased. When the war broke out, there were various opinions as to its probable duration. Some thought that it would not last more than six months; others mentioned a year; others again thought that two or three years might elapse before it could be concluded. We determined to do our full duty by Canada and the Empire by putting forth our maximum effort. But at the time, not knowing what the future held, we aimed, in the first instance, at a force of 25,000 men. Some 33,000 men assembled at Valcartier

and were sent overseas. The appropriation in the August session of 1915 for war purposes was $50,000,000. That indicated our view of the effort which we should immediately put forth.
The 50,000 men grew to 100,000, and in 1915 the War Appropriation Bill was for $100,000,000. The 100,000 men grew to 200,000, and then to 250,000, and to-day there have been recruited, and are overseas, or under arms in Canada, no less than 300,000 men. The Appropriation Bill of this year will provide for $250,000,000 of the expenditure, and, as stated in my Budget speech, we shall he faced, during the coming year, with the task of raising in the neighbourhood of $225,000,000 'by borrowing.
In my Budget speech I did not attempt to minimize the seriousness of. the financial situation:	At the same time, I believed
then, and I believe now, that, with the resolution which her people are displaying, Canada can meet, and readily meet, the increased expenditure which will 'be required to equip, send forward and maintain our. army of 300,000, or 350,000, or whatever number we may succeed in enlisting. I have no doubt whatever [DOT] as to that, but, while that is so, the expenditure is, of course, very heavy. It is heavy in comparison with expenditures of the past; it will be heavier six months from now than it is to-day, and, if the war lasts, it will be heavier next year than this. But we are all prepared for that, and the people are willing and even eager to make whatever sacrifice may be necessary in order that Canada, in this crisis in the affairs of the Empire, may do her full duty. I think that is common ground.
The general financial policy which, as Minister of Finance, I have tried to work out is this: I have thought it well that the Dominion should finance well in advance. No one can tell from day to day, and from week to week, what will happen. The financial situation may change overnight, and, therefore, if is a sound policy, even at the risk of losing some interest upon your bor rowing, to borrow well in advance, two or three, or four, months in advance, because, it might chance that, if you pursued a different policy, and borrowed, so to speak, as you immediately required, market conditions might develop in which you might not be able to borrow, and the consequence might be serious. Therefore, I think it is sound financial policy to borrow well in advance of your requirements in war time, and to take advantage of
favourable market conditions as they arise. As the result of that policy we have been successful in financing up to date, and, at the present time, we are financed for many months ahead, so that, while the financial responsibility which we are assuming is seriousi, I believe the country is well able to sustain it.
The second principle which I have adopted is this: that short date loans * should be avoided as much as possible. At the outbreak of the war it was not possible to avoid short date loans, but securities should be issued for reasonably long dates, I would say for as long dates as possible, because it is not desirable during the progress of a war that maturities should have to be met, possibly at a time when fresh borrowing is required for the purposes of the war. Nor is it desirable that after the war, when we are in a period.of dislocation and more or less of reconstruction, heavy liabilities should be falling due. That is the time when I think the Dominion should have the full value of such credit as she possesses to take whatever steps may be rendered necessary by the existing situation.
The third principle is that we should keep expenditures for purposes other than war within as reasonable bounds as possible, and that we have endeavoured to do. When the war broke out, As I stated in the early part of my remarks, there was a serious derangement of business and much unemployment, and I think it was of great advantage to Canada at that time that the Dominion Government had under way a large programme of public works. That fact greatly minimized the unemployment situation.
Reference has been made to the Estimates, not only upon this debate but upon other occasions when the subject was under consideration by the House. When I made my Budget speech I spoke as follows:
As regards our ordinary and capital expenditure, we shall endeavour to continue to effect all possible reductions. Our Estimates contain numerous items hitherto adopted by Parlia-. ment, representing works with which it is not our intention to proceed during the period of the war. The policy adopted from its outbreak, which has given such excellent results to date, of proceeding only with works actually under contract, will continue to guide us. Further, should financial exigency so require, we shall not hesitate to terminate contracts and leave works in an unfinished condition, notwithstanding the immediate and prospective loss and damages involved. I do not, however, think that such a course will be necessary.
That represented the views and intentions of the Government. Should the exigency


William Thomas White: On acount of
war conditions. The war has imposed additional duties and responsibilities upon all the members of the Government, and upon nearly all departments of the Government. In my own department the work devolving upon me as minister has been multiplied many fold. The Department of Finance since the outbreak of the war has had exceedingly heavy responsibilities, and we have had to add to our staff in order to take care of the great commercial loan and other work devolving upon us by reason of the war. I have been in business for some years, and I may say that if as great 'an increase had taken place in the business of any private concerns throughout the country, there would have been a much greater increase of the staff than has been the case . in my department. In many cases the men in my department have frequently worked day and night since the war broke out, in connection with the handling of the gold for the Bank of England, in connection with the financing of the Dominion, and in connection with our loan. There is not a doubt about it that much heavier responsibilities are devolving upon, I believe, most departments of the Government, if not all, than before the war; and simply by reason of the war. I believe the Post Office Department has heavier duties and responsibilities than before the iwar. The work of the Customs Department, too, by reason of the tariff of 1915 and the embargo upon goods of various kinds going out of Canada, and in scores of other ways, is much greater than before t,he war. I am satisfied that the duties of the Trade and Commerce Department have also been largely increased by reason of the war. One might think that the war had imposed no extra work upon the Inland Revenue Department, but as a matter of fact the duties devolving upon

that department have greatly increased since the outbreak of the war-duties devolving upon it by reason of the Budgets of August, 1914, and of February, 1915. It may be that in some departments there is not the same amount of work to be done as before the war, but, generally speaking, I believe it is true that heavier duties and greater responsibilities have devolved upon the departments of the Government than existed before the outbreak of the war.
The Immigration Department has been referred to. As I have already pointed out, there had been a steady increase in immigration to this country up to 1914, but it began to drop off in 1915, and the figures are of small dimensions since the war broke out. But the Immigration Department has had a great deal to do in the Northwest since August, 1914; heavy duties have devolved upon that department in connection with the seed grain distribution, involving something like $13,000,000 or $15,000,000-1 have forgotten the exact amount. There is this further to be borne in mind. When the^ war broke out some were of the opinion' that it would last only a short time. Now, my view would be that, even at the risk of having an overmanned department for a short time, it would be a mistake to disband such an important staff as that of the Immigration Department. Unless it was believed that they would not be required for a considerable time to come, I do not think it would be good policy to disband the staff of any important department. I do not mean to say that economies cannot be effected; I believe they have been effected, and will be effected. But I think it would be a mistake to adopt such a drastic course as dismissing the staff of an important department, when it might be required again within a few months or a year.
These, of course, are general observations with regard to the several departments of the Government. I do not purpose to go into the details of criticisms which have been offered here, except to say that in my judgment the most important question in this country for many years to come will be the question of immigration, the settlement of the land, and increased agricultural production. If you get immigration, you get the land settled; and if you get the land settled, you get increased agricultural production; and increased agricultural production will solve all the other questions which we have been discussing. Increased agricultural production is the key to the future economic situation 
in this country; It is basic, and fundamental. Increase your agricultural production, and increase in all other business will follow. Increased agriculture production, brought about by the energies of our present farming community, by immigration, and by land settlement, will solve the railway situation, ultimately, in Canada.
I do not believe that it would be wise, in order to effect minor economies, to disband the Immigration' staff at this time. I am only expressing my own view upon that point, as the matter has been raised, and the Minister of the Interior is not here.


Mr. NESBITT:: What are the present
staff doing to help out?


