1916-03-16

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

Mr. TURRIFF:: Is it the intention of the Government to carry out the suggestion of Sir George E. Foster, that every application for a public work or a public improvement should go before a competent

board of engineers; and business men, to be reported upon by them for the information of the Government, before it is passed and put into the Estimates?


Mr. ROGERS:: Every application for a
public work or a public improvement is reported upon by the permanent staff of the department before it is undertaken. The report in the first instance is made by the district engineer and is submitted by him for the approval and consideration of the chief engineer. Thereafter the application is considered first by the Treasury Board and afterwards by council.


REGINA MILITARY CAMP.
Mr. THOMPSON:: 1.	When was the military camp established at Regina, Sask. ?
2.	Who are the medical doctors who have been in charge of camp from commencement?
3.	How many men are there in that camp?
4.	How many deaths of enlisted men have occurred in that camp?


Mr. KEMP:: 1.	At the end of June, 1914.
2.	The medical officers in charge are: Captains E. E. Meek, W. R. Coles, A. S. Gorrell, and E. B. Alport.
3.	1,320 all ranks, as on February, 1916.
4.	Three deaths have occurred since November.


ARISAIG LIGHTKEEPER.
Mr. WILLIAM CHISHOLM:: 1.	Who is the lightkeeper at Arisaig, N.S. ?
2.	When was he appointed, and at what salary?
3.	On whose recommendation was the appointment made?


Mr. HAZEN:: 1.	Rev. D. L. McDonald, temporary keeper.
2.	February 14, 1916.	$140 per annum.
3.	Hon. E. L. Girroir and Mr. G. A. R. Rowlings.


CENSORS AND DECODERS AT LOUISBURG.
Mr. CARROLL:: 1.	What are the names of the censors and decoders at the wireless station at Louisburg, South Cape Breton?
2.	What salary is each paid?
3.	How much was paid for this service in
1915?	*
4.	What was the occupation of each before being appointed as censor and decoders?
5.	Are they to give the whole of their time to this service?


Mr. KEMP:: 1. Censor, Joseph Macdonald.
Assistant censors: D. S. Hooper, S. P. Challoner, W. R. Tobin, Neil Ferguson.

Decoding clerks: John J. Bagnell, Charles McDonald, Stewart Maddonald, Frank Cook, Thomas Hayden, Michael J. Dowd.
2.	Censor, $9 per diem; assistant censors, $7 per diem; decoding clerks, $3.50 per diem.
3.	Joseph McDonald, $3,285; D. S. Hooper, $2,555; S. P. Challoner, $1,519; W. R. Tobin, $210, appointed Dec. 2, 1915; Neil Ferguson, $168, appointed Dec. 8, 1915; I. J. Bagnell, $1,277.50; Charles McDonald, $1,277.50; Stewart Macdonald, $1,277.50; Frank Cook, $959, appointed April 2, 1915; Thomas Hayden, $17.50, appointed Dec. 27, 1915.
4.	Joseph Macdonald, barrister; D. S. Hooper, merchant; S. P. Challoner, journalist; W. R. Tobin, barrister; Neil Ferguson, merchant; J. J. Bagnell, insurance agent; Charles McDonald, law student; Stewart _ Macdonald, medical student; Frank Cook, clerk; Thomas Hayden, law student; Michael J. Dowd, accountant.
5.	The entire time of these officers is at the disposal of the Government.


ANNANDALE BUOYS.
Mr. HUGHES:: 1.	Did a man named James R. Robertson look after the buoys in Annandale or Grand River east harbour in Prince Edward Island?
2.	If so, what did he receive per year for doing the work, and when did his contract expire, or was he dismissed?
3.	Who succeeded Mr. Robertson, and what did he get for doing the work?
4.	Did he get the contract by tender, or how was he appointed?
5.	Who is looking after the buoys at present, what is he getting for doing the work, and how was he appointed?


Mr. HAZEN:: 1.	Yes.	'
2.	$41.67 per annum. The contract terminated 15th June, 1912, but Mr. Robertson continued to maintain the service until 6th September, 1912.
3.	William E. Swallow, of Annandale, $41.50 per annum.
4.	The service was transferred to Mr. Swallow upon recommendation of Mr. A. L. Fraser, of Souris.
5.	John J. Clarke, of Annandale, $33 per annum. Public tenders were invited last year, and Mr. Clarke's tender, which was the lowest, was accepted.


UNOPPOSED MOTIONS FOR PAPERS.
[Stage Direction]
Mr. A. K. Maclean.-For a return showing how many medical doctors are employed by the Militia Department at Halifax, N.S.; the name of each, and their rank and pay, respectively; whether the entire time of all or any is devoted

to the militia service; when not constantly employed in the militia service, what is their daily period of service.
Mr. Carvell.-For a return showing whether the Government has received any complaints as to the manner of supplying clothing to the Royal Military College, or as to its fit, workmanship or materials employed, or as to any delay in furnishing the cadets with clothing; if so, from whom such complaints have been received; on what grounds were such complaints made.; what form was the complaint in; what was the nature of the complaint; whether the Government is aware as to whether or not there has been dissatisfaction as to the fit, workmanship and materials employed, or as to any delay in furnishing the cadets with clothing; whether it is true, as alleged, that the late Commandant of the Royal Military College, Colonel Crowe, before he left, recommended a change of system for the supply of clothing, and outlined the features of such a system; if so, what were the details of the plan suggested; to what extent was the plan suggested by Colonel Crowe adopted, and If not adopted, why not; whether the present Commandant of the Royal Military College has made any suggestions as to a change in the system of supplying clothing to the cadets; if so, what were the changes which he suggested.

[Stage Direction]
On. the Orders of the Day:
Hon. J. D. HAZEN (Minister of Marine) :: The right hon. leader of the Opposition made inquiry of me yesterday with regard to the service being rendered by the line of steamers, subsidized by the Canadian Government, which run from St. John and Halifax to the West Indies and I told my hon. friend that I would endeavour to get the information for him.
The Royal Mail Steam Packet Company is the company that rune this line of steamers between Halifax and St. John and the West Indies. I asked the Deputy Minister of Trade and Commerce this morning to read my right hon. friend's remarks and mine in yesterday's Hansard and send me a statement with regard to the matter. I have the statement here in the form of a letter from Mr. O'Hara, the Deputy Minister :
Ottawa, Out., March 16, 1916. Dear Mr. Hazen:
X have read in Hansard of yesterday the remarks of the Right Hon. Sir Wilfrid Laurier upon the subject of the shipment of syrups from the West Indies, and also your reply.
The information you gave to Sir Wilfrid is correct, but, in the absence of Sir George Foster I may add, that the Minister of Trade and Commerce has been aware for some time of the congestion existing in connection with the service of the Royal Mail Steam Packet Company to the West Indies. This congestion exists both ways. Neither Canadian exporters or importers are able to get the space they demand, and Sir
George has been doing everything he possibly could to relieve the situation, even to cabling the Admiralty to release some of the ships commandeered from the Royal Steam Packet Company, without success.
The company states that 70 per cent of their tonnage is now in the hands of the British Government. Canadian exporters of lumbe-, flour, and other foodstuffs have been complaining of the small amount of space available, as have complaints come from Canadian importers and West Indian exporters of their inability to get sufficient space for sugar and molasses.
The difficulties are heightened by reason of the fact that there are no tramp steamers available for the molasses trade, which steamers always largely divide the traffic with the Royal Mail Steam Packet steamers. The Royal Mall Steam Packet Company are giving the best service Canada has ever had to the West Indies. They are performing the service under subsidy, with the vessels required, and so far as we know are doing all they can with the space at their disposal to accommodate the shippers, at either end, to the capacity required.
I may say that the Royal Mail Steam Packet Company have ever shown a sincere desire to meet this department in every request we have made of them, even though such requests at times exceeded the limits of their contract.
Yours faithfully,
F. C. T. O'Hara,
Deputy Minister.
206th BATTALION-SUPPLY OF KITS.
On the Orders of the Day:


Mr. LEMIEUX:: I .call the attention of the acting Minister of Militia to the following article which appears in this morning's Daily Mail of Montreal:
Made in Germany; Kits supplied to Local Battalion-Col. Pagnuelo expresses indignation over Kitts given the 26th Battalion.
Three hundred kit bags were received this week from the Department of Militia, Ottawa, for the men of the 296th French-Canadian Overseas Battalion, now being recruited by Lieut.-Col. T. Pagnuelo. Each kit was neatly packed and contained the usual soldier's toilet haberdashery, consisting of a military brush and comb, toothbrush, razor, service shirts, etc. But, to the surprise and disgust of the commanding officer, upon examining the articles it was found that many of them were marked. Made in Germany. " I was never more disgusted in my life," said Lt.-Col. Pagnuelo to a Daily Mail representative. " It is either another imposition of graft or the exercise of gross negligence on the part of the militia authorities in permitting unscrupulous manufacturers to unload German-made goods upon the Government, particularly for the use of Canadian soldiers. I only hope," added the colonel, " that my men will be given the opportunity of using these same razors on the despicable Hun, and it cannot be too soon to suit us."
Another prominent officer of high rank said that nothing could be more inconsistent in view of the present agitation to place a boycott on everything of German manufacture. " William the Brutal, by fair means or foul, and mostly foul, is out to place himself as conqueror of the world and as vice-regent of heaven," he said. " This is one way to help him to attain that end."



This paper is friendly to the Government, and I should like to know from the acting Minister of Militia if he can give us any information upon this matter, and what the Government intends to do.


Mr. KEMP:: It would certainly not be the intention of the Government to buy anything made in Germany at the present time, and perhaps that policy may be carried out after the war. All razors that have been purchased, so far as I know, have been purchased either in Great Britain or in the United States. There are no razors made in Canada. No razors of German origin have been purchased, so far as we know. I shall have the matter looked into, and try to give my hon. friend some satisfactory answer.


INQUIRY FOR PAPERS.
[Stage Direction]
On the Orders of the Day:
Mr. KNOWLES:: I wish to call attention to an evident misunderstanding in the preparation of some papers asked for by the hon. member for Assiniboia. The hon. member asked the Minister of the Interior to lay on the table of the House the papers in connection with the proposals to collect the total amount of seed grain indebtedness last fall, and the subsequent arrangement to collect only 50 per cent of the amount, and also a copy of the instructions to the sheriffs. The papers brought down deal exclusively with instructions to sheriffs. The telegrams that passed between the Prime Minister and myself were dated on the 4th and 8th of September, while this file commences on the 23rd of November.


Mr. ROCHE:: If the papers asked for have not been included in any other return that has been brought down, I will see that they are brought down.	.


PETITION FOR DISALLOWANCE OF ONTARIO STATUTE.
[Stage Direction]
On the Orders of the Day:
Mr. E. LAPOINTE:: Has a petition been received by the Government asking the Governor in Council to disallow an Act of the province of Ontario, being 5 George V, chapter 45? If so, has the Government taken any steps in the matter, and what are those steps?


Robert Rogers: I personally have no knowledge of such a petition having been received. If it has been received, it will be dealt with in the ordinary course.


MUNITIONS CREDIT TO IMPERIAL GOVERNMENT.
[Stage Direction]
On the Orders of the Day:
Mr. E. M. MACDONALD:: I see in various newspapers a statement attributed to the Minister of Finance that certain financial arrangements have been made by the banks with regard to a credit for the money necessary to ensure further orders for munitions in Canada. Would the minister tell the House just what has been done?


Sir THOMAS WHITE:: In order to give my hon. friend and the House the information which he desires, it will be necessary for me to refer to a conference which I convened early in December last; I think during the first week of December. This was after the domestic war loan had been made. My hon. friends will recall that the domestic war loan was for a sum of $50,000,000, but that subscriptions were received aggregating over $100,000,000. It was before we had dealt with the matter of those subscriptions that I convened this meeting of representatives of Canadian bankers, in fact, of all the general managers of Canadian banks, for the purpose of taking up what then seemed to us to be a very important question by reason of prevailing exchange conditions, namely, the question of providing in Canada a credit for the Imperial Government for the purpose of paying for munitions and other supplies ordered in Canada.
It will not be necessary, unless my hon. friend especially desires me to do so, to refer to the exchange situation further than to state, as I have indicated, that the conditions were serious, and that it looked as if the Imperial Government, in the absence of such a credit, would not be able to place further orders for munitions, at least upon a large scale, in Canada. At that time the banks were engaged in the task, a very heavy task from the financial standpoint, of moving the western crop. After conferring with the bankers, I stated that, in view of the fact that the Canadian war loan had been made and would of course make demands upon the financial situation, and in view of the fact that further demands were being made upon the banks by the requirements of the crop movement, it appeared to me that public opinion would support the Government in allotting subscriptions to the amount of $100,000,000 of the domestic war loan. It was my view that we should take $50,000,000 for the purposes of our war expenditures, and that we
I

should set aside $50,000,000 as an Imperial credit here for the purpose of enabling the Imperial Government to finance the requirements of the Shell Committee or the Imperial Munitions Board in making its payments to manufacturers and others from time to time. My hon. friends in the House know that that policy was followed with very happy results, I think very happy [DOT] Imperial results, because the announcement was received most favourably both in Canada and in the United Kingdom.
I stated further to the bankers at that time that this credit would last for a few months longer, and that, in the spring, I would again convene them for the purpose of seeing whether it would not be possible on the improved financial situation which would then exist, to establish a further credit here, or to adopt some expedient, such as the establishment of what is called dollar exchange, for the purpose of facilitating payments here by the Imperial Government, and getting over the exchange difficulty which still continued serious.
In brief, I may say that we have had several conferences extending over the last two or three weeks, and the result, I was able to announce yesterday that the Canadian Bankers Association, representing the several banks of Canada, had made an offer which I am informed is entirely acceptable to the Imperial authorities to establish a credit of $75,000,000 for the Imperial treasury here. The result will be that any difficulties, so far, as financing in Canada is concerned-and when I speak of difficulties, I refer to exchange difficulties- have been overcome for some months at least, and that further orders will be placed in Canada, in due course, to the amount of at least $75,000,000, and, I am hopeful, to the amount of $100,000,000. In anticipation of the arrangement being concluded, because I have had information for some little time past, that it would likely be concluded, orders aggregating some $20,000,000 have already been received by the Imperial Munitions Board from the Imperial authorities.



PRIVILEGE.

[Stage Direction]
On the Orders of the Day:
Hon. T. W. CROTHERS (Minister of Labour):: I desire to rise to a question of privilege. On the editorial page of yesterday's Toronto Globe appears the following:
When the Minister of Labour at Ottawa was reported as telling- the House of Commons that
" he was not sure Great Britain and her Allies would win the war," that " a German victory would mean a German Canada," that " he did not approve of everything done by the British House of Commons for the relief of disabled soldiers," and that " no one knows when this war will cease or how it will end," there was a general feeling of painful surprise. Mr. Croth-ers, having had abundant time allowed him for the correction of published reports, and having admittedly prolonged silence that he had nothing to plead in bar of condemnation, may fairly be held responsible for his peculiar point of view and mode of expression.
That is* the first statement of the kind which I have seen or heard since the occasion referred to. It is a gross misrepresentation of what I said, although perhaps about 'as near the truth as the Globe generally gets when dealing with the utterances of political opponents. This statement, referring to me, says, among other things:
He did not approve of everything done by the British House of Commons for the relief of disabled soldiers.
The intent being, apparently, to convey the idea that I was not in sympathy with disabled soldiers. That statement is entirely without foundation in fact, and is wholly fabricated. I made absolutely no reference in my remarks to the relief provided for disabled soldiers by the British House of Commons, as a reference to the unrevised edition of Hansard would clearly show. Concerning our own soldiers, I said, as appears on page 1709,' Hansard:
I was glad also to hear the remarks of the hon. member for North Oxford (Mr. Nesbitt), and the hon. member for Edmonton (Mr. Oliver) concerning the treatment which we should mete out to our returning soldiers.
Both hon. gentlemen spoke very sympathetically as to the men who might return from the front disabled or wounded, and took the position that we should leave nothing undone to enable them to secure an honourable livelihood, and to re-educate them if necessary; and, as will be noticed, I expressed my pleasure at the stand taken by those two hon. gentlemen from Oxford and Edmontoji respectively. I said:
I am very gl& d to know that every member of this House, and I believe every person in Canada, appreciates to the full the great sacrifices that our young men are making in fighting our battles on the fields of France and Flanders They are making the supreme sacrifice there. '
I pointed out that everything possible was being arranged for them on their return through the Military Hospitals Commission.
I said further:
We are not unmindful of the soldiers. Nothing is too good for the man who has risked his life for the British Empire.. . This commission

is composed of some of the leading men in Canada. They are giving their services. . . They are doing their very best for returned soldiers, and will continue to do so regardless of any adverse criticism.
I did not use the words attributed to me: " He was not sure Great Britain and her Allies would win the war." I was pointing out the necessity of our concentrating all our efforts towards the successful termination of the war, and among other things I said:
We are not, as some people say, feimply rushing to the assistance of the Mother Country, as, of course, we did, but that we are fighting for the liberties we enjoy as Canadians, which would be sacrificed if Germany should win.
Mr. Pugsley: I think we all agrde with you in that.	1
Mr. Crothers: I thought my hon. friend made some observations to the effect that he did not believe there was any danger in that direction.
The hon. member for St. John did not deny having said something to that effect, but he said:
Mr. Pugsley: I am sure we are going to win, that is all.
Mr. Crothers: I am not so sure.
The word " so " is left out of the Unrevised Edition. I said further:
No man knows when this war will cease, or how it will cease, and while we are in that position it seems to me we should concentrate all our efforts on the successful prosecution of the war, and not divert our strength therefrom in any way whatever.
These remarks were quite in accord with those made by Lloyd George, and many other prominent men in England on many occasions since the beginning of the war. 'The right hon. the leader of the Opposition ,on the 19th August, 1914, said in substance that there was danger at the front when he used the words:
We offer no criticism, and we shall offer no criticism so long as there is danger at the front.
Danger of what at the front? The danger now is no less than it was then, and in substance the right hon. gentleman said what I am criticised for saying, and it will now be in order for the Globe to instruct the right hon. gentleman's following in this House to depose him from the high and honourable position he now occupies. .
Some hon. MEMBERS : Oh, oh.


Sir WILFRID LAURIER:: I thought my hon. friend rose to explain, blit he is attacking.


Thomas Wilson Crothers: I am trying to justify -what I said by what was said by my right hon. friend, for whom I have the highest respect.



DOMINION LOAN- $75,000,000.

[Stage Direction]
On motion of Sir Thomas White (Minister of Finance) the House went into Committee -Mr Rhodes in the Chair-to consider the following proposed resolution:
That it is expedient to authorize the G overnor in Council to raise by way of loan, in addition to the sums now remaining unborrowed and negotiable of the loans authorized by Parliament by any Act heretofore passed, such, sum or sums of money, not to exceed in the whole the sum of seventy-five million dollars, as may be required for paying maturing loans and obligations of Canada, carrying on of public works authorized by Parliament and meeting expenditures for general purposes authorized by Parliament.
William Thomas White: The object of this resolution is to replenish the necessary borrowing powers of the Dominion for the purposes mentioned, the present borrowing powers being only about $10,000,000 due to our large borrowings of the past year. The Appropriation Act of 1915 recites that there remains unborrowed and negotiable of the loans authorized by Parliament, for the construction of public works and other general purposes, the sum of $78,291,206.04. I propose to file, for the information of the House, a statement showing that the balance which can be borrowed under the authority of that Act is at the present time $10,897,425.88.


Wilfrid Laurier: What was the amount authorized last year by the statute?


William Thomas White: Finance Department, -February 9, 1916.
The purpose of this resolution, as I have stated, is to replenish our borrowing powers which have become too low for our purposes. Hon. members will understand that financial conditions are unsettled and uncertain, and it is in the interest of the Dominion that we should be in a position to take advantage of favourable opportunities for borrowings as they arrive. I may state that last year the conditions, in their susceptibility to change, were almost kaleidoscopic, that a favourable opportunity would arise for a loan and that a week or ten days afterwards the conditions would be unfavourable. I think it is not necessary to enlarge upon that point. We are simply asking the House to enlarge, to the amount we deem sufficient, the present statutory borrowing powers of the Dominion Government. The House is doubtless aware that for several reasons it is inexpedient to borrow at present in the United Kingdom; if for no other reason the exchange situation, and the large cost of bringing money to'this country if borrowed there. We are therefore limited practically in our borrowings to this side of the Atlantic; in other words, to Canada and to the United States. I am going to ask the House, if it will be good enough to do so, to accelerate the passage of this Bill in order that it may have its third reading to-morrow.


Wilfrid Laurier: Will this
$75,000,000 exhauist the amount which my hon. friend intends to borrow this year, or will he have to come back to the House again?	[DOT]


William Thomas White: My right hon. friend the Prime Minister will introduce, this year, as he did last year, a Bill to cover the estimated war expenditure of the Dominion for the coming year. My right hon. friend (Sir Wilfrid Laurier) will recall that the Prime Minister introduced a Bill authorizing an expenditure amounting to $100,000,000 last year. I am not quite certain as to the amount which will be asked for by the Prime Minister for that purpose for the coming fiscal year, but I
should think it would be in the neighbourhood of $250,000,000, as stated in my Budget speech. The Dominion, for the coming fiscal year, will be confronted, using round figures, with a situation in which, from April 1, 1916, to March 31, 1917, we shall have to raise by way of loans in the neighbourhood of possibly $200,000,000 or $225,000,000. I am unable, of course, to state the amount definitely because the sum will depend upon the number of men who will be und,er arms by the end of the year, and the times at which they enlist. We have the Canadian market, and we have the American market, but we borrow in Canada for war purposes. This $75,000,000 will be part of the entire borrowing which I have mentioned.	-


Mr. W. F. MACLEAN:: Is that the loan which is mentioned in the evening papers of to-day as being about to be completed by J. P. Morgan & Company?


William Thomas White: For some weeks past negotiations have been proceeding, but they have not yet been concluded, between the Dominion Government and a New York group of financiers looking to the placing of a loan there.


Wilfrid Laurier: I understood the Minister of Finance to say what we practicaly knew already, that the Prime Minister will introduce a Bill providing for the war expenditure. I understand that, according to the arrangement which has been made, this war expenditure will be provided for by the British Government, but what I want to know from my right hon. friend is, if this amount which my hon. friend asks the House for now is all that he intends to apply for and. to borrow, apart from what will be borrowed under the Bill to be introduced by the Prime Minister? -


William Thomas White: ada, in the United Kingdom, and in France. We use a certain amount of that Imperial credit from month to month for the purpose of making our payments in the United Kingdom and in France, hut I d,o not de^ sire to draw upon it to a greater extent than is absolutely necessary because I should prefer that Canada should, as far as possible, pay her own way. Great Britain is labouring with unprecedented financial responsibilities.
While the Imperial Government is willing to give us this credit, should we desire to avail ourselves of it, it is the earnest wish of the Government that we should not avail ourselves of that credit to a greater extent than is indispensably necessary. Answering my hon. friend, then, in the light of what I have said,' this will not he the limit of our borrowing, apart from our borrowings from the Imperial Government during the coming fiscal year; at least, in my view it will not, because I think that our expenditures for war will be such that we shall have to provide a total in the neighbourhood of $200,000,000 or $225,000,000. We shall take advantage of the Imperial credit when we find it indispensably necessary to assist in our financing, and particularly in our financing in the United Kingdom and on the continent of Europe. In my view we shall require at a later date-many months from now, possibly towards the end of the year-to borrow further amounts, possibly in Canada. My hon. friend from Rouville (Mr. Lemieux) asked me the other day whether I had in mind a domestic loan. My hon. friend is aware that it is a good maxim not to state what you are 'going to do in the matter of borrowing. I am sure he will recognize what is an obvious fact, that it was really a wonderful achievement for Canada to subscribe $100,000,000 towards the loan last year, and to me it is a matter *of very great pride that notwithstanding the $100,000,000 which we took last year from the people's savings and from the financial institutions of Canada for the purposes of the war, the banks are now able to come forward and furnish an additional credit of $75,000,000. Now, that credit of $75,000,000 is a further reason why for the present at all events, it would in my judgment be inexpedient to bring on a domestic loan.


William Findlay Maclean: I do not want to hinder in any way the Minister of Finance in getting through this resolution, and the necessary legislation authorizing this loan. Three different financial propositions have been mentioned here to-day:

an advance to the British Government by Canadian banks; the loan now under consideration, and a war loan to be submitted later to the House. I have discussed this question on one or two occasions since the war began, and the only objection I have to the minister's proposal to-day is that to my mind it is not on a sufficiently large scale, and further, under the present circumstances, I think we should' adopt what I would call more modern methods of financing. I think we should re-organize our whole financial position. We should nationalize our currency to begin with, instead of having, as we now have, a bank currency. In the next place, we could adopt the system now in vogue in the United States, and in practically all other countries, of a national bank of re-discount. I believe that if we called on the New York market to-day -to my mind we should have done it before this-we could get a loan of $500,000,000 for the use of Canada, and we could get it better now, probably, than later on. We do not know what may happen in connection with the United Sstates market, and that is now the one available market for Canada. I should like to have seen the Finance Minister go to the New York market for a loan of $500,000,000, $250,000,000 of which could be paid to us in gold, and deposited in the treasury as a 25 per cent reserve against a possible issue of a billion dollars of national currency in case we should require that money in connection with this war. I believe that would have been a better way of financing under the present circumstances, and it would not have been over-straining the banks, as we may be doing now, in asking them and the Canadian people generally to finance Canada. At the, present time there is a super-abundance of capital in New York. To my mind we should proceed on very large lines, and when the opportune time arrives-and I believe it has arrived to-day-we ought to avail ourselves of it. I should like to have seen the Minister of Finance re-organizing the currency of this country.


Wilfrid Laurier: On what line?


William Findlay Maclean: I would withdraw from the banks the privilege they now have of issuing a bank currency, and in place of that I would allow them to draw on the national currency in practically the same proportion. I would let them have money at one per cent, and grade it up. That would give them the same resources they have to-day under the system of bank

currency, and it would enable us to establish a bank of re-diseount such as they have in the United States. I believe the Canadian banks would consent to be parties to a bank of re-discount very much on the line of the United States system. Practically every civilized country in the world to-day with the exception of Canada, has a national currency and a system of re-discounting. This method of financing is modem; it is sound; it has been justified by practice; and it gives a nation and a Government an elas-, ticity of credit, and affords greater facilities and larger credit to the business of the country. I am convinced that it is not only sound, but in the interests of the country. Some may say that I am proposing what may be called rag money, but I do not think a national currency backed up by a gold reserve of at least twenty-five per cent would be a dangerous, a soft, or an inflated currency. It would be a currency and a system of banking equal to the growing requirements of the country, and equal to war conditions as they are. To my mind, because of the dislocation caused by the war, we cannot, carry out the work of reorganization in Canada without an absolute reform in our system of financing. To do it right we must have a national currency. If we had that, Canada could help finance the Mother Country in her expenditures on munitions, and it would also bring us a lot of business.
We are moving along those lines now, but in a small, picayune way; we are asking the banks to finance a loan of $75,000,000 for the use of the Imperial Munitions Board to pay for orders for munitions. We should put that load, not on the banks, but on the credit of Canada as a nation and as a country having a line of credit, and if we had the courage to have a national currency and a bank of rediscount, we would, take a great load off our banks, and we would be able to finance not only our own country, but the Mother Country. Canada's credit to-day is equal, if not superior, to that of every other country in the world, and if to-day we offer a loan on the New York market for $500,000,000, the same amount as the Pranco-British loan, the Canadian loan would sell at a better price and at a lower rate of interest than did, the Franeo-British loan.


Mr. NESBITT:: For what purpose would you borrow that $500,000,000?


William Findlay Maclean: For the purposes of Canada. That is the very point I am coming to.


Mr. A. K. MACLEAN:: Who would lend you money on such grounds?


William Findlay Maclean: Who would?


Edward Walter Nesbitt: England was borrowing money to pay for supplies produced in the United States. What excuse would you give for borrowing $500,000,000?


William Findlay Maclean: I would borrow $250,000,000 as a 25 per cent reserve against a possible issue of national currency up to $1,000,000,000, if such, an issue became necessary.


Alexander Kenneth Maclean: What excuse
would you give?


William Findlay Maclean: I would give the same excuse as we are giving now in connection with the $75,000,000 which the Minister of Finance proposes to borrow, that is, for the general purposes of Canada. I am not going to give all the details of the proposal, but I am asking this House to finance on more modern methods and to use the national credit in order to have a national currency, and to lessen the weight on the banks and on our people by improving our banking system. The Minister of Finance speaks of the banks financing a loan of $75,000,000. I am told that orders for munitions of war to the extent of $1,000,000,000 would be placed in this country if they could be financed. Well, we are to have a loan of $75,000,000 now and the banks are to finance it. I do not quite knbw how they are to do that; I can only imagine, and perhaps my imagination is wrong in the matter; but it may be that t'he banks will be able to raise the money to pay for those munition orders that we have heard about by issuing a Canadian national currency against the deposit oi British bonds with the Minister of Finance. Such a scheme, if it could be carried out, would be all right; but it ought to be carried out on much broader lines. We ought to start with a national currency and the creation of the Bank of Canada, as I would call it, which would be a bank of rediscount and which would rediscount for all the banks of Canada any paper or any securities that they cared to deposit with it. In other words, the Bank of Canada would be an organization for
4 p.m. the emission of the national currency to the banks as they required it, on rules and regulations to be made by Parliament and by the Department of Finance, and it would also rediscount for the banks any securities that

they had to offer. In that way our banks would he largely relieved from the duty imposed upon them of financing Canada, not only for general purposes but for war purposes, and of helping to finance the Imperial Government in connection with the war.
My proposals may he radical, but I do not think they -are, because they have been carried out elsewhere; and in discussions which I have had with gentlemen who have been in America in connection with the financial situation in Europe and the financial requirements of Great Britain, I have been informed that the best way to assist in the finanacing of the Mother Country and of ourselves would be to have the courage to adopt these two modern systems of banking which I am advocating. We have them in skeleton form now, but we do not have them on our statute book as an essential and integral part of the financial organization of Canada. We are to-day rediscounting in a way for banks, and we are using the national currency in order to aid various proposals, but we are doing it in a roundabout fashion. We ought to do it in a broad way, and the time to do it is now if the opportunity has not already passed. We could, however, place a large loan on the New York market; we could use a portion of that loan as a gold reserve for the issue of a national currency, and in that way we could permit our banks to devote all their energies and all their credits to the reconstruction of Canada which must ensue after the war is ended. There are two duties resting on our shoulders at the present moment; the first is to carry on the war and help the Mother Country in every way; the second is to take care of Canada and to see that there is abundance of money for the reconstruction of the country, and the surest and fairest way of providing the necessary money is by an issue of national currency, and by having a bank of rediscount. As long as I am in a position to do so, I intend to present to the people of this country the fact that this practice, which has been the practice in other countries, is the proper method of financing in Canada.
There is a demand in the Canadian West for a system of farm credit, and the same demand is pressing from the other provinces. We must give our farmers a system of credit which will be an improvement on the present system. At the present time we are making petty amendments to the
til". W. F. Maclean ]
Banking Act allowing our banks to extend their practice ' in the making of loans to our farmers; but the way to get credit for the farmers of this country and to put money at a cheap rate at their disposal for the development of their farms, the purchase of livestock and things of that kind, is to have a system of farm credit based upon the credit of the nation. The proposal that has been put forward in the United States, and that will be passed in an amended form, is based largely on the authorization of the United States Government to deposit its moneys and its own currency with land	banks.
No currency in the world to-day is equal to the national currency of the United States. If we had here such an abundant national currency, based, as I have said, on the necessary gold reserve, we could make advances to these land banks by way of national currency, absolutely secured in every case by mortgage. We could create an investment security that would probably run at 4 or 5 per cent; that would give our farmers abundant money at a lower rate. If we reform our currency system and our financial and banking system now, in this time of war we shall finance ourselves better than we are now doing; we shall do more for the Mother Country than we are now doing. Besides, by taking this course, we would help the general business of the country, strengthen the Canadian banks, and assist the Canadian farmers. The only argument that I have ever heard against the suggestion I make now is that it would strike a blow at the hanks that now have a bank currency. I say it would not. Provision could be made whereby they would have just as liberal a currency as they have to-day; they would have to get it from the nation, and the nation would have security for it. We cannot succeed in business, competing with the United States, if we have not as good a banking system as they have. They are ahead of us in this respect; the reorganization that was effected within the last two or three years in the United States was the result of most careful inquiry by a commission appointed by Congress a good many years ago. After examining the history and methods of banking organizations all over the world, they came to certain conclusions, which have been embodied in the system now prevailing in the United States. They are carrying the system of re-discounting further now by providing an abundant credit for the farmer. I repeat that we shall not be able

do our duty by our own country or by the Mother Country until we have as good a banking and currency system as they have in the United States. That we recognize the value of their methods is proved by our imitating them, though only in a half-hearted way: we are rediscounting, through the "Minister of Finance, for the banks, but not as they do it in the United States. We are going to have some kind of system of farm credit for our farmers; I am glad to know that the minister has put himself on record in connection with that. To my mind, however, he has not come right up to the full opportunity that is before him, and I hope that he will widen his views in this respect, having regard to the enormous requirements of the country at the present time. We are only beginning to hear of these requirements. We have heard of two requirements of $75,000,000 to-day, an advance to the Mother Country for munitions, and a very large loan, in connection with which the Prime Minister is going to bring down legislation. Why not make a combination of the whole thing on the newest and most approved lines of banking and national finance? If he should do that, the minister would widen his reputation, improve the condition of affairs in Canada, and allow this country to be a still greater help to the Mother Country in the present hour of trial.


Rodolphe Lemieux: I do not rise with a view to obstructing the adoption of this resolution. I have some confidence in my hon. friend the Minister of Finance; I think he is a well-meaning Finance Minister, and if he were left to his own good self, the administration of the Finance Department would be carried out in a manner satisfactory to the Dominion at large. Unfortunately, he has been frequenting certain company of late, and I fear that in consequence he may become somewhat given to unwise expenditure. I observe that this money is to be applied to public works and to meeting expenditures for general purposes authorized by Parliament. I am not forgetting, in the crisis through which we are passing, that I represent a farming community, where a dollar is a dollar and a shilling a shilling, and where the people have learned the four rules of arithmetic. In view of the fact that so many loans are cropping up, one after the other, the time has come for the Government to curtail expenditure. I repeat what I said the other evening when I had the honour to address the House on the Budget: we should
have a round table conference, where the representatives of the two parties could unite in applying the pruning knife to the Estimates. While we are passing through this awful crisis, I think we can easily save to the country at least a quarter of a million dollars. The hon. member for South York is sailing under false colours. He is a radical with a false label. Interesting as his argument is for a change in the national currency, when tire Minister of Finance is proposing to borrow more money from the United States I should expect from the hon. member for South York another argument than the one that he has just offered to the committee. I would remind the hon. gentleman of a certain issue of the Toronto World, which appeared at a time preceding the elections of 19111. I remember that it was during the dog days-July, if I mistake not- and, as it was very hot, my hon. friend was represented as addressing an immense meeting on the outskirts of Toronto, not far from his own constituency, with his coat off. He was arguing against that awful reciprocity pact, and he was telling the electors of South York that the Canadian people should not truck or trade with the Yankees.


William Findlay Maclean: Never.


Rodolphe Lemieux: He was telling them that we should do nothing with the Yankees.
Mr. W, F. MACLEAN: Never.


Rodolphe Lemieux: To-day he has another
theme. He suggests a change in the national currency, but he has nothing to tell my hon. friend, who was one of the leaders of the noble eighteen in Toronto who attacked so vehemently the last Administration because, forsooth, a pact was made between the American Government and the Canadian Government by which there would be the right to exchange certain natural products between the two countries. Nobody was compelled, according to the Fielding-Knox pact, to do business with the Americans. The Canadian people were left perfectly free to sell or to -buy from the United States, but in the present instance, to my great horror, I find my hon. friend the Minister of Finance coming before this Parliament asking for legislation by which he will be authorized to borrow the sum of $7)5,000,000. It is not stated in the resolution that he will borrow it from the United States, on the New York market, but he has just stated in so many

words that he is not going to issue a domestic loan but that he is likely to get this money from the Americans in New York. I am simply shocked to hear my hon. friend, my honest friend, the Minister of Finance, coolly proposing that this Canadian Parliament should authorize him to borrow money from the Yankees. I am sorry that Old Man Ontario is not in the House to-day. I see many of the representatives from Ontario. What would they say if their electors were in this House to-day? Or what would their electors, think if they were here this afternoon and heard this discussion, and heard the Minister of Finance proposing that Canada should borrow $75,000,000 from those awful Yankees in' New York? We remember how one of the apostles of the 'Conservative party in the last election stated that with the Reciprocity Treaty the banking accounts of Canada would be transferred from Montreal, 'Toronto,, and Winnipeg, to Chicago and New York, and that Canada would become the 'backyard of the United States and we also remember


Mr. WILCOX:: It was Taft who said that.


Rodolphe Lemieux: We remember what
scorn was expressed by hon. gentlemen when the Taft letter appeared in which mention was made of Canada becoming an adjunct of the United States. Well, Sir, for the second time this fiscal year, Canada is going, by her representative the Minister of Finance, on the New York market to borrow money from the Americans. When my hon. friend made his loan of $45,000,000, I noticed some very harsh criticism in the financial papers of the country because ot the way the loan had been underwritten in New York. It was said that the rate of interest was rather high for such a good security as the one offered by my hon. friend. It was stated that this loan would affect adversely other loans made by Provincial Governments or by municipalities in the Dominion. How is he going to underwrite this loan? Of course he may not think it wise to give the House the procedure he is going to follow, but, at all events, I think we should he made aware of this fact, whether or not tenders will be called or whether it is going to he underwritten by one commercial firm without others competing.


William Thomas White: My hon. friend (Mr. Lemieux) has touched on several matters, from reciprocity to the proper

method of floating a loan. I have always observed that when a matter is much upon one's mind, he frequently refers to it, and 1 am sorry to think that my hon. friend has not yet got over 1911. Time heals all things, but it does inot seem to have been effectual in the oaise of the defeat on the reciprocity issue. There is nothing further from my thoughts than political controveoBy. Since this war broke out, I, in common with other members of the Government, have had what I might describe as fairly heavy responsibilities, and I have not had any heart for political controversy of any kind. Therefore I shall not discuss with my hon. friend the reciprocity issue, which has been dead and buried, in my view, for some years now, except to call his attention to this: He speaks of borrowing from the United States. My 'hon. friend knows, as every hon. member in this House knows, that Canada has bought from the United States for years past much more than she has bought from any other country. Our imports from the United States have been enormous. When we make a loan we simply buy money. We are not doing anything different in buying money from the United States from what we have been doing for many years in buying goods from the United States.


Wilfrid Laurier: Hear, hear.


William Thomas White: My hon. friend
says hear, hear? My hon. friend needs enlightenment also; but in the case of a man of the acumen and the discernment of the right hon. leader of the Opposition, it has always been a marvellous thing to me that he has never been willing to admit-although I suspect that in his heart of hearts he knows it-that the really serious feature of the reciprocity agreement was the fact that he was making the agreement at all, that he was fettering Canada in the matter of her tariff arrangements. I have never said, I never heard any one else say, that Canada should have no truck or trade with the United States.


Rodolphe Lemieux: Oh, oh.
Sir TjHOMAS WHITE: On the contrary, the whole history of Canada has been, as I have stated that we have-


Edward Mortimer Macdonald: You carried
on a bill board campaign.


William Thomas White: I certainly never saw it on a bill board or heard it from any one that we should have no truck or

trade with the United States. The fact is that we have been buying from the United States much more largely than from any other country. Therefore, there is no departure in principle in borrowing-which, as I have stated, is buying money,-nor do we, by borrowing this money, in any way fetter ourselves in respect to our fiscal freedom. There is no interlocking of tariffs, to use the term of the right hon. Prime Minister in what we are doing to-day, nor would my hon. friends have been defeated, if instead of submitting the reciprocity pact to the people, they had made the sole issue such a transaction as I now lay before the House.


Some hon. MEMBERS:: 
William Thomas White: I said, "the
sole issue."


Mr. GRAHAM:: Reciprocity is the only
issue my hon. friend fought us on.


William Thomas White: If my hon.
friends' other sins had been added, the result would have been as certain as it was in 1911.


George Perry Graham: My hon. friend fought
us only on that one issue.


William Thomas White: Reciprocity-


Wilfrid Laurier: He was all
right on the others.


William Thomas White: My right hon.
friend has a charm all his own. I may say that since coming to Ottawa I have discovered a great deal of the doings of the late Administration that I never even suspected.


George Perry Graham: My hon. friend would
learn a good deal about his own Government too, I suppose.


William Thomas White: To get back to
our muttons-my hon. friend has asked me a rather leading question as to the methods of financing our loans. I may say to him that in my view, in the public interest, it is not of advantage to discuss that phase of the question at present, but I do think it is fair, in answer to my hon. friend, to give him my views with respect to the matter of asking for tenders. It is perfectly clear to me, and it is the opinion of the best financiers, that for large loans, loans to governments, loans running up to $25,000,000, $50,000,000, $75,000,000, or $100,000,000, good results cannot be obtained by the tender system. It has never been followed in this country by any Government. The policy
adopted in the past is the policy which I have continued, and I believe it is the sound policy. We usually negotiate through the Bank of Montreal, and negotiation is carried on for a considerable period, and every precaution is observed to get a proper price for our securities, having regard to the market conditions. The loans are placed in the utmost good faith with the sole idea of doing the best possible for the Dominion. I think that has been proved with regard to all loans placed by this country; at least, I do not know anything to the contrary. The traditions of the Finance Department have been good, and I hope to hand them on unimpaired in that respect. Since this war broke out financial conditions have been most trying; they have been kaleidoscopic, as I have before stated. Transactions in time of war cannot be judged by transactions in the preceding period of peace. The minister finds himself in the position of simply doing the best he can.
My hon. friend has referred to the loan of $45,000,000 which we negotiated last August in New York. There was some criticism in the press, I think rather natural criticism, for this reason: Municipalities and provinces had been borrowing, or were about to borrow, and the community had not really become aware of the changed conditions which existed. I may say to my hon. friend from Rouville (Mr. Lemieux) that in England, when the British Government departed from the 3i per cent standard, and got on the 4 per cent standard, and departed from the 4 per cent, and got on the 4i per cent standard, all the municipalities were more or less disturbed, because it established a new rate for loans. Let us take the situation that existed when I placed the $45,000,000 loan in August last. In my opinion, that was one of the most useful loans that had ever been placed by the Government of Canada. It served Canada admirably well, and it served the Imperial Government admirably well, and paved the way for the $500,000,000 Anglo-French loan. The loan which we negotiated last August aggregated $45,000,000: $25,000,000 one-year notes, maturing on August 1,	1917;	$20,000,000
two-year notes, maturing on August 1, 1918, coupled with a provision to take Dominion 20-year bonds at par, maturing in 1935.
I do not desire to go into details, except to say this: the rate of commission paid was exceptionally low, 'being three-quarters of one per cent. I do not know of any transaction that has been negotiated to bet-


Rodolphe Lemieux: No better man.