William Thomas White: They are devoting their energies to immigration. There is a great deal of work to be done now. I repeat that I do not think it would be in the national interest to break up the staff of the Immigration Department, because the question of immigration is one of the most important that we have to deal with, and after the war is over all the energies of the Government should be directed to increasing our immigration, and getting the land settled in order to increase production.
With regard to measures of taxation _ which have been introduced, I desire to make this general observation,^ which I do not think can be successfully <k>nitroverted: There are many nations at war, but I believe that this Government has so administered the affairs of the country since the war has broken out that Canada is taxed less heavily than any other of the Dominions, much less heavily than the United Kimgdpm, and less heavily than any country that is engaged in the war. Let us see with what measures we undertook to meet the heavy responsibility with which we were confronted at the outbreak of the war. In August, 1914, it was not desirable, by reason of the dislocation and disarrangement of business, that any comprehensive measure of taxation should be entered upon. What did we do? We had resort to the duties of customs and of excise upon luxuries, upon sugar, upon 'beer, and upon spirits. That taxation measure was a light one. In order that we might meet the situation without resorting to heavy taxation, we took the opportunity of issuing $15,000,000 of an additional Dominion note circulation. We were able to do that because the financial situation was. so strong, and because we had such heavy reserves of gold. There was no injury done to the

financial situation; in fact, it was benefited by the action we took.
By the following February it was pop sible to adopt a comprehensive scheme of taxation, and we did so. We brought in a scheme of special taxation and a scheme of general taxation. Under the special taxation plan the banks, the trust companies, the loan companies were required to pay special taxation into the Dominion treasury. The tax upon the banks alone amounted to about $1,000,000 a year. Taxes were imposed upon cheques, telegrams, and money orders. Taxation was imposed upon those who could bear it. Then we increased the tariff by 5 per cent British preferential and by 7j per cent general. I was surprised to hear my hon. friend from Halifax (Mr. Maclean), because he is usually pretty, fair, state that the result of our tariff increase had not been to increase the revenue except, I	think	he said, in so	far asit	was	upon free goods. I dissent entirely from his conclusions.
The Budget of 1915 aimed at a revenue of $150,000,000, and up to March 31, 1916, which was the end of the fiscal year, the revenue of the Dominion under the Budget of 1915 aggregated over $171,000,000, or $21,000,000 or more over the estimate. It cannot, therefore, be said that the Budget of 1915 did not realize the intention and the object which it bad in view.


Alexander Kenneth Maclean: How much came from the importations under the general tariff? That was the point I was making.


William Thomas White: I have not the figures here; but if my hon. friend will look them up, he will find that the greater portion by far, of the difference between the estimated revenue which we should have had under the old tariff and the revenue which we actually derived was from the increase in the tariff.


Alexander Kenneth Maclean: The application of the 7J per cent tax on free goode brought in $18,000,000 or $19,000,000 of revenue. I admit that. I was questioning the value of the imposition of the 7J per cent on the general tariff 'as a revenue measure.


William Thomas White: I have not the figures here nor do I think that my hon. friend has the figures. But there is no question about it, that as there was an additional tax of 7J per cerit upon all imports that came in, with the exceptions set out in the Budget, there must be an increase
by reason of that 7J per cent tax. My hon. friend might argue that more would have come in if the duty had not been imposed; but, as the duty was imposed and collected upon such imports as came in, it does not appear to me that he can demonstrate that no results followed from the imposition of the 7j per cent upon the general tariff. If a return were brought down from the Customs Department showing the amount of revenue derived from the 7J per cent duty and the 5 per cent duty, I think my hon. friend would find that it accounted for by far the major portion of the entire amount of the additional revenue, some forty or fifty million dollars, which was raised under the Budget of last year. That Budget in my opinion was eminently successful. I did not expect that I would realize $171,000,000 from it; I thought if I realized $150,000,000, I would do well, but the results have been beyond our expectations.
Coming to the Budget of this year, and especially to the measure which is now under consideration, the same principle has been carried out. The taxation is upon those who, we think, can well afford to bear it. The hon. member for Halifax has intimated that in his opinion it would have been preferable if it had been upon those individuals, firms and companies engaged in supplying war material and munitions. -


Alexander Kenneth Maclean: I suggested that the tax upon such as these might be larger than upon others.


William Thomas White: Let me ask my hon. friend whether or not that would be quite, fair. I considered that point, because it would naturally occur to one in drafting a taxation measure in war time. But has my hon. friend thought of this aspect of it? What about those who supplied raw material and semi-manufactured products to those who worked them up into material and supplies which they sold to this or any other Government?


Alexander Kenneth Maclean: You would get at them under the other provisions of the Bill.


William Thomas White: A steel manufacturer may not be making shells, but he may be making huge profits upon steel sold to those who manufacture the shells. If he made as much money as they did, upon what principle could you say: in the one case we will impose a heavy tax, and in the other case a lighter tax? Take those, for example, who have made large profits on the appreciation in the price of com mo-

dities of various kinds due to the outbreak of the war, and to the demand which sprang up after the outbreak of the war for such goods and commodities. It does not seem to me that discrimination can fairly be made. There are many businesses which have made large profits directly owing to the	war,	and others which have
made large profits indirectly owing to the war, and it is difficult to discriminate as amongst them. A taxation measure should be uniform. This taxation measure, as I have said, should not bear heavily upon the business community. In the first place it exempts all businesses with a capital of less than $50,000.
As to those having a capital of ever $50,000 we say: up to 7 per cent in the case of incorporated companies and up to 10 per cent in the ease of individuals and partnerships, you are exempt from taxation; as to the profits which you make in excess of 7 per cent upon capital in one case and in excess of 10 per cent upon capital in the other, we take one-fourth and leave you three-fourths. I do not believe that any exception can be taken in war time to a measure of that kiqd. It is a much milder measure than the measure adopted by the Imperial Government. I observe from the cabled report of the speech of the Chancellor of the Exchequer that by the Budget which he has just brought down he has increased the excess profits tax in Great Britain. I do not see, therefore, how exception can well be taken to this taxation, which is limited in its duration to December 31, 1917, no more than three payments to be made, one in each year.
It has been pointed out by the hon. member for Pictou that the agricultural interests were excepted,by the Budget and that the statement was made that resort would not be had to taxation upon the property or effects or income of farmers. He indicated that in his view that was a class discrimination. I believe that the course taken in that regard embodies a sound principle. Agriculture is the basic industry of this country. [DOT] Any advantage possessed by agriculture inures to the advantage of the entire community, because all other parts of the community depend upon the agriculturist, whose work is fundamental. As our part in this war is being carried out not only by men afid munitions but also by the resources of the nation, the burden of taxation should be made as light as possible upon the farmer, because upon his efforts no less than upon the efforts of the
fSir Thomas White.]
men in the field and in the munition factories will depend in large measure our success in this war. We asked the farmers to increase production and they responded nobly last year with the greatest crop in the history of Canada. We have asked them since to put forth every effort to increase production, to sow, to plant, to raise everything thejr can in order to enable Canada to sustain the burden of the war and continue to do her duty by herself and by the Empire. We are making that appeal to-day and asking the farmers to increase their production, and it does seem to me that it is proper for us to lay down the principle that we should not impose special war taxation on the farming community.
It has been pointed out that many with large incomes will escape taxation. That is true, but this is not an income tax measure. No doubt a good deal could be said for an income tax measure, but we traversed that ground in the discussion in committee upon these resolutions and I do not purpose going into the matter further, except to say this:	It
must be borne in mind that income taxation is being levied by some municipalities and provinces throughout Canada. It may be that the provinces and municipalities will have to resort in greater measure to income taxation. If it were clearly in the national interest, having regard to our needs, to impose income taxation, I should not hesitate to do it, but I have pointed out that until it is clear that it is in the national interest, having regard to our needs, to impose that taxation the policy should be to trench as little as possible upon the field to which the 9 p.m. provinces alone can resort.
Basing a conclusion upon the returns from the income taxation in the United States, an income tax in Canada would return but a fraction of what we hope to get by this measure. I do not believe that an income tax upon individuals in Canada would produce more than $3,000,000. In the United States, which is a very much more populous and a very much wealthier country, I think the return from the income tax on individuals is between $30,000,000 and $40,000,000-I have forgotten the precise figures. I believe that in Canada we could not hope to get more than one-tenth of that amount, and from that would have to be deducted the whole cost of administration of the measure. As I have stated to the House, the

imposing of an income tax would mean that this Government would havie to organize at this time almost a second Civil Service for the purpose of covering the country from the Atlantic to the Pacific to make an income assessment. As our country is of very large geographical area and of scattered population, the cost of making an assessment would be very great. It has been stated that we might avail ourselves of t'he provincial machinery, but I do not think that that would be feasible or practicable. In the first place, some of the provinces have no machinery for that purpose; in the second place, the municipalities are under the jurisdiction not of the Dominion, but of the Provincial Government, and any system of Dominion taxation would have to be carried out by Dominion and not by provincial or municipal officials. I think, therefore, that the income tax proposal, at all events at the present time, is impracticable.
The hon. member for Halifax and the hon. member for Pictou referred to the mining industry and the effect upon it of this taxation. I think that at the outset the taxation measure was somewhat mis-understod by a portion of the mining community. I am quite satisfied, however, that they now understand the measure; they know that it is and was the intention that an allowance should be made for exhaustion of capital. So far as I can learn-and I am fairly in touch with the mining community-this has been accepted as a fair measure in war time. I do not see on what principle I could exempt mines that are paying huge dividends to shareholders and assess all other businesses in the community. This war is being carried on by us for Canada and for every part of Canada. It is being carried on for the mining industry as well as for the manufacturing industry and for the general business, agricultural and other interests of Canada. I know that the mining community, speaking generally, are desirous of paying a portion of this taxation. I think that a number of prominent mining men would feel disappointed if the mining industry was passed over. Many of them desire to pay a share of the taxation which is rendered' necessary by this war, and that is precisely the position which I would expect them to take. As a matter of fact, comparatively few mines in Canada will have to pay at alii because after allowance is made for exhaustion of capital, after capital and reserves are taken into consideration, and
after the 7 per cent allowance is m'ade, the one-fourth of the balance of net earnings will certainly be no very serious matter for the mining companies of Canada which will come within the provisions of the Act.
My remarks have been somewhat desultory, but I have touched only upon the points raised by the hon. members opposite. I certainly have no exception to take to the spirit or tone of the discussion upon the measure now under consideration; it has been exceptionally fair throughout.
I have derived many useful suggestions from the discussion that has taken place since the Budget was introduced. A measure of this kind has to be brought in more or less rough hewn, because full information is not available on which to perfect it or put it into practical shape. However, since the Budget has been brought down, the resolutions have been improved in many material respects, and I believe that we have now a measure which can be worked out without material injustice to any, el^ss of the community, at comparatively small expense, and I feel that its results will equal all the expectations we have formed of it.


Edward Walter Nesbitt: Mr. Speaker, I agree very largely with what the minister has said, but there are some things on which I do not agree with him. Personally I would not expect the Government to cease work on large public undertakings necessary for the well-being of the country unless it was imperatively necessary to do so. I do not think that any member on this side of the House has complained about that sort of public expenditure. What we have complained of is unnecessary public expenditure and the fact that the minister has permitted other ministers to put in the Estimates expenditures which they had no intention of carrying out. The minister has stated that it would be difficult or impossible for the different ministers to keep their Estimates down to what they expected to expend. But there are many items that we have passed during the time we have been in Supply that certainly could have been done without. Take, for instance, the Geodetic 'Survey, mentioned this afternoon by the hon. member for Pictou (Mr. Macdonald). That could have been done without in a year of stress such as this, without doing harm to anybody. The expenditure was excused by the Minister of the Interior on the ground that he did not desire

to break. up his staff. But I understand that many additional men have been employed in different departments that are not very busy, and I can see no reason why these men should not have (been transferred to the departments that have had additional work thrust upon them, just as a man conducting a private (business would adjust his staff to suit special conditions. I quite appreciate that the Departments of Finance, Customs and Militia would 'be exceptionally busy, but I do not see why the Post Office Department should require the large increases that have been made in the staffs in cities like Montreal, Toronto, and Quebec, especially as there has been a very slight increase in the post office revenue^ Nor can I see why much of the additional work should not be taken care of by calling upon the existing departmental staffs to work a little harder. Their hours are not-long. If business men required their staffs to work only for the same hours that prevail in the departments here, the increase in the cost of the ordinary .business would eat up all the profits. It is of these increases in the number of civil servants in such times as these that people complain. The minister says that when he suggested economy he really meant economy in all departments. The whole people of the country were prepared, as he said, to .pay tlheir share of the cost of the war, perfectly and absolutely willing to do so. But when they see the departments increasing their staffs, and the civil servants getting to work at 10 o'clock and quitting at 4 or 5 o'clock in the afternoon, the ordinary workingman, who. works from 7 o'clock in the morning until 6 o'clock at night, and the ordinary farmer, who works from 4 o'clock or half past four in the morning until 8 o'clock or 9 o'clock* at night, cannot appreciate the statement that the Government are economizing very much. That is the feeling to-day throughout the country. The feeling is that the Government -should set an example in economy. It is not for us to point out to them how they can do so. Each minister should go over his department and see where he can economize. If something of this kind is not done there will be dissatisfaction throughout the length and breadth of the land among people who work hard for tlheir livings, and in many cases get a poor living at that. That is what we mean toy economizing. It is folly to put in such Estimates as we passed the 
other night for this -museum. We are now occupying the museum and are likely to do so for some time. What is the use of putting in Estimates to buy trash for the museum during the next year? That surely is not an example of economy. The ordinary farmer, for instance, in my. section of the country, is perfectly willing to pay his share of the cost of the war; but if I were to take those Estimates home and; show that we 'had voted $300,000 or $400,000 for a geodetic survey in various parts of the country, that could easily be left over for 5 or 10 years, and for a lot of trash for the museum, such as wooden elephants and whales, or those big wooden things we see in the entrance to this building-and if they cost anything the man who bought them ought to be sent to jail-


William Thomas White: Totem poles.


Rodolphe Lemieux: Family trees.


Edward Walter Nesbitt: The farmers I represent are not prejudiced or stingy, but if they realized these things they would- want to turn us all out for voting for such expenditures, and to put in somebody else who would not vote for them. As to immigration, I absolutely agree with the minister that now is the time to work out a proper scheme for the reception of immigrants into this, country and for placing them on the land. The -pres'ent immigration staff have done nothing to place immigrants upon the land so 1 far as I can judge. For years and years these immigrants have been brought to this country and dumped in the large cities, and that is the end of the matter, so far as the Dominion Government is concerned. They do not see to it that they are placed on the land. It would be better to have only one hundred immigrants in a year, place them on the land, and give them a good start as citizens, than have 10,000 who would flock to the cities and towns and do no particular good to the country. They are not required in the cities and towns. Our mechanics resent them being there. They only reduce the wages of our mechanics, and they live in a way to which our mechanics are not accustomed. If the hon. minister would see to it that the money expended by the Immigration Department was expended in a common-sense way, in conjunction with the provinces, so that the immigrants could be placed on the land and taught something about farming, which would make them take an interest in the farm, he would take a great step in advance towards the solution of the immi-

gration problem in this country. It would pay us more than we can possibly estimate. But we are not doing that.
If immigration declined to 42,000 last year as against 400,000 in 1914, surely the officers of the department might have been employed in some other department. I would not like to say that these men should be sacked, but I do not agree with the minister when he says that if they were discharged it would be difficult to get them when they might be needed again. We all know that if there is one position open in any department, there are from 10 to 100 applicants for it. There is no trouble in getting men, not a particle.


George Perry Graham: There are lots of applicants even when the positions are not open.


Edward Walter Nesbitt: # Yes, but when they are open Heaven knows there are enough applications. I am not one of those who believe in discharging men because there happens to be a dull time, unless it is absolutely necessary for the safety of the business. At the same time, these men could be. used as every large manufacturer uses his men: when there is slackness in one department, he uses them in another.
J ust a word about the tariff. My hon. friend the minister must bear in mind that a great deal of the increased revenue came from the 71 per cent duty on goods that were formerly free. I also know that there has been an increase Horn the machinery and raw material that had to be imported for the manufacture of war supplies since the war started. It would be almost impossible to calculate the amount of the increase from machinery and ihaterial imported from the United States since the war started for the manufacture of war material. I think it is from that source and from the duty on goods that were formerly free that the minister has got the bulk of his increased revenue, because until last fall ordinary business in the country had not very materially increased. In fact, all last summer there was a great dullness, and in ' the case of some businesses it exists at the present time, but last fall the general run of business improved, and there is no doubt that there has been a considerable increase in the importation of raw materials both from Great Britain and from the United States. Still, if I had the time, I could point to many businesses that have not returned to the normal condition by any manner of means.
. With reference to the present Bill, my hon. friend the Minister of Finance saidand he said it very emphatically- that he believes in uniform taxation. I absolutely agree with him, but is this uniform taxation? That is where I disagree with him. It is not uniform taxation. It is all very well to say that Great Britain is taxing war profits, but, so far as I have read the British Bill, and so far as I understand it, it proceeds on a very different principle from the minister's Bill. They take a period of two or three years previous to the war, ascertain the normal profits of the business during that period, and then take one-half of the increase in the profits during the war period. That is a fair method of taxation in comparison with ours.