William Thomas White: I heartily agree with my hon. friend in that. The loan was negotiated to a point where we felt it was an absolutely fair transaction, having regard to the conditions that there existed. We enlisted the support of the strongest interests in the city of New York. There are two things that must be borne in mind in connection with every loan. In the first place, regard must be had to the terms, and that is a matter of negotiation. The terms should be judged by the prevailing financial conditions. The second feature to which regard must be had is the fact that it is extremely desirable that a loan should be a success, that is to say. that the loan should reach a premium. I need not say to the members of this House that it is very desirable to have a market in which your loans are a success. There fore, that aspect of the matter must not be overlooked when considering the question of price. That loan was negotiated in New York, and it was one of the most useful loans ever placed by the Dominion Government. It was particularly useful having regard to the exchange situation prevailing last August, it was decidedly in the Im-

perial interest and it paved the way for the Anglo-French loan of $500,000,000.
To come back to the question asked by my hon. friend; it is a fact that a new basis was established for securities; that is to say, a new basis appeared to be established for securities, but in reality, as I stated to the general manager of the Bank of Montreal after the transaction had been concluded, the fact was that the basis had existed but it was not known that it did exist. The market had been an uncertain one. When bond houses would attempt to place securities, there was doubt as to what price should be paid, and .there was a certain difficulty in placing securities, but when the true price was established by the Dominion flotation in New York, the air was cleared and people knew what they had to face in the way of interest rates, and they faced them. The result has been that there has been a first-class market in New York for the higher grade of Canadian municipal and provincial securities.
This loan of ours in New York paved the way for the Anglo-French loan of $500,000,000. It is true that.there was some criticism in the presis in regard to my financing in New York. As I stated, that was natural, because the rate of interest was higher than we had ever paid before, but after all, the sound sense of the community soon realized that the war had entirely altered conditions and that the price was a fair one under the circumstances. Any doubts that any persons may have had at that time were dissipated when, headed by the Lord Chief Justice of England, a man who had had wide experience in finance, and representatives of the British treasury, the Imperial Commission, including a great banker of London, came over to negotiate the $500,000,000 loan. What was the result? The result was that the arrangements which had been made by the Canadian Government through the Finance Minister and (Sir Frederick Williams-'Taylor were more favourable than the arrangements made by the Imperial Commission. I had forgotten to mention that the gentlemen whom I have named were accompanied by representatives of the French Government. That Commission, representing, as they did, the Imperial Government and the French Government, and pledging their joint credit, were not able to obtain as good an interest rate, or to negotiate on as fair a basis of borrowing, as the $45,000,000 loan was negotiated on. Of course, no reflection whatever is made
upon the commission which negotiated the Anglo-French loan. I think they handled that very important matter with great tact and ability, buit the facts had to be faced, and among the facts are the interest rate and financial conditions.
It is very illuminating to read, in the financial history of the American Civil War, of the action taken at first by the Secretary of the Treasury in the matter of floating loans. They did not believe, of course, that the war would last so long as it did, and they were naturally reluctant to face market conditions or to face the high interest rates which prevailed. They had in mind that before the war they could borrow money for 3J or 4 per cent; they were reluctant to place themselves on a 6, 7 or 8 per cent basis, and some short date loans were negotiated, loans which fell due while they required to make further borrowings, and the result was that a very serious condition developed in their finances. The principle which I have been endeavouring to follow since this war broke out is this: I realized that there was a world financial condition which must be faced. You must face the facts. I have believed that this war is going to last a considerable time. I made up my mind that the true policy for the Government to pursue was to face the facts, to face the interest rate, and to avoid, so far as it was possible, short date borrowings. What I mean is this: In the first place, short date borrowings may provide for the time being, but you may need fresh borrowings for the purpose of the war; secondly, after the war there is always a period- of so-called reconstruction, in which it may be very necessary that you should have available your full credit resources for the purpose of the nation in that period. No matter who may be the Finance Minister of this country, no matter what the Government of the day may be, it is the duty of the Minister of Finance at this time to face the existing situation and borrow for longer dates rather than for shorter dates in order that these short date loans may not mature during the remaining period of the war, or in the period immediately succeeding the war. I believe that such a policy will meet with the approval of this House and of the financial and business community.
In regard to the $45,000,000 loan, I would very much rather have made a five or ten-year loan, but the conditions at that time were such that I could not make a five or ten-year loan, and the result is that I had to make a one or two-year loan, and I had

to give an option which at the time I would much rather not have given. The transaction was carried out to the best of the ability of those who negotiated it and in the result I think it stands put as rather a notable instance of a loan, negotiated for the first time in a foreign market, on exceptionally favourable conditions having regard to the market situation at that time.
I have dealt sufficiently with the matter of the Canadian loan of $45,000,000 in New York. Now, I come to another matter-mentioned by my hon. friend, and I think quite properly, and that is the question of economical administration. Since this war broke out, I do not know what policy the Government could have adopted that would have given better results along that line than we have achieved. As far back as a year ago last June-because this war was casting its shadow before us and financial conditions were very trying before the war broke out,-the policy was adopted of going ahead only with works under contract until conditions should improve. It is not the smaller expenditures that give us trouble, it is not the little wharf here or the little dredging yonder, or the customs house there, that add materially to the expenditures of the Dominion; it is the larger works which have been under construction. It might be asked: Why did you not stop last year the construction of the National Transcontinental railway? It would seem to be that public opinion would not support a Government in stopping that construction. It would only mean grave injury to the line and to all parts of it. We therefore could not shut down on the construction of the National Transcontinental ; nor could we very well shut down on the Quebec Bridge. It is true we could serve notice on the contractors, and break the contract. But the plant is there, and the contractors would undoubtedly have an action for damages. Then there is the further fact that the spans of the bridge that are already in place would undoubtedly deteriorate. We therefore decided to continue the construction of the bridge. The Welland Canal was also under construction. The Welland Canal project was embarked upon with the consent of both parties in this House before the war broke out. It is under contract for construction, the contractors have their plant there, and contract* for certain sections have been let; but no contracts for new sections have been let since the outbreak of the war. I have heard both my right hon. friend the leader [Sir Thomas White. 1
of the Opposition, and the hon.. member for South Renfrew (Mr. Graham), in a discussion in this House before the war broke out, state that they were in favour of the enlargement of the Welland Canal, and also in favour of the Georgian Bay Canal. Therefore, I do not think that this Government can fairly be attacked for not having discontinued work upon these large enterprises, which take the major portion of our expenditures apart from the necessary expenditures on Civil Government. 1 assume that that is common ground. I do not know how this Government could have been more economical than it ha* been in regard to public works since the war broke out, for since about a year ago last June we have embarked upon no new works, except possibly some by way of repairs. We have discontinued new works, and gone on with works only eo far as it was necessary to go on with them, and if hon. gentlemen opposite can tell me how we could have been more economical than that I should like to hear their suggestions.
There is another point. At the time this war broke out there was a very trying period for general business for many months. There was a profound dislocation and interruption of business in this country, and I say it was a good thing for Canada that we had a fairly large programme of public works under construction at that time, because it minimized unemployment. It seems to me it would have been most unwise for this Government, at that, of all times, to have discontinued expenditures on public works, and further unsettle the entire community. My hon. friend from Pictou (Mr. Macdonald), who I am sorry is not in his seat, referred the other night to increases in the public debt of Canada. I desire to say that no sound conclusion can be drawn from the mere fact of an increase in the public debt of Canada in any one year, or in any period of years. The real question is not whether the public debt has been increased, but whether the money borrowed has been wisely expended. I have never taken up this question of an increase in the public debt, except in defence of the Government when charges have been made, as they frequently have, that we had greatly increased the public debt. But, as the question has been raised, I desire, for the information of the House, and not in any controversial spirit, to lay upon the table the net debt of Canada from 1903 onwards. Speaking briefly, I may say that in 1903 the net debt was $261,000,000. In

1911 it was $340,000,000, or an increase of $79,000,000. I am not making any criticism as to that increase. In 1912 the net debt was $339,000,000. In 1913, the first year this Government was in power, the net debt was $314,000,000, or a reduction of $25,000,000. In 1914 the net debt was $335,000,000. In other words, on the- 31st day of March, 1914, (that is to say, at the end of the fiscal year before the war broke out) the net debt of Canada was less than when this Government took office by $5,000,000.	Then the war came on.
It is true that the net debt of Canada has increased for 1915 to $449,000,000. It is also a fact that, apart from the war, the national debt has increased by something over $50,000,000. But, the other night, when the hon. member for Pictou was dealing with this question, I referred to the fact that our revenues had been cut in half from August, 1914, the date of the outbreak of the war, onwards. Where we were getting $10,000,000 a month before, we got only $5,000,000 after the outbreak of the war. Maintaining our expenditures as I have already stated we did, for the purpose of minimizing unemployment in this country, and with our revenues decreasing until the tariff was brought down in February, only one result could accrue, and that was an increase in the national debt. But I do not believe that the fact of an increase in the national debt, by reason of conditions brought about by the war, is any just ground for criticism of this Government.
There is another point which, as the hon. member for Rouville has raised it, I may as well deal with now. Hon. gentlemen opposite, when Estimates have been up from time to time, have frequently repeated a statement which was made in the first instance by the hon. member for St. John (Mr. Pugsley). That statement was made in the first instance by the hon. member for St. John on March 3, 1916, and appears in the unrevised Hansard as follows:
Mr. Pugsley: The hon. gentleman who is In charge of these Estimates (Mr. Hazen) will re, collect that the Minister of Finance stated that there were items in these Estimates aggregating about $29,000,000 which the Government thought it would not be called upon to expend in the coming year. If the minister would state the items in this department that go to form part of that $29,000,000, it would facilitate the work of the committee.
That statemient 'has 'been repeated by hon. gentlemen opposite time and again on the occasion of ministers taking up their Estimates. As a matter of fact, I
said nothing of the sort. What I stated in my Budget speech was that it was the policy of the Government not to proceed with works not actually under contract. What the hon. member for St. John adduced from that was this. He said: Your total Estimates are $188,000,000; you say you are going to have an expenditure of $160,000,000; subtract $160,000,000 from $188,000,000 and you have a balance of $28,000,000, which you say you are not going on with; will each minister therefore kindly explain the items that will be embraced in that $28,000,000? I need not say to this House that that is an absolutely fallacious inference. The hon. member for St. John proceded on the assumption that there was no difference between the Estimates and expenditure; that is to say, estimate of works that are being gone on with, and the expenditure that will be made upon them. It is well known that there are always lapses, and in order that the House may have full information on this point, and that there may be no repetition of a statement which is manifestly erroneously founded, without going back too far, I desire to call attention to the fact that in 19101911 the difference between the expenditure and total Estimates was $17,000,000; in 1911-12

the last year that my right hon. friend opposite was Prime Minister-the difference was nearly $30,000,000; in 1912-13 the difference	was	$35,000,000;	in	1913-14	thedifference	was	$41,000,000;	in	1914-15	thedifference	was	$46,000,000;	in	1915-16	thedifference	was	$32,000,000;	and in 1916-17
the difference is $28,000,000, that ie to say, the difference between the estimated expenditure and the Estimates actually laid upon the table of the House. Now the Estimates that have been laid on the table represent items which have been adopted by Parliament.
We have placed them in the Estimates because they have been voted before. The war has interrupted the progress-of these works, and I laid down the policy of the Government in the Budget speech when I stated that it would not be our policy to go on, during the period of the war, with those works not actually under contract. The reasons, of course, are obvious: Our expenditures for war are so great, and the financial demands upon us will be heavy. Apart from that, there is no necessity today for furnishing employment, because at the present- time it is very difficult to get help in this country for our industries.


Rodolphe Lemieux: Why did you keep those items in the Estimates?


William Thomas White: There is, and always has been a difference between estimates and expenditures. I desire to read' a statement made by my predecessor, the Hon. Mr. Fielding, with reference to this very matter, because it is clear that the Opposition at that time had a habit, which seems to be followed by the Opposition of to-day, of raising the question of lapses. This question came up in 1907, and I have no doubt it has come up on almost every occasion on which a Budget speech has been delivered. Mr. Fielding, as reported in Hansard of 1907, volume IV, page 7859, said:
Mr. Fielding: I assume they are. I observe my hon. friend is not content with taking the ordinary appropriations of the year hut he takes everything that it is possible to take, everything that is in sight, everything that is not nailed. He takes the appropriations for the ordinary works, he takes the appropriations for capital account, he takes the appropriations for railway subsidies, he takes the appropriations for everything that can be thought of. Well, that is all legitimate enough as a statement of the appropriations of the year, hut it is apt to convey a very misleading impression ; it is apt to convey the impression that it is proposed to expend these moneys within the year. Now, as respects a considerable part of these moneys they are not expended within the year and are not [DOT] likely to be expended for several years. There are millions in that vote to which my hon. friend refers, which have been included in his calculation two or three times. Take the railway subsidies. We are voting not one dollar of new railway subsidies this session but a revote of appropriations of former years. They have appeared in the calculations of my hon. friend, they have appeared in his budget of gloom at the close of each session ; but they were not expended, they never added a dollar to the obligations of the Dominion of Canada. But now that they are being revoted they afford ar opportunity to my hon. friend to include them again in his budget. I am afraid some of them will turn up in future years and he will be able to include them again, because it is quite likPly that a number of these expenditures will not be made within an early time, though we would be pleased if they were. If we could be assured that every mile of these railways would be built within the next four years, far from complaining we would be pleased to have it so, because it would make for the general Improvement and development of the country.
Now, my hon. friend from Pictou (Mr. Macdonald) happens to be here, and I made a reference to some remarks of his the other night. While I do not desire to repeat, what I said was in substance this.


Edward Mortimer Macdonald: I would like to ask my hon. friend if he regards the remarks of the Hon. Mr. Fielding as being at all applicable to the present situation. Mr. 
Fielding was speaking about a number oi appropriations for railway subsidies which certainly would not be paid until they were earned. If my hon. friend were asking for appropriations for railway subsidies, that would be a different matter; but we are not speaking about railway subsidies at the present time. Mr. Fielding was also speaking about public works in connection with which the amounts were not going to be spent in that particular year, but preliminary surveys were to be made, locations to be determined, etc. Does my hon. friend intend, under the items that he is including in these Estimates, to go on with the purchase of sites' for public buildings, to employ surveyors for the purpose of making surveys for public works, and to do preliminary work of that kind? That was what the Hon. Mr. Fielding was referring to, and he pointed out that it was impossible to use the money until the preliminary work was done.


William Thomas White: I am sorry my hon. friend was not in when I was speaking before, because I discussed the matter pretty thoroughly. My hon. friend misunderstood the trend of my argument, which was this: The hon. member for St. John stated:
The hon. gentleman who is in charge of these estimates (Mr. Hazen) will recollect that the Minister of Finance stated that there were items in these estimates aggregating about $29,000,000 which the Government thought it would not be called upon to expend in the coming year. If the minister would state the items in this department that go to form part of that $29,000,000, it would facilitate the work of the committee.
This statement of the hon. member for St. John has been made on several ocea; sions in Committee of Supply. What 1 de-, sired to point out was that I made no such statement as that attributed to me. The hon. gentleman (Mr. Pugsley) reached his conclusions in this way: he said: Your Estimates are $188,000,000 and your expenditures for the coming year, apart from the war, will be $160,000,000 or a difference of .$28,000,000. Therefore there are in the Estimates items amounting to $28,000,000 which you are not going to expend. I pointed out, before my hon. friend came in, that that argument was erroneous for this reason, that with regard to those works, that are under contract at the present time, and which we are going on with, there will be lapses as there always have been, in the past, and I read a statement to the House in which I showed that in 1910-11 there

was a difference between Estimates anc( expenditures of $17,000,000; in 1911-12, of $29,000,000; in 1912-13, of $35,500,000; in 1913-14, of $41,300,000; in 1914-15 of $46,000,000, and, in 1915-16, of $32,000,000.


Edward Mortimer Macdonald: Does my hon. friend then mean to say that in regard to the Estimates this year in reference to which he said:
New works would not be undertaken until the financial outlook became clearerhe is not going to economize any more and not going to do anything different from what was d,one by the former Minister of Finance.	.


William Thomas White: I am sorry my hon. friend was not in the House, because I do not like to repeat all my argument, but I have so much respect for my hon. friend that I shall dwell on it a little.
5 p.m. When I stated the other night that I did not take the remarks of my hon. friend seriously, I said what I regarded was a delicate compliment to his intellect, because his remarks were, to say the least, strange. I stated what was the policy that we followed on account of the outbreak of the war and the enormous additional expenditure devolving upon the Dominion, and, I believe, it is a right policy. We determined, that we were not going on with new work until conditions permitted. I stated, in my Budget speech this year, that while the war was on our policy would be not to go on with new works which were not actually under contract.


Edward Mortimer Macdonald: Is that a new policy, or are you only doing what Mr. Fielding did?


William Thomas White: Mr. Fielding gave me nearly all the troubles that I have had during the last four or five years. I was stating before my hon. friend came in, that it has not been the little armoury here, nor the little post office yonder, nor the custom house in the other place that has given us any financial difficulty.


Edward Mortimer Macdonald: You are not answering my question.


William Thomas White: I am answering. The vast expenditure of this Dominion has been the expenditure that we have had to make in connection with the Transcontinental railway, the Quebec bridge, and other public works undertaken by the late Government.


Mr. OLIVER:: The Welland canal.


William Thomas White: I do not want
to draw all the Liberal skeletons out of the closet and show them up here; I have had my troubles with them.


Frank Oliver: That is your own skeleton.


William Thomas White: When my hon.
friend from Pietou had the audacity, with a perfectly serene countenance and without a blush, to accuse this Government of being extravagant


Edward Mortimer Macdonald: I will do it again.


William Thomas White: -when he knew that the great burden that is being placed on us has been in connection with work inaugurated by our predecessors and carried on by us, it is no wonder I said that I did not take my hon. friend seriously.


Edward Mortimer Macdonald: Would my hon. friend explain the marvellous increase in the expenditures in the Public Works, Post Office and Immigration Departments, and in the other departments to which I referred the other night? If my hon. friend is an economist, he is an economist of a new type. My hon, friend might also get away from generalities and tell me whether or not his including these items in the Estimates this year is inaugurating a new policy, or' whether it is only doing what Mr. Fielding spoke of doing in 1907.


William Thomas White: I think it is a new policy in this respect: We have stated that until conditions permit we are not going on with certain items that appear in the Estimates. I never knew Mr. Fielding to announce that; I think his policy was to go ahead with all the works in the Estimates.


Rodolphe Lemieux: Does my hon. friend
think that the fact of leaving in the Estimates amounts which he says will not be spent does not affect the credit of Canada? Is it a matter of business to say: We ask this year $180,000,000, of which we intend to spend only $160,000,000? The money lenders obtain their information as to the outlay of the Dominion from the Estimates.


William Thomas White: I cannot imagine anything that would tend to strengthen the credit of the Dominion more than the statement that I have made. It is this: Parliament has voted many items in the Estimates the expenditure in connection with which we do not intend to go on with until conditions permit. It seems to me that



this is a strong position for the Government to take; that it makes not for the weakening, but for the strengthening of its credit. The trouble with the hon. member for Pictou is this: He is a man of fine intellectual quality, except when his intellect is clouded by partisanship. He has a temperamental partisanship, which on account of its intensity must be hereditary; I do not believe that he will ever get over it. If he were dealing judicially with a nonpolitical matter, I should accept his conclusions, but when he attacks this Government he throws fairness .and logic to the winds. My hon. friend says that we have increased the expenditure since 1911. Is there anything very wonderful in increasing the expenditure since 1011?


Edward Mortimer Macdonald: Yes, when you have no increase in the population.


William Thomas White: Let us observe some of the tests by which national progress is evidenced. When this Government came into power the total trade of Canada was under $800,000,000. It grew to $900,000,000, to $1,000,000,000, and this year it is the largest in the history of Canada, $1,200,000,000. Look at the increase in the bank deposits, and judge the conditions in the country by that. My hon. friend referred to immigration. It is a fact that the immigration into this country in the years 1912 and 1913, until the outbreak of this war, was greater than it had been in the history of Canada. Hon. gentlemen opposite had engaged in great public works; they had engaged in the National Transcontinental railway. The corollary of their encouraging transcontinental railway building was that there devolved upon this Government a great deal of expenditure in connection with the development of ports-Halifax, St. John, Quebec, Montreal, Vancouver. We have had to make large expenditures for that purpose; we have had to meet enormous expenditures upon public works and undertakings inaugurated by the Government of my right hon. friend. The hon. member for Pictou says that our expenditures for 1914 were actually greater than they were in 1911. Well, that is not a very extraordinary matter. What about the expenditures of the Government of my right hon. friend in four-year periods? Could any one have the hardihood to say that the expenditure of the Government of my right hon. friend was no greater in 1911 than it was in 1907, no greater in 1907 than it was in 1903, no greater in 1903 than it was in 1901?
fSir Thomas White.]	'
That is the argument of the hon. member for Pictou. What are the facts? The total disbursement of the Government of Canada in 1900 was $52,000,000; in 1906, $83,000,000; in 1911, $122,000,000; in other words, an increase from 1906 of $40,000,000, or 50 per cent. I am not at this moment blaming my right hon. friend's Government for that increase, but it is a fact that that increase did take place. Yet the hon. member for Pictou says to us: you are blamable, you are chargeable, you are censurable, because your expenditure in 1914 was greater than it was in 1911. With all the expenditures which we had to meet upon the National Transcontinental railway and upon the other works that I have mentioned, and with the great development that took place in immigration and in all the business activities in this country, to me it would be a most marvellous thing if the expenditure had not increased. In any country the expenditures increase year by year. The hon. member for Pictou the other night challenged me to reply-he knew that he had the floor and that I had not-when he called attention to the growing debt. Well, would it not be a remarkable thing if, from1 1911 to 1915, under normal circumstances, there had been no increase in the national debt? What about the increase of the national debt during the period of the Government of my right hon. friend? My right hon. friend would not say that the debt of Canada did not increase during his regime, because the facts would rise up in contradiction. For four years previous to 1911, the national debt of this country increased by about $70,000,000. The largest reduction in the national debt is to the credit of this Government in the year 1912-13. I do not believe it is a fair basis of comparison to say: you increased the national debt so much, and we did not increase it as much. It seems to me that that is not a sound argument, and my hon. friend should not put it forward. The real question is not whether the national debt has been increased; it is, what has the national debt been increased for?