Francis Ramsey Lalor: Does the hon. member
think that it would help the manufacturers if we took the profits of two years previous to the war as a basis? Those years were probably dull years. Does he think it would be fair to the manufacturers to make the profits of those two or three years the basis, and then take one half of the profits they have made since the war started?


Edward Walter Nesbitt: If you took the three
years previous to the war I think it would be fair.


Francis Ramsey Lalor: I doubt it.


Edward Walter Nesbitt: I am not trying to help the manufacturers. I think the manufacturers who are hit by this tariff are perfectly willing. to pay, but they object to their neighbours not paying. The British system would hit the neighbour who does not pay; that is what I mean.


Francis Ramsey Lalor: Who are the neighbours
to whom my hon. friend refers; what class of people are they?


Edward Walter Nesbitt: They are the people whose businesses are abnormally capitalized, and the class of people whose capitalization falls below the $50,000 mark. The method suggested would take them both in. I would exempt nobody, and I do not think that anybody asks to be exempted. I believe, as I said at the beginning, that everybody in this country is prepared to pay additional taxation for the purpose of carrying this war to a successful issue. Something has been said about the farmers. I believe that the farmers are just as willing to pay as the manufacturers or the merchants. So far as my experience goes, no class has contributed more largely to the patriotic funds than the farmers. They have taxed themselves. I know that, in Ontario, county

councils and township councils throughout the length of the province have taxed themselves for the benefit of the Patriotic, Red Cross and other war funds, and taxed themselves willingly. I believe that that is their feeling to-day.	.
Coming back to the British tax, I believe it would have been a very much fairer basis, because it would have got at what we want to get at, the excessive profits made during the war period. If manufacturers and other business men have not made excessive profits during the war period, they would not be called upon to pay. Under the minister's Bill, if they have ngt made more than 7 per cent they will not pay anything, but if they have made 5 per cent or 6 per cent, and they had not made profits to that extent for three years previously, according to my idea, they would have to pay a proportion of their profits as war taxation, and properly so.
As to the mining industry, I agree with the minister that the mining men throughout the country are perfectly willing to pay a war tax. I have yet to meet any class of people who are not willing to pay their fair .proportion. But my hon. friend takes too much on himself in this mining clause. He says it will be left to himself to estimate what the exhaustion of the mine is. He may know a great deal, and I think he does know a great deal about finance, but I do not think he knows anything about what is underneath the ground in a mine. The best mining engineers in Canada are very frequently mistaken as to the exhaustion of a mine. As far as I know, the principal objection of the mining men to the Bill as it stands is that the allowance of profit is not sufficient. A mine is supposed to earn more than 7 per cent and a mine is no good that does not earn more than 7; per cent at the same time exhausting its capital. A mine is no good if it does not earn 10 per cent while it is exhausting its capital. .The mining men say that the minister should have allowed a 10 per cent profit the same as to partnerships and individuals as well as making an allowance for the exhaustion of the mine. That is all I have to say about the mining provisions, because the minister has made up his mind to put this clause through.
It is wrong to call this a business profit tax. It should, in my opinion, be called a Bill to tax partial business profits because there are many manufacturers \tfho are not going to pay the tax. There are a great 
many manufacturers who are over-capitalized and would not come under the $50,000 capital proposal. Let me once more state that I do not believe any class of people in this country w-ant to evade fair taxation, but this is not going to be fair taxation. The man who has built up his business with untiring energy, who has put it on a profitable basis, who has kept his capitalization down to as low as $50,000 possibly is the man who is going to pay the tax. The man who has not put energy enough into his business to make it a profitable venture goes free, the man who has over-capitalized his business goes free while the man who ' has done his business legitimately, the man whom we want to encourage, who has worked night and day to build up his business is the man who will be paying the whole of this tax in so far as it is>
a tax on profits.


Francis Ramsey Lalor: The hon. gentleman and
myself do not seem to understand the Bill alike. I understand that it is not capitalization but that it is the actual money that is invested in the business that they are allowed to earn 7 per cent on and that over-capitalization does not cut any figure.


Edward Walter Nesbitt: We will see about that when it comes to he put into operation. It depends entirely on the interpretation of what capitalization is. The man who has kept his capitalization down is going to pay more than the man who has not done so. The man who has run his business on $50,000 capital, where he should have had a capital of $150,000,000 and is earning on that $50,000 12 or 15 per cent through his own energy and hard work, will have to pay more than the man who has got the same sized business with a capitalization of $150,000.


Mr. STEVENS:: His reserve is considered as capital, and he will be allowed 7 per cent on that.


Edward Walter Nesbitt: Yes, his reserve is shown by his statement, but a great many people's reserves are not shown by their statements. While very few people will try to evade their responsibility, this proposal puts a premium on evasion. Everybody who knows anything about manufacturing business knows that at the end of the year it entirely depends on the manufacturer's stocktaking methods as to his profits. The man who wants to evade the tax may do so. The minister will have a fine time making a valuation of a manufacturer's stock if he does not put in a proper state-

ment. The man. that puts in a proper statement will pay and the man who does not will not pay. I do not believe many will take advantage of that, but it is quite possible, and in many instances it is quite probable.' My hon. friend says that the collection of income tax would require the services of an army of officials. But it will take two armies to collect this unless the people are absolutely honest in their statements.


Henry Herbert Stevens: Is not the collection of an income tax subject to the same difficulties as those which my hon. friend has pointed out with regard to this method?


Edward Walter Nesbitt: Not necessarily.


Henry Herbert Stevens: Persons make false statements as to their income.


Edward Walter Nesbitt: They might put in false statements, but we know about their incomes in the towns. The assessors in the various towns and cities cannot be misled by a false statement of a man's income; it is known locally. I believe that my hon. friend could get his income tax. I am not advocating an income tax, hut I do not believe it would take the army of officers that he thinks it would. In ordinary towns his customs and inland revenue officers could easily get at the income of everybody in the place. They could do that without any difficulty and. it would give them something else to do besides playing golf in the afternoon, not that I object to those chaps playing golf.


George Perry Graham: They might overdo it.


Edward Walter Nesbitt: Yes, but the ordinary taxpayer who is paying through the nose objects. I personally have no particular objection, but I think that my hon. friend could get at the income of people through the country to a viery great extent. As to the farmers, I agree with my hon. friend the minister that as farming is the basic industry of this country, it is well to- encourage it as far as possible. As far as I know the farmers are just as willing to pay their way and to pay what is necessary to bring this war to a successful conclusion as any other class of men in the community.


Mr. LOGGIE:: When I addressed the House on the resolution, I made certain overtures to the Minister of Finance regarding this proposed measure. I cannot quite concur with my hon. friend from North Oxford (Mr. Nesbitt) in the view that there will be any difficulty in getting at the
capitalization of companies. I think that can be reached without very much difficulty.
I think it is an absolutely fair method which is proposed at the present time by this legislation. I wish to refer for a moment to what appear to me to be some anomalies in the Bill, and which I think are unfair to the country at large. The telegram that was read by the hon. member for Pictou (Mr. Macdonald) to-<jay from the Rossland Board of Trade bears out my view, and is an evidence that the feeling of the people on our western coast is somewhat on the same line. The telegram in part reads as follows:
-and failing this, that the minimum capital affected be reduced to $25,000, and the spread between persons and corporations be changed from 3 to 2 per cent.
First of all, the minister has never yet given the House any reason, as far as I can recall, why the spread in Canada should be three per cent, when it is only one per cent in the United Kingdom. It has been explained that the rate was made six per cent for incorporated companies in the United Kingdom because money would not earn as much there, and seven per cent for individuals and partnerships . because they have not the advantages that incorporated stock holders enjoy. We are quite willing to accept that explanation as correct, but the minister has never yet explained why he made the spread in Canada three per cent instead of one per cent as in England. To illustrate, let us suppose there are two companies side by side, one an incorporated company and the other a . partnership, each with a capital of $400,000 and earning 10 per cent. The incorporated company will have to pay to the Treasury $3,000 per annum, and in three years it will have paid $9,000; whereas the partnership company, engaged in the same business and earning the same money, would not have paid one cent. To me that seems an anomaly.
With regard to the other recommendation of the Roseland Board of Trade, that the minimum be reduced to $25,000, I confess I think it a very wise suggestion, and in my judgment it would mean no greater cost for collection. The minister is taking power to ask the companies to have an accounting period, and those that have not had one in the past can be compelled to take stock and make a statement of their business to the minister. I repeat that I think it a wise suggestion to reduce the minimum capital to $25,000. For example, in a town of 5,000 people, an incorpor-


[Stage Direction]
Motion agreed to, Bill read the_ second time, and the House went into, committee thereon, Mr. Rhodes in the Chair.
On section 1-short title:
Alexander Kenneth Maclean: What does the minister think about my suggestion of changing the title to "The Business Profits War Tax Act, 1916"?


William Thomas White: When the Bill was under consideration I thought of inserting the word "War," but it occurred to me that it might be objectionable to call it a tax on war profits, as I suggested to my hon. friend this afternoon.


William Stewart Loggie: The worst of it is that it would not foe true.


William Thomas White: In some cases it might be undoubtedly a tax upon war profits, but in many cases- it would not be a tax upon war profits, at least direct war profits. In seme cases parties will pay this tax who have not derived their profits from the war directly or indirectly. Therefore I think it would be a mistake to call it a tax upon war profits.
Mr. A,. K. MACLEAN: No. I said: "The Business Profits War Tax Act." I think that is. different from "The Business War Profits Tax Act." We might let this section stand for the present.
Section stands.
On section 2-definitions:


Mr. SINCLAIR:: In regard to the Board of Referees, I would like to have the minis-

ter'-s view. I hope the selection will not be made under the ordinary patronage system, nor that all the members of the board will be of one political stripe. I think the minister ought to say something about the policy that he will adopt in appointing the members of this board, as it is of great importance to the taxpayers.


William Thomas White: I do not know that I can answer my hon. friend except to say that it will be my abject to appoint men of good standing who will be absolutely fair in the discharge of their duties, which will be, in a sense, judicial. I do not know exactly what my, hon. friend means toy the ordinary patronage method of appointment. I certainly will endeavour to get good men for so responsible a position.


John Howard Sinclair: I think the minister understands what I mean, because it is well known that all the officials appointed by this Administration or by any party for that matter are usually of their own stripe; but in a matter of this kind, where both sides are equally interested and where there should be no political advantage giten to any one, it would be a very proper and fair thing if the minister should, in making his appointments, see that suitable men were selected and not confine himself to one political party.
There is another matter that I wish to draw to the attention of the minister-and perhaps this is as good a time as any- and that is the importance of publicity in regard to this assessment. I have not seen anything in the Bill which requires the minister to make public the assessment that he makes on those people who are liable to assessment. One of the great safeguards in the assessments that are made by the municipalities throughout Canada is the fact that they are published; that when the list is made out by the assessor 'of the city or the town, it is either published or placed in the office of the city or town, where every man can see it, and people know the business of their neighbours well enough to know whether thex assessment is fair or not. So far as I can judge, under this scheme the Department of Finance or the minister himself is the sole judge. He has abandoned the idea of taking the legal, well-known capital of a company as the basis; he has to fix that basis. All that work is thrown upon the minister. It is a very heavy task and he would be greatly assisted in
doing it properly by publicity. I would suggest to- him that he consider that point, and, if necessary, insert some clause in the Bill providing that the list of those whom he intends to tax in each province in Canada toe posted up so that all the people that are taxed may see how other people are taxed. In that way he will get a great deal of information that he cannot get in any other way. If he does not do that, the roan who lives across the street will not know what his neighbour is paying. He has a better idea than the minister has of what his neighbour is able to pay, and unless some publicity is given, it goes almost without saying that the taxation cannot be fairljl made.


William Thomas White: I do not think it desirable that publicity should be given in the way that my hon. friend suggests. I have already said that, if Parliament desires a return, such a return . shall be brought down. This is a business tax dealing with private affairs of individuals, firms, and companies, engaged in business throughout the country, and while Parliament is entitled to any information as to the results of the tax, I do not believe the details should be advertised any more than is necessary.


John Howard Sinclair: It may be too late when Parliament is assembled for a man to get any advantage from the publicity, as the list is settled in September, and Parliament meets later on. It is not very much comfort to the man who has not received a fair show on the scheme of taxation to know that he can move in Parliament for a return and find out then what his neighbour has been taxed. I can see no objection to publicity. There is no objection under the municipal system and there should be none under the federal tax.


Edward Mortimer Macdonald: I quite agree with my hon. friend from Guysborough. All the information that he suggests the public should have is information that the public ought' to have. In order to have the fairness of any measure of taxation firmly established, it is necessary that everybody be sure that the tax is equitably imposed. So much discretion is left to the minister's department under this Act that he must concede that, putting it in the mildest way, there may be a lack of confidence in regard to the allotment of the taxation which could be avoided by publishing information as to the amounts paid under the

Act by different firms and corporations in the community.


William Thomas White: The returns of assessment will be brought down to the House if asked for, as I have no doubt they will be asked for. Dominion taxation is different from provincial of municipal taxation. A great deal of discretion is necessarily reposed in the minister or his department, but that is true in the case of any taxing department; it is true with regard to the Customs Department and the Inland Revenue Department. Assessment will be made, there will be a right of appeal, the assessment will be fixed, the tax will follow and returns will be brought down by this Parliament. It .'feerns to me that in that way all necessary publicity is given.


William Stewart Loggie: I concur in what the minister has said. One reason why this information should not be published is the fact that of two companies in the same community one may have to pay and the other may not. To my mind it is very much better to keep that information in the department, and if any member of the House wants it he can get it in the regular way.


John Howard Sinclair: Do I understand the minister to say that no bluebook will be published containing the names of the firms taxed, the valuation of their properties, and the amount of their assessment under this Act? Will this information appear in any of the reports or publications of the department, or will it be kept privately in the minister's office, to be seen by no person except one who moves for a return in' Parliament?


William Thomas White: My statement
is that returns will be brought down to the House of Commons if required by Parliament. I think it would be inadvisable to publish the returns in a bluebook or ,give details of the business of parties or firms assessed throughout Canada. Parliament, of course, is undoubtedly entitled to information as to the result of this tax a,nd as to the individuals or firms assessed under it. Take the Customs Department; details are not published in any bluebook, though the results are published.


[Stage Direction]
Section agreed to. y
On section 3-tax imposed:
Edward Walter Nesbitt: Will the minister tell us what (a) and (b) mean?
Sir THOMAS W'HITE:	My hon. friend
will recollect that under the Budget of 1915

a special War Revenue Act was brought down under which banks, trust and loan companies and insurance companies were specially taxed. They are liable to this Act, but the amount which they will pay under the special War Revenue Act will be deducted from the amount which they would otherwise be liable to pay under the provisions of this Act.


Edward Walter Nesbitt: Suppose a company is
not liable to pay anything under this Act?


William Thomas White: They pay whichever is the greater.


Louis Audet Lapointe: Why is there a
difference between the tax imposed on an incorporated company and that which applies to a business owned by a firm or partnership?


William Thomas White: I am sorry that my hon. friend was not present when this matter was under consideration by the committee, because we spent many hours in the discussion of that very question. I think it is generally conceded that if a man goes into business and risks his fortune in that business he' might' fairly receive 10 per cent upon the capital invested in the business as a return. On the other hand, 7 per cent is regarded as a
10 p.m. normal return upon the capital stock of a joint stock company. Further, an individual risks his entire fortune in his business, because' if he fails all his assets are liable for the business. On the other hand, in the case of a joint stock company a man limits his liability to the amount he puts into the company. For these and some other reasons that I could mention, but which it is probably not necessary for me to go into now, it was thought advisable to decide upon the 10 per cent rate in the case of individuals and the 7 per cent rate in the case of incorporated companies.