Edward Mortimer Macdonald: Is my hon. friend aware that his own leader characterized that increased expenditure under my leader as being so enormous and unjustifiable that it was evidence of corruption, and that he denounced that expenditure? If that logic was at all correct, and the Minister of Finance went on and increased the expenditure still further, what does he say that increase would be evidence of?


William Thomas White: Did the Prime
Minister say it was evidence of corruption, or only prima facie evidence?


Edward Mortimer Macdonald: What is the difference?


William Thomas White: I should think
the increase in debt was so large for a few years, from 1907 to 1911, that the right hon. the Prime Minister of to-day (Sir Robert Borden) may have said it was prima facie evidence of corruption. Whether he said it was conclusive evidence of corruption, or not, I do not know; but certainly the fact remains that on the 31st day of March, 1914, the net debt of this Dominion was $5,000,000 less than when this Government took office, and for the four years before we came into office the increase in the net national debt of this country was about $70,000,000.


Wilfrid Laurier: How much
was it the following year?


William Thomas White: On the 31st day of March, 1914, the net national debt of this Dominion was $5,000,000 less than when we took office. I have explained to my right hon. friend what happened to the revenues of this country after the outbreak of war. I stated that our revenues had been cut in half, or were divided by three, after the outbreak of the war; that we deemed it a proper policy to maintain our expenditure on public works in order to minimize unemployment in the trying period following the outbreak of war; that it was the inevitable result of this that the national debt of Canada should be increased; and that it was a proper and a justifiable increase.


Wilfrid Laurier: The reduction of the first year was only a prima facie reduction?


William Thomas White: The reduction of the previous year was a real reduction, not a bookkeeping reduction, and we have to our credit the largest decrease in the national debt, namely, $25,000,000, that was ever obtained in any single year in the financial history of the Dominion. But I am the first to say that this argument of: We increased the debt to so much and you increased it to so much is illogical. You can draw no sound conclusion from it, and I never use these statistics except in rebutting attacks of an unreasonable character, such as. that made the other night by the hon. member for Pictou. ,


Edward Mortimer Macdonald: What about the expenditures?


William Thomas White: I think I have sufficiently dealt with that subject, and my hon. friend will have his turn on some other occasion.
I come now to a matter that has been drawn to our attention by the hon. member for South York (Mr. W. F. Maclean). I always listen to the hon. member for South York with a great deal of interest-in a way he is a prophet.


William Findlay Maclean: Thank God there are some.
Sir THOMAjS WHITE: But there are prophets whose vision is clear and true, and there are also prophets who, as to some-matters at least, are not necessarily true prophets-and then there are prophetesses like Cassandra, who was a true prophetess, although nobpdy believed she was a true prophetess. Whenever I listen to my hon. friend putting on his propaganda with regard to the currency I always think of the rainbow story. When I was a little boy I used to believe, in common with other boys, that there was a bag of gold at the end of the rainbow if we could only get to-the end of the rainbow, and' I used to look for that bag of gold, but I never found, it. The propaganda which my hon. friend preaches in his journal, and on the platform, and in this House, is very attractive. It opens up a golden vista, money, plenty of it, $100,000,000, $200,009,000, $500,000,000, $1,000,000,000-put your arms into it, plenty of money for all national purposes, the purposes of Canada, or the purposes of the Imperial Government. And what is it? National note circulation, reorganization of the currency, an issue of $1,000,000,000 of note circulation with $250,000,000 of gold against it. These are the panaceas of the hon. member for South York. I believe that my hon. friend from South York, for whom I have the greatest respect and admiration, is quite unsound in the financial views which he puts forth.
I feel bound to say that, because he has raised, at a critical time-at time when the people consider carefully every proposal put forward-what I regard as an impossible and impracticable and illusory financial proposal. My hon. friend says: Why not nationalize your currency; why not make the banks take Dominion note circulation and call in their notes? Well, if you did that, and it is possible to do it, it would mean that the banks would owe the Gov-

eminent in respect of the note circulation the amount of their present note circulation, and would put out Dominion notes to that amount. The fundamental mistake made by the hon. member for South York, if I may say so, is this: He does not realize that note currency, bank note currency or Dominion note currency, is only useful for circulation purposes; and that you cannot increase that circulation beyond a certain amount without in reality, making a forced loan without interest, either from the bank or from the community.


Edward Walter Nesbitt: Hear, hear.


William Thomas White: The banks have a certain note circulation whicji varies from time to time according to the commercial needs of the community. It is pocket money in the community, till money, so to speak. If a man gets a thousand dollars or two thousand dollars in bills, he does not carry them in' his pocket, but deposits them in the bank and, by the clearings the next day, the several banks that have issued the bills get back their notes and have to pay any balance against them in gold, or the equivalent of gold, viz., Dominion notes. My hon. friend says: Why not go to New York and borrow $500,000,000 or $250,000,000 in gold and then, to the extent of 25 per cent, make that gold a deposit against an issue of	$1,000,000,000, and then we
will have plenty of money for the meeds of Canada, plenty of money for ithe Imperial Government, plenty of money to purchase munitions and *carry on the waT. The idea is so apparently feasible, I might ask him: Why does not the Imperial Government gather up a thousand million dollars of gold and issue four thousand million dollars of paper money? Why does not any Government do that. It is very easy to turn on the printing press, even if you have a 25 per cent reserve of gold, but nevertheless, to the extent that the notes are not required for the circulation needs of the community, your paper has 'been watered; to that extent you have made a forced loan without interest; and the inevitable Tesult will be the depreciation of your currency. Let me give an extreme case. Supposing to-morrow the Dominion Government put out an issue of a thousand million dollars of paper. Who would take it? What would happen? The public would get it. They would take it in payment of services or for commodities, and they would deposit it in the *banks'. It would not be required for the 
circulation of the community, and the result would be that the banks of Canada would soon have tens of millions of dollars lying idle, not bearing any interest, and what would be the inevitable result? Why, a bank or a financial institution would say: We will take a bond because it bears interest, but we do not want a note, that is not needed for the circulation purposes of the country, lying idle and unremunerative in our'vaults. And what would be the result? Gold would go to a premium and your note would go to a discount, and the inevitable result of a large issue of paper money, an issue of paper money beyond the circulation requirements of a community, would be depreciation in your currency, destruction of your credit, and the loss of the gold that your country has. There is no doubt about that whatsoever. To-day the circulation needs of this country are met by the bank circulation and by the Dominion note circulation. Increase it by $10,000,000 and you get redundancy; increase it by $50,000,000 and yet get a great redundancy, and your notes are at a discount, and your gold at a premium. If there is anything we desire to avoid at this time; if there is anything calculated to damage the credit of the Dominion in New York or anywhere else, it would be to state that we were going to put out an issue of $1,000,000,000 of paper


William Findlay Maclean: I did not say that.


William Thomas White: against $250,-
000,000 of gold. My hon. friend suggests the putting out of $1,000,000,000 worth of paper against $250,000,000 of gold on top of the present Dominion note circulation, for the purpose of financing our requirements and the requirements of the Imperial Government. I think the result would be depreciation. At the time of the American civil war, the North had to resort to paper currency, and so had the South. What happened? I may say that Germany is resorting to paper currency to-day.. The paper currency of the North went down to between 35 and 40, and it was fifteen years at least after the end of the civil war before the currency of the United States was restored to a parity with gold. What happened to the paper currency of the South? It became absolutely valueless: ten thousand would not buy a plug of tobacco. I stand, and intend to stand for sound finance, and I think that in this country, at this time, we should stand for sound finance, because it means so much to the credit of this country. A propaganda

of that kind at this time is, in my judgment a dangerous propaganda, because it holds out hopes to the people that cannot be realized. Speaking for myself, I do not know anything that would injure the credit of this country, that would prevent us from getting loans at a fair ihterest, that would impair our standing in the world more than an enormous issue of paper currency.
I come to another matter, my hon. friend's statement about federal reserve There is a great danger in attempting to compare the financial systems of different countries, unless you take all the circumstances into consideration. The United States system, before the establishment of the federal reserve banks, was a system of individual banks, not banks with branches, but individual banks; and on account of the requirements of the banking laws of the United States, the banks could only issue notes against national securities. These national securities were selling on an artificial basis, and the result was that it was not in the interest of the banks to issue sufficient currency to meet the needs of the country. That was the situation in the United States; it is not the situation in Canada. There is plenty of circulation here to meet the circulation needs of this country, but there was not enough circulation in the United States to meet the circulation needs of that country before the federal reserve system was created. For months after the war broke out, 1 kept in my office a comparative statement of the condition of the banks in Canada, of the British banks, and of the American banks, and I say that the degree of liquidity of the banks of this country was on all fours with the degree of liquidity of the best British banks. In other words, we adopt here the sound banking principles of Great Britain. Last fall, because I had read a good deal of the arguments advanced in favour of the establishment of a federal reserve system, I got a banker of this country to write to New York to ascertain officially whether the federal reserve banks in their discounting of paper of the banks of the United States were using any more currency than was required for the circulation needs of the United States. The answer was precisely what I had expected, namely, that the federal reserve policy is to issue only the amount required for circulation. In other words, the federal reserve banks of the United States occupy the same relationship to those individual banks in the United States, in the several regions, as the head
office of one of our great banks occupies to its branches.


John Gillanders Turriff: Was that information
obtained from a federal reserve banker, or from the Government?


William Thomas White: I asked for the
information through the manager of one of the leading banks of Canada. I asked him to ascertain the facts from New York. There could be no other answer. If, as a matter of fact, the federal reserve banks were isuing more paper than the circulation needs of the United States required, the inevitable tendency would be for their notes to go to a discount. The thing is absolutely commonplace; it has happened frequently in the history of the world, and it will happen in the future.


John Gillanders Turriff: I noticed, just before that law was brought into force, that at a meeting in New York of over 2,000 bankers of the United States, every one of the bankers condemned the innovation of federal banks. But I understand that these banks have worked out well since, so that the views of the regular bankers on that occasion would not seem to have been very sound; not that I am advocating the same system for Canada.


William Thomas White: I think that the establishment of the federal reserve system in the United States was necessary, but, as I have pointed out, the situation there was fundamentally different from the situation in this country, because the United States had a system of individual banks. The head office of every large bank in Canada is, so to speak, a federal reserve bank qua its branches throughout Canada, because the head office takes money from one section of the country, where it is not needed, and transfers it to another section, and loans it out there. The result is that under our system, which is the same as the British system, the head office of the bank is the conduit pipe, so to speak, through which the money flows. Where it is not needed, it is transferred to a place where it is required. In adopting the federal reserve system, the United States adopted the precise principle of the British and Canadian banking system. Yhe idea was to make the currency more flexible, and to take the money from one section of the country where there might be an accumulation, and make it available in another place by way of loans to the banks in that other place where money was needed. That is the underlying principle of the federal reserve

system, but you cannot compare it fairly with the Canadian banking system. You cannot say: we will take a certain system from the United States and transplant it here. In England they have a bank of re-discount. It is very desirable, but it cannot be created overnight; it requires years to build up. The only way to build it up, apart from the ordinary mode of growth, would be to have the banks of Canada take shares in some central bank, just as the banks of the United States take shares in the federal reserve bank in the several districts. But, as I have pointed out, the head offices of the banks in Canada discharge the functions that the federal reserve banks discharge towards the individual banks in their several areas. I do not think that it is necessary, therefore, at this time to consider reorganizing the bank system of Canada. We have a war on our hands; there are extraordinarily trying days both at present and to be apprehended in the future, and it does seem to me that the banking system of Canada is, at the present time, working fairly well.
My hon. friend from South York (Mr. W. F. Maclean) has referred to this credit of $75,000,000. He thinks the credit should not have been established, because it might impose too great a burden upon the Canadian banks. I desire to reassure my hon. friend. The banks of Canada have a very considerable accumulation of money upon their hands, and it is a matter of great pride that they are able to come forward at this time and offer such a large sum as $75,000,000 as credit to the Imperial Government. It is not a small sum; it is a large sum. Having disposed, whether satisfactorily or not, with the question of the issue of paper money, I desire to say this: From time' to time plans are put forward for creating credit, or for creating money. I do not know of any way of creating sound credit, or of providing money, exoept the old-fashioned way of saving it. What we have to learn in this country-this Government does not need to learn the lesson- is the virtue of saving and not putting our faith in panaceas and nostrums. We must put our faith in individual savings, in saving the money that men have obtained for their services, in saving the profits that men have made out of business. That is the only sound, safe, orthodox way of increasing the loan funds of this Dominion. As far as Governments are concerned, the Only way to finance them in time of war, is to reduce as much as you possibly can once your military expenditure commences

to grow, your ordinary expenditure, just as we are doing.


Rodolphe Lemieux: Oh, well!


William Thomas White: Having gone that ' faT, how much farther could we go?


Rodolphe Lemieux: You might have reduced it by $25,000,000.


William Thomas White: We have gone so far as to reduce the expenditure and to make available all the resources of the country for the purpose of the war and for what is necessary in getting the money for the war. I am not going to use the term " credits." You often hear people say: We do not want any money, but give us a credit. What does that mean? It means money, it means just what you and I mean by the word term " money," and the only way of providing money for the war is by taxation or borrowing and paying interest rates, and not by forced loans from banks and the community.


Wilfrid Laurier: You are on dangerous ground there; think about your Insurance Bill.


William Thomas White: Well, the'insurance Bill is very fair legislation. The point I make is that you must keep up your revenues by taxation or you must keep it up by borrowing and paying the price. If you depart from that principle your policy will lead to evils which may be greater than war. I have spoken at greater length than I intended to on this matter, but in view of the argument of the hon. member for South York, the propaganda which he has put forward in his paper, and the expectations which might be raised by the suggested adoption of a policy which I believe to be unsound, although generally I agree with my hon. friend, I felt it my duty to deal with this question. I have stated the financial faith that is in me. Whether I have carried the judgment of the House or not remains to be seen.


Edward Mortimer Macdonald: I want to say a few words with regard to my hon. friend's reference to me in the course of his speech. My hon. friend ventured to question some remarks which I made in the course of the Budget debate but he has not explained the statement which I made that he was responsible for the debt of the country being increased to the extent of $51,000,000 over and above the cost of the Transcontinental railway and over and above those

other things of which he complains. My hon. friend has always been putting forward as an excuse for these alleged burdens that he had to provide for the National Transcontinental railway. We cleared all that question up in discussing the matter the other day, but it might be as well to remind my hon. friend, and I do not think he has forgotten it, that he was a believer in the National Transcontinental railway proposition in 1904. He did not then find any reason for withdrawing from the leadership of my right hon. friend in front of me (Sir Wilfrid Laurier) in 1904 or 1908. My hon. friend stood behind my leader and the Liberal policy of constructing the National Transcontinental railway right through until he took his position upon reciprocity. When my hon. friend comes and holds up his hands in holy horror about the Transcontinental railway, he should remember that it was a proposition to which he gave his full support previous to 1911. But I do not intend to follow my hon. friend in his desultory discussion of such facts as I have absolutely proven. But, there is another point that he has not explained to the committee and that is why he should persist in keeping in the Estimates sums aggregating $25,000,000 which he says he does not intend to spend.


William Thomas White: They are not in.


Edward Mortimer Macdonald: My hon. friend says: They are there and we are not going to spend them, but I am not going to take them out. Hon. members who are helped by their being in the Estimates have ventured to suggest that the war will come to an end perhaps, that the situation will be cleared and that between now and the 31st March, 1917, it may be possible to spend that money. The Minister of Finance knows that the commitments of this country - at this moment absolutely prohibit the possibility of his undertaking any new works or of availing hinmelf of any of these items which are included in the $25,000,000 if he is going to be a prudent Minister of Finance. My hon. friend reads for our edification a statement made by Mr. Fielding in 1907 in which Mr. Fielding went on to point out that the computation was made at the end of the year of the commitments and that it was improper to treat that the whole amount of money contained in the Estimates as being an absolute commitment because they might include a general vote for a project upon which preliminary expenditures, of necessity, had to be made,
that these preliminary expenditures took time and that, as a consequence, once a vote was initiated for any particular purpose in a given year of, say, $20,000, or $50,000, that did not mean that that $20,000 or $50,000 would be expended in that year because preliminary work had to be undertaken.


Mr. BURNHAM:: If that disproves anything at all in what way does it affect this?


Edward Mortimer Macdonald: Nobody wants to disprove anything.


John Hampden Burnham: You disprove your own argument.


Edward Mortimer Macdonald: I am presenting an argument founded on the quotation and I am dealing with the Minister of Finance on broad lines. The Minister of Finance puts that forward as a justification for having this amount in his Estimates this year. My hon. friend knows very well that what Mr. Fielding eaid in 1906 or 1907 with reference to the conditions prevailing at that time could have no possible reference to the conditions that exist in this year, 1916, when you are up against the most trying situation in all our history. Yet my hon. friend for some purpose-and there can be no purpose unless it is political-in the face of this financial situation, as my hon. friend from Rouville (Mr. Lemieux) points out, persists in keeping before the eyes of the money-lenders, and of the parties to whom he has to go to obtain money, the idea that it is necessary for an expenditure of $25,000,000-


Frank Oliver: 

Mr	MACDONALD:-$28,000,000	more
than he says he intends to spend. Why does he keep it in the Estimates when he tells the money-lenders that he is not going to spend it. Can anybody find out why? If he is honest in regard to that statement -and I do not mean to impute any personal dishonesty to my hon. friend-what-can it mean? If that amount is there for no particular purpose then my hon. friend should say so. If my hon. friend does not intend to spend it why does he keep it there? He keeps it there in order that political pressure may be exerted under this or the other condition and in order that it may be possible to send a corps of engineers into a particular county to run up and down, plant stakes and do certain things that the electors who perhaps desire to have a public work may have held

before	them the alluring proepect
that it is to be gone on with. My hon. friend knows it. It is there for no other purpose in the world. My hon. friend knows very well that his attempt to justify himself by a statement of Mr. Fielding is simply begging the question.


William Thomas White: Perhaps my hon. friend did not quite understand what I said. I stated that the hon. member for St. John had reached the conclusion that I had said there were 828,000,000 in the Estimates which it was not proposed to expend. By subtracting $160,000,000, the amount of the estimated, expenditure, from $188,000,000, the amount of the Estimates, we get a balance of $28,000,000. Now, the error made by the hon. member for St. John was in assuming that the $160,000,000 of estimated expenditure coincides with $160,000,000 of the Estimates. Now, the point I made, and in reference to which I quoted Mr. Fielding, was that the $160,000,000 of estimated expenditure represents much more than $160,000,000 of Estimates of works actually under construction. There are some items in the Estimates-how many I do not know -which are not under construction, and which will not 'be gone cm with for the present. But it is no such amount as $28,000,000. I think my hon. friend understands what I am driving at.


Edward Mortimer Macdonald: What the minister says is that the amount may not be $28,000,000, but that there are included in the Estimates certain works which will not be gone on with.


William Thomas White: Until conditions permit.


Mr. MAC DONALD:: My hon. friend
knows perfectly well that conditions cannot possibly permit of any new works being gone on with this year; I am speaking of the financial year, which begins on April 1. Will my hon. friend say that he can conceive of financial conditions under which he will be able to engage in new works this year?


William Thomas White: While I am prepared to make a general statement that we should not go on with works under contract until conditions permit, I would say to my hon. friend:	that from time ' to
time in the administration of this country it has become perfectly clear that it is in the^national interest that a particular work, even at a time like this, should be gone on with. For instance, some work in connec-

tion with ports or harbours may be absolutely needed. There were one or two cases like that last fall. I recall the case of Bathurst, N.B., -where some work had to be done in order that business might proceed. It would never do for me to say expressly and explicitly that this, that or the other item, amounting to so much, will not be gone on with under any circumstances. I am quite prepared to make a general statement, and I have already done so, but I cannot state explicitly that no single item will be gone on with, and my hon. friend knows it is unreasonable to ask me to do it.


Edward Mortimer Macdonald: I do not think my hon. friend would stand much cross-examination if we had him before a tribunal where we could cross-examine him.


William Thomas White: I have no desire to.


Edward Mortimer Macdonald: He really wants
to keep these items in the Estimates. Cases such as he has referred to could be covered by Governor General's warrants, and my hon. friend knows it. Can my hon. friend imagine any supervening public necessity that would justify the erection of a post office at some of the places provided for in the Estimates?


William Thomas White: It is improbable but it is quite possible. Conditions in connection with rural mail delivery, for instance, might make it necessary. But I do not think it probable.	[DOT]


Edward Mortimer Macdonald: If a provincial
election were impending, would my hon. friend regard pressure from political friends as a supervening necessity? My hon, friend went out of his way to gratify his political friends in British Columbia, by imposing a duty on apples. Can my hon. friend conceive of his lending a soft ear to representations made by Mr. Bowser for certain public works in British Columbia, supposing he had to face the electorate in June? Does my hon. friend mean to say that he would turn a deaf ear to Mr. Bowser if he came along with any such proposals?


William Thomas White: In all my experience as Finance Minister I have never, in the four years I have occupied that position, had any such request proposed to me, My hon. friend's experience during the preceding Administration has evidently been different. He is altogether too suspicious. I do not believe that any expenditure by this

Government in any constituency in British Columbia


Wilfrid Laurier: Could save the Bowser Government.


William Thomas White: or in any other
province, would have any effect upon a provincial election.