William Stewart Loggie: I asked the minister if he would not consider having a special clause providing for taxation on the turnover in the case of sales of war supplies, with a provision similar to that in the Bill with respect , to banks, by which hanks are exempted from payment of taxes under this Bill to the extent of the taxes imposed on them by the legislation of last year. I supported the minister a moment ago; perhaps he will support me now.


William Thomas White: My hon. friend will recall that I said that such a plan would work injustice in many cases, where

I
the profit on eales of war supplies is very small or where there is .no profit at all. The proposal, I think, would work hardship.	'
Mr. MeCREA: This measure is the most vicious piece of legislation ever put upon the Statute Book of any country, but we should endeavour to make the best of it and put it in the best shape possible. By subclause (a) the minister takes authority and power to decide all disputes, his de-. cision to be final and binding. We have not yet been told how he proposes handling the administration of the Act. This country is large. Does the minister propose to deal with this whole matter himself and to be the sole judge and umpire, or will it be handed over to a committee, or several committees? This may require quite a staff of officials, and'whilst I would have considerable confidence in the minister himself in dealing with these matters, and ' would accept his decision as final, I would not be prepared to thus accept the decisions of all the appointees he might make. My experience with officials appointed by the Government has been that they are sometimes very officious and sometimes annoying without cause. I have 'had some experience with appointees of the present Government in this respect, in my own particular business, where they spent a considerable time and caused some annoyance trying to make out a case when there was no case. I anticipate great cause for complaint, whether with reason or without reason, in the administration of the Bill. Where a corporation is supposed to be favourable to the Government, there may be a disposition not to look over their statement as. closely as those of political opponents of the Government. The Act would be bad enough if we were dealt with very leniently under it. I think this idea of the Government forcing themselves on the manufacturers as partners in their days, of prosperity, but having nothing to do with them ini their days of adversity, will not be found popular. In the last two or three years the manufacturers have made little or no profit. Just now there has been a turn in the tide, and many businesses are a little more prosperous, but when the war is over I doubt very much if that reign of prosperity will last very long. By this measure the Government proposes to be a partner with the manufacturers in our days of prosperity, but when days of adversity come they will
say: We have nothing to do with you now, you will stand alone or fall, just as you like. For my part I have absolutely no objection to paying and to being taxed my fair share in proportion for the funds necessary to carry on the war and the business of this country; but, as I have said before, I do not believe that'this tax will apply equitably. I said that it would not affect 50 per cent of the people of this country who are well able to pay. I say now it will not affect 20 per cent of the people in this position, but will affect some very injuriously and very unfairly. I rose to ask the minister to explain how he proposes to operate this measure so that we will have some measure of guarantee of how we are to be treated in this respect.


William Thomas White: No measure of taxation will ever be popular, but, unfortunately, we have to resort to measures of taxation from time to time as the. public interest requires, and if ever there was a time in the history of Canada when special taxation was justifiable, I think it is now, in the midst of this war. I do not understand that my hon. friend in any way desires to avoid paying his fair share of taxation. Any taxation measure which has to be administered by the Dominion Government must be administered by some department. In this case the measure will be administered by the Department of Finance. The minister here means the minister, as head of the department, acting either by himself or through officials. It is not to be supposed that the minister will be able to give personal attention to every detail of the administration of a measure of this kind any more than it would be possible for the assessment commissioner of a city, who is generally responsible for the assessment of the city, to perform every act in connection with the assessment. But the minister is the responsible head of the department, and questions will be referred to him from time to time as they are in connection with all administrative duties of the department. We shall have to administer the Act from the department here; it will be necessary to have, a staff throughout the country, a certain number of officials who will assist, but assessments will be made from the Department of Finance here. We shall, in the first instance, call upon parties thought to be liable for a return. When, those returns come in they will be examined, and, if they are accepted, the assessments will be made accordingly.

If not, the assessment will be made according to the judgment of the department. In case of the party assessed feeling aggrieved, he has as his remedy an appeal to the board of referees, and if he is not satisfied with the judgment of the board of referees, then he has a further appeal to the Exchequer Court. In a general way, and only in a general way, that is what would happen under the administration of the Act.


Louis Audet Lapointe: I would call the attention of the Minister of Finance to the second clause of the Bill which states that " minister " means the Minister of Finance. I do not see how the minister can delegate his powers to his first clerk or second clerk or to any other assistant. Then in clauses 4 and 6 it says that the minister, that is, the Minister of Finance, shall determine what is to be done.


William Thomas White: If my hon. friend will look up the Customs Act and other Act he will find that the minister is supposed to do everything. That means that the minister is responsible, acting for himself, or through his staff. I have administrative duties to perform every day. Sometimes I do them directly, and sometimes I consult with officials, but they are all done in the name of the minister. There are some sections of this Bill which require the exercise of the discretion of the minister himself. In these cases, the minister would exercise that discretion, but, so far as the making of the assessments throughout the country and the general administration of the Act are concerned, the intention is that they shall be done by the minister through hig staff.


Edward Mortimer Macdonald: I would like to have a statement from the minister in regard to a matter concerning which I have received, as, I think, other hon. gentlemen have received, communications. It is complained by the licensed fire insurance companies that, while they will be taxed, the fire insurance companies which are not licensed, and of which there is a large number in Canada, will escape. I do not exactly appreciate the distinction. I would 'like to know whether the minister has heard of the complaints, and what action will be taken with reference to them.


George Perry Graham: I think the situation,is,, that under the taxation Act of 1915, certain taxes -were imposed on fire insurance com-[Slr Thomas White.]
panies having licenses in Canada, while other companies, which do business without a license in Canada were not taxed. I think, that the point raised is by the insurance men who are interested in the licensed companies of Canada who object strongly that they should be taxed while companies that Are not licensed are not taxed under the Act of 1915.


William Thomas White: It is in this Bill too.


George Perry Graham: The point has been '
brought to my attention, as it seems to have been brought to that of my hon. friend from Pictou (Mr. Macdonald) and there has been a good deal of correspondence about it. I would like the minister to answer the question put by my hon. friend from Pictou, and tell us why those other companies are exempt.


William Thomas White: My hon. friend will realize that this Bill could not apply to unlicensed companies which are not carrying on business in Canada, because they could not be reached.


Edward Mortimer Macdonald: Why not?
Sir THOMAS-WHITE: Because they have no offices in Canada. The companies, to which reference is made, are companies like the New England mutuals, or other companies in the United States, or Lloyds, which have no offices in Canada, and which, therefore, can not be directly assessed in Canada. They do business in the Dominion in the way of insuring plants. The contracts' for such insurance can be made outside the boundaries of Canada, or an agent may come to Canada and write a policy. But the Dominion cannot impose a tax directly upon them because they are not represented here. That is recognized by the licensed insurance companies, but the suggestion was put forward that as we would not be able to reach those companies by reason of their not being domiciled in Canada, a tax should be imposed upon the premiums paid by business people in Canada who insure in such companies, so as to equalize matters. There is a good deal to be said for a tax of that kind, but I may point out that five or six years ago a Bill was introduced for that purpose in this Parliament, that it passed the House of Commons, but was rejected in the Senate. It was quite a controversial measure, and I do not believe that at this particular time it is desirable to introduce a Bill -which I think would give rise to a good deal of

controversy, that is, a Bill imposing taxation upon the premiums paid by business houses in Canada to those unlicensed companies. Personally I am of the view that, when the Insurance Act comes up for revision in this House, that question might properly be discussed, because there is a good deal to be said for the view of the licensed companies.


George Perry Graham: There is quite a large volume of business done by these New England companies, and it is quite unfair to the Canadian companies.


William Thomas White: The mutual companies will not come under the provisions of this Act.


Rodolphe Lemieux: The fraternal societies are in the same position, are they?


William Thomas White: Yes.


Mr. McCREA:: I do not know whether I am right or not, but I do not see that the Bill specifies how often an accounting shall take place. Some of the best concerns in the country make their accounting twice a year, and if they took advantage of that they might make a profit of 14 per cent and not pay anything.


William Thomas White: No. If the
accounting period is for six months, the return will be made in respect to such accounting period. My hon. friend will observe from section 3 that the rate is 7 per cent per annum, so that the same principle will apply to the six months accounting periods.