Edward Mortimer Macdonald: Other hon.
gentlemen might disagree with my hon. friend. If my hon. friend has not had communications from the Government of British Columbia, perhaps his genial friend the Minister of Public Works has whispered in his ear. Perhaps he is the medium through which the Finance Minister is approached on these questions. As I was saying, my hon. friend would not stand a very close cross-examination on the subject of the Estimates. We are bound, however, to take him at his word. He says that he has pledged his word to the people from whom he is going to borrow money that there is in these Estimates a large sum which will not be spent unless a superlative public necessity demands it. My hon. friend forgets what he said to the hon. member for South York a moment ago. Then he preached the doctrine of economy; savings, he said. Is my hon. friend going to moralize in regard to banking and finance and economy, and at the same time not put his theory into practice? My hon. friend will not declare that conditions in this country are such as to require the expenditure of this money in the Estimates which ought not to be there at all. If this money is not to be expended, it should not be in the Estimates. My hon. friend has not given any warrant why it should be there, and I say it is only for the purpose of leading people in different sections of the country to believe that certain works are to be gone on with in their part of the country. Where is the minister economizing? Take the Post Office Estimates, for instance, to which reference has already been made. In 1911 the expenditure was $7,954,000, and in 1915 $15,900,000. This year my hon. friend proposes an expenditure along that line practically the same as last year, if not greater. Is he economizing there? How is he economizing?


William Thomas White: I do not want to interrupt my hon. friend unduly, but does he think that, on- a bare statement that there was a post office expenditure of $7,000,000 in a certain year, and that four years after there was a' greater expenditure, he has proved anything? My hon. friend
compares the post office expenditures of 1903, 1904, and 1905 with that of 1916, and asks: Are they larger or are they smaller? What about the rural mail delivery? What about the multiplied activities of the Customs Department due to our large increase in trade, 50 per cent over what it was in 1911? What about our parcel post system, which was established by the late Postmaster General? My hon. friend is too intelligent not to know that he has no basis of comparison when he puts an expenditure of $7,000,000, in 1907, against a larger amount in 1915, and says that that means extravagance. It does not mean anything of the kind.


Edward Mortimer Macdonald: When I add to my argument the fact that my hon. friend expends all this money and in addition has a deficit of $3,000,000 in the Post Office Department, I think that does mean extravagance. My hon. friend should cut his coat according to his cloth, and he should not spend in the Post Office Department more money than he receives from it. When, in addition to that, we remember that in regard to the Post Office Department it has been shown that there has been no economy at all, but a tremendous increase in the number of employees in the service throughout the country, my hon. friend should cease homilizing to the House about economy. As his leader said in regard to an expenditure, many millions less than what he is purposing to make this year, it is prima facie evidence' of corruption. If that argument in reference to the expenditure referred to was true, it is ten times as true with regard to the expenditure which my hon. friend purposes making, and I apply the words of the Prime Minister, who is the leader of my hon. friend, and say that this expenditure which he is proposing to the people of this country to-day is prima facia evidence of corruption.
At six o'clock the House resumed and then took recess.
The House resumed at eight o'clock.



PETITION FOR DISALLOWANCE OF ONTARIO STATUTE.

Hon. C. J. DOHERTY (Minister of Justice) :: By your leave, Mr. Speaker, and
with the consent of the House, I should like to say a word in answer to a question that was put this afternoon when the Prime Minister and myself were not present. The question was asked, I believe, by the hon.

member for Kamouraska (Mr. Lapointe) as to whether a petition had been received asking for the disallowance of recent legislation in the province of Ontario providing for the appointment of a school commission. The Minister of Public Works, who was leading the House <sA the time, answered that he had not personal knowledge of the petition. I desire to say that the hon. Minister of Public Works was not present when the petition came before Council. Such a petition was received; it came before Council, and it has been referred to the Lieutenant Governor of Ontario for any observations that he may desire to make upon it. That is the course which is followed whenever a petition is made for disallowance of an Act of the legislature of a province.



DOMINION LOAN-$75,000,000.

[Stage Direction]
Consideration resumed in committee of the proposed resolution of Sir Thomas White to authorize the Governor in Council to raise by way of loan an additional amount not to exceed the sum of $75,000,000; Mr. Rhodes in the Chair.
The CHAIRMAN:: Before the committee proceeds I feel it my duty to remind hon. gentlemen of the rule which governs the discussion of subjects such as we have before us. It is found in subsection 5 of section 13, and reads:
Speeches in Committee of the Whole must be strictly relevant to the item or clause under consideration.
The discussion this afternoon took a very wide range; so wide, in fact, that the greater portion of it was not, in my judgment, relative to the item under discussion. Various reasons contributed to the wide range of the discussion; I do not know that any useful purpose can be served by referring to them in detail. I trust, however, now that I have brought the rule to the attention of the committee, that greater care will be exercised during the remainder of the sitting to see that the discussion, if not brought within the strict letter of the rule, may be at least brought within the spirit of it.


William Findlay Maclean: So far as my remarks this afternoon were concerned, I think they were germane to the question before the committee. I desire now for a few moments to reply to some of the observations that were made upon some of my remarks during the course of the discussion.
I am as anxious as you are, Mr. Chairman,

to observe the rules and to further the adoption of the resolution now before the committee, but I think that I am entitled to reply to some of the arguments that came up this afternoon, and to the criticism of the Minister of Finance of some of the views that I expressed. I have the greatest respect for the minister. I have watched his career in this House; it has been a rapid rise; in the eyes of the people of Canada it has been the satisfactory development of a public man. But if there is one thing a Minister of Finance ought to avoid it is the temptation to think that he knows it all; the temptation, I will not say to be egotistical, but to assume the attitude that he is in possession of the gospel of the finances of the country. Above all, he ought n<?t to patronize or to belittle the argument of an opponent.


Wilfrid Laurier: Of a supporter, you mean.


William Findlay Maclean: 
Wilfrid Laurier: What is a
modern system of banking?


William Findlay Maclean: A modern system of banking is to nationalize the banking and not to make it a private monopoly. I understood the Minister of Finance this afternoon to say that a monopoly of the currency issue of this country should be in the banks. I say that the monopoly of the currency of this country ought to be in the nation, and it ought to be issued by the nation, and the whole credit of the nation should be used for the necessities of the country, both for the war and for other public needs. So I am not preaching an heretical doctrine, nor am I a false prophet.
The hon. gentleman suggested that perhaps I was likeCassandra, that I spoke something to the Trojans that they did not believe, but that yet proved to be true. The difference between the Trojans and the people at this time is that the Trojans did not know that what Cassandra had prophesied was true, while we do know, and the Minister of Finance knows, that the modern system of banking that obtains in Europe has been tried, is sound, and is in the public interest. And yet if anybody in this country suggests a more modern system of banking for Canada than we have had in the past, he is branded as a false prophet. I take issue with this argument, and I say that we can ourselves as a nation and by reforming our system of banking raise the money we want for the requirements of this war. The Minister of Finance says we should not bring on such a question now, in time of war. But that was the very time that Lloyd George and the British Government put it into practice.
Therefore I say that the Minister of Finance should have exercised a little more care in criticising the method I suggested, because he is practising in some degree every suggestion I made. He is using the national currency of Canada to help hiin out of the difficulties he has experienced; he is practising a system of re-discounts, and re-discounting for the banks. He issued a proclaimation to the banks of

this country and to others; he has even re-di&counted propositions that did not come to him through the banks, although I take it that the law in the beginning was limited in that way. So he relies on a national currency in an emergency and he is relying on a system of national re-discount in order to aid the banks. Do you not see the great and practical result of this system of re-discounting? We think it is a discredit to a bank to re-discount; with us a bank that re-discounts is supposed to be in difficulty. The Bank of England re-discounts whenever it wants money, and so do all big banks, because every bank knows that if it can re-discount it has not to conserve and keep itself strong in reserves and . liquid securities. As a consequence our banks cannot do as much for their customers at critical periods, because they say: "We -must keep enough to take care of the securities we have out, and of our depositors, should they call for their money.''' Butt when a bank knows that in a financial stringency, and in a situation like what we have to-day, they can re-discount the paper they are carrying in a national bank, they have much more money for the use of their customers, for carrying on the trade of the country, and for giving the people money sufficient to carry on their business. That is my argument, and it is not a new argument. It is not a.' new doctrine; it is not a heretical doctrine. If there is heresy in it, then the Minister of Finance is practising it every day. He has never come forward and said he proposed to stop re-discounting in this country, or that he proposed not to avail himself of the national currency. He uses both. He also committed himself the other day to a promise that he would take up and bring forward in this House a system of credit for the benefit of the farmers. They have that in every other country except the United States, and they are going to take it up there. They have it in France, in Ireland, in Germany, in Italy, and in Russia.
To nationalize the banking system of Canada, and the currency of Canada, as I proposed here this afternoon, is, I maintain, directly along the line of the proposition before this House. I am not to be placed before the country as proposing paper money, Us wanting to keep a printing press going. More and more, the world is being financed on credit, and the representation of credit is a document of some kind which comes from the printing press. But the credit is there behind it. Gold is becoming less and less a factor in the credit of a nation, of the 
individual and of a bank. Banks do not deal in gold; they deal in credit, and the more credit they have and can give to their customers, the better it will be for the business of the country.
Just one other thing, when I am talking of nationalization. Mr. Lloyd George not only nationalized the currency and put the State behind the banks, but he nationalized the railway system of Great Britain. The big thing for a nation in the day of trial is to nationalize things, to mobilize its securities for the benefit of the nation, and to mobilize its resources. If that is heresy it is only heresy in Canada I hope it is not heresy in this House. I hope that it is not a matter for ridicule that a member of this House should propose such modern, and, I think, such sound ideas of finance.
I am going to close with two very short statements. If we cannot have nationalization of our currency and of our banking, and the mobilization of our resources for the benefit of the country, we will be a second rate nation on this continent, for they have more of that in the United States than we have. So far as I am concerned, the day cannot come too soon which puts Canada on an equality with the United States and gives us as good a banking system as they have there. They have improved their system; it is much better than ours, and the proof of it is that there is abundance of money in the United States, the rate of interest is lower, and they are becoming the bankers, not of the world, perhaps, but of this continent. I take issue with any one who says that the banking and currency of the country should not be put on a national basis. If we cannot have it in this House it may be that the time has come to have a national party in this country that will bring about these things. We have a rather serious condition of affairs in this country, which may require to deal with it a national government and a national party, irrespective of old methods and practice. But whether that be so or not, I know that the people of this country, I know that the farmers of this country, whether in the East or in the West, believe in using the credit of the nation, the power of the nation, its resources, and its strength for the solution of the problems that present themselves to-day. The banks of Canada cannot save the Canadian situation; the nation must save itself, and it must do so on the lines I have suggested. The banks were not able to save the situation in England, and they have not been able to do it in the United

States, or anywhere else. But the countries using the national credit and the national currency, well secured by gold, have done so. It is all very well for the minister to represent me as saying here this afternoon that I propose to put the printing press to work and to send out a billion dollars' worth of securities. I did not use an illustration along that line, because I think we ought to have a gold reserve in this country to the amount of $250,000,000. When I spoke of issuing a billion dollars, I had regard for the present Dominion notes and the bank currency which, together; amount to more than $250,000,000, probably nearly $300,000,000. I do not want to misrepresent the minister, but I gather that he thought I was suggesting an inflated paper currency to be issued to such an extent that it would clog up the banks. I made no such proposal, but I ask him if he thinks that is likely to happen. Has it happened in England since they have adopted the system of re-discounting the state issue of notes? Has it happened in the United States? Are the banks clogged up there? I do not think so. They have a better system than we have. We have not got a national currency, nor a national system of banking, nor re-discounting, though perhaps we have made approaches to it. We have improved the situation, and I am urging the minister to go on in the practice he has already introduced, and not to belittle the practice which he has observed. When he talks about a proposal to issue notes of an unlimited amount, which would clog up the banks and reduce the credit of the country, I cannot see the appropriateness of his argument. Now that he has begun the system to which I have referred, I hope he will continue, and that he will come forward yet, not with a proposal to borrow $75,000,000, as in this case, with the Prime Minister coming along with a war .. proposal of $200,000,000, but to come forward, as the British Government did under the leadership of Lloyd George, with a large system, using the national credit, the national currency, and national banking. Then we would be able to clean the situation up in a much better way than is possible under the proposal now before the House or under the other proposals that are to follow.


William Thomas White: I certainly do not desire to speak in any way as one having authority, but I am, at this time particularly, very jealous as to the credit of this Dominion; and I say that I do not know anything more likely to injure, or to derogate from, that credit than a suggestion to increase our issues of paper money.


William Findlay Maclean: Properly secured by gold. I disagree with the minister there.
'Sir THOMAS WHITE: My hon. friend refers to the situation in Great Britain, and to the situation in the United States. I therefore think that my hon. friend has not been at the pains to understand the situation that exists in Great Britain and in the United States. Before this war broke out, my hon. friend knows, the currency of Great Britain, that is to say the circulation medium of Great Britain, consisted of Bank of England notes, which were issued only against gold, and gold and silver in the hands of the nation. The essential difference between the situation in the United Kingdom and in Canada was this, that in England so much circulation was coin, while in Canada, on the other hand, circulation was principally paper money-paper money issued by banks secured by their entire assets, and Dominion note circulation secured by gold. If my hon. friend would take the trouble to look up the facts he would learn that Great Britain has not inflated the currency beyond the circulation needs. Great Britain was desirous that gold should not be hoarded and should not be exported, and, to meet the situation which arose at the outbreak of war, the proper expedient was adopted, availed of only to a slight extent-


William Findlay Maclean: To the extent ol hundreds of millions of pounds.


William Thomas White: Millions is only a relative term, but the point I am making is that the note issue of Great Britain has not been increased beyond the circulation needs of the community. If it had to be so increased, only one result would follow -it does not make any difference whether it is Great Britain or any other country. If circulation becomes redundant then currency goes to a discount, gold goes to a premium and the exchanges of the world begin at once to run against that country. In time of war, if the stress is severe enough, nations are driven to expedients, and it has occurred many times in the history of the past that in order to meet the financial situation created by war-Germany is doing this to-day,

note issues are inflated. But there is only one possible result from note inflation, and that is rise in prices, depreciation of the currency, gold at a premium, and the exchanges of the

world beginning to run against the country which has inflated its currency. This was done in Germany. Germany has oyer-inflated its currency, and the result is the depreciation of the German mark on the exchanges of the world. Therefore, Great Britain's note issue did not mean that at any time Great Britain had issued notes beyond the circulation needs of the country. What has happened is that notes have gone out and gold has come in. Gold has been conserved. Notes have largely taken the place of gold as a circulation medium.


William Findlay Maclean: That is what I propose we should do.


William Thomas White: As in this country, the fact remains that the circulation needs of Great Britain are well beyond the note issue of Great Britain. My hon. friend also speaks about the United States. He states that the banks of the United States, they having nationalized the currency, as he says, are able to extend credit for the movement of crops. The way that the Government of the United States assists in moying the crops is by adapting perfectly legitimate financial means. What are those means? They make deposits, just as the Dominion Government might to-morrow make a deposit in a bank, with the banks of the United States engaged in business connected with the movement of cotton and grain. That is perfectly legitimate finance. The treasury of the United States has a fund on hand.


Mr.  W. F. MAGLEAN@: It issues national notes.


William Thomas White: But these national notes have gold against them. The treasury makes deposits by cheque with banks in the usual way, an<} these banks, just like any other bank, having large cheques on deposit from the Government, have further facilities, perfectly legitimate, for carrying on this added business during the crop-moving period. But that is a very different thing from the Government of the United States handing out to banks unsecured paper money, or secured only to the extent of 25 per cent. I do not mean to say that there is not some leeway as to the amount of circulation that shall be secured, but that is a question of degree. In this country, for many years, the leeway has been 522,500,000 in connection with Dominion notes; that is to say, that everything beyond that was secured in gold. But circulation to the extent of $22,500,000

was what was called free circulation. Why? Because, as a matter of fact, the Government could always count upon $22,500,000 being out in circulation among the people in one and two dollar bills. But the fact remains that if we in this country were to adopt any such expedient as I certainly gathered my hon. friend had in mind, namely, to issue a large amount of paper money for the purpose of providing credit here for the purchase of munitions, even if secured by 25 per cent of gold, one result must follow, and that is that the currency would become depreciated, gold would go to a premium and the exchanges of the world would begin to run against this country. I am perfectly certain that if $50,000,000 of additional paper money were put into circulation in this country there would be a marked redundancy in our currency. I have no desire to discuss this matter on anything but a fair basis. I submit these considerations to my hon. friend from South York because I am satisfied that he is wrong and that he has not investigated these matters in the other countries to which he refers sufficiently to enable him to understand them. There is a great deal of difference between a Government making deposits in a bank, of funds collected in the usual course of the Government's business, and a Government handing out paper money to a bank if the bank must take that paper money beyond the circulation needs of the country. We did in this country what they did in Great Britain, only we did it very much more quietly. After a war has broken out in Europe, the first action on the part of a Government, in * order to conserve ite gold, is to suspend the Bank Act. That only means that instead of paying out in gold they are ready to pay out a circulating medium. In this case the situation was met in England by the issue to a reasonable amount, having regard to the circulation needs of the country, of the notes of the treasury. The very fact that this announcement is made at once stops panic and gold is not taken out of the bank to any considerable extent. Action of this kind is only intended to avoid the consequences of panic. I have no possible objection to my hon. friend putting forward his views as to what he believes to be a needed reform in our banking system; nor do I say it is impossible to nationalize the banks of Canada if it is not thought desirable to do so. But my hon. friend has stated that instead of al-

lowing the banks to issue notes, he would have the Dominion Government issue notes through the banks allowing them, I gathered from what he said, one per cent upon the amount so issued. We have to deal with the existing situation. The existing situation is that the banks had notes out in circulation to the amount, last year, of $100,000,000. If it were desired to nationalize the banking system, issue Dominion notes to that amount and require the banks to get in their bank notes, the situation would be that the banks would owe the Dominion Government $100,000,000, representing the amount of the notes which the Dominion Government had deposited with them and they would have to issue those to bring in their note circulation. It is true that the Dominion Government would be owed this large sum of money, but the question arises as to what the effect of that would be.
Now, this is a large question, and as the chairman has observed, it is irrelevant; but it is an important question, and I do not like to leave the discussion in this House and before the country without expressing my views upon it. I stated this afternoon that as Finance Minister I consider it my duty to express the *faith that is in me. My hon. friend has talked about world credits. The difficulty is we are apt to become confused in our terms. We hear about mobilizing resources, re-organization of our finances, of commerce and industry, and about establishing rural credits, and it is necessary to ascertain precisely what we mean by these terms. A rural credit does not mean anything more than this: that by legitimate financial methods a certain sum of money is placed at the disposal of the farming community to be availed of by way of loans. The fact that you call it a credit does not in the least alter the fact that what you are dealing with is money in the ordinary acceptation of the term. It would be possible for this Government, as for the United States Government, to establish a rural credit system, but that rural credit system, if sound, would have to be based upon existing sound methods of finance. That is, if rural credit societies or land banks were established, the United States Government could make deposits with those banks, or finance them by other perfectly legitimate methods, for the purpose of extending credits throughout the United States. I do not mean to say they have that in view, but that would be a feasible course, and would not be unsound financing, because
the money would be advanced in the ordinary way. My hon. friend seems to have the view that the money would be advanced, not in the ordinary way, but by handing over United States notes to these societies and banks.


Mr.  W. F. MAOLEAN@: I did not say anything of the kind.


William Thomas White: If my hon. friend did not say that, then his argument, as I understand it, is only this: the Government of the United (States, or the Government of any other country could establish these credits by the ordinary sound financial methods of to-day. That is a very different thing from issuing paper currency. If I misunderstood my hon. friend, and he says that I did, I am quite ready to make amends, but I certainly did not desire to misrepresent him on this important question. But I say that to finance the Dominion Government in this stress of war, and to finance Imperial purchases here to the extent that my hon. friend has in mind- because he spoke rather slightingly this afternoon of a credit of $75,000,000-by an issue of Dominion notes secured by 25 per cent of gold, could only have the consequences which I mentioned this afternoon: there would be a redundancy in the currency, there would have to be a forced loan without interest, the notes we depreciate, exchanges would run against this country, prices would rise, and it would lead to many evils that are well known, to students of economic history.


William Findlay Maclean: It did not happen in the United,States.


Mr. MICHAEL CLARK:: I will only keep the committee a few minutes, and I hope I shall keep well in mind the suggestion which you, Mr. Chairman, with great pertinence have given to this committe. If I may be permitted I should like to say that in doing so you have given one more proof, if it were needed, that at the present time, both as to the speakership and the chairmanship of committees, we are particularly well-officered. I think the committee is indebted to my hon. friend from South York (Mr. W. F. Maclean) for having drawn from the minister a very lucid explanation of what I have always understood to be sound views on currency. I hope my hon. friend from South York will not be offended if I say the minister has at the same time demonstrated that when a minister has a difference with a


Edgar Nelson Rhodes: I hope so.