George Perry Graham: Objection is raised by the licensed companies to the non-taxing of unlicensed companies. These unlicensed companies do a large amount of business in Canada amongst the manufacturers at a rate considerably lower than the licensed companies charge owing to certain conditions existing amongst themselves. I have had insurance agents come to me time and again last year about this very matter. I could not make out clearly why they were not taxed. I can see only one way of taxing the profits of these companies in Canada and that would be through the only people you could get at in Canada, namely, those who are paying the premiums. If these companies would allow those whom they insure a reduction equal to the amount of the tax they have to pay, I presume the manufacturers would not object to paying the tax. I see the difficulty which arises in taxing the premium directly. It might be done. I would urge the minister to consider it seriously, because, while by our tariff taxation and otherwise we are endeavouring to build up business in Canada, we seem to be putting a premium on companies that do not take out a license in Canada. I think the minister would be well advised if he would consider the matter very seriously and see if there is not some way of meeting this difficulty. Not only is there a very strong objection raised by the licensed companies themselves, but every representative they have in the Dominion is also deeply interested, as the minister can see, because these representatives do business largely on a commission basis and every premium they are deprived of not only injures the licensed company but really works detrimentally to the man in the field who solicits insurance.


Edward Walter Nesbitt: I have brought this question up for a number of years. Whenever the minister has changed his tactics I have brought it up. At the time the present Insurance Act was up for consideration there was a great deal of discussion over this question. The manufacturers and the licensed insurance companies met before the Banking and Commerce Committee at that time, and after two or three weeks of discussion arrived at a solution. The insurance companies based their argument on the fact that the manufacturers were protected in everything they manufactured, while the insurance companies were not protected at all. While they employed large staffs, invested their money practically all in Canada, erected large buildings in cities and helped to build up the country to a very great extent, they were not protected at. all and there was no inducement for them to take out a license. Yet they took out licenses not only in the Dominion, but in every one of the provinces. They took up the question of what they called underground companies, the New England Mutual, the Reciprocal Underwriters, and the American, German and French Lloyds who do business in Canada without taking out any license whatever. The arrangement they came to in the Banking and Commerce Committee was that every assured person was to pay 15 per cent of the premium. The proposal was sent to the Senate, but the Senate struck out the clause''and put in a clause that the insured were to Teport to the Insurance Department the names of the underground companies that insured them and the amount of the premin ns. I think



they report that now. That is the way it .ended, but there has always been, a great deal of dissatisfaction on the part of licensed companies because they have to take out a license if they want to do business in an honest and straight-forward way. They carry all classes of business and the reciprocal underwriters only carry sprinkler risks. Recently the Board of Insurance Underwriters also started .a sprinkler department and they have a certain number of these risks themselves. At the same time they have to meet with an unfair competition. These unlicensed companies do not pay anything towards the upkeep of this country, they derive a profit from their business, or they would not do business, and that is why I have always urged upon the present Minister of Finance, as I urged upon the former Minister of Finance, that it was only reasonable and fair that these unlicensed companies should be forced to pay a certain .percentage on the premium which, of course, would have to be paid by the assured in this country. I think that ought to be included in this Bill.


Edward Mortimer Macdonald: I see that the minister has received a circular on this subject setting forth the arguments which are urged by the Insurance Federation in Canada in regard to the matter. They present the argument of the mutual companies that it would be inexpedient, having regard to the small amount involved, to impose taxation on these companies as it would involve a departure from the principle of the taxation of insurance companies directly. They suggest that the answer to this is that as a matter of general principle to impose a general tax upon one class of companies who are carrying on a legitimate fire insurance business and to permit another class to go free is a discrimination that is not fair. I think that the situation is on6 that should be dealt with from the war standpoint, apart from the general question which arose, and to which the minister alluded as having been dealt with toy special legislation some two years ago. I am at a lo-ss to understand why my hon. friend should exclude this class of people who are not licensed in this country, because the Bill provides that foreign companies doing the business in Canada on other lines shall contribute. I did not see any reason why, in dealing with foreign companies doing business in Canada, my hon. friend does not tax these

unlicensed companies in the same way that he taxes other foreign companies.


William Thomas White: These insurance companies have no offices in Canada. I do not know that it is urged at all that we could reach them directly. It is suggested that by reason of the fact of not being able to reach them directly the tax should be levied on the premium paid by the insured in Canada.


Edward Mortimer Macdonald: In a great many cases these companies do not have offices in Canada, but it is well recognized that these risks can be placed. The hon. member for North Oxford (Mr. Nesbitt) has put the point. We all know where they are. They are really doing business here. The contractors may toe in New York, or some other place, but they really insure the manufacturer here against loss by fire just as effectively as any company in Canada could.
It is suggested in this memorandum that those who place insurance with unlicensed companies should be compelled to make returns to the Superintendent of Insurance; and that those returns should be 'accompanied by a statement covering the percentage decided upon; and that it should be incumbent upon any one recovering a loss from the company to prove that the taxes and premium had been paid. Those are the methods which are suggested by the licensed companies for dealing with this matter. It does seem anomalous that under our system unlicensed companies who take blanket risks in a great many ways should be able to do business free from all the restrictions that apply to licensed companies. I am sure the minister appreciates the argument which has been made in favour of taxing these unlicensed companies if they can be taxed, but I understood him to say that the expense involved in collection would do away with whatever money might be derived. I think a tremendous amount of insurance of that kind is being done in Canada, and I should like to know on what ground the minister justifies his not attempting to make these people pay under this measure.


William Thomas White: It would not be possible to do that under this Bill, because we cannot tax directly an insurance company carrying on business in New England, for instance, and having no office in Canada. I do not think it would toe within the power of the Dominion Government to impose a direct tax upon a non-Canadian

company having no place of business in Canada.	'


Edward Mortimer Macdonald: You cou'ld tax the contract.	,


William Thomas White: But that would not come under the provisions of this Act. In order to do that we should have to have a supplementary measure of taxation. It might be- done, let us say, by an amendment to the Insurance Act, but it could not be done under this measure. Not only that, but as most of these are mutual companies their earnings would not make them liable under the provisions of this. Act. My own view is that there is a great deal to be said for the contention of the insurance people, and when the Insurance Act is under revision again this question will have to be considered and dealt with. My predecessor had a great deal of difficulty with it. I am told that there was no question that was more discussed at the session of 1910, deputations coming from various parts of Canada representing business interests. We are imposing a -tax upon the business people of Canada under this Bill. It is now suggested that we should impose a further tax, and tax the premiums which people pay to- these insurance companies. I think that would be a highly controversial question, and., considering the experiences in this House and the Senate in 1910, I do not think it would be advisable to consider such a tax at the present time.


Edward Walter Nesbitt: In 1910, fifteen per cent was suggested before the committee as a compromise.


William Thomas White: Am { not right in saying that it was a highly controversial question ?


Edward Walter Nesbitt: It undoubtedly was. .


Edward Mortimer Macdonald: I understand the minister's attitude, although I can see no reason why a supplementary measure to reach these people should not be introduced. Will not the mutual insurance companies incorporated, under provincial charter, and doing ibusines-s in that way, be .reached by this Bill?


William Thomas White: If they make the stipulated profits they are liable, notwithstanding that they are provincial incorporations, but I think the companies my hon. friend has in mind would hardly make the profits to render them liable.


John Howard Sinclair: Subsection (b) of clause 3 reads:
166* [DOT]
(b) That the dividends received from the stock of any incorporated company which has paid a tax upon its profits under the provisions of this Act shall not be included when the profits of any business are -being determined.
That I suppose is to protect a holding company which holds the stock of an incorporated company. I would suggest that it is possible for a holding company to hold shares or an interest in an unincorporated concern. I have known such cases myself, and in order that companies holding an interest in an unincorporated company should not be doubly taxed, I think we should add something to this sub-section, and I would suggest the words " or any shares or interest in an unincorporated company."


William Thomas White: We have gone
pretty far in exempting the holding company in respect of dividends derived from companies whose stock they hold. The income tax of the United States applies to all holding companies in respect of their entire profits. I am not quite sure that 1 understand my hon. friend.


Alexander Kenneth Maclean: He says that you are exempting the profits which one incorporated company holds in another, but making no exemption when the holding company has an interest in a firm or partnership. For instance, a shipping company might own 32-64ths of a ship, which is practically a partnership.