Michael Clark: While the- balance of trade is being aggravated against us from the United States, I have another remark and another suggestion to make. It is a curious fact, if my memory serves me aright, that in the last fiscal year, when we bought $123,000,000 worth more from the United States than we sold to them, we sold to the United Kingdom $121,000,000 worth more than we bought from them. In the language of baseball, we allowed the United States to put one over us in order that we might put one over Great Britain. Well, that is a very horrible state of affairs to have been brought about by an imperialistic and patriotic party such as I see opposite to me, to allow the United States to perpetrate this thing against us so that we might perpetrate a similar horror against the United Kingdom. It ought to give every man on the right side of the House the shivers-but such is the fact. I will repeat the figures for the sake of my hon. friend the Minister of Public Works, because I am not sure that he is very good at figures. We bought from -the United States $123,000,000 worth more than we sold to them, and during the same year we sold to the United Kingdom $121,000,000 more than we bought from them. It appears to me a strange course to be followed by a wise Minister of Finance of an imperialistic party, a party which came into power pledged to increase the business of this country with the United Kingdom, and if possible almost to destroy it with the United States. I know the minister did not know about that placard, but the placard was hung over the streets of Ottawa all the same-no truck or trade with the Yankees. This party came into power pledged to increase our trade with the United Kingdom, within the Empire, and to decrease it or at any rate to frown upon it with the United States. They have increased it with the United States, and they have diminished it within the Empire.
Now, what should they have done? A

wise minister-I was going to say an allwise minister, but my hon. friend does not know it all or I would not have to tell him inow what I am telling him; he does not practice what he knows anyway, and this would be a much better world if we all did as well as we know, and my hon. friend the Minister of Finance is one of the greatest sinners in that respect, because he knowTs a great deal more than he practices, and I want to bring his practice up to what he knows-he knows that at the very time he should have given free wheat in order to increase our exports to the United States, so as to change the adverse balance into a favourable one, he should not have put an extra 5 per cent duty against goods coming from Great Britain, but rather he should have reduced the tariff against that country, or have rubbed it out altogether, so as to get more from them. Then we would have been taking some steps to have prevented the United States from putting one over us, and we should have ceased, especially at this time when the balances are so difficult for the British Chancellor of the Exchequer, to embarrass the Old Country to the extent they are doing by exporting so much more to her than we are importing from her.
I am sure the Minister of Finance will admit that I have not taken up much of the time of the House and I have not spoken in a controversial spirit. I am prepared with him to let by-gones be by-gones about words. If he will never mention reciprocity again, neither will I. But he must meet me half way; while he gives up the word, he must help me to establish the trade; that is the great thing. It is no joking matter, Mr. Chairman, because this money that we are borrowing will have to be paid back. Individuals may escape debts, but a respectable nation like Canada cannot. We shall have to pay this debt back, and we shall have to pay the interest on it. The minister has tremendous problems before him in the immediate future; I do not want to aggravate them by wasting his time. I hope that the minister will not make a long speech in reply to the remarks that I have made. I want him to think very seriously, almost prayerfully, about what I have said, before he makes answer at all, because when his answer comes I want it to be the right kind of answer. I want to bring home to him what is already very close to him, the terrible problems that he has to face in the future of this country in the way of paying these debts and of putting our trade upon

a proper basis. Let him become a free trader as he used to be in his youth. They say that a man is very rarely wholly untrue to his early beliefs, and I have great faith in the elasticity and breadth of mind of the Minister of Finance. If ever a national party is formed in this country, with all my respect for the member for South York I do not think he will be the man for that party; I think the Finance Minister will be the man. And, if he will get back to the ideas of his youth and not go on doing this horrible, excessive trade with the United States and do more trade with Great Britain, I shall be one of the most humble of his followers. I hope that he will take into consideration, anyhew, the horrible state of the balance of our trade that has come about since he came into power. I hope that he will consider the matter and adopt as much as he can of my suggestion.


Mr. GLASS:: The remarks of the hon.
member for South York (Mr. W. F. Maclean) have been very interesting; equally interesting has been the answer of the minister. The hon. member for South York says that the banking system of the United States has been brought to a state of perfection. It is a fact that during the last three years the United States has spent over $50,000 in making investigation of the subject of rural credits. After careful investigation, it has been found that the ordinary banking system of that country fails to meet the needs of the farming community. Last year several Bills were introduced into the United States Congress, but none of them were sufficiently comprehensive to be finally adopted. The matter was left with a joint committee of Congress and the Senate last year to devise and present a Bill for adoption at this year's session of Congress. With all its good features, it would seem that the banking system of the United States does not meet the varied needs of the agriculturalists and of the industrial communities. The minister is to be congratulated on broadening the lines of banking so as to provide a better system of credits for our farmers. I am sure that before thus responding to a popular demand and an urgent need, he must have given the matter a good .deal of consideration. As the needs develop, the minister will broaden and extend the banking system in such manner as to provide adequately for all the needs of Canadian agriculturalists. The steps which have been taken will prove a great stimulus to agriculture and its allied in-

1S43
dustries. Just in proportion as the desirability of intensive farming is urged upon our farmers, so much the greater will be their need for banking accommodation. The minister, therefore, has made a progressive step in this respect, and it gives me pleasure to congratulate him for doing so.
Resolution reported and concurred in.
Sir THOMAS WHITE thereupon moved for leave to introduce Bill No. 60, to authorize the raising by way of loan, of certain sums of money for the public service.
Motion agreed to and Bill read the first time.



CUSTOMS TAXATION.

[Stage Direction]
On motion of Sir Thomas White, the resolutions reported from the Committee of Ways and Means on March 15 were concurred in.
Sir THOMAS WHITE thereupon moved for leave to introduce Bill No. 61, to amend the 'Customs Tariff, 1907.
Motion agreed to and Bill read the first time.

[Stage Direction]
The House in Committee of Ways and Means, Mr. Rhodes in the Chair.
On paragraph 1-interpretation clause:
Wilfrid Laurier: There is a change in this from the resolution as first introduced. The first resolution read:
1. That, in the following resolution, " Minister," means the Minister of Finance of Canada; " non-Canadian company " means an incorporated company having its head office or principal place of business outside of Canada, but having assets in or carrying on business in Canada-
The minister has added:
-either directly or in the name of another company.
Is any machinery provided for ascertaining if a foreign company is carrying on business in Canada in the name of another company, either directly or indirectly?


William Thomas White: The only machinery will be the machinery of the department in administering the Act. The Act will have to be administered by officials, and it will be the duty of the officials to inform themselves in such manner as they may be able as to the facts in such a case. The object, of course, is to prevent evasion of the terms of the Act through a foreign company, which is not doing business
116 J
directly in Canada, being permitted to carry on business through another company.


Wilfrid Laurier: Are there any such companies doing business here in the name of other companies?


William Thomas White: Not to my knowledge at present; but I think it is necessary that the Act should cover the case.


George Perry Graham: Does the Copper Company come under this section?


William Thomas White: Not this particular section.


Mr. LOGGIE:: The definition of the word "person" is so broad that it would seem to cover an incorporated company, either a limited liability company or any other incorporation.


William Thomas White: The word was so defined in order that it might be used throughout the Act to represent not only individuals, but firms, partnerships, associations, incorporated companies or other corporate bodies.
On paragraph 2:
There shall be levied and paid to His Majesty a tax of twenty-five per centum of the amount by which the profits, earned in any business exceeded, in the case of a business owned by an incorporated company, the rate ef seven per centum per annum, and, in the case of a business owned by any other person, the rate of ten per centum per annum upon the capital employed in such business. Such tax shall be levied against and paid by the person owning such business for each and every accounting period ending after the thirty-first day of December, one thousand nine hundred and fourteen.
Provided, however-
(a)	'that the amount paid or payable by any person under the provisions of part one of the Special War Revenue Act, 1915, shall be deducted from the amount which such person would otherwise be liable to pay, and the minister shallhave power to determine any questions that may arise in consequence of any difference in the several periods for which the taxes under the said Act and those proposed herein are payable ;
(b)	that the dividends received from the stock of any incorporated company which has paid a tax upon its profits under the provisions of any Act based upon these resolutions shall not be included when the profits of any business are being determined ; and
(c)	that the amount of any tax paid by a person under the provisions of the Finance Act (No. 2) 1915, passed by the Parliament of the United Kingdom of Great Britain and Ireland or under any legislation for raising revenue for the present war in force in France, Russia, Italy, Belgium, Servia, Montenegro, Japan or the colonies or dependencies of any of

these countries in respect of the profits of any business liable to taxation hereunder shall be deducted from the amount of the tax that would otherwise be payable by such person.


George Perry Graham: Did this point ever strike the minister, that the war loan being exempt from this taxation, if the whole $100,000,000 of the war loan were subject to the taxation of 25 per cent, the rate of that war loan would be pretty high. For instance, per cent is, in round figures, the rate payable on the war loan. Thus there would be about $5,000,000 annual income in interest payments to the holders of these bonds. If the minister will figure that out he will find that in the three years, if this whole amount be exempt, the Government will lose by this exemption in "'taxation something over $3,000,000.
Looking at it from the other angle, those who are exempt will receive a rate, on account of that exemption and including the 51 per cent interest of about 6:1 per cent on their money. In other words, taking the exemption, and the rate of interest paid by the Government on the war loan together, the war loan is costing the country about 6| per cent.


William Thomas White: I do not follow my hon. friend. I think he is assuming that the war loan is held by the businesses that will be subject to this tax.


George Perry Graham: That is my presumption.


William Thomas White: My hon. friend knows that the war loan is held by some
25,000	individuals, firms, and companies throughout Canada, and it is probable that a considerable amount is held by businesses which become subject to this taxation proposal. But my hon. friend has no doubt observed from the text of the resolutions that we do not impose any tax until the rate earned is 7 per cent in the case of companies, and 10 per cent in the case of individuals. Therefore, it would not immediately apply to the revenue derived from the loan. A company which held a part of the war loan, and whose net profits were estimated, would be entitled to say, so far as the interest upon the war loan is concerned, that it was exempt from taxation, and that it should not be taken into consideration in imposing this tax.


George Perry Graham: Take a concrete example. The banks hold $25,000,000 of that loan. They pay more than 7 per cent, consequently their excess profits would be

taxed. The $312,500 which they will save in one year, will, in three years, amount to something like $1,000,000. Perhaps Ihave not made myself clear. Exemption from this tax will save the banks, on the $25,000,000 of the loan which they hold, $312,500, and in three years, the period for which the loan runs, they will benefit to the extent of over $1,000,000.


William Thomas White: I think my hon. friend ia confused, if he will pardon me saying so. The banks hold a certain amount of the war loan. They did hold, I think, about $20,000,000. I doubt if they hold $20,000,000 now, because there has been a good demand for the loan, and it has been gradually absorbed. Let us assume, however, that they hold $20,000,000 of the loan. In estimating the amount that any bank would pay under this proposal, we should have to consider the net profits of the bank, and in estimating the net profits, regard would be had to the gross profits, and to the cost of administration. Among the gross profits undoubtedly would be the interest upon these securities. But, as I pointed out, the interest is less than 7 percent on the amount invested in them. I do not think that the banks would save in respect of holding these securities, except that it might be said that, if instead of holding these bonds they held some other securities that yielded over 7 per cent, they would be liable to pay a little more. But, after all, if my hon. friend considers the total assets of the banks of Canada, from which they earn their gross profits, the sum of $20,000,000 is relatively a very small amount. My hon. friend knows that it is necessary in floating a loan, in time of war especially, to provide that it shall be exempt from taxation by the Dominion. If vve had an income tax in this country, I have no doubt that private individuals would buy the war loan, as they have bought securities in the United States and other countries that are exempt from taxation for the purpose of avoiding the claims of the income tax. But I think it has no real bearing upon the principle of the Bill, if my hon. friend will permit me to say so; nor is it objectionable, so- far as I can see, that the banks should hold a substantial part of the war loan because it is exempt, for it is exempt in the case of any citizen as well as of the banks.


George Perry Graham: I was not objecting to it. It makes the loan easier, and more attractive. It might help the loan, certainly it

will not injure it at all. If my point has any influence at all, it should show that the loan is a better investment than it looked on the face of it, particularly to those who come under the clauses of the other tax bill. Exemption, as I figure it out, is practically equivalent to about 6i per cent under the ordinary circumstances; that is to say, if the individual were subject to the war tax. Exemption makes a difference of li per cent.


William Thomas White: I am not able to agree with my hon. friend. However, I do not think it is desirable that we should get into a mathematical argument.
Mr. LOGGIE-: Is there not a conflict in this section where it says that incorporated companies are to pay when they have a profit of over 7 per cent, and that persons are to pay when they have a profit of over 10 per cent? In the section, already passed, we have a definition that "person" means an incorporated company. The minister told us that "person" meant an incorporated company. If that is so, is there not a conflict between the two statements in this section?


William Thomas White: If my hon. friend will read section 2 he will see that there is no conflict. The word "other" is there; it says "in the case of a business owned by any other person the rate of 10 per centum per annum upon the capital employed in such business."


Wilfrid Laurier: There has been a good deal of discussion upon the provisions contained, in this second section, but it seems to me that the point has never been made clear, at least not to me, why there should be a discrimination between incorporated companies and other persons. The incorporated company is allowed a profit of 7 per cent, and any other business is allowed a profit of 10 per cent. I repeat that the matteT has not been made clear to me why there -should be such a (difference.


William Thomas White: In order to answer my hon. friend, it will be necessary for me to dwell for a moment upon the principle of -the Bill. The Bill is not a tax upon all profits, nor upon capital. The idea is this: Since the war broke out many persons, many firms, and many companies have not been able to maintain the rate of earnings which they maintained before the war. In many cases, net earnings have been
reduced, and dividends have been passed or reduced. In the case of other businesses, whether carried on by persons, firms, or companies, it is a fact that since the outbreak of the war net earnings have been maintained upons the pre-war basis, or even higher-In many industries and businesses of Canada very large net profits have been made. The principle of the Bill is this:	We fix
upon a rate of net profits which would be deemed reasonable in normal times and we say, in the case of -persons, firms, and companies which have, since the outbreak of the war, or in any accounting period ending since the outbreak of the war, not been able to make that percentage of net profit that they shall not pay because the' inference would be that they had suffered somewhat from the war... On the other hand, take the case of persons, firms and companies who have earned in the accounting period since the war broke out more than the norma] percentage of profit; the inference is in this case, speaking generally, that they would not be disadvantaged by the war. In many cases they have been greatly advantaged by the war, and the idea is to raise this taxation from these rather than from those of the former class. The idea is that those who have not been injuriously affected by the w-ar, and those who have made profits out of the war, should contribute a portion of those profits to the exchequer of the country for the purpose of carrying on the war; whereas, those who have not been able to maintain their normal rate of returns upon capital shall not be taxed. In answer, particularly to the question of my hon. friend; he does not understand why, in the case of private individuals and partnerships we allow 10 per cent on capital before the tax applies, whereas in the case of incorporated companies we allow 7 per cent only on capital before the tax applies. There are many reasons. The reason which appealed to me particularly when I brought down the Budget was that in the case of many companies-not all, but a large percentage-it is not possible to ascertain the precise cash value of the assets, as can be done in the case of firms and partnerships, because the matter has been complicated by the issue of stock for assets acquired by the company. That is one reason. Another reason is this:	An individual who
engages in business is responsible to the full extent of his estate for the debts of the business. In the case of joint stock companies shareholders enjoy the advantage of

limited liability. They can be called upon only to the extent of the shares for which they have subscribed or which they have paid up. Men are able to take an interest in many joint stock companies. Men, operating through boards of directors, are able to invest their capital in fifteen, twenty or more joint stock companies. They are liable in each one only to the limit of the shares which they hold in each, whereas, if a man goes into business for himself, or if partners engage in business, they are liable to the extent of their entire estates for the debts of the business.' It follows that an individual would expect, and would be justified in expecting, a higher rate of return in the case of a business conducted personally by himself without the benefit of limited liability. Men engaged in business for themselves, or partners engaging in business, expect to make, under ordinary business conditions, a return of at least 10 per cent upon their capital. I think that would be concurred in by business men. Let us take the case of joint stock companies, and particularly industrial companies which we are dealing with just now; seven per cent is the natural rate that occurs to one as representing a fair return upon the par value of stock paid up in a going concern. Preferred stock is usually put out on about a seven per cent basis. Men are willing, by reason of the advantage which they enjoy from the joint stock principle to take a less rate of interest upon their capital. They do not have to give the matter their individual attention, and they have the advantage of limited liability. These are some of the considerations which lead me to say that 10 per cent would be deemed, in a business community, only a reasonable return to a person, firm, or partnership, whereas seven per cent would be deemed to be a reasonable return upon .a business conducted by a joint stock company. In England, in applying this tax, their principle is the same. Taking a prewar standard, they fixed upon six per cent in the case of a limited liability company, and seven per cent in the case of persons, firms, and partnerships. But, so far as we can ascertain, having regard to the conditions of business, we think seven and ten per cent respectively would be a fair rate in this country.


Alexander Kenneth Maclean: I have never seen the English Finance Act, Bill No. 2, but I read the debate upon it when it was introduced by the Lord Chancellor. I understand that the profits taxed are the profits

which are in excess of the peace time profits. They, I understand, establish peace time profits by taking a period of three years, and they only tax the profits which are in excess of the peace time profits, but they tax them 50 per cent. I would like to know if I am correct in that.


William Thomas White: My hon. friend is in one respect correct in his conception of the Act, and incorrect in another. One principle of the Imperial Act was this: they established for a three-year period the net profits of a company which would become subject to the tax. They sought to establish the net earnings, or percentage of net earnings, for the three-year period. They made their legislation retroactive to the outbreak of the war, and they said to a company: If you have made more since the outbreak of the war than that average rate of profit, we are going to take 50 per cent of the excess.


William Findlay Maclean: That is what I say.


William Thomas White: My hon. friend will understand that there are companies which had not been in existence three years previous to the war. Then they fell back upon this principle; they said: What prewar standard shall we fix upon? They fixed the pre-war standard at six per cent and seven per cent.


William Findlay Maclean: That was because they just had that profit.


William Thomas White: This six or seven per cent was what could be regarded as pre-war standard which would be fairly earned upon the capital of these companies. Section 40 of the British Act reads:
(1)	The profits arising from any trade or business to which this part of this Act applies shall be separately determined for the purposes of this part of this Act, but shall be so determined on the same principles as the profits and gains of the trade or business are or would be determined for the purpose of income tax, subject to the modifications set out in the first part of the fourth schedule to this Act, and to any other provisions of this Act.
(2)	The pre-war standard of profits for the purposes of this part of this Act shall, subject to the provisions of this Act be taken to be the amount of the profits arising from the trade or business on the average of any two of the three last pre-war trade years, to be selected by the taxpayer (in this part of this Act referred to as the profits standard) : Provided that if it is shown to the satisfaction of the Commissioners of Inland Revenue that that amount was less than the percentage standard as hereinafter defined, the pre-war standard of profits shall be taken to be the percentage standard.
The percentage standard shall, for the purposes of this part of this Act, be taken to be an amount equal to the statutory percentage on the capital of the trade or business as existing

at the end of the last pre-war trade year, subject. however, to the provisions of this Act as to any alteration in the manner of calculating the percentage standard in special cases.
The pre-war standard of profits was six per cent in the case of companies, and seven per cent in the case of individuals. The English Act is exceedingly complicated, and I desire to draw my hon. friend's attention to a feature in the English situation which does not exist here. My hon. friend knows there is an income tax in England, and that must be borne in mind when instituting any comparison between the English legislation and our own. All companies in England are subject to that income tax. In this country, of course, we have no income tax. If we institute a comparison in our legislation between the profits of a company in Canada since the war, and the profits of a company in Canada before the outbreak of war, in many cases some such result as this would occur:	A company might be earning twenty per cent before the war broke out. If it continued to earn twenty per cent after the war broke out, it would not pay anything. On the other hand, a company that was earning, let us say, six per cent before the war broke out might be earning ten per cent after the war. In that case, on the principle of the English Act, we should take half the difference between six and ten. It seems to me that it would be manifestly unfair to tax the company which is making only ten per cent and allow the other company which is making twenty per cent to escape. The principle of the English Act must be considered in the light of the fact that all those companies in England are subject to income taxation, which has been greatly increased since the outbreak of the war.


Wilfrid Laurier: I have listened to the explanation of my hon. friend, but it seems to me that the distinction which he makes between incorporated companies and unincorporated companies is arbitrary and not at all fair. The rule is to be that an incorporated company will be allowed only seven per cent of profits before being taxed; but that an incorporated company, carrying on just the same kind of business, is to be allowed ten per cent. I have in mind in the city of Montreal two large retail dry goods stores. One I know is carried on by an incorporated company; as to the other I am not quite sure, but I believe it is unincorporated. These two stores stand side by side, are doing exactly
the same kind of business, running the same risks, and probably making the same rate of profit, but under these proposals one is to be allowed ten per cent, and the other only seven per cent. Now, it seems to me that this example shows very conclusively that the minister's method of selection has not been a happy one, and that an injustice will be done to some companies. It seems to me that the guiding principle ought to be, not whether a company is incorporated, or not, but the rate of profit it is making compared with other firms doing the same kind of business. What reason can there be for discriminating between two enterprises doing the same kind of business and making the same rate of profit, just because one is incorporated and the other is not?


William Thomas White: My right hon. friend has overlooked the point I madje with respect to limited liability. There is another point which I did not make, but which I desire to draw to his attention-as a general thing, in the case of partnerships comparatively small amounts are taken for administration, but in the case of joint stock companies, still speaking generally, the officials are paid, and the business is carried on by directors and other officers. It seems to me that the two points I have mentioned are of weight in this connection: first, the fact that in the case of many companies, if not most companies, there is a difficulty of ascertaining the precise value of the cash assets of the company; and, secondly, there is this feature of limited liability. As a result and consequence of that limited liability seven per cent is deemed to be a fair profit upon an industrial company, whereas ten per cent would, be looked for by a man who pledges his entire estate in the conduct of a private business. No doubt the figures have been fixed arbitrarily in one sense, and yet not arbitrarily in- another. In a tax bill you must fix arbitrarily on figures, and in reaching conclusions one should have regard to the general views of the community with respect to the matters dealt with. In the one case we have to consider what would be d,eemd -a fair return upon the capital stock of an industrial or busines-s company, and in the other what would be the percentage looked for by a private individual or partnership1 en-. gaged in business.


Mr. PARDEE:: I agree with what the minister has said so far as limited liability

is concerned, but I can hardly agree that in a joint stock company more officers are required, and the administration expenses are greater. In many joint stock companies the stock is largely held by one person, the balance simply being held in a nominal way to comply with the Joint Stock Companies' Act. I do not think, therefore, that that argument would apply to any very great extent. However, that is not what I rose to take exception to. I have here a letter from a very large manufacturer in the western part of Ontario. I shall read a portion of it, not with the object of making any criticism, but for the purpose of getting information. My correspondent says:
It would seem to me that there ought to he a distinction made between financial companies and those engaged in manufacturing or business, but there should be no difference in the latter and the exemptions as between a company and partnership.
The instance that has been cited by the right hon. leader of the Opposition bears out the last part of my correspondent's letter, but it appears to me, although my view is subject to be corrected by the Minister of Finance, that so far as financial companies, pure and simple, and manufacturing companies are concerned, there ought to be some distinction made just ae is pointed out in this letter. I would therefore ask the Minister of Finance to say whether or not in his opinion there ought to be some such distinction made.