William Thomas White: I thought we
had gone pretty far with regard to holding companies, but I will consider that suggestion. We can let the subsection stand.


Francis N. McCrea: How would the minister
deal with a case of this kind? Stocks, oi course, of every kind are higher than they were twelve months ago, 10 per cent increase being about the average; that is, a man who takes an inventory in 1915 would probably find his goods were worth in per cent more than they were worth in 1914. The minister, I presume, would consider that as part of the profits of the year. But how would he deal with it' when it comes to the last accounting period in 1917? Before the man has got rid of his stock, it may have dropped in value. It is certainly likely to drop after the war. What would the minister do in that case? VVould he reap the benefit of the increased value of the inventory in 1916 over 1915, and allow the owner to stand the loss if the value of the -stock decreased in 1917?


William Thomas White: It would depend upon the value at the time of the stock-

taking for the accounting period. So far as capital is concerned, that will be determined as from the beginning of the accounting period. The value of the stock would be taken and the accounts made up at the end of the accounting period.


Francis N. McCrea: I mean the stock on hand.


William Thomas White: Stock on hand
and the accounts as made up would show the profits for the accounting period. I do not think we can assume that the price is going to drop at a certain time; if you assume that, you cannot make your assessment at all. You have to deal with your stock for the accounting period on its merits.
Mr. MoORAE: The price of shells might drop a great deal.


William Thomas White: Of course, it
would not be good business to take the stock at its full value. You might be justified in having a contingent account to take care of any drop that might occur. No rule can be laid down as to that; it is a question of fact in each case of what are the true profits for each accounting period.


Francis N. McCrea: I am just asking for information to know how the minister intends to deal with such matters.


William Stewart Loggie: As I understand it, the
general rule in taking stock is to take stock at cost price, and if it be worth more money at that time, that is an anticipated profit that goes into next year's business.


Edward Walter Nesbitt: If the stock depreciates, what do you do?


William Stewart Loggie: You reduce the amount if it depreciates. I think that is the custom of the trade. If the stock has depreciated in value, you put it down at its proper value at the time the stock is taken, and the proper value in no case is greater than the cost price.


Alexander Kenneth Maclean: Will subsection
(b) stand?


William Thomas White: I do not see my way to agree to that unless some concrete case is brought to my attention.


Alexander Kenneth Maclean: I can hardly see how
you can logically exclude such dividends. There would be ho harm in letting the subsection stand.


William Thomas White: All right.


Alexander Kenneth Maclean: Is there any variation
from the resolution in the first eight sections of the Bill?


William Thomas White: No.
Subsection (b) stands.
Section 3, with the exception of subsection (b), agreed to.
On section 4-accounting period defined.


Edward Walter Nesbitt: I presume that, if a firm is in the habit of taking stock at the end of six months just to see how its business is panning out, but still carries it forward to the end of the year, the annual statement will be all that is necessary for the minister?


William Thomas White: That is all that is necessary.


[Stage Direction]
Section agreed to.
On section 5-trades and businesses included :
William Stewart Loggie: During the discussion of
this section when the resolution was before the House, I made the following statement as reported in Hansard, page 2054:
Mr. Loggie: I wish to bring a case to the attention of the Minister of Finance, and ask him how he could possibly arrange a basis for taxation in that case. Take, for example, the Arm X referred to, that of Armstrong & Ferguson. This firm had an order to supply the army, if you like, with certain commodities. In the tourse of three months they sold $3,000 or $4,000 worth. So far as any record shows, the Arm was not in existence before that time, and it went out of business three or four months later, and was succeeded by William Ferguson, who, I believe, is the Ferguson of the firm.
I want to say here that I was not right when I made the statement so far as any record showed the firm was not in existence before that time. I have reason to believe that the firm was in business for pearly i year before war was declared; that it continued for three months thereafter; that it executed contracts during the three months, but that the contract was not completed, and that William Ferguson, who is the Ferguson of the firm of Armstrong and Ferguson, succeeded to the business. I think it only fair that l should make this correction. I was making an illustration of this firm, showing the minister the difficulties I saw in the way of his enforcing subsection a of section 5; but, of course, the circumstances are somewhat changed, and it is very much as the minister said in his reply: it depends on the facts. When the facts were found out,

if the capital was in the business and the profits were made, provided that the war supplies were not less than 20 per cent of the business, then there would be a tax; but if the war supplies were less than 20 per cent of the turnover of the business, then there would not be any tax on the war supplies even although the firm earned a very large profit. It seems to me that section 5 will be difficult to operate, because it will be hard to get at the facts as to what portion of war supplies we are to expect some tax from. The minister, however, in his reply to me, said it was a matter of fact; that the question was a matter of capital and earnings, and what were the total sales of the firm and the total sales of war supplies. The members of this firm are still at Newcastle; and if they are liable for a tax under the law, I think they will be perfectly good for it, although the firm was dissolved about three months after war was declared.	-


James Joseph Hughes: When the resolutions were before the House, an hon. member opposite from the province of Ontario stated that there were quite a large number of companies incorporated in that province with a capital of $40,000 for the purpose of evading some local tax or for some other reason. He stated that they were doing well, many of them making money; that many of them would wish to come under the operation of this measure, and that a considerable sum of money could be obtained in that way. Is there anything in that statement?


William Thomas White: I thinik I can say that no petitions have been received from such companies asking to be brought under t'he provisions of the Act. If the minimum amount of capitalization were reduced to $40,000 it would be urged that companies with a capitalization of $30,000 ought to be included. If they have a capital of $50,000, they will be liable; if they have a capital of less than $50,000, they will not be liable. With Tegard to the title of this Bill, referred by the hon. member for Halifax I would move that [DOT]section 1 be amended by inserting the word "war" before the word "tax" in the first line thereof.


[Stage Direction]
Amendment agreed to.
William Thomas White: As to subsection (b) of section 31, a question was raised by the hon. member for Guysborough and by the hon. member for Halifax. The wording of that subsection is:
That the dividends received from the stock of any incoroprated company which has paid a tax upon its profits under the provisions of this Act shall not be included when the profits of any business are being determined.
I do not quite understand what amendment is suggested. Hon. gentlemen will observe that the words used are "the dividends received from the stock of any incorporated company."


Alexander Kenneth Maclean: What was meant was this: If company "A" incorporated holds Shares in company "B" incorporated, and company "B" has paid the war tax under the provisions of this Bill, that fact should be taken into consideration in determining the assessment of company "A" incorporated. Supposing company "A" incorporated holds a half interest in a partnership carrying on a business similar to that carried on by the incorporated company, and supposing that partnership has assets in excess of $50,000 and has paid the tax; should that not be taken into consideration whehi assessing the taxation payable by company "A" incorporated? The cases are exactly the same except that the company in which the incorporated company "A" holds an interest is in the one case another incorporated company while in the other case it is a partnership.


William Thomas White: Would my hon. friend think that the word "dividends" would, be apt in both cases? That is what I am not clear upon.


Alexander Kenneth Maclean: I think the minister would have to recast the whole 'section in order to cover the point.


William Thomas White: We will let it stand until we have a chance to consider it.


Edward Mortimer Macdonald: If a corporation
which had been in existence for some years and which had a capitalization of $40,000 at a time later than the coming into force of this Act increased its capitalization to $50,000, would this Act apply to that company only from the date upon which the formal increase of capitalization was effected?
Sir THOMAS WH1,TE: Subsection a of section 5 says:
The business of any person the capital employed in which has been throughout the accounting period less than fifty thousand dollars.
The word, "throughout" is used.


Edward Mortimer Macdonald: As a matter of legal interpretation, unless the word "eontinu-

ously" was used, the word "throughout" might not be held to>
cover the whole period.


William Thomas White: This is an exception which only applies if the capitalization has been less than $50,000 throughout the accounting period.


Edward Mortimer Macdonald: Supposing only last October a company had increased its capitalization to over $50,000, would the minister toe able to go hack to the accounting period previous to January 1, 1915, the first accounting period, and make the tax payable from that time?


William Thomas White: If during an accounting period a company increased its capital front $40,000 to $50,000, it would be liable in respect of that accounting period in respect of the capital employed during that accounting period.
Section 5 agreed to.
Progress reported.
On motion of Sir Thomas White the House adjourned at 11.10 p.m.
Friday, April 7, 1916.