William Thomas White: It would be difficult, under a measure such as this, to make any discrimination as between financial companies and other companies. After all, the proprietors of companies are the shareholders and the tax, of course, falls upon them. Now, shareholders of financial companies need their dividends just as much as do shareholders of industrial or other companies. I would say, that in the selling value of shares upon the market, in the case of a first-class financial institution, 6uch as a bank or loan company, the shares would sell upon a lower interest basis than in the case, let us say, of an industrial company. That is in accord with the argument of my hon. friend. '


Frederick Forsyth Pardee: Does my hon. friend not think that the risk in an industrial company is very much greater than that in a financial company?


William Thomas White: A good deal depends upon the industry; but, although

opinion has changed considerably in that regard in the last few years, owing to the specialization of our industries, generally speaking, I may say that industrial stock is regarded as somewhat more hazardous than the stock of a financial institution. My hon. friend, when he mentions purely financial companies, such as banks, trust companies, and loan companies, will recalls that, in my Budget speech of a year ago last February, we especially taxed those institutions; that is to say, we derive today out of existing taxation, apart altogether from this Budget, $1,000,000 from the banks, and a few hundred thousand dollars a year from the trust companies and loan companies. Resort was had to them in the first instance, and I think it could have been justified largely upon the idea that my hon. friend has in view. We now come to a point where we are imposing a more general and comprehensive tax. I have been unable, I am sorry to say, to see the question as between the joint stock company and the individual in the light in which my hon. friend from West Lamb-ton (Mr. Pardee) evidently regards it. I think there is a distinction between the two classes, and, in seeking to apply the principle of the measure, namely, to tax profits in excess of what may be regarded as a normal standard, I find it necessary to distinguish between the two classes of business and to give the advantage to the privately-owned company in which a private individual or a firm is responsible for the whole of the estate.


Alexander Kenneth Maclean: You will find small corporations, owned by the members of one family, who are conducting the business.


William Thomas White: The conduct of the business is practically the same as in the case of a partnership. My hon. friend, as a lawyer, will, I am sure, concede that in legislation it would not be
10 p.m. possible to discriminate as amongst joint stock companies.
I agree with my hon. friend that very often a family or a partnership turns its business into a joint stock company and then it becomes what is called a privately-owned joint stock company; but my hon. friend knows that next week those shares could be distributed and sold, and then the company would become what is known as a publicly-owned corporation. There is, 'however, no distinction in law between the two, and I do not see how it would be possible to discriminate by legislation.


Wilfrid Laurier: You are going to start on a wrong principle.


William Thomas White: I do not see how it is possible to discriminate between joint -stock companies, and to say that one is publicly-owned a,nd another is privately owned. A company, with the joint stock principle applied, is an entity different from all of its shareholders, and I do not see how we could discriminate.


Rodolphe Lemieux: Will land syndicates
come under this taxation measure? I have ' in mind several companies which, as my hon. friend knows, have cropped up in the good times under the late Administration.


William Thomas White: You mean just before the war?


Rodolphe Lemieux: For instance, a company has bought a strip of land, say in the suburbs of Montreal, and is incorporated, not to do business for all time to come, but just for the sale of that strip of land. Supposing it has partly sold the land, will it come under this taxation measure?


William Thomas White: If a company has bought a tract of land and has sold part of it and is offering another part of it for sale, it is undoubtedly carrying on a business, and the question would arise under the provisions of this measure: What is its capital, its reserves, its accumulated profits? In other words, what is the amount of capital invested in that company and what are its net profits? No doubt in a case, such as my hon. friend has in view, there would be some difficulty in estimating the profits, but that is only a matter of administration under this measure; and, if it appeared upon a true balance sheet and a profit and loss account, that the company had earned for the accounting period a net profit in excess of 7 per cent, then it would come under this legislation.


Alexander Kenneth Maclean: The hon. member for West Lambton (Mr. Pardee) raised quite an interesting point. There is no doubt that industrial companies are entitled to a greater profit than the trading concerns. Investments would not be made in industrial companies were there not a probability that very considerable net earnings could be made, for the reason, I suppose, that in prosperous years the profits must be abnormal in order to make up for the years in which substantial losses may be expected. Therefore, I think a distinction
might very well be made between industrial companies and trading concerns.
I d,id not, however, rise to discuss that matter, but rather to ask a question suggested by the remarks of the hon. member for West Lambton. Supposing a manufacturing concern in the year 1914 had been in business for ten years, and that for nine years it not only did not pay a dividend, but actually lost money, which had to be supplied by the company by borrowings or otherwise, and let us say that since the war began these manufacturers-say of leather-had been fortunate enough to make a great deal of money. In computing their liability under this taxation scheme, would the company in this case be allowed to deduct all additions to capital or back dividends before the minister could, step in and take his portion?


William Thomas White: I would say no. Here is a company which was earning practically no profits before the outbreak of the war, and by reason of the outbreak of war that company has been advantaged. We are Taising this money to help pay our expenditures in the war. We take from that company not all the earnings which it has made as a result of the outbreak of the war; we allow them first 7 per cent free, and then we say: if you make more than 7 per cent we take one-quarter of one per cent, so that if you make 15 per cent we take two per cent.


William Findlay Maclean: But that company may suffer losses for another period of five years after the close of the war. They may claim that they were entitled to excess profits.


William Thomas White: I think we could not have regard either to a period before the war or to a period after the war. The outstanding fact is that this particular company, in marked contradistinction to many businesses which have lost money as a result of the war, has made money as a result of the war. We say: if you have* made money as a result of the war, we are going to take a little of that money from you to help pay our share of the cost of carrying on the war.


William Stewart Loggie: The minister has said that one of the reasons that led him to place partnership companies on a basis of 10 per cent and incorporated companies on a basis of 7 per cent was the difficulty in getting at the exact cash value of the capital of incorporated companies. I must congratulate

the minister that on reconsideration he has vastly improved the resolution in that regard. As it was originally brought before the House, it certainly was not practicable, but as he has remodelled it, I think it meets the situation very well; it puts incorporated companies on practically the same basis as partnership companies. But the difficulty that led the minister to put partnership companies on a basis of 10 per cent and incorporated companies on a basis of 7 per cent has now disappeared, because he has found a way to get at the proper capital of over-capitalized as well as of undercapitalized incorporated companies. For the life of me, I cannot understand the equity of collecting from the partnership company one dollar and from the incorporated company four dollars. On a basis of 11 per cent earnings, you collect from the partnership company one dollar and from the incorporated company four dollars, or, in the larger number, $10, and $40, $100, and $400, $10,000 and $40,000.


William Thomas White: My hon. friend
will permit me to correct him; I am sure that he does not desire to make an erroneous statement. My hon. friend has overlooked the fact that the Bill only takes one-quarter of the excess, so that if the percentage were 11, in the case of a firm, partnership or individual it would be one-quarter of a dollar, and in the case of a joint stock company, one per cent.


William Stewart Loggie: I quite understand that;
but what I say is absolutely true. If the minister will take a pencil and a piece of paper and work it out, he will find that on the basis of 11 per cent, for every dollar that the private company pays the incorporated party pays 'four dollars. On a IB per cent basis the proportion is as two to five; partnership companies pay two dollars while an incorporated company pays five dollars. On a 13 per cent basis, the partnership company pays $3 and the incorporated company $6. So that on the basis of earnings of 11 per cent, one company pays 400 per cent more into the treasury than the other company. Is that equitable? I have in mind in a certain district four or five unincorporated manufacturing concerns having a larger capital than $50,000, and right beside them are a number of incorporated companies. Can the minister give me any reason why there should be a spread on 11 per cent earnings of 400 per cent as between the amounts paid to the Crown by these different kinds of companies? The

minister has told us that in the United Kingdom there is a spread of one per cent, If the minister had suggested that the difference in this case should be one per cent, I should have been willing to consider it, but it does seem to me that the present proposal is unreasonable. The minister will find that the collection of this money will be attended with great difficulty; that the ' tax will be paid unwillingly by those who believe that the Government have not placed their company upon a reasonable basis as compared with that of other companies. I instanced a case in Ottawa and the minister has not replied. Can he tell me on what basis J. R. Booth of this city should escape paying any taxation, up to 10 per cent, whereas the E. B. Eddy Company and the W. C. Edwards Company will have to pay on their earnings over 7 per cent? I cannot see the equity of this, and I think that the minister will be well advised if he decreases the spread between 7 per cent and 10 per cent. If he makes it 7 per cent and 8 per cent there will be much less fault found with this measure when it comes to the collection of the tax. I would ask the minister to allow this to stand and to reconsider it. The right hon. leader of the Opposition instanced the cases of two dry goods firms side by side. Will the minister say why he should make it possible for one dry goods man to get his store rent free for three years? That is what it means, because the other man would have to pay the equivalent of his rent into the Crown, although he has the same earnings and stock. Many incorporated businesses are practically the same as though they were not incorporated. Of course in this I do not refer to the very large incorporated companies, such as the Canada Cement Company or the Canada Car Company. In such companies there is, perhaps, a significant difference, but in the ordinary incorporated companies, doing business say on the Miramichi river or in Bathurst or Shediac, the difference is very slight. I have in mind two businesses in Shediac that would probably come under the law, one incorporated and one conducted by a person. In the name of all that is fair and true, why should you ask one man to pay $4 and the other man to pay only $1, assuming the same basis of earnings and the same capital? My hon. friend has referred to the limited liability of the incorporated company and has advanced that as a reason why these companies are incorporated. I can give an-

other reason that is perhaps a greater incentive to incorporation, that is the question of succession; a business is incorporated so that in case of death the business can go on without interruption. Whatever advantage there is in that the companies pay for it when they get their incorporation papers. I think the minister is wrong in making a spread of 3 per cent, making the tax in some cases on one firm 400 per cent greater than on another.


Mr. McCREA:: Another reason for not having this inequality against the incorporated companies is that the company pays a provincial tax to the provincial treasury, whereas an individual or partnership does not. For the sake of argument and emphasis, take the case of our citizen, J. R. Booth. If his institution was incorporated at its proper value and his properties capitalized at anything near their actual value, and the business was conducted as a limited liability company, he would be paying many thousands of dollars in taxes to the provincial exchequer, through the provincial collector of revenue, whereas he * pays nothing.


William Thomas White: So far as I am aware, there is always, in connection with public taxation, a discrimination against the joint stock company in favour of the individual, for the reason that the joint stock company does enjoy a privilege conferred by the State. This is simply a difference of opinion as to the amount of spread, and it seems to me it can best be determined by our considering again,what is the principle of the Bill. The principle of the Bill is to collect a certain amount of excess profit beyond what might be regarded as the normal percentage of return Supposing a private individual is going into business, he is going to pledge his whole estate in the business. If he fails, he loses everything. How large a percentage of return might he reasonably expect upon his capital? I ask the House to bear this further in mind, that in the case of individuals and firms no large salaries are taken out of the business as in the case of joint stock companies. A private individual gives his attention, day and night, to his business; he takes out in most cases only the amount of his living expenses; but in the case of a joint stock company they pay directors, they pay the president, they pay the officials, and they have to compete in engaging those officials with others requiring their services. All of these payments are taken out of the earnings before this tax. That raises a very strong consideration
in favour of the private individual as compared to the joint stock company in respect of the rate of return which may fairly be expected. Is there any man in this House who would go into general business to-morrow and give his time to it, day and night, taking out only his living expenses or a very small salary from the business, and accept a less return than 10 per cent upon his capital? ' That is question number one. Question number two is: In the case of a joint stock company, is it not a fact that the shareholders have the advantage of limited liability, that if the company fails they do not have to pay more than they have put in the company or subscribed upon its shares? Is there not a clear advantage there to the joint stock company which should be recognized in any legislation oi this kind? There is no province in this Dominion, so far as I know, there is hardly a state in the union, that does not impose taxation on joint stock companies because they are joint stock companies, because of the privilege they enjoy of limited liability, which is a much greater privilege than people generally recognize. Let us assume two businesses side by side. In one case, A, a private individual carries on business. He fails; he loses everything he has in the world. Beside him B, a more prudent man, who is worth a million of dollars says:	I am not going to risk my
million dollars. He will subscribe stock in a joint stock company to the extent of $200,000, and will engage in business alongside of A. B does not lose his million dollars; -he loses only $200,000.


Mr. ROSS:: Does the same difference in liability exist in Great Britain? What is the reason then for the difference in the spread as between 7 per cent and 10 per cent. Why should that spread be made so large in Canada when the spread in the liabilities as between [DOT] incorporated companies and private companies is so small?
$ir THOMAS WHITE: It does not necessarily follow that the British Act fixes the precise or correct standard in each case; that is open to argument. My hon. friend will hardly lay it down as a principle that we must be solely guided by British legislation. The point my hon. friend has overlooked is this:	interest rates are much
lower in England and there is a greater stability in an older country than in a new country and investors are, content with lower rates of interest. While I do not pretend to know the English situation, I

should assume that a private individual there would be more content with 7 per cent, having regard to the rate of return which can be obtained in the United Kingdom, than an individual in a comparatively new country like this, with no settled situation as they have in Great Britain. In this country they would expect 10 per cent.


Francis N. McCrea: I think that if the minister will examine the records, he will find that where men go into partnership concerns with a certain amount of capital- I do not mean men who go into business without capital, but men who go into business on their own account as partners with capital'-the percentage of failures is very much less than it is in the case of companies in which the same amount of capital has been invested in the first instance. In the case of partnerships a man handles his own money, but in the case of companies or corporations he has nothing to do with the control of the money, and in many cases the money is lost. The failures of corporations are very much more numerous than they are in partnerships where the same amount of money has 'been invested at the commencement of the business.


Mr. LALOR:: I am not interested in a private company, nor in a partnership; my interest, so far as manufacturing business is concerned, is all in joint stock companies. It strikes me that the spread of three per cent is fair. The advantage of a limited liability company is very great indeed. As every one knows, your assets, outside of your liability, in that company, are entirely free. Let me cite an instance which may bring more clearly before the committee the difference 'between a limited liability company and a private company or partnership. If there is a partnership, and you want to borrow from the bank say $10,000, $50,000, or $100,000, as the case may be, you go to the bank and endorse that note, and become responsible for it. In a limited, liability company you do not do that at all. If you were to ask the directors, or the stockholders, of a company to endorse the notes in a bank for the money borrowed to carry on the business they would absolutely refuse to do it.


Alexander Kenneth Maclean: I venture to say that 51 per cent of the corporations in Canada have their paper endorsed by their directors.
ISir Thomas White.]


Francis Ramsey Lalor: ' I quite agree that that is sometimes the case, but it is not always the case.


William Findlay Maclean: Pretty nearly.


Francis Ramsey Lalor: I do not know of any company with which I am connected which has to do that; neither directors nor stockholders endorse individually. Surely the stockholders are never called upon to endorse; they are free entirely from that liability, whereas in a partnership, or in the case of an individual carrying on a business, he has to become responsible entirely for the money which he borrows, and for the capital which he invests. Not only that, his assets are liable as well. There is a very great difference, and although my interests are in stock companies, I think the spread is equitable and fair.


Mr. HUGHES:: I want to present one idea to the minister. I presume that the object of this legislation is that it shall reach as many people who should be taxed as possible, and particularly those who have made profits on account of the war. It is pretty well known that there are a number of people in this country who are known as middlemen, and, who have made profits by getting contracts, and passing them over to others. I think the usual rate of commission is about 10 per cent in thefee cases. Under this legislation these people would, apparently, escape altogether. They have taken no business risks; they have, as a rule, provided no capital, and it seems to me that if there is any class of persons in the community who should be reached, it is that class. I have in mind some people who have done business on the percentage basis with the Government direct in purchasing war supplies, and who have received a commission of 10 per cent, and made considerable sums of money, with very little effort on their part, and, as I have stated, with no risk at all, and no capital. If these people escape, I think it would be most unfair.


James Joseph Hughes: If their profit is ten per cent, and does not exceed that, as individuals they would escape. If a company acted in that capacity, and made 10 per cent, they would not escape. I could mention names -they are well known. Take the Ellis Bros, of Toronto, for instance; they purchased binoculars for the Militia Department, and 10 per cent was the commission they received. I forget the total amount which they made, but it was quite a large sum

of money, and it was easily earned. Under the conditions that I have stated, if they were individuals, or were in private partnerships, they would escape.


William Thomas White: I may point out, although I am not quite sure of the facts, that the firm of Ellis Bros, is an incorporated company, and any earnings that they may have made out of the transaction to which my hon. friend refers, would, I should think, be included in the company's earnings, and, consequently, they would become subject to the provisions of this Act. My hon. friend has spoken of middlemen. I inserted a provision in section 4 which I think will meet the case of individuals who have acted as middlemen and made large profits. Of course there will be cases of middlemen in petty transactions whom the Act will not reach, but if my hon. friend will look at subsection (a) of section
4.	he will see that the $50,000 limit does not apply to the business of any person who is or has been engaged in manufacturing, or in dealing with munitions of war. I put the words " or has dealings in " just to meet that case.


James Joseph Hughes: I have not the right resolution here then; there is no subsection 4.


Mr. COPP:: The Minister of Finance is in rather an unfortunate position in regard to the resolution which he has introduced for the purpose of raising taxation. The principal reason for his taxation proposals apparently is that the minister has realized fully during the present session, and possibly before, that a large number of incorporated companies have made excessive profits out of the supply of munitions of war. I appreciate very much the attempt of the minister to get something out of the parties who have made such excessive profits, but while the minister, by the action he has taken, admits the propriety of the principle of attemptng to recover unjustly acquired profits, he finds himself in this unfortunate position that if he only levied thetaxupon those who have furnished munitions of war, he would be admitting the truth of what has been charged against the Government in this respect. To get clear of that dilemma, the hon. gentleman has seen fit to levy this taxation upon all corporations and partnerships doing business in the country. The tax that he is levying upon companies and partnerships for the purpose of obtaining the revenue that he requires is unfair and inequitable. My hon. friends have given illustrations of
the manner in which this tax will be applied. One cannot cite illustrations without being sectional, and without referring to matters that are personally known to himself. We have a number of incorporated companies in my county doing lousiness side by side with partnerships, and the inequality of the arrangement as applied to these two classes of businesses was well illustrated by my hon. friend from Northumberland (Mtr. Loggie). In my county there are two firms practically side by side carrying on exactly the same business. One business is carried on in the name of an incorporated company; it is purely and simply a family affair, an incorporated company having been formed by the brothers interested in the business. The neighbouring business is carried on under partnership, and if anything there is more money invested in the partnership than in the incorporated company. I happen to know these organizations, as I have done business with both. On what principle of equality is it proposed to tax the profits of the incorporated company exceeding 7 per cent while * the partnership can have a profit of 10 per cent without paying anything into the treasury? I do not know whether the minister has absolutely considered all the points raised by hon. gentlemen here to-day, or whether he has fully made up his mind to put this resolution through and levy the taxation on that basis, but I say that it is a most inequitable arrangement, and one which must raise a great deal of dissatisfaction throughout the country. I have had a number of letters and telegrams from my constituents protesting against this great inequality as between partnerships and companies. On behalf of these constituents I beg to draw the attention of the minister and the members of the committee to the matter. I sincerely trust that the minister will see his way clear to reconsider this proposal and put the different organizations which are being taxed on a more equitable basis so that they will pay an equal amount into the treasury whether they are doing business as incorporated companies or as partnership firms. The hon. member for Haldimand (Mr. Lalor) speaking in regard to the status of companies as compared with that of partnerships, said that all the assets of the partnership are at stake. I may say to him that I know that the directors of a number of companies in my province, if they want to borrow .money from the bank,

have to go to the bank and endorse notes the same as private individuals have to do.


Francis Ramsey Lalor: How about the stockholders; do they have to do that?


George Perry Graham: The directors own most of the stock.


Mr. OOPP:: It is not customary for stockholders to endorse notes, because a very large amount of the stock is generally held by the directors. One of the qualifications for a director is that he must hold so much stock. They usually go to the bank when they want to borrow money, sign notes as directors, and makes themselves personally liable. I know of some cases where the shareholders oi companies have also had to go to the bank with the directors and endorse notes to enable them to borrow money to carry on their business. I felt it my duty to bring these facts to the attention of the committee. They have come to me, not because I have any interest myself; I am in very few companies and in no partnerships. I am not speaking from the personal standpoint, but I am simply trying to voice the sentiments and complaints of a number of my constituents in regard to this matter. I would urge the Minister of Finance -to adopt some of the suggestions which have been made by hon. members on this side of the House.


George Perry Graham: I presume the minister will agree that one equitable way to have imposed this taxation would have been to have levied it on income. Might I ask him if he was influenced in any way against that plan by the suggestions of the provinces, or by an intuition that the provinces wished to retain that source of revenue for themselves? I have seen some discussion recently on that point. It is a well known fact that the provinces are having their difficulties, as well as the federal authorities, in finding new sources of revenue. In Ontario, for example, so long as we had our reserves of timber resources, these looked after the revenue fairly well.
At the present time the revenue is not coming from that source to any great extent. The provincial treasurer of necessity is looking for new sources of revenue. Some of,the incorporated companies that will be taxed under this Act have ben taxed for years by the provinces. A certain rate is also being imposed 'by the municipalities throughout the provinces for war purposes. I am inclined to think that the treasurer

of Ontario at least has his eyes on income taxation as a fruitful source of revenue at a not far distant date.


Francis Ramsey Lalor: They will have to 6top dividend payments then.


George Perry Graham: The Minister of Finance seems quite shy of an income tax which would reach every person earning above a certain income. I think he had in mind that this source of revenue should be reserved to the provinces. Of course, the principle of direct taxation by the Dominion Government is comparatively new, and when the minister was considering possible sources of revenue he, perhaps, said: I will not impose taxation on incomes, but will leave that to the provinces. The remarks of my hon. friend from Haldimand (Mr. Lalor) are all right, but we are not all on velvet, as the saying is, and in as big a way as he is. War or no war, he goes along with an equanimity which a good many of us envy. But it was the smaller companies I had in mind, where the limited liability does not cut much figure. A large proportion of joint stock companies, at all events in Ontario, are formed for convenience sake. A father may want to get his two or three sons in the business, and as young men nowadays do not like to work with their father if there is nothing coming directly to them, a joint stock company is formed, and the stock distributed amongst the father and his sons.	But all of us are not fortunate enough to have sons, I am not referring to myself. On the one hand, then, we may have a father and his three sons engaged in a joint stock company, and on the other hand a man who has no family and is not in a joint stock company. He has only his capital. Now, the inequality comes in because one man is allowed to earn only seven per cent, while his neighbour is allowed to earn ten per cent. I am inclined to think that the spread is a little too great, particularly when we take into account the fact that a very large percentage of these businesses have been formed into joint stock companies, at all events in Ontario, merely for the sake of convenience and for the purpose I have outlined. The larger companies can look after themselves, but it does seem to me that it would be more equitable if some plan could be devised applicable to these smaller companies. In discussing this tax on business, I am not referring to those companies, whether large or small, that

have made big profits out of the war. We all agree that they ought to hand back a good deal of their profits, because we are all being heavily taxed on account of the war. But I am referring to the smaller companies that have been formed as family affairs, and which perhaps comprise seventy-five per cent of the whole. If the minister could include these companies in a separate class-it might not be easy to draw the line-I think it would remove a great many of the objections that some business men have to this legislation, and it would remove the feeling which some of them have that they are not being treated fairly as compared with others. A point was raised by an hon. member a few moments ago that has bothered me considerably. I am sure the Minister of Finance understands that I am not making these suggestions for the purpose of worrying him. Taxation, of course, is not welcome at any time, and we. are all of us interested in any taxation proposals. Under present conditions, however, taxation will be more cheerfully borne than under any other circumstances you could possibly imagine, and I want to assist the Minister of Finance so that every one will be satisfied that each is bearing his share of the taxation and no one more than his share. An hon. gentleman speaking a moment ago made this point, and it is particularly applicable perhaps to some of the smaller companies I have mentioned, and perhaps partnerships as well. Owing to the general revival in business on account of the war, many of these smaller companies not directly engaged in producing war supplies are in a much better position than they were a couple of years ago. Then they had their face, you might say, almost to the wall, but now many of them are sharing in the general business revival. Many of these companies may be using a portion of their surplus to pay off a heavy bank over-draft of a couple of years ago. Tliese companies will be taxed on all profits over seven percent, and I think when the war is over they are going to have a very, very difficult time. We all agree that it will be a miracle if there is not a decline in business in the readjustment period. After the war is over, this artificial business will disappear, and these smaller companies will have to look rto their ordinary business. Values are sure to go down, and I think many of these smaller companies will need a respectable part of their surplus to carry them over the readjustment period. I am afraid this taxation will have' the effect of driving some of these smaller companies out of business. I am not anxious about the larger ones; they are controlled by men of financial strength who can see their way to finance these companies as they go along. But I repeat that, unless you allow these smaller companies a fairly good reserve, many of them will go into bankruptcy after the war and they will blame it on this taxation. Of course, I know it is easy to make suggestions, but all my suggestions have been made in good faith and with a desire to get an equitable scheme of taxation. I think the minister and his experts might be able to devise some scheme whereby these smaller companies would be enabled to carry themselves through the readjustment period after the war.


William Thomas White: I appreciate very much the admirable spirit in which my hon. friend has approached the consideration of this question. My hon. friend realizes that in any scheme of taxation that can be devised there will be anomalies when special cases are being dealt with. I had a very wide experience many years ago in connection with the Assessment Act of the province of Ontario, and I was struck particularly with the fact that from time to time special cases arose in which there appeared to be anomalies and even hardships, and yet it would appear impossible to draft a measure in which that does not occur.
I will now take up seriatim the points raised by my hon. friend. He speaks of this being a very heavy tax upon small companies. He will observe by the provisions of the Bill that it does not apply at all to companies unless the capital amounts to $50,000


George Perry Graham: That is a comparatively small amount.


William Thomas White: -unless in the case of companies engaged in the manufacture of munitions, or in furnishing war supplies. I gave very careful consideration to the aspect of it that my hon. friend has very properly in mind, but the figures are not at all large. Take the case of a $50,000 company earning, let us say, 11 per cent. In that case the tax would be one per cent upon $50,000, or $500. Now, take the case of a company with $100,000 of unimpaired capital earning 11 per cent. The tax is only one per cent, or $1,000. A company

with a capital of $100,000, if it makes 11 per cent, is surely able, for the limited period of this measure, to contribute $1,000 towards the war. Take the .case of a company with an unimpaired capital of $1,000,000. If such a company made 11 per cent upon its capital it surely would not be a great hardship to ask it to contribute one per cent, or $10,000, towards the war. Therefore the amounts are not considerable.
Taking the comparison between joint stock companies and individuals, I have figures which I think will show that the spread, while it appears to be considerable, is, in realjty, not of very great consequence. Take the case of a company with a capital of $100,000 and earning, let us say, 20 per cent, or $20,000, in an accounting period. The tax which that company would pay would be one-quarter of $13,000, or $3,250 a year. Take the case of a partnership with precisely the same capital, $100,000, and earning precisely the same rate, namely, 20 per cent, or $20,000. The tax which that company would pay would be one-quarter of $10,000, which is the excess over 10 per cent, or $2,500. Subtract the $2,500 in the case of a partnership from the $3,250 in the case of a joint stock company and you get a difference of only $750 in the case of a $100,000 joint stock company and a $100,000 partnership, each earning 20 per cent. Having regard to the great advantage to the joint' stock company of limited liability, and to the other facts which have been adduced in argument here, I submit that $750 is not an unreasonable spread in the case of those two companies.
Needless to say, any Minister of Finance would like to avoid taxation; but it became apparent, not only to the Government, but to the Parliament and to the country, that in a time like this it is, to say the least, exceedingly desirable that we should pay as substantial a
11 p.m. part as we can of the principal of our war expenditure, especially when it is running into such large figures. And, further than that, as I have pointed out in previous discussions on the subject, I believe it to be indispensably necessary in the preservation of our country that we should show to the financial communities of the world that we are taking measures to meet the exceptional situation with which we are confronted, because it very much strengthens the hand of a minister and of a Government to be able, in issuing loans, to say to those who are to purchase the loans: The Dominion of Canada is facing the situation; it is im-

posing taxation; it is taking a part of the excess profits which have been earned on account of the war; it expects to raise a revenue of eight or ten or twelve million dollars per year from that taxation this year, and last year it imposed taxation which restored its revenue. Such action strengthens the hand of a minister and of a Government in selling its securities on the money markets of the world. This is a temporary measure, and the operative part of it comes to an end at the date mentioned in the Bill, that is to say, the 31st day of December, 1917. It is true that in the succeeding year there will be a payment in respect of the accounting period falling due during the year 1917, but the Bill is designed to last only three years, and it will not last longer than that.


Rodolphe Lemieux: Did not my hon. friend, when he was introducing this Bill, say that we might expect some further taxation later on?


William Thomas White: 

country than would be realized in a smaller community.


George Perry Graham: It would depend somewhat upon the rate.


William Thomas White: I should point out that the provinces and municipalities do, for the most part, although there are some exceptions, levy an income tax. That is to say, the municipalities in some provinces levy an income tax under provincial authority for municipal purposes. In one of the provinces, or in some of them, the province itself levies a direct income tax. My hon. friend may be on sound ground in stating that the tendency will be for the provinces to resort more and more to income tax. Without pronouncing at all upon the policy of the Dominion Government with regard to the matter of income taxation-because it is not really before us at the present moment-there are some considerations that I should, like to mention. I have given a good deal of thought to the question, not only in connection with Budget, but since I became minister I have reflected a good deal on modes of taxation. It must be borne in mind that this country is one of large area. It is as large as the continent of Europe; it is larger than the United States. As we have a sparse population in the administration of an income tax by the Dominion very heavy cost in proportion to the amount realized would be involved as compared with the cost of administration in the United States, where it is admittedly very high. It is, I think, a sound maxim or canon of taxation that, in considering a tax, regard should be had to the cost of collection. If the cost of collection is very high, it is a sound maxim of taxation that that form of taxation has an objectionable feature. Of course, the object of taxation is to get money for public needs, and if in the collection of money for public needs a very large percentage is necessarily absorbed by collection, the result is that the tax to that extent is imposed for the benefit of the collectors. I submit these considerations because I was much impressed by the speech of the hon. member for Halifax, in which he said that the time would come when a comprehensive system of taxation might be necessary in this country. I am throwing out these observations as showing some of the considerations that would, have to be taken under review in considering the question of an income tax by the Dominion Government. I have adverted to the matter Thomas White.]
ter of cost, and at this time it would seem to me particularly inexpedient for the Dominion to embark on income taxation. An army of officials would be required in a country like Canada, because the woTk would, have to be done thoroughly or should not be done at all. We should have to establish almost a new Civil Service. I do not desire to exaggerate the magnitude of the service, but it would be very large. We should have to have assessors and their clerks in practically every township, every county, every village, every town, and every city, for the purpose of levying the assessment; afterwards we should have to have machinery for revision and collection. I need not say that that would be a formidable undertaking.
These are some of the considerations which are involved in the question of an income tax. I do not consider it necessary to express any opinion as to whether or not in the future the Dominion would at any time resort to such a tax. I think it would be most inexpedient for me to pronounce any opinion upon that. My hon. friend referred to some smaller privately owned companies. I think that as a legislator of experience he will realize that even though there is some anomaly and some hardship -if such a term may be implied to a Bill which imposes such a moderate measure of taxation unless in case of excessive profits -there would be great difficulty in discriminating between joint stock companies. After all, a joint stock company is a joint stock company, and I do not see how we could treat one joint stock company differently from another. I think I have dealt with nearly all the points raised by my hon. friend from Renfrew (Mr. Graham), and I take the opportunity of again expressing my appreciation of the very fair view he has taken of this measure and his realization that there is room for difference of opinion.


Francis N. McCrea: I think the principle of
this taxation is all wrong. In my judgment it is imposing a penalty on thrift.


Edward Mortimer Macdonald: Hear, hear.


Francis N. McCrea: For instance, take a corporation or company who use judgment, energy and ambition, and handle their business economically, wisely and prudently, they are punished for doing so. I think it is a bad principle; it is against progress. Furthermore, I think you will find it will have a tendency to drive capital from this country that would otherwise come in and

invest. Immediately they realize that their ' capital will r*, taxed 25 per cent of their earnings, they will steer clear of it. I know of one or two firms that were seriously considering erecting plants in Quebec who are now hesitating. They say: This is the beginning of it and we do not know what the end will be. I think that will apply all over the country. The principle itself is wrong, and without any reflection whatever on the Minister of Finance, who comes to this House with a reputation as a clearheaded, clever financier, I think if he had used his own best judgment in working out a system of taxation, if he had not, perhaps, listened to the Minister of Elections, he would have succeeded better than he has done.
Mr. LAiL/OR: I think it is the minister who is hit.
Mr. MoOREA: He is perhaps willing to he hit. The Minister of Finance will find that the tax will not touch fifty per cent of the people who are well able to-oontribu-ture their share of taxation, and who are willing to contribute. This Government are, I think, the most fortunate Government that ever held office in Canada, so far as taxation is concerned-remember, that is as far as I wish to go. Taxation of any kind is never welcome. It is never very much appreciated by the people of Canada. But at this particular time, 1 think the people of Canada realize that taxes have to be imposed, that they have got to pay taxes, and they are willing to pay them; but, they want to be taxed equally; they want this burden to be distributed so that it will bear equally and fairly on all parties. If that is done, I think there will be no complaint or grumbling about it. It is perhaps easier to make criticisms of this kind than to devise a scheme for obtaining that object. Nevertheless, it is, in my judgment, true that this taxation will not touch fifty per cent of the people who are willing and well able to pay their share of th'e burdens that have to -be borne. I am glad it is only a temporary arrangement. I hope that our Finance Minister will not forget that, and that it will be done away with very soon.


William Thomas White: I am on record.


Francis N. McCrea: It has not yet been explained how the tax is to be levied and collected. I should like to know what system of arriving at the taxation to be imposed will be employed. Will the re-
117J
turns or statements made up by large corporations and prepared by proper accountants, be accepted, or will the Government appoint officials to audit the books of the companies and make their owp valuations?
I	anticipate some considerable trouble,
which in some cases may be imgainary. For instance, a corporation makes a return to the Government of what they consider their net profits have been. Will the Government accept that, provided it looks reasonable and fair, or will they appoint a set of auditors and accountants to visit every man's plant and take stock and make their own estimate? If they do, I am afraid there will be very great suspicion that the corporations and companies that are favourable to the Government will get special favours, and that those oh the other side will not. These are points and fact3 that I think the minister will be glad to explain to us.	[DOT]


William Thomas White: The matter of administration, of which my hon. friend has referred, might, I think, be more conveniently taken up when we reach section 11, which deals with that phase of the taxation. I shall be very glad indeed to deal with it then, if that will be acceptable to my hon. friend.


William Stewart Loggie: When I was addressing the committee, the Finance Minister took issue with me as to the rate of taxation on an
II	per cent basis. Does he admit that I was correct in my statement that one company would pay $4 while the other company would pay only $1?


William Thomas White: I am afraid I did not quite follow my hon. friend. I have no desire to challenge his figures, except to say that I think if he will take an example say of the case of a one hundred thousand dollar company and a one hundred thousand dollar firm, and assume that they make 11 per cent or 15 per cent, and then work out the actual result under the Act, he will find that the difference is comparatively small.


William Stewart Loggie: I have that actually
worked out, and I wish to tell the minister and prove to him that what I say is absolutely true. The earnings of $100,000 at 11 per cent are $11,000. In the case of a partnership, there is 1 per cent over. One per cent of $100,000 is $1,000, and 25 per cent of that is $250. In the case of an incorporated company, $100,000 at 11 per cent iS $11,000. There is 4 per cent over. On $100,000 that amounts to $4,000. Then 25 per cent of that is $1,000. Thus, in the

case of the incorporated company, the tax will be $1,000, and in the case of the' partnership company the tax wdll be $250, so that the incorporated company pays $4 for $1 that the partnership company pays.
I	do not think that the illustration the minister gave us was a fair one. He gave the illustration of earnings 20 per cent. That is a most uncommon rate; it is uncommon in the Maritime Provinces to earn even 11 per cent. If we do that we consider ourselves mighty lucky. It is no use to bring up an illustration of 20 per cent. When the percentage is less than 11, a company would pay $750 and the partnership would pay nothing. If they earn 9 per cent, the tax would still be very heavy in the one case as compared with that imposed on the other; I think it would be $500 against nothing. If they earned 1 per cent less, that would mean $250. against nothing paid by the partnership. On the basis of
II	per cent, a company would pay $4 for every $1 that the individual or partnership would pay.


William Thomas White: My hon. friend is a good mathematician, but I am afraid he has not considered how little that really means. He is dealing with a company that has $100,000 of capital, and with an individual or firm or partnership that has $100,000 of capital. That is a fairly substantial capital, but in the case he has given, there would be a difference of only $750. A company with $100,000 capital pays only $750 in the case he has instanced more than the individual or partnership. That is only $7.50 per $1,000 of capital. That is all that this tax penalises, so to speak, a joint stock company with its privilege of limited liability as compared with an individual or firm or partnership. I do not think that that is a very serious matter at a time like this in a tax which, as I have stated, is for a limited period.


William Stewart Loggie: The minister tries to get away from the point by saying that the amount is not very large. That is not the question at issue. The question is, why should there be a spread of 3 per cent. Suppose the capital is $500,000; then the payment by an incorporated company will be $5,000, as compared with $1,250 in the case of a partnership. In three years that would amount to $15,000, &s against $3,750, an amount sufficient to buy a store in a town of 5,000 or 6,000 inhabitants.


Francis Ramsey Lalor: I am almost beginning to feel that I am on the wrong side of the

-House. The champions of the manufacturers and joint stock companies are our friends opposite. My experience in the House, spread over a good many years, does not bear that out. I find my hon. friend from Sherbrqoke (Mr. MoCrea) taking the view that the manufacturers and joint stock companies are taxed too heavily. I agree that they are taxed pretty heavily. Then there is my hon. friend from Northumberland (Mr. Loggie) I am quite surprised to hear him take up the attitude he has adopted to-night, because he has always taken the ground that the manufacturers and the joint stock companies were the people who were extorting too much m,oney from the people, in fact, practically robbing them. I should have thought that he would have welcomed the taxing of these companies. It is quite encouraging to find hon. gentlemen opposite taking up this new position. The first thing we know will be that they will say there is not enough protection, and that there should be more. There is one thing that strikes me in .connection with this Bill. It seems to me that in place of the limit being fxed at $50,000 it should be $40,000. In the province of Ontario a tax is imposed on joint stock companies with a capital of over $40,000, and the result is that a great many companies are incorporated, with a capital of $40,000. I think that very few are incorporated with a capital of $50,000.


George Perry Graham: It is the same way in other provinces; the limit is $50,000, and many of them are incorporated with a capital of $49,000.


Francis Ramsey Lalor: The companies incorporated with a capital of $40,000 might escape altogether.	.	.


Mr. NICKLE:: In so far as I understand taxation, there are only three methods that can be adopted. One is to tax expenditure, the second property, and the third income. If I remember Tightly, the Minister of Finance, in his Budget speech of last year, made a raise alt through the tariff, and it was bitterly attacked by hon. gentlemen opposite. Certainly that was a tax on ex-, penditure, because the money raised is on the expenditure of the people, on their imports into this country. The second method' of taxation is to tax property. That is a form of taxation which was adopted^ by the province of Ontario last year in levying a rate of one mill on the dollar on property in the province. I remember the drastic eriticism to which the Ontario Government

[DOT] 1861
was subjected. The critics said that it was not fair, because the assessment throughout the province was not equal, that the assessment in the cities was higher in relation to value than the assessment in the counties, and that if the Government wanted to adopt such a system of taxation they should: equalize the assessments, equalize land values and business taxes throughout the province. Hon. members understand how great a work that would be. Then we come to the Finance Minister's proposition this year. Certainly it is an income tax, but it is an income tax on ithose who are able to pay, upon the men who have made money, directly or indirectly, through this war. In my judgment, it will commend itself to the people of this country, as it certainly commends itself to me. If I believe in taxation at all, and we must believe in taxation, the man who can pay is the man who should pay at a time like this. I believe that it is the man who is wealthy who should contribute to the maintenance of this war, and I am certain that that is the sentiment of the people at large. I am not going to express any opinion as to whether or not it might be necessary ultimately to establish an income tax on a Dominion basis. Perhaps that time may come, and if it does come, I hope the Minister of Finance will consider carefully the entire scheme, because an income tax is not the simple thing that some people would have us believe. You have to take into consideration the difference in the tax paying power of single men as compared with married men; the capacity of the man with a family to pay as compared with the capacity of the man who has no family, and the question of how great an exemption should be given to the man in the city as compared with the man in the country. All these things cannot be worked out in a minute. I think the Minister of Finance has met the opinion of the country at large in bringing down his measure of taxation, and if it should be necessary at a future time to bring down an income tax, I am satisfied that the people have confidence that he will bring down a well-devised scheme.


Edward Mortimer Macdonald: Has the minister decided to make any further changes in the Bill affecting the mining industry?


William Thomas White: I amended it to provide that the minister will determine the profits. It occurs to me that that would meet the situation. I have not in mind any further amendments to propose, but I need
not say that if my hon. friend has any views respecting the matter, I shall be very glad to hear them.


Rodolphe Lemieux: Does not the hon. gentleman think that the same principle might apply as regards land? I was speaking a moment ago of land syndicates which come under this taxation measure. Land will also be exhausted. An incorporated company is dealing in land, as the land is being sold by lots it becomes exhausted, and, therefore, it seems to me that the same principle should apply to that corporation as to the mining corporation. Am I to understand that the same principle applies?


William Thomas White: A proper statement of a land, mining or any other company, would show net profits, and whether the capital was being exhausted or not.


Rodolphe Lemieux: WThat about timber
limits?	.


William Thomas White: The same principle would apply to timber companies, oil companies, companies holding leasehold properties or any properties in which waste, depreciation or exhaustion of capital is taking place. A proper balance sheet can be made of any business, and it is only a question of ascertaining the facts and using good judgment in regard to them to reach a correct conclusion.


Alexander Kenneth Maclean: I think there are two very good reasons why the committee should rise now. In the first place the minister has been on his feet the whole day and must be tired, and, in the second place, it is not important if this section is not now passed, because its adoption does not expedite the passage of the resolution, and I think it is desirable that we should have a fuller house, because then the points raised will not have to be repeated.


William Thomas White: I am entirely agreeable to the suggestion of my hon. friend. It is an important clause, but since, the committee wishes that it shall stand over till to-morrow, I am quite prepared to agree. I therefore beg to move that the committee rise, report progress, and ask leave to sit again.


George Perry Graham: It wil not impede the
passage of the resolution one iota. We would not be any further forward if we passed the item.


Francis N. McCrea: I have a word to say by way of suggestion. I think there should be some limit in the case of a partnership. II

the capital invested in a partnership reaches a certain limit the partnership should be put upon the same basis as a corporation. The biggest industry you have in the city is owned by one individual. Is it fair that that industry should be allowed 10 per cent profit on its capital before being taxed as against some of its neighbours, who are probably a good deal harder up and have a smaller investment? I make this suggestion because I may not be here to-morrow and I think it is one that may be worth considering. My suggestion is that if the investment of a partnership reaches a certain stage, say $300,000, it should be placed on absolutely the same basis as a corporation.
Progress reported.
On motion of Sir Thomas White the House adjourned at 11.45 p.m.
Friday, March 17, 1916